Read Brian Franklin’s feature article in Campaigns & Elections magazine: “The Slow Boom of Campaign Technology.”

Why transformational change in political media may take longer than expected….

by Brian Franklin

On the shelf in my office sits one of my favorite items: the sock puppet, a historic symbol of the dot-com boom and bust.

The sock puppet, a blatant rip-off of Conan O’Brien’s Triumph the Insult Comic Dog, was a pervasive and popular mascot for the company, which tried to be the Internet’s first pet supply superstore. Despite $180 million in funding from Amazon, couldn’t scale up quickly enough and as the bubble collapsed, the company was mercifully put to sleep by its board.

The dot-com boom was, in many ways, an incredibly successful wealth redistribution scheme based more on excitement about the future than actual market opportunities. If you had a cool idea, a well-written executive summary, a promising Forrester forecast to back it up and a good ad agency to mock it up, you had a good shot at getting some kind of funding.

Startups were everywhere, and large corporations were suddenly investing millions in online divisions and tech infrastructure to prevent a possible loss of pre-existing market share. Many ad agencies, media buyers, writers, graphic designers, coders and the savviest investors were the beneficiaries of this optimistic view of the future.

During this time, I was working as an advertising creative director and marketing strategist, and worked with a number of dot coms, ranging from news and entertainment portals to large healthcare and apparel sites. In nearly every case, their success was dependent on a huge increase in Internet adoption. Convinced of imminent Internet stardom, many of our clients ignored our cautionary advice and made big bets on the future based on ambitious forecasts. It didn’t matter that in 1999 Amazon posted a $900 million loss. Our clients were convinced a massive society-wide transformation was upon us. We just gave the best advice possible, tried to temper expectations, and made sure we got paid on the front end.

As it turned out, the societal changes didn’t come fast enough for many dot-coms. The majority of the public wasn’t quite ready to trade their yellow notepads and DayRunners for Palm Pilots, or to buy dog food on and wait for a full two days for it to arrive. Some people still preferred the instant gratification of stores to online shopping. Likewise, traditional advertisers used to TV and print metrics simply did not accept the (inflated) value of banner ad impressions or the new metrics associated with them. Their reluctance and the entrenched business models of advertisers, agencies, media buyers and retailers slowed the whole rate of change down.

One forecast after another failed to verify, and slower than expected traffic and unsold or discounted CPMs (cost per thousand impressions) killed revenue projections. Cash ran dry and with that the dot-com bubble collapsed into a heap of devalued stock options and company rec room ping pong tables. A full $5 trillion in market value evaporated just like that.

Fast forward to today and talk about technology dominates our industry’s conferences. Obama’s 2012 techniques are the buzz of the town, and tech companies are hyping the transformational changes to come. It feels like 1998 all over again.

The Campaign Tech Boom
Political consulting is going through its own tech boom, fueled in part by the roles the Internet and mobile devices now play in voter behavior. Much of the new software we’re seeing in the exhibit halls is truly awesome, even mind blowing in their potential applications. The emergence of online ads, targetable to voters among specific demographic and psychographic criteria, is already revolutionizing the political new media ad business. But while overall investments in new media, data and technology are rising, these investments still represent a fairly small part of political campaigning.

Let’s face it: if your campaign spent more than 10 percent of its media budget on new media, that’s considered fairly proactive.

Technology companies and new media consultants are emerging as accepted, essential parts of the campaign consulting team. But that has also drawn in new players, leading to increased competition and fragmentation of the available business. Increasingly, TV consultants are bringing new media in-house or partnering with new media specialists. Data and software companies are now everywhere, with very similar marketing claims. The net effect (pun intended) is a larger chorus of technology promoters, but not necessarily a better case for blowing up traditional campaigning.

The technology needed to completely upend traditional political consulting practices (and, for that matter, consumer advertising as a whole) already exists. But will the forces of change be negated, or at least radically slowed, by standard operating procedure and entrenched business models? History indicates they might.

Imagine the total addressability scenario: television ads are delivered directly to the TVs of specific audiences, regardless of cable zone—similar to how we’re delivering pre-roll today to computers. The campaign chooses an audience and the media buyer purchases impressions—not spots or timeslots. The campaign is only charged for an actual impression of the ad on a television that is turned on and actively displaying the ad. They get data back on how many people watched the commercial versus how many people switched to another channel or simply fast forwarded through the spot. The metrics change from cost per point and GRPs to CPMs, or even cost per engagement. Campaigns are able to see real time analytics from their TV commercials and essentially get instant feedback on how good their ad is. This level of targeting and feedback—all of which currently exist in the form of pre-roll ads online—might happen pervasively in the TV business.

Certainly the largest corporate advertisers and campaigns have a vested interest in pushing for that level of data acquisition and accountability. The differences between your TV and your computer are swiftly blurring with the popularity of Internet-enabled TVs and technologies such as Apple TV and mirroring. New media consultants are gleefully talking about the role of online video and how important we will all be in this new schema (as if TV consultants won’t adapt themselves).

At the same time, networks, advertisers, ratings companies, cable and broadcast companies, media buyers and TV consultants already successful within the current model have plenty of reason to resist these changes and treat them as potentially disruptive to their businesses. The ratings/points system currently in place is largely working for them. The model based on GRPs, DMAs and cable zones is profitable and there are both technological and operational infrastructures built on it that would be difficult to change.

Outside of the largest campaigns, most TV consultants and media buyers don’t yet have to suffer through the same kind of moment-to-moment analytics scrutiny that new media consultants do. The status quo might be favorable from a business standpoint.

As cool as total addressability may sound, how it’s ultimately priced will truly be the determining factor as to whether it’s a better solution for a campaign. The narrowest targeting of online advertising is still pretty expensive (though that’s changing), and the inverse proportion between waste and cost still drives a lot of dollars to more bluntly targeted, lower-cost alternatives. Even if more efficient, innovative ways of targeting and distributing TV ads were rolled out pervasively tomorrow, they would need to be priced very low to become significantly disruptive to the DMA/cable zone/GRP model.

Consider the QWERTY keyboard— a layout that dates back to 1878 and took hold initially because it resulted in typewriters with fewer jams at higher speeds. A full 135 years later, the jamming concern is moot, but QWERTY prevails despite the possibility of more ergonomic or faster layouts.

Switching to a different, more ergonomic or efficient layout would not only require retraining typists, but it would also mandate massive investments by computer, mobile and accessory manufacturers, software writers and other businesses that currently use QWERTY. Since the existing layout is so dominant, there’s an inherent economy of scale and QWERTY is currently “locked-in.” Just ask your campaign’s finance or field director to switch from the campaign software they’re familiar with to the latest and greatest alternative and you may experience a version of lock-in.

Consulting’s Path Dependence
The fact that general consultants are still winning races largely relying on tried-and-true formulas without fully embracing the latest, most innovative practices is most certainly leading to what some psychologists and behavioral economists call path dependence—the reliance on experience and history, even when the underlying circumstances may have changed. This “history matters” approach is pervasive in political consulting and it naturally slows tech adoption. It might also have hampered Mitt Romney’s campaign, which relied on media buying tactics in contrast to Obama’s data-driven Optimizer.

Daniel Gilbert, professor of psychology at Harvard and author of the New York Times best-seller, “Stumbling Upon Happiness,” notes that “every animal in the world, even those without a central nervous system, will do again what they were rewarded for doing in the past … [traditional] campaigns aren’t using crazy strategies. They’re using old strategies. They’re using strategies that were quite successful before. The other thing to consider is that these are teams. People who are making decisions that will be scrutinized by others, who are accountable to others, can be very conservative in their thinking.”

However fast technology transforms political consulting, the exuberance, rational or not, will likely play an important part in laying the groundwork for future campaigns. The biggest players with the most to gain from the status quo are hedging their bets. They’re investing and experimenting with new technologies, and they’re working to make sure their companies are well positioned regardless of how fast change occurs. For example, Comcast is embracing the third screen. Nielsen is swiftly adapting its ratings system to account for mobile devices and computer viewing.

These investments, while surely prompted to some degree by actual changes in the marketplace, will no doubt have the effect of enabling broader tech investment and adoption over time. Even after the dot-com bubble burst, companies like Cisco and Amazon emerged as survivors operating in a more favorable environment.

In “Totally Wired: On the Trail of the Great Dotcom Swindle”, Fred Wilson, a venture capitalist during the dot-com bubble, offered this observation on what this history can teach us: “A friend of mine has a great line. He says, ‘Nothing important has ever been built without irrational exuberance.’ It means that you need some of this mania to cause investors to open up their pocketbooks and finance the building of the railroads or the automobile or aerospace industry.

And in this case, much of the capital invested was lost, but also much of it was invested in a very high throughput backbone for the Internet and lots of software that works, and databases and server structure. All that stuff has allowed what we have today, which has changed all our lives. That’s what all this speculative mania built.”

Speculative mania is too strong a term to apply to what’s happening in political technology today. But is this rational or irrational exuberance? The answer may lie in the timeframe and psychology of the innovators themselves.

Professor Gilbert points out that the exuberance many new tech entrepreneurs feel could be an example of what psychologists term optimism bias. “It is easier and more rewarding for us to imagine our odds of success than our odds of failure,” he stated.

Gilbert also points out the popularity and exposure generated by successful endeavors also distorts our imagination making it even more likely we don’t imagine failure.

“If Walter Issacson had written a biography of every person who was every bit as smart as Steve Jobs but whose idea just didn’t work, they’d fill the Library of Congress,” he said. “But there’s just one biography and it’s the biography of the winner. So it’s very easy to have optimistic illusions for these kinds of reasons.”

For true innovation to filter down through the campaign world, companies and strategists must navigate through many institutional and psychological obstacles and build strong, persuasive arguments for deployment. Expect quick adoption, or be overly optimistic about the benefits to the campaign, and you may wind up being shelved.

Brian Franklin is president of Impact Politics, which specializes in campaign communications and new media strategy. He is the co-chair of the AAPC Technology Committee.