The Obama campaign of 2008 had the most expensive political campaign budget of that time. It paid Massive Incorporated $44,465.78 for online advertising alone. It also spent a good portion on snail mail and other forms of voter outreach.
Here is how their political campaign compared against that of the opposition (check the row that says ‘Budget’):
Pic Courtesy: Slideshare, Obama campaign
With such insanely high spends, their political campaign budgeting would’ve been a nightmare. How did they know how to allocate the money? How did the campaign managers create such a detailed budget?
Hopefully, this post will take you one step towards finding those answers. While I can’t tell you exactly how they did it, I can give you some guidelines that you can use for your campaign budgeting.
What kind of expenses can you anticipate?
There are only two kinds of spends in any political campaign (regardless of how massive it is):
- Persuasive spends: All spending that is focused on voter persuasion or voter communication. This will include spends for rallies, billboards, door to door canvassing, etc.
- Non-persuasive spends: Your entire campaign is aimed towards voter persuasion. However, there will still be some overheads. For instance, paying for your HQ comes under non-persuasive spending.
Sounds easy, right?
Now that you have grasped the basics, can you tell me where the ‘Digital budget’ fits in?
Using social media or SMS to win voter support comes directly under communication. In your political campaign budget, it neatly falls under persuasive spending.
But the salary for your digital marketing manager comes under non-persuasive – it counts as overheads.
So, while managing the campaign budget looks simple, it can actually get quite tricky. Not only do you have to keep track of the various disbursements, but you also have to ensure it remains properly segmented.
What should you know to create a winning political campaign budget?
The right campaign budget will make it easier for you to:
a) Track the funds that were collected and
b) Segment the various costs incurred during the entire campaign period
To craft such a budget, you should be clear about a few things right from the get-go.
What is the source of your funds?
The 2008 Obama campaign was famously crowd funded. His opposition, however, used public funds for his campaigns.
How are you planning on funding yours?
It can come from you as the ‘candidate’ or from the party that supports you. Or, you can also look at crowdfunding to help you out. A combination of the three is typically the easiest option.
Knowing the source of funds is important because you don’t have to run around, making last-minute adjustments to the ‘income’ column of your political campaign budget.
When will your funds come in?
Has the funding from a Trust or Party been promised after your win? Or will it come in right after your nomination?
If you know when your funds are getting credited, planning for expenses would be easier. For instance, if you knew that a substantial amount is credited to your campaign expenses by your party (after the nomination), you can start the majority of your voter communication efforts after it.
When will you need the funds?
This question is as important to solve as knowing when the money is coming. If the expected funds come in too late, it could adversely impact your campaign planning.
Even if your campaign is self-financed (and you have the liberty to dip into your funds whenever needed), having a timeline for the big expenses makes your budget run a lot smoother.
For instance, GOTV efforts a month before the polling will command the majority of your funds. So you should have enough money left in your account to support those expenses. That means the remaining campaign expenses will be budgeted accordingly.
When will you spend the money?
This might seem like an absurd question – you will, of course, spend the money every time you need it. But you do have options to pay for some bills later.
For instance, if you have leased your HQ for the campaign duration, the cost would be upfront. However, a thank you get together for your supporters can come in a lot later. Similarly, if your campaign is running on loans, paying the debts would come in after the polls.
These four questions will give you a clear idea of the cash flow that you can anticipate during the entire campaigning.
How to create a winning campaign budget?
The key to a sound campaign budget is to work it backward. That is, say you have scheduled GOTV efforts at the last 3 days of polling. Then the first money allocation would be towards those expenses.
The idea behind this approach is to ensure that you do not fall short of money at the fag end of the campaign (this could make all the difference between winning and losing).
Once you have outlined all the major expenses in your political campaign budget, here is how you can actually go about allocating the funds.
Step 1. Get an estimate of projected spends
For the 2020 USA elections, Group M estimates that close to $10 billion will be lavished on Ad spends alone. PQ Media estimates that amount to be roughly $8million. The total cost of the entire campaign would be much higher.
Do you know how much (roughly) you are going to spend for the entire campaign? Let me show you a quick way to calculate this number.
Say you need 1000 votes to win a majority, and every vote costs $100. Then, your total spends (for the whole campaign), would be 1000*100= $100,000.
|Estimate of election spend = cost per vote * total no. of votes needed to win|
From this $100,000, it is up to you to allocate various amounts for each campaign exercise. For instance, if your campaign manager recommends 20% of all expenses to be digital, then here is how much of the cost that would be digital:
$100,000*20/100 = $20,000.
Please note that this is a hypothetical scenario. What each vote costs is highly dependant upon geography and the election cycle.
For instance, if your local election is right in the footsteps of a Federal election, then the GOTV efforts for your campaign would cost less. That is because the electorate is already aware of their duty to cast a vote.
Since you do not have to spend on persuading them, instead of $100, each vote could simply cost you $70. So the remaining campaign spends, and the budget has to be adjusted accordingly.
Look at the previous election spends to get an idea of how much each vote costs. Also, refer to the previous candidate’s budget split. It will tell you the kind of costs you can incur. Here is an example from opensecrets.com
Pic Courtesy: Federal Election Commission, United States
Thumb rule: Don’t guess. Do your research and put in the exact price. This rule applies to not just the high-level campaign spends, but also to the minute details (e.g., bill-board costs, yard sign costs, software costs, etc.)
Step 2. Confirm with your campaign strategy
Message delivery, length of the campaign, and voter communication strategy will define the cost for your campaign.
If the election campaign period is for a whole month before the polls, the spends will be comparatively higher than if the campaign is only for 15 days.
Similarly, if your strategy chooses to target millennials, then you will spend heavily on digital communication. In this scenario, you will incur software costs (for GOTV text communication), and your salaries would be a bit higher.
On the other hand, if you are focussing on volume, the budget would be different. If you want to talk to 1000 voters every day for the month leading up to the elections, you have to factor in calls, texts, and door to door campaign time to your budget.
Here is a breakdown of the 2008 Federal election budget:
So get your campaign manager to sit in on the budgeting session. The campaign strategy he outlines will heavily influence the cash flow and the attached costs.
Thumb rule: Try to run an inexpensive campaign, not a cheap one. Cutting corners is unavoidable when it comes to running tight campaigns. That is not entirely a bad practice (it allows you more financial liberty).
However, in an effort to spend less, do not go for sub-standard options. For instance, say you are getting yard signs printed.
An inexpensive option would be going for the simplest design. A cheap option would be one that has low-quality paper that is not waterproof!
In the latter scenario, your signs would just get washed away by rains. You do not want to be known as the candidate who got ‘washed-out’ before the polls even began!
To cut down on campaign costs, see if you can rope in volunteer time. For instance, ask volunteers to send snail mail, instead of paying for mail handling expenses.
You can also ask supporters to donate in-kind (sponsor yard signs), instead of asking for cash. Whenever possible, rent instead of buying.
Also, check for robust software options (like CallHub), instead of expensive ones to help you with communication.
Step 3. Draw up an excel sheet
I am sure there are a few software tools that can help you manage the budget. But going by our thumb rule no.2, an ‘inexpensive’ option would be excel sheets.
It will enable you to add in extra expenses (as rows). Also, it offers ample formulas to make calculations easier.
The trick in getting the best out of your excel sheet budget is to be comprehensive about the expenses you would incur, and segment each spend.
Here is a sample Excel budget sheet that I got from Candidate Boot camp:
Notice how ‘Fundraising’ and ‘Operations’ have a segment of their own (these come under non-persuasion spends). You can refine this further by splitting Voter Contact into ‘Digital’ and ‘Direct.’
You can also add another row: Miscellaneous/disbursements, to keep track of petty cash distribution.
Thumb rule: Segment as minutely as possible. You should foresee every possible expense you would incur and account for it. You would know if you have done a good job if the ‘Miscellaneous’ section has the least money.
An ideal split is 70% of your campaign spends towards voter contact, 20% to overheads, and 10% for miscellaneous or contingencies.
Step 4. Plan it monthly/weekly. Then move it up to daily
In the above Excel sheet budget example, you will notice that the expenses are calculated on a monthly basis. Clearly, it is suited for bigger campaigns (like a federal election), that have a longer campaign period.
Your budget need not be that long. It would start from the time nominations begin (or you decide to run for office), and extend till the polling date.
In such a scenario, sticking to a monthly spend throughout is not ideal. The closer you get to polling, the more intensive your spends get. So keeping a weekly or even a daily spend sheet is better.
Thumb rule: Aim for budget zero. That is, no money left in the bank, and no debts waiting when you win.
A horror story here is Newt Gingrich’s 2012 Presidential campaign. He spent close to $800,000 on a website and mass-email system, and landed his campaign in debt.
Instead, he could’ve simply opted for a robust communication tool (like CallHub) and cut down his costs.
There is another end of the spectrum. That is, having money in the bank when you finish campaign. In tight races, every penny counts. There is no point in having $5000 in your account, if you could have won by spending it on voter communication.
Step 5. Account for everything
Admittedly this is an extension of the ‘segmentation’ rule. Still, it merits a section of its own because it makes it simpler to audit your campaign after the elections.
Here is a breakdown of the 2008 Obama campaign spends:
Notice that this list catalogues only Ad spends. In your political campaign budget, you should also account for the various administrative and operative costs that you would inevitably incur.
Thumb rule: Be cognizant of cashflow. While you list every expense, keep in mind that money should also be flowing in.
That is, schedule major spends only after fundraising events. Similarly, if your campaign is operating on loans, ensure that you pay it only after the campaigns are done.
What comes first: budgeting or fundraising?
Unlike the classic chicken or egg problem, this question actually has a solution. Your budgeting comes first. Fundraising is based on the estimated projection your political campaign budget gives you.
Let me explain why.
If you are planning to run your campaign on your own money (and raising funds), it would be tempting to get started immediately.
Based on how much you have managed to raise, and how much money you have in your bank, you would allocate campaign spends.
This approach is not necessarily the best one.
You see, the cost per voter is not dependant on the amount of money at your disposal. That means, if it costs $70 per voter to convince him to vote for you, your communication spends have to be based on 70*no.of voters to contact.
This amount is not negotiable.
What you can do is, once you get this estimate, you can set up a fundraising goal for your campaigns and ask supporters to contribute.
Working towards a goal is a lot more encouraging for your supporters and guaranteed to get the money in.
Sources for raising campaign money
Once you have lined out all campaign tasks to invest in with an estimated budget for each based on past campaign records, you can set about deciding how you are going to raise the money for your campaign.
Here are some ways campaigns get financed.
- Personal investment by the candidate. This may not be viable for every candidate. In case, you decide to take this route, put in the money as a loan. That way you stand to get some of it back when you raise donations.
- PACs / Special interest groups that endorse candidates whose policies are in line with their interests.
- Major donors of past campaigns have a habit of donating. Discover them through voter lists you buy.
- Events and mail tend to take up expenses and the returns are variable for each campaign. Campaigns still stick by these traditional forms of communication.
- Loans that you can apply for or get cosigned by someone supporting your run for office
- Public funding programs. Some cities and districts have public funding programs to allocate taxpayer money into campaigns. You have to adhere to the strict terms to make your campaign eligible for public financing.
- Some services like transport, printing and catering would be covered by supporters for free.
Factors that affect political campaign budget
Depending on the office you are running for and the location, there are some variations in the budget that you have to consider. Some of these expenses are measurable at the outset while some are dependent on the support you draw or how your communication plan works out. Here are a few.
- Electorate size – Primaries have fewer voters to contact than a general election. A local election campaign will have even fewer voters to reach out to.
- Opposition – How many opponents are you up against? How close is the competition?
- Newcomer vs incumbent – A candidate with a recognized name ID would need to spend less than a first timer to raise their candidate profile.
- Voter communication methods – Your contact methods like phone banking, door-knocking and community events have varying expenses.
- Coverage by external sources – Political party endorsement, free press coverage and supporter action can cut your expenses as well.
Allocating your political campaign budget
Dividing your budget among the complete campaign functions is also important. One way to do this is by separating all expenses into two categories. Direct voter contact and overhead.
Direct voter contact covers anything that is used to communicate with the voters. Polls, website, ads and phone banking are all grouped under this category. About 65 – 70% of your total budget should be used in direct voter contact expenses.
Overhead covers staff, consulting fees and any other bills you rake up from traveling to renting. It is good to play it safe and keep some part of the budget aside for contingencies down the road. Around 10% of the budget should be held for such expenses.
A fine budget plan will see you through the entire campaign without the need to scrape activities or take the cheaper route. Plan in advance and consult with your campaign manager and consultant to draw a budget which will facilitate the campaign you hope to run.