Home Business & Finance Building a business of politics the rise of political consulting and the transformation of American democracy
Technological Developments and Economic Opportunities
Alongside business adaptations that provided a degree of financial stability in an uncertain political world, consultants benefited from a confluence of factors that improved their bottom line. Through the 1970s and 1980s, in fact, advances in technology coupled with changes in public policy made it possible to provide products and services such as polling, media, and direct mail at a lower cost and higher volume than in the past. As consultants responded to these opportunities, they transformed the character of the profession as well as the conduct of political work.
Notably, the 1970s mark a period of increasing specialization in the consulting business. Although many practitioners still functioned as general strategists and overall campaign managers along the model pioneered by Whitaker and Baxter, consultants increasingly focused on more lucrative parts of the business that combined technical proficiency with political acumen. Polling, for example, blended an academic understanding of statistical sampling techniques with a creative ability to translate survey data into campaign strategy. Media consulting was more than just slick advertisements; it also required molding campaign messages to the changing circumstances of the race.
Similarly, voter targeting or direct mail combined the data-driven precision of direct marketing with the precinct-level political intelligence of a party boss. Consultants were drawn to these specialties in part because it gave them control over a product campaigns could not provide on their own. As much as a seasoned strategist like Joe Napolitan was in demand, his advice was one among many voices in the ear of the candidate. By contrast, the purchase of a survey, advertisement, or mailing was increasingly something only a consultant could provide. However, unlike a general strategist who could work out of a suitcase, polling or media entailed rather high fixed costs that could create cash flow problems given the up-and-down nature of political work. Once these fixed costs declined, the economics of political consulting notably improved.
Polling offers a good example. The commercial survey business that emerged in the 1930s was both labor- and capital-intensive. Pioneer pollsters like Gallup and Roper employed an army of survey takers scattered around the country who conducted door-to-door interviews.57 Results were then tabulated by hand or using punch card machines. Advances in computing enhanced pollsters’ analytical capacity, but the capital expenditures required were far from trivial. In 1976, Computerworld magazine reported that the Gallup Corporation’s data-processing capabilities included an IBM 1130 computer along with additional disk drives, keypunch machines, punch card readers, and printers.58 Although marketed as a low-cost business computing system, the IBM 1130 cost more than $40,000 when it was introduced in 1965, and peripherals like punch card readers and printers could add another $15,000 in hardware.59 Even then, sophisticated statistical analysis required a level of computing power beyond the reach of all but the largest companies (the IBM 370 mainframe computer with 1MB of memory carried a $4.7 million price tag in 1970).60 Consequently, survey research firms often rented time on an off-site computer in order to conduct more complicated work. This typically took days to complete.61 Given the high costs of polling, it is not surprising that the field was dominated through the 1960s by a handful of commercial firms like Gallup and Roper plus a few academic institutions like the University of Michigan Survey Research Center and the National Opinion Research Center at the University of Chicago.62
In the 1970s, however, several factors combined to make it much cheaper to conduct surveys and analyze the results. First, the telephone replaced face-to-face interviews as the preferred method of collecting data. With home telephone penetration near 100 percent and advances in sampling techniques using random digit dialing, pollsters could employ a single call center staffed by thirty or forty workers rather than a legion of survey takers scattered across the country.63 Second, changes in the telecommunications industry, precipitated by the breakup of AT&T, dramatically lowered the cost of telephone surveys compared with in-person interviews. Putting aside the complicated story of deregulation, the practical effect of government action was lower prices, especially in the long-distance market.64 The cost of a flat-rate long distance line for business use (a WATS line) declined in real terms by 30 percent between 1974, when the Justice Department filed its antitrust suit against AT&T, and 1982, when the telephone giant agreed to break up the Bell System. Long-distance costs continued to fall thereafter, declining by almost 50 percent in real terms over the next ten years.65 Third, with the dawn of the desktop workstation, the cost of computing went down significantly. The nominal price of a small computer dropped from around $15,000 in 1975 to less than $2,000 ten years later. In real terms, this was equivalent to an 80-percent drop in price, or almost 25 percent on an annual basis. Computer memory also became significantly cheaper. Between 1975 and 1984, the cost of random access memory (RAM) fell by 96 percent.66 In the 1980s, the combination of low-cost long distance and desktop computing led to the development of computer-assisted telephone interviewing (CATI). Using individual workstations equipped with a computer that dialed numbers automatically, interviewers could input survey responses as they went along, eliminating the need for punch card tabulations and giving pollsters almost immediate access to the data they collected.67
Other specialties underwent similar changes as low-cost technology made it cheaper for consultants to provide campaigns a steady diet of products and services. With the growing availability of portable video recorders in the 1970s and 1980s, for instance, media consultants could produce campaign advertisements at a fraction of the cost of traditional film recording. Whereas campaign advertisements recorded on film cost $50,000 or more to produce in the 1970s, video made it possible to create a campaign advertisement for just a few thousand dollars.68 This made political media much more widely available. As Ray Strother observed, “My candidates couldn’t afford ... film,” but they could afford a campaign commercial “I could produce for $2,000.”®
Similarly, advances in computing transformed the direct mail business by making it possible to collect, store, and manipulate large databases of voter files that included histories of past contributions, registration information, and various social and demographic characteristics. Using this information, direct mail consultants produced bulk mailings of computer-generated letters tailored to the specific interests or concerns of the recipient. Although the computing power required for direct mail was not cheap, the rate of return made up for the cost. In 1978, direct mail consultant Richard Viguerie teamed up with Republican Party chair William Brock to raise funds for GOP candidates in the congressional midterms. Using a series of targeted appeals aimed at conservatives angered by liberal court decisions on abortion and prayer in schools, Viguerie and Brock raised enormous sums for the party, turning an $8 million investment in direct mail into $25 million in contributions.70 Direct mail was also lucrative: the Washington Post reported in 1978 that Viguerie pocketed $3.2 million out of a total of $5.8 million he raised on behalf of the National Rifle Association.71 Of course, not all of this was profit. According to Viguerie, he spent $100,000 in monthly fees leasing the powerful mainframe computers he needed to generate up to 500,000 letters for a single campaign.72 In time, however, lower-cost computing made direct mail techniques more widely available. By the early 1980s, a handful of inexpensive desktop computer software packages (some costing less than $1,000) tailored direct mail to the needs and budgets of individual candidates.73
Another important factor in the growth of direct mail was campaign finance reform. Legislation passed in 1974 prohibited large, unregulated contributions from “fat cat” donors; in response, parties and candidates increasingly targeted small, individual contributors using direct mail solicitations to fund their campaigns. In 1978, Congress recognized the political value of direct mail by extending reduced-rate bulk mailing privileges to “qualified political committees” such as national and state parties.74 Previously limited to nonprofit organizations, reducing the bulk mail rate meant that political causes and campaigns could solicit funds for as little as four cents per letter.75 Together, the growing reliance on individual contributions and lower postal rates increased the importance of direct mail consultants in the conduct of campaigns.
In sum, a combination of technological and policy developments fueled a process of specialization in products and services that generated a high rate of return. As a result, the economics of consulting improved markedly in the 1970s. As pollster Bob Teeter explained, “The barriers to entry were much lower,” especially once low-cost telephone service and data-processing capabilities replaced the need for a “big, mainframe computer” and a “national field force” of in-person interviewers. Lower costs attracted more people to the business. What began in the 1960s with “only a few” pollsters, Tweeter recalled, eventually became a crowded field.76 Similarly, video lowered the barriers to entry associated with media consulting, making it easier to specialize in one of the most lucrative parts of the business. For an earlier generation of consultants like Tony Schwartz (the creator of the famous “Daisy Ad” for Lyndon B. Johnson’s 1964 presidential campaign), a reputation for artistic and technical sophistication came from years of working in TV advertising before turning to politics. In contrast, video made it possible for someone like Jill Buckley, who had extensive campaign experience but no formal background in television, to become a media specialist and reap the financial benefits.
In the case of direct mail, the demand for specialized products and services also had a great deal to do with campaign finance rules. Money in politics was nothing new; Mark Hanna raised unprecedented sums for the Republicans in 1896 to defeat William Jennings Bryan. What distinguished the last quarter of the twentieth century from this earlier period in American politics was the legal requirement that campaigns publicly report how every dollar was spent. For all the weaknesses of campaign finance reform, rules set out in the 1970s for how candidates and parties could spend their money would yield tremendous benefits to the consulting industry in the decades that followed.
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