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

Read more: Politics, News, Walter Shapiro

Illustration by Val. B. Mina

May 9, 2006 | WASHINGTON -- Psst! You with your checkbook in one hand and a political fundraising letter in the other. Are you sure you're being shrewd instead of being screwed when you send your money to this particular campaign?

OK, you've studied the issues so intently that you can recite from memory the candidate's nine-part plan for graduated, phased "victory with honor" withdrawal from Iraq. And you've crunched enough polling data to create a black hole and can prove through regression analysis that your candidate can knock off the incumbent merely by picking up 11 percentage points among male voters over the age of 37 who watch the Cooking Channel.

But have you scrutinized the financial arrangements and consultant contracts of this campaign the way you would skeptically analyze the balance sheet of your favorite charity? Would you feel ripped off if you discovered that about 15 percent of everything you donate goes right into the pockets of the media-consulting firm?

What we are talking about is one of the biggest secrets in politics, right up there with debate briefing books and sealed divorce decrees. 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. Small wonder that in virtually every free-spending political race in both parties, the campaign manager (who is paid a salary, which is publicly disclosed) and the pollster (who is usually compensated by a flat rate per poll) start gazing enviously at the media consultant as they conclude, "We're in the wrong business." Remember, we're not dealing with chump change here like FedEx charges or gassing up the campaign van. We're talking about an off-the-top rake-off of campaign funds that might make Exxon executives envious. As Leslie Kerman, a Democratic campaign lawyer and a leading behind-the-scenes crusader against the inflated fees paid to media firms, puts it, "These same consultants love to run ads about out-of-control compensation for CEOs, but they don't think about their own compensation."

Democrats have the reputation as the party of gold-plated consultants largely because of Bob Shrum, the sharp-elbowed and avaricious image-maker for Al Gore and John Kerry. But in this campaign year, at least, there do not appear to be major differences between the two parties in terms of the vigorish paid to media consultants. Interviews with both Democratic and Republican campaign managers, pollsters and national party officials all produced similar descriptions of the current fee structure for ad makers. 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" and sometimes a $3,000-a-month consulting fee. To convey a sense of how perplexing this all is (especially to the campaign managers who negotiate the contracts), 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). If the prior sentence confuses you, just think Hollywood sleight-of-hand bookkeeping.

What does all this mean to you as a campaign donor? If a congressional candidate budgets, say, $1.5 million for television, less than $1.3 million will be spent on airtime and production costs. The rest (imagine your money with little wings on it flying out the window) goes directly into what might be called the image-maker's beach-house fund.

Next page: Why are consultants' fees such a hush-hush arena of politics?