E-Commerce

Squeezing the Internet for Political Cash, Part 1: Follow the Leader

As the heated Democratic primary race came to a conclusion last month, much discussion centered on presumptive nominee Barack Obama’s superior fundraising. Hillary Clinton started the race with an edge among deep-pocket donors, but Obama roared to the nomination finish line with a substantial fundraising lead. Much of that money came in through the Internet, a trend that experts say will figure prominently in the general election to come.

“Historically, it hasn’t been cost-efficient to get money from smaller donors,” Massie Ritsch, communications director with the nonpartisan political watchdog Center for Responsive Politics, told the E-Commerce Times. “Candidates would have to spend money buying lists, writing letters and putting stamps on them. Now, the Internet has created a way for politicians to reach donors who are willing to part with (US)$20 here or $50 there.”

Drips and Drops

In fact, $20 here and $50 there is exactly how Barack Obama took the No. 1 spot in Democratic fundraising over Hillary Clinton. With a substantial base of long-time supporters, Clinton appeared early in the primary race to have the war chest and fundraising machine to outlast underdog rival Obama. That’s not how the final months played out, though.

Late in the primary season, Obama overtook Hillary Clinton in overall fundraising. He posted a total of $30.7 million in contributions in April 2008 compared to Clinton’s $25.8 million, according to the Center for Responsive Politics.

As the race drew to a close, Obama continued to garner the most small donations, with 45 percent of his total donations coming in increments of $200 or less. Whereas 20 percent of Hillary’s Clinton’s overall donations came from contributors of $4,600 or more; only 5 percent of Obama’s funding so far has come from that category of donor.

The pioneer of using the Internet to generate presidential campaign cash is, of course, Howard Dean. In the lead-up to his bid for the Democratic nomination in 2004, Dean consistently made headlines by using catchy fundraising themes such as the “$100 revolution” and launching well-known drives urging online donors to match dollars given to Republican efforts at select big-ticket dinner events.

Since then, as chairman of the Democratic National Party, Dean has sought to replicate the highly successful state-by-state strategy used by Republicans since the 1980s to build grassroots support.

In decades past, though, such individual voter networks were built through laborious door-to-door and phone-bank operations. Today, Web 2.0 tools make it much more cost- and labor-efficient to gather contact information from supporters so they can be mobilized for later efforts.

Maxing Out vs. Easy Asks

The Internet has radically shifted how candidates approach their donor bases, Justin Buchler, assistant professor of political science at Case Western Reserve University, told the E-Commerce Times. As in the early days of e-commerce, it is the gap in possibilities between the physical world and the virtual one that is making all the difference.

“Prior to Internet fundraising,” Buchler explained, “the most effective method was to gather regular contributors physically and ask them each to ‘max out’ by contributing the maximum legally allowable.”

Once contributors reach that maximum, though, they’re prohibited from contributing again. Thus, said Buchler, “this method is guaranteed to raise a certain amount of money, but there is an upper limit.”

By contrast, the Internet gives candidates access to many donors who wouldn’t be likely to appear at the formal fundraising events characteristic of traditional campaigning, he noted. Thus, these donors went untapped to begin with. In addition, it’s relatively inexpensive to ask a donor who gave a small amount through an Internet donation site to do so again, placing the potential cap on those donations at a much higher level, both in number of donors and in total dollars raised.

Nothing If Not Traditional

Like e-commerce, though, Internet-based campaign fundraising must retain the most important elements of personal interaction to work. In that sense, Obama’s success is more evolutionary than revolutionary, according to Jonathan Zucker, executive director of the partisan Democratic infrastructure support organization ActBlue.

“One thing that tends to get lost in the hum of news is how much work goes into a successful online fundraising operation,” Zucker told the E-Commerce Times.

“Money doesn’t fall from the air; it doesn’t arrive, for the most part, without being solicited. Everything that mattered before still matters — cultivation, personal contact, attention to the donors’ needs, organization. If ‘traditional’ means identifying, contacting, pursuing, reminding and thanking, then successful Internet fundraising is nothing if not ‘traditional,'” he explained.

Still, the numbers are impressive, and numbers are exactly what the Obama campaign has been stressing.

“The campaign had staffers dedicated to cultivating and managing the population of online donors,” said Zucker. “They viewed those donors as participants. And they brought the press along with them by focusing on the metric of donors instead of dollars. Over time, those donors came to be viewed as an indicator of vitality. That’s a fairly substantial paradigm shift, and it could only have been made with technology.”

Squeezing the Internet for Political Cash, Part 2: The March to November

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