Election Spending Put Millions in the Pockets of Private Firms

From coast to coast, political strategists, media consultants, lawyers and pollsters earned millions of dollars in the nation’s most expensive presidential election in history.

Olsen & Shuvalov, the direct marketing firm in Austin, Texas, that was founded by Karl Rove, President Bush’s political strategist, received $34 million from the Bush campaign. Rove no longer has a financial interest in the firm.

Integral Resources Inc., a Boston-area telemarketing firm begun by one of Sen. John F. Kerry’s former aides, got $1.8 million from the Kerry campaign.

The Thunder Road Group, a Washington media firm founded by Kerry’s onetime campaign manager, Jim Jordan, was paid $4.1 million from the largest of the independent liberal groups opposing Bush.

Experts say that when the last dollar is counted, the cost of this year’s race for the White House may exceed $1.5 billion.

Not surprisingly, with so much money injected into the process, a lot of people make a lot of money. Indeed, politics has become big business.

Instead of using volunteers, the presidential campaigns and their allies were far more likely to turn to savvy political operatives who charged top dollar to conduct opposition research, survey would-be voters, create advertisements, buy media time or mail out literature.

The money game also was fueled by the intense nature of this year’s campaign.

“In an election where both candidates knew every vote would count, they began campaigning and spending money earlier than ever before,” said Anthony Corrado, a campaign finance expert at Colby College in Maine. “What we saw in 2004 was an eight-month-long general election campaign.”

A Times analysis of campaign spending by the presidential candidates and the so-called 527 groups found that more than 60 firms received more than $1 million. The analysis was based on data provided by campaign finance research groups Dwight L. Morris & Associates and the Center for Public Integrity.

The majority of money spent in the campaign was on television advertising.

But there were other expenses as well: The Bush campaign paid $2.2 million to the White House for use of Air Force One. The Kerry campaign paid $557,000 for the use of the Flying Squirrel, a private plane owned by his wife Teresa Heinz Kerry

The Bush campaign paid $492,270 to the Reynolds Plantation, the Georgia resort where the campaign had its top fundraisers stay for a weekend celebration in April.

The Kerry campaign paid $1.2 million in rent to Piper Rudnick, a Washington law firm that employed some of his top fundraisers.

But the biggest payouts were to two firms, Maverick Media Inc. in Austin and Riverfront Media in Washington. Each received more than $110 million to produce and place TV ads.

Although much of that money went to television stations, the commissions alone would have netted millions for the firm’s partners. Those commissions are typically not disclosed, but political observers say they could run as low as 2% or 3% to as high as 9%.

Bush strategist Mark McKinnon, a former songwriter, set up Maverick in 1998 to handle media for Bush’s Texas gubernatorial campaign. The Bush campaign paid Maverick $171.4 million this election cycle.

Kerry strategists Bob Shrum and Jim Margolis set up Riverfront last year solely for the presidential campaign. The Kerry campaign paid Riverfront $114.4 million, and Shrum’s firm, Shrum Devine Donilon Inc., received $2.5 million.

Two other firms, Media Strategies & Research and Mentzer Media Services, handled much of the media buying for the 527 groups that were weighing in with advertising on behalf of Kerry and Bush. The groups are named for the Internal Revenue Service tax-code section that governs them.

Media Strategies received $55.7 million from five liberal 527s, including the Media Fund and MoveOn.org.

Mentzer received $40.6 million from three conservative 527s, including the two largest, Progress for America Voter Fund and Swift Vets and POWs for Truth.

Democratic strategist Harold Ickes, founder of the Media Fund, said the Democrats didn’t really have a choice to spend less.

“It’s like the threat of thermonuclear war in the ‘50s and ‘60s,” he said. “If the other side is running $11 million a week, as the Bush campaign was, you’re not going to sit there and not run media. If one does it, the other has to.”

But one advertising executive who also worked on the Kerry campaign said the television advertising fell short of “minimal professional standards.”

Gene Case, who got his start writing political ads for President Lyndon B. Johnson, said the amount spent on television this year was “obscene.”

Case, who ran a $500-million advertising agency before opening up a small shop that caters to progressive causes, was paid about $250,000 from the Kerry campaign for some newspaper ads.

“The real scandal is not how much they made ... but the real scandal is the quality of what they did. It was terrible,” said Case, the creator of the Mennen Skin Bracer aftershave ad that ended with, “Thanks, I needed that.”

He said the Swift Vets group’s initial $500,000 television ads questioning Kerry’s military credentials were very effective. He said he thinks that overall the quality of 527 advertising was better than Kerry’s, and the Bush campaign’s television ads were even better.

Pollsters also received millions. The Kerry campaign paid the Mellman Group $2.1 million.

“A very large proportion of the money that comes in goes out the door,” Mark Mellman said. “Unfortunately, it’s not all into our firm.”

He noted that when a firm takes on a presidential campaign, it often forgoes work for other clients. “In terms of our overall bottom line, it’s not the best year we’ve ever had,” he said.

Jordan, who established Thunder Road, had similar comments about the amount of money paid to his firm by America Coming Together and the Media Fund. He said the total was “stunningly inflated” and included his costs to pay employees and conduct research.

Ickes acknowledged that ACT alone had seven pollsters on its payroll. “They made a lot of money because a lot of money was being spent,” he said.

Though the election is over, America Coming Together is not disbanding. More than 75 of the group’s top contributors participated in a conference call Thursday and pledged further support for the group.

Ickes said the organization would probably reemerge as a small operation with an office in Washington that would focus on key elections in certain states in the next few years.

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Whither the money

The presidential race, the most expensive in history, included record spending by the campaigns, most of which was spent on television advertising. Other top vendors provided air travel, direct mail, marketing, polling services and office rental.

*--* Top Kerry vendors Vendor Amount (in millions) Riverfront Media $114.4 Air Charter Team $17.6 Paychex $6.0 O’Brien McConnell & Pearson $3.4 Uniworld Group Inc. $2.5 Shrum Devine Donilon Inc. $2.5 Mellman Group $2.1 Bank of America $1.9 Dewey Hub $1.9 Integral Resources Inc. $1.8 Addressing Services Co. $1.6 Commercial Jet Inc. $1.5 Political Productions.com $1.5

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*--* Top Bush vendors Vendor Amount (in millions) Maverick Media Inc. $171.4 Olsen & Shuvalov $30.1 Praxis Lists $3.9 Feather Larson & Synhorst $3.6 White House Airlift Operations $2.2 Administaff $2.1 MDS Communications Corp. $2.0 CMDI $2.0 Thomas Graphics Inc. $1.8 Wachovia $1.7 Vance Uniformed Protection $1.5 2111 Wilson Blvd. $1.5

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Source: Dwight L. Morris & Associates