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The billion dollar election: Who got paid?

By Jen Christensen, CNN
updated 8:31 PM EST, Fri November 9, 2012
STORY HIGHLIGHTS
  • At least $4.2 billion is estimated to have been spent in the 2012 elections
  • Ad agencies were among those who were paid the most money from the campaigns
  • Companies run by former campaign insiders made big money as well

(CNN) -- Far away from Washington, in the heart of the Midwest, CEO Cliff Franklin and his Fuse Advertising team worked hard to become one of the Obama campaign's secret weapons.

They helped craft the president's efforts to target minority voters -- efforts that seemed to have paid off, with Obama capturing 93% of the black vote, 71% of the Latino vote and 73% of the Asian-American vote.

Even as late as Election Night, the Fuse team couldn't even take time off to watch the returns. They were in Chicago on standby to help the campaign make any last minute changes to its message.

2012 election priciest to date: $4.2 billion tab and rising

"It's exciting to be a part of this, but it is tough work, too. We've had to keep our studios in rapid-response mode for months," Franklin said. "Last week, we worked all night on radio ads that needed updating with voter ID law information and polling hours."

And it appears Fuse was well paid for that work. A CNN analysis of Federal Election Commission records shows that Fuse is one of the biggest beneficiaries of the campaign this year. Obama for America spent some $2.86 million with the firm.

Romney thanks major financial backers

A blur of waving flags greeted President Barack Obama's victory speech at an election night event in Chicago, Illinois. A blur of waving flags greeted President Barack Obama's victory speech at an election night event in Chicago, Illinois.
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Estimates show the election could cost at least $4.2 billion, and others say it could reach $6 billion. That's a record.

So where did all this money go?

The FEC, which tracks election spending, shows that most of campaign money, by far, goes to framing how voters see a candidate. It buys television ads, on-line image campaigns, direct-mail outreach and those phone banks used to call prospective voters.

The focus on battleground states this year brought big paydays to companies in Ohio, Florida, Nevada, Colorado, Wisconsin, Virginia and Iowa.

Local television and radio stations in those markets did exceptionally well. Caterers, rental spaces, lighting and production companies, and printing presses saw revenue skyrocket from having so many campaigners in their own backyards.

Romney campaign vs. Democratic spending

But the biggest winners in this election are the companies that have close ties to campaign insiders.

While inside-the-Beltway Washington and similar firms who have run campaigns before made the most money from the Obama and Romney campaigns, the biggest expense for both camps was still broadcast advertising.

"Despite all the declarations that everything is going on the Internet, the biggest industry beneficiary of campaign spending is any business that works with broadcast media," said David M. Mason, a former FEC chair who now helps mostly Republican-related campaigns comply with federal and state regulatory requirements. "It's always been advertising for as long as we've really had good data on election spending."

The ad firms
At the top of the list for Obama's camp is GMMB, a Washington-based ad firm run by Bill Clinton's 1992 former media strategist Jim Margolis. According to October 25 public data from the FEC, the firm has been paid so far $47.16 million to build and buy the ads on behalf of the Obama campaign.

But Margolis said that the overall ad buy figure is actually much higher, although very little of the money stays at his firm.

"The campaign has spent in excess of $400 million on advertising during this cycle," Margolis told CNN. "All of those dollars have come through GMMB, to be paid out to stations. But It doesn't stay here. It goes out to pay for all the advertising you see on TV."

Traditionally, ad agencies such as GMMB do receive some sort of commission or fee for creating, placing or managing those ads, typically a tiny percentage of the overall ad buy. Margolis declined to reveal GMMB's compensation.

Margolis has managed a number of other high profile campaigns for Democrats. While GMMB is essentially an ad firm, its website makes it sound like it does a lot more.

"We are societal problem solvers. Engineers of social change. Activists. And realists," the website reads. The "digital to doorstep" branding campaigns it creates have "never been traditional" and GMMB promises to create a message that can reach "increasingly skeptical audiences" and people who can "screen out messages that challenge their beliefs or opinions."

American Rambler Productions LLC received the most money from the Romney campaign. The campaign messaging and advertising specialists received $41.85 million. Unlike the other top firms making a profit from this election, its online profile is nearly non-existent.

Public records show the company was incorporated in Delaware two years ago, although it lists its mailing address in Beverly, Massachusetts, outside of Boston. It opened up shop a little over two years ago, right as Romney launched his campaign. A piece in the New York Times suggested the firm was named for the brand of car Romney's father helped develop in the 1960's.

Three Romney insiders are connected to the firm: Stuart Stevens, Russell Schriefer and Eric Fehrnstrom, according to the Wall Street Journal. They are highly experienced Republican messaging strategists, but two of them made headlines for a couple of high profile missteps.

After Romney won the Illinois primary, Fehrnstrom appeared on CNN saying the campaign had to "hit a reset button" for the general election and then remarked, "it's almost like an Etch A Sketch." The comment went viral and Romney's opponents seized on the gaffe suggesting the candidate's policies were too malleable.

Some campaign insiders blamed Stevens for Romney's flat poll numbers after the Republican National Convention.

Among other firms that are big winners this election cycle are two digital strategy agencies.

Romney's campaign has used Targeted Victory. The Romney camp has spent $3.1 million with the agency. Zac Moffatt, who is Romney's digital director, co-founded the company. He was on leave to work at the center of Romney's staff -- evidence of how important the campaign considered its digital strategy.

Microtargeting: How campaigns know you better than you know yourself

Online outreach has been a real advantage to the campaigns, Moffatt told CNN early in the campaign. "You can be a lot more precise with your message online," Moffatt said. "We can immediately demonstrate its value and we have hard numbers to show a person's engagement."

Targeted Victory also helped Karl Rove's Super PAC, American Crossroads, place ads online. A profile in Bloomberg said co-founder Michael Beach got the idea in 2008. He was overseeing the Republican National Committee voter turnout operation at the time and Obama's "online grassroots army" had overrun it.

Obama's campaign spent more than $4.61 million with digital marketing and advertising agency Bully Pulpit Interactive. Its website explains that "digital marketing helped then candidate Barack Obama bring millions of new supporters into his camp and start a political movement." Bully Pulpit says it's placed more ads online than any other political operation on either side of the aisle.

The firm was founded by Andrew Bleeker, Ben Coffey Clark and Mark Skidmore, three men who are considered the real pioneers of this kind of targeted advertising. Analysts believe their digital efforts in 2008 set the Obama campaign apart from Hillary Clinton's since it was able to adapt quicker than her primarily TV and radio-focused campaign. The organization's website says it maintains an email list of 13 million subscribers.

Businesses like Bully Pulpit and Targeted Victory benefit from this election regardless of the winner. However Fuse's CEO Cliff Franklin said when the candidate you work so hard for does win, it feels like a bonus.

"I know its business, but it means more to us than that," said Franklin, whose firm also worked on Obama's 2008 campaign.

"It's really surreal to participate in something like this at this level. We are a firm in St. Louis, far away from the epicenter of power, and yet, somehow because of the work that we do, we ended up in the thick of things. Not many business can say this about their work, but we really are helping to shape history."

Correction: An earlier version of this article incorrectly identified Jim Margolis' position with the 1992 Clinton campaign. He was a former media strategist.

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