Outside Groups Drove More Political Money to Web

When the U.S. Supreme Court’s Citizens United ruling came down in January, many speculated a torrent of money would rush from shadowy groups during the midterm elections, some of it spreading online. Digital political consultants, digital media firms, and third-party political groups indicate the ruling did indeed help generate new spending spigots from which ad dollars flowed to the Web.

Groups on the right and left used the new rules to run ads – online and off – that advocated for or against candidates through “independent expenditures.” On the right, groups including the U.S. Chamber of Commerce, Club for Growth, and Karl Rove-connected group American Crossroads ran online campaigns using independent expenditures (IEs). On the left, groups including The League of Conservation Voters and Patriot Majority PAC did the same.

The campaign finance changes allow these groups to collect unlimited funds to be used for IEs.

“This is the media subsidization act of 2010,” said Chris Tolles, CEO of Topix, a hyper local news aggregator site that built local 2010 election forums and plans to invest more in generating content that drives political ad dollars. Tolles, who said Topix collected about 20 percent of its ad revenue from political advertisers in the past quarter, believes “there is more money flowing in the system” as a result of the ruling.

For instance, conservative anti-tax group Club for Growth was unable to solicit donations for its political action committee on behalf of specific candidates before the rule change. Whereas before the group’s ads could only ask for support of the organization, now the ads could say “Help us get Sharron Angle elected,” explained Peter Pasi, EVP of Emotive, a digital agency that handled online IE ads for American Crossroads and Club for Growth Action.

Angle, a tea party Republican, ran for Senate in Nevada and lost to incumbent Democrat Senator Harry Reid. Liberal group Patriot Majority PAC used IEs to fight Angle online. The organization ran an anti-Angle takeover campaign on LasVegasSun.com in the final days leading up to the November 2 election.

Patriot Majority PAC President Craig Varoga told ClickZ News the organization spent “tens of thousands” of dollars on online ad buys totaling less than $100,000. The “main focus in everything we’ve done online and elsewhere is to define the radical policies of Sharron Angle,” he said before the election.

Even though the bulk of the IEs went to television and other media, suggested Pasi, it’s only natural that the money would trickle to digital media – if only to buy search ads to capture those learning about a candidate from an IE television ad and searching online for that candidate.

“[IEs] really did have an impact,” said one Democratic digital ad consultant who asked to remain anonymous. In some races that weren’t expected to be tight, he said, “money came out of nowhere” to fuel negative online ad blitzes paid for through IEs.

“We couldn’t do some of this prior to the Citizens United case,” said Greg Casey president and CEO of Business Industry Political Action Committee, which bought the YouTube homepage across the U.S. on election day and spent over half its budget online during the 2010 election cycle, backing several non-incumbent Republican candidates.

The group put about 60 percent of its online budget towards IEs supporting specific candidates, and the remainder went to issue advocacy and voter education ads, according to Michael Davis VP political programs for the 47-year-old organization. BIPAC ran digital ads supporting House race winners like Pat Meehan of Pennsylvania and Steve Pearce of New Mexico, for example.

The ability to use a candidate’s name in an ad is “a lot more sexy” than using the name of a PAC, said Pasi. He said about 25 percent of the online ad spending that went through his firm came from IE groups.

“From our perspective,” said Casey, the ruling “allowed us to do a better job of communicating.”