Media consultants making out like bandits

Salon (subscription required) has a good report bringing attention to how political media consultants or advertising firms are profiting enormously off Democratic campaigns. http://www.salon.com/news/feature/2006/05/09/campaign_consultants/print.html

Unfortunately, for reasons made obvious in the last two paragraphs of the excerpts below, the writer does not name names other than the infamous perennial loser, Bob Shrum. He does note that the Democratic Party in 2004 departed from percentage compensation to a less costly flat fee approach to the consultants and content creators, while engaging a separate media buying firm. Hillary and Mark Warner are reported to have done the same.

If the 15% referenced is the historical advertising agency take – which as far as I have heard is a dinosaur in real commercial circles much shrewder than Democratic politicians – it is actually the last 15% of the total cost, which is almost 18% of the media cost (divide 85 by 15). If it’s the “suggested list” price as Shapiro reports below (but without much detail), then you are probably talking in the neighborhood of 25% of the actual media cost.

The greedy truth about media consultants

Think you know where your campaign dollars go? Think again, sucker. Political image-makers skim off percentages that would make Exxon execs envious -- and the public never knows about it.

By Walter Shapiro
May. 09, 2006
In this fate-of-the-nation political year when more than $1 billion will be given to Senate and House candidates, there is just one certainty about the outcome -- the true winners in November will be the leading media consultants in both parties.

For more than a quarter-century, media consultants have been paid not in fixed dollar
terms, but as a percentage of the campaign's television buy. The more often a candidate goes on television, the more the media consultant makes, even though the actual cookie-cutter commercials may have all the originality of a Harvard undergraduate's coming-of-age novel. . . . Remember, we're not dealing with chump change here. . . . We're talking about an off-the-top rake-off of campaign funds that might make Exxon executives envious. . . .

Given the reluctance of virtually everyone in politics to talk on-the-record about this taboo topic, I sometimes felt as if I would have to resort to meeting my sources in underground parking garages at 2 in morning.

These days, in a typical hotly contested House race, the media consulting firm will get between 10 percent and 15 percent of the total television ad buy, full reimbursement of production costs, maybe a post-election "victory bonus". . . . the consultant's percentage fee is calculated based on the TV stations' posted ad rates (the inflated gross) rather than the actual charges (the net).

Why are consultants' fees such a hush-hush arena of politics? Part of the explanation is that such financial data is only available by anecdote. . . . [A]ll television costs are lumped together on a campaign's FEC report making it impossible to decipher how much . . . is retained by the media consulting firms. Media consultants are understandably secretive. . . . Campaign managers are skittish . . . because they do not want to make enemies in this incestuous industry . . . .

Political reporters . . . tend to shy away from this topic because, frankly, consultants tend to be our best sources. . . . It seems journalistically self-destructive to aggressively quiz these invaluable political insiders about their personal income. Not surprisingly, the only newspaper reporter in recent years who examined in depth the financial dark side of campaigns (the Washington Post's Susan Glasser in 2000) immediately left the political beat to report from Moscow.