February 01, 2004

WILL CAMPAIGN FOR FOOD

Howard Dean is losing, but his campaign staff are cashed-up winners:

Presidential hopeful Howard Dean lived up to his slogan "people-powered Howard" last year, making campaign staff and consultants one of his biggest expenses as he spent all but about $8.5 million of the record $41 million he raised.

Dean spent more than $6.5 million on staff salaries and related expenses, and more than $2 million on consultants. Ads were another big cost, accounting for at least $7 million, and he spent at least $4.5 million on direct mail, campaign finance reports showed Saturday.

Ex-Dean campaign manager Joe Trippi is possibly the biggest winner, apparently collecting a 15% commission on Dean advertising buys. Too bad Howard himself is now almost out of money:

Last week, sources close to the campaign said Dean was down to about $5 million in cash after bills were paid. Dean is withholding staff salaries, declining to advertise in the seven states holding primaries on Tuesday, and planning to cut or shuffle staff as he decides which states to compete in.

Hes previously done well in a State of Rage, and subsequently in various States of Denial. My advice, offered free: compete in a State of Poverty. Oh, wait; he already is.

Posted by Tim Blair at February 1, 2004 10:14 PM
Comments

Tim, you talk about so many journalists in Australia and elsewhere who are clueless about the real world.

Well, you can add to that list any journalist who is amazed that Joe Trippi collected a 15% media commission on Dean's advertising. You see that office full of people across the floor? They're called advertising sales people. And they collect the money that pays for your journalism.

Admittedly, I don't know how it works in Australia. But in America, for more than a century, the ad agency (and Trippi's ad agency, Trippi Squiers McMahon, still places media for Dean even though Joe is no mo'), the agency buys media at a 15% discount for its client and pockets the discount.

What that means is, if Howard Dean called up and tried to buy a million dollars of time from a TV network, it would cost him a million dollars. And then he would have to pay Joe Trippi $50,000 or something for his services. But if a recognized ad agency buys the same time, they get it for $850,000. They keep $150,000, and Howard Dean saves $50,000 because he doesn't have to pay anything other than the media commission for Trippi's time and genius. (Of course I can't swear to the precise particulars. But in general, that's how the whole business works.) Everybody wins.

There's NOTHING unusual here. Someone who doesn't like Trippi is feeding the normal state of affairs to journalists and bloggers as if it were a scandal. And said journos and bloggers have fallen for it.

Posted by: Mike G at February 1, 2004 at 11:38 PM

Mike, Mike, Mike,

Messers Blair, et al, KNOW that this is politics as usual. We all know that campaigns cost money.

The heart of the matter is that Dean's campaign comprised (or did it...) a grassroots "hippie" base. A base of Americans who, we're supposed to believe, think that the profit motive is what's hurting this country... Well, why the hell didn't those folks working for Dean go on some sort of sabbatical? Why didn't those who believed in him simply opt for the most modest of "administrative fees" or work for free? Some of his supporters (like Dr. Dean himself) are filthy rich. They could've organized a collective of sorts from which all the workers could've shared. Instead, we find that Dean's main man was coining it in - JUST LIKE WE WOULD EXPECT ONE OF THOSE ROTTEN REPUBLICANS TO DO.

It's disgusting, that's what, even if it is business as usual. Take back the White House? For what? More of the same?

Posted by: Dave_Violence at February 2, 2004 at 03:09 AM

It's not the nature of ad agencies or the actual percentage that surprises people. What's surprising is the guy was Dean's campaign manager. I think that strikes many people as a conflict of interest.

Dean: "So Joe, I'll give you a 15% commission on ads. By the way, as campaign manager, do you think I need more ads?"
Trippi: "Oh yeah. Cha-ching! Uh, did I say that out loud?"

Possible conflict of interest + Dean's massive spending = Dean probably got fleeced, in the minds of most people.

Posted by: Dorkafork at February 2, 2004 at 03:45 AM

Meanwhile, a certain Presidential candidate spent $33.6 million in 2003, despite not facing any opposition whatsoever from within his own party.

Who? Duh.

Posted by: vaara at February 2, 2004 at 04:38 AM

Yep, vaara, absolutely no reason for Bush to spend any money before, say, October of 2004. Especially since there aren't a lot of Democrats out there pounding away on him. "Duh!!" indeed. Tell you what, once the Dem candidate is obvious, he should stop spending until after Labor Day, at least. After all, he will have no real competition. I would guess that if it is Kerry, we shouldn't have to hear from or about him from about March 1 to Sep 5. Boy, would that be a relief. (Probably help his campaign, too.)

And, oh, yeah, how much of that spending was on ads and how much was to pay for trips to raise money (which he *has* to do by law -- that is pay for that part of a trip devoted to fundraising?) Evidently you wouldn't be opposed to Bush going all over the country as President and raising all that cash and not paying any expenses over it because, after all, *he's the President and he has to go places and see people*.

Posted by: JorgXMcKie at February 2, 2004 at 05:15 AM

Those plastic turkeys don't just pay for themselves, ya know!

Posted by: Angus Jung at February 2, 2004 at 05:21 AM

Actually, Dave_Violence almost arrives at a very good point-- for a supposedly grassroots non-traditional Internet-based campaign, they seem to have actually spent a lot of money very quickly in traditional media.

Dorkafork, again, it may seem a conflict of interest-- no, it PROBABLY IS a conflict of interest-- but what it isn't is anything unusual. These guys all work this way-- sell some services cheap and make it up on media commissions (which, as noted, sort of don't cost the client anything, since it's savings he couldn't reap on his own unless, like Senator Bruce Barton many years ago, he happens to also own an ad agency). So again, the real story here is that someone is trying to smear Joe Trippi on the way out by accusing him of... standard practices in his business.

Posted by: Mike G at February 2, 2004 at 06:46 AM

Oh, and while we're on the subject of ad agency conflicts of interest, why do you think all those clients get talked into placing incredibly expensive Super Bowl ads?

Posted by: Mike G at February 2, 2004 at 06:48 AM

What's vaara's point? Apart from the fact he's a dick, I mean.

Posted by: Quentin George at February 2, 2004 at 06:55 AM

Boy Tim, I wish my life could be described as "poor" when I got down to my last $5 million of slush money. It sure is hard at the bottom!

Posted by: Jake D at February 2, 2004 at 08:09 AM

The difference is no one individual pockets 15% of Bush's 33 million, unlike Dean's excessive budget which was siphoned through the one agent who recommended and booked the campaign.

Plus the hypocrisy. Especially the hypocrisy.

(PS If you're in business, hire an advertising consultant who doesn't bill on media commission but creative strategy, headhours, percentage of sales results or agreed price. And send me a million bucks. Thanks.)

Posted by: ilibcc at February 2, 2004 at 11:23 AM

Hi.

Dean's situation was that he had to win fast or forget it. In order to bluff everyone into accepting him as the predestined candidate, it made sense to spend lots early. Had the candidate proved a winner, it would have worked. Since the candidate proved not to be a winner, he's going broke, but the correct strategy of his campaign manage still gave him the best shot he had.

Posted by: David Blue at February 2, 2004 at 11:37 AM

"The difference is no one individual pockets 15% of Bush's 33 million"

Perhaps not, but I'll bet an ad agency or media placement service does. Trippi McMahon Squier isn't really "one individual" either.

Posted by: Mike G at February 2, 2004 at 12:54 PM

You're right on both counts, of course, Mike. Nevertheless it is highly unusual for a campaign manager - a kind of internal auditor of the campaign's cost and benefits - to personally benefit from commissions.

Posted by: ilibcc at February 2, 2004 at 02:17 PM

Sounds like time for Halliburton to get into the advertising business.

Posted by: Razor at February 2, 2004 at 07:10 PM