Obama spends millions on flags, pizza, consultants—and TV ads.

Who's winning, who's losing, and why.
Oct. 21 2008 6:01 PM

How Do You Spend $150 Million?

Easy. Blow it all on TV and video games.

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Barack Obama

Presidential campaigns normally face a series of tough choices this time of year. Cut advertising in Pennsylvania or Ohio? Pull campaign workers out of Michigan or Colorado? Barack Obama's campaign faces a different but perhaps equally tough choice: Where, oh where, should it spend its mountains of cash? The Obama campaign announced on Sunday that it raised $150 million in September, bringing the candidate's total to more than $600 million—almost as much money as was raised by every candidate in the 2004 presidential race combined. (John McCain's campaign, meanwhile, has $47 million to spend in October.) Obama has presumably spent a few score millions already, but can his campaign really blow through $150 million before Election Day?

Easily. The Obama campaign will use the loot to pay for TV advertising, radio spots, transportation, mailers, phone banks, buttons, signs, flags, virtual ads, donations to other campaigns, consultants, bandwidth—and, if all goes well, confetti.

The single largest expense, unsurprisingly, is TV. In September, the Obama campaign spent $65 million on media buys—including TV, radio, and Web ads—after spending $32 million in August. Now it's spending more than $30 million in a single week. Obama is already outspending McCain 4-to-1 nationally. At this rate, Obama will likely break George W. Bush's 2004 record of spending $188 million on advertising in a general election. But ads are like ice cream: There's always room for more.

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The first step is to raise spending levels in regions where the campaign is already spending money. Some media markets are more expensive than others. Philadelphia and Cleveland are two of the most expensive swing-state markets, but more money means more—and more valuable—eyeballs. During one recent week, Obama bought time for 1,074 ads in the Philadelphia market for $1.7 million, according to the Campaign Media Analysis Group. Over the same period, McCain bought 531 spots for just more than $1 million.

Step two is to expand into new markets. One of the advantages of Obama's cash hoard is that his campaign may never have to choose between airing spots in places where he needs to be competitive and places where he'd like to be competitive: He can do both.

In Florida, Obama is outspending McCain 3-to-1. In Virginia, a state McCain would rather not have to defend, the ratio is also 3-to-1. In North Carolina, which McCain would really rather not defend, it's 8-to-1. And so on. An influx of cash means Obama can expand to Georgia, West Virginia, and North Dakota. It doesn't matter if ad buys don't swing those states his way. As long as Obama can narrow McCain's margins in states McCain can't afford to lose, he can force McCain to compete there.

Lastly, Obama can afford to target niche audiences. Ads touting his commitment to Second Amendment rights might air during Saturday-morning sportsmen's shows in rural areas. A spot about water access in Colorado might run in the conservative Colorado Springs media market. Obama has already done some pretty sophisticated targeting, placing ads in video games like Madden '09 and Guitar Hero (just barely wrenching the youth vote from McCain's grasp). The campaign will also be airing a half-hour infomercial on CBS and NBC in the days before the election. (Devine estimated the cost to be "over $10 million.") These kind of blowout moments—the TV equivalent of moving your acceptance speech to Invesco Field—give Obama far greater visibility than McCain.

But it's not all about TV. The cash injection also frees the campaign up to travel more frequently and more freely. The Obama campaign spent nearly $5 million on travel and lodging in August, and that was before it had to support the Joe Biden Road Show. Now, with Barack, Michelle, Joe, and Jill all conducting separate tours, the campaign needs enough cash to keep all its jets aloft, its rallies prepared in advance, and its respective staffs fed and lodged. On Sunday, Biden traveled to Tacoma, Wash.—an odd choice so late in the election but an indicator of the campaign's financial wiggle room.

Other expenses will also go up. In September, the Obama camp spent a total of $2.8 million on direct mail—$1 million on production and $1.8 million on postage. That has almost certainly increased in the final month. The campaign can also afford to pay for more staffers and volunteers. That doesn't necessarily mean hiring more people—it already has an obscene number of field offices, including 20 in Virginia and more than 50 in Colorado. But the money can pay volunteers' expenses, which may make them want to work all the harder.

There are other fixed costs. Payroll is nearly $3 million a month. Phone banks and robo-calls cost about a million bucks in August. Computer equipment ($150,000 in September alone), "strategy" ($340,000), and internal polling expenses ($1.1 million) also add up, not to mention rent, utilities, and phone bills. But the Obama camp doesn't have luxury consultants in the mold of Mark Penn, who famously billed $14 million to the Clinton campaign during the primaries. Total payroll in September came in just more than $3 million, and David Axelrod's AKP&D Media billed only $46,000. (Its bill was $150,000 in August.)

Another expense is contributions to state Democratic parties, which totaled about $7.6 million in September. Naturally, the parties in Florida, Michigan, Ohio, and Colorado came in for some nice donations.

And of course there's the small stuff. The campaign blew $3,000 at the 10 Pin Bowling Lounge in Chicago in September. It also spent a few million on flags. For food, $2,500 went to Panera cafes, $500 to Potbelly Sandwich Works, and hundreds more to random pizza places. Obama apparently managed to limit his arugula intake—the campaign spent only $30 at Whole Foods Market.

At any rate, it would be pretty hard to blow your millions on pizza and bowling. But when you're buying TV time, the money goes pretty fast. A decade from now, we may even look back at the Obama campaign and wonder how it did so much with so little.

Christopher Beam is a writer living in Beijing.

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