The Selling of the Candidate
The campaign business “is really a young man’s game,” Frank Tobe said as he escorted a visitor through the Marina del Rey office of Below, Tobe & Associates. “Of course, I’m only 21,” he added--eyes twinkling beneath a head of gray hair.
For 17 years Below Tobe has been the nation’s leading provider of direct mail and computer services for Democratic politicians. It’s a business that has allowed Tobe to indulge his passion for liberal politics. But as a businessman, he said, “I live very dangerously. My fiscal year ends June 30. The month of May makes it profitable.” His next chance at profitability comes in October.
And during those two months clients demand services in a hurry--creating a frenetic pace unlike any other business, Tobe said. Clients want everything at the last minute either because they are too inexperienced to know what they need until the last minute or they don’t have the money, he said. To move in a hurry, Below Tobe has invested millions of dollars in a IBM 4381-2 mainframe computer, high-speed laser printers and other equipment. “For a candidate, there is no tomorrow,” Tobe added. Small wonder that his former partner--Bill Below--called it quits a few years ago, he added.
Hundreds of people drop out of the campaign business every year only to be replaced by hundreds more eager to vie for a share of the immense sums Americans are increasingly willing to spend in pursuit of an elected office or a political cause.
Difficult to Define
During the 1983-84 election cycle, $1.8 billion was spent on political campaigns of all types across the nation, according to Herbert E. Alexander, director of the Citizens Research Foundation at the University of Southern California. “We are now projecting at least $2.5 billion--probably closer to $3 billion--for the 1987-88 cycle,” he said. About $450 million of the projected 1987-88 total will be spent by presidential candidates, he added, compared to $325 million spent in 1984’s presidential campaigns.
There is general agreement that all of that money has created an industry that is growing and becoming more organized and specialized. But there’s no consensus on how to define the industry.
One problem is whom to include, said Sal Russo, a principal in Sacramento-based Russo Watts & Rollins Inc., which provides media strategies and other consulting services for Republican candidates. “Some of these people go in and out of business with (the start and end of) the campaign,” he said.
Others who work for campaigns are really professional bureaucrats who take time off from the public payroll to do campaign work, another consultant said. The Political Resource Directory lists almost 150 California companies that offer campaign services. Together the businesses illustrate the diversity of the nation’s industry.
Some companies--printers, button makers, graphic designers and the like--provide only sporadic campaign services, reaping a few thousand dollars during the election season. Karen Connell, owner of Badges by Karen in Oroville, said she expects orders of about $5,000 to $7,500 for buttons, bumper stickers, balloons and other promotional paraphernalia from candidates this year.
Work Exclusively
Consultant fees typically make up 12% of a campaign’s budget, and California is home to some of the big moneymakers who are in the political business full time because they work for candidates and campaigns all over the country. “There are campaigns going on all the time,” one California consultant said.
Irvine is the headquarters of Spencer-Roberts & Associates--adviser to President Reagan since 1965, except 1976, when Stuart Spencer defected to the campaign of then-President Gerald R. Ford.
By necessity, serious political consultants, and many technical firms, are partisans who work exclusively for Democrats or exclusively for Republicans. One of the nation’s leading Democratic consultants, Cerrell Associates, is based in Los Angeles. Its chairman, Joseph Cerrell, managed the California campaign of John F. Kennedy in 1960 and has been active in nearly every presidential campaign since.
Campaign consulting, however, is only about half of his business, said Cerrell, a native New Yorker who trained as a school teacher but who has been a political organizer almost since arriving in California as a USC student in 1951. Though it originated as a campaign management concern 22 years ago, the company also does public relations for a number of corporations.
Survival is a constant struggle for the majority of campaign businesses, according to many professionals in the industry. Allan Hoffenblum, owner of Allan Hoffenblum & Associates, a Republican management and consulting firm, admittedly charges his clients “high fees” to make up for the months when there is no work. They pay, he said, because they know that it is in their best interest for him to stay in business when there are no campaigns. Additionally, Hoffenblum says, some of his legislative clients keep him on retainer all the time.
A Problem Collecting
A lot of people in the business don’t understand some basic business principles and make costly mistakes, said Tobe, who trained and worked as a certified public accountant before starting his business. He said he has encountered political professionals who don’t understand the accounting necessary for a seasonal business.
Below Tobe, which does political work exclusively, is a perfect example of a small seasonal business, he said. The company will have about $6 million in revenue in even-numbered calendar years (when most elections are held) and about $2.5 million in odd-numbered years. The company operates on a split corporate fiscal year to even out its earnings, he said.
A more common problem of survival is getting paid for services, political consultants said. When Mr. Smith goes to Washington, you can’t always count on him to remember the people who got him there, consultants said. Cerrell related the story of a political consultant who once helped elect a governor of a Midwestern state.
When the consultant pressed for payment, the governor said that if the consultant didn’t back off, “ ‘I will see to it that you never work again in this state.’ That fellow never did get his money,” Cerrell said.
Candidates’ reputations as deadbeats are why the media demand advance payments for political advertising and why telephone companies often require hefty deposits before providing service to a campaign. Pacific Bell requires a $200 deposit, Cerrell said, because he advised the company to do so when he was its representative.
Below Tobe doesn’t start work on any project before it gets at least half the fee, and “we don’t deliver until we have it all,” Tobe said.
Stiffed by Friends
However, “most consultants can’t insist on 100% up front,” said Mal Warwick, who does political direct mail and fund raising through Mal Warwick & Associates Inc. and Changing America Inc. in Berkeley. Changing America was formed to work for Gary Hart’s presidential campaign. When Hart folded, the group won the contract to do direct mail fund raising for the Rev. Jesse Jackson’s presidential campaign.
“I’ve been stiffed by friends. And believe me it hurts no less when it is a friend,” Warwick said.
Getting paid is a “terrible problem for hungry young companies that want business just to get established,” said Russo, a principal in a well-established firm that includes a former adviser to President Reagan. Sometimes “in the hunt for victory” they succumb to the temptation to front the candidate for the cost of “just one more mail piece,” Russo said.
Of course, the reason the debts aren’t paid is that the campaign simply doesn’t have the money--especially the losers, Cerrell said. The notion that the party will help the faithful loser pay debts is not something you can count on, he said. “It just doesn’t work that way,” he added.
Campaign businesses are indeed unique, Tobe said. “No other business would put up with the crap we take from candidates,” he added.
