The logos of Twitter and Facebook. Image: MATCHBOXMOBILE
The logos of Twitter and Facebook. Image: MATCHBOXMOBILE

Washington — The Democratic National Committee’s debate-qualification rules are driving a social media spending frenzy.

But as the 2020 presidential campaigns spend millions to secure donors and push up polling numbers to win coveted debate slots, they are also discovering that the economics of online advertising can be confusing — and punishing.

Between January 5 and July 13, about two dozen Democratic candidates collectively spent nearly $26m on social media ads, according to Bully Pulpit Interactive, an online communications agency. The biggest spenders so far have been Massachusetts senator Elizabeth Warren, at $2.9m, and Vermont senator Bernie Sanders, at $2.6m.

While most candidates say they have benefited from social media and relish its ability to target specific groups in desired locations, its costs often fluctuate wildly, making it difficult to control expenses. With a crowded field of Democratic hopefuls competing for the same online audience, prices can skyrocket. Some candidates are even seeing a loss from their online investments, having spent millions on Facebook without reaping a bump-up in the polls.

Some campaigns are in danger of being “bled dry” by spending well more than $1 to get a $1 contribution and meet the debate criteria, said Niko Duffy, managing director of Commonwealth Media, a digital strategy firm for liberal candidates. “They’ve shifted their resources, as opposed to spending money on the ground in Iowa, to spending money to acquire these $1 donors.”

Part of the problem, said Chris Nolan, founder of digital ad-buying firm Spot-On, is that campaigns are competing with deep-pocketed corporations and global brands for digital ad space. “All online advertising is set up for the commercial space,” she said, which can produce inequalities between what each campaign pays.

‘They’ve shifted their resources, as opposed to spending money on the ground in Iowa, to spending money to acquire these $1 donors.’

The competition for ad space is likely to get worse, digital-ad experts said, under the DNC’s tougher rules for the September and October debates. Candidates must have at least 130,000 unique donors — twice the number needed for the first two debates — with at least 400 contributors from 20 states. They also must reach 2% in four DNC-approved polls, while the first debate required hitting either 1% in three polls or the donor target. The DNC said last week that 20 of 24 candidates qualified for the next debate, to be held July 30-31 in Detroit, but many have yet to meet the criteria for the autumn rounds.

After Warren and Sanders, the heaviest users of social media have been former vice-president Joe Biden at $2.5m, and California senator Kamala Harris and South Bend, Indiana, mayor Pete Buttigieg both at $2.3m. President Donald Trump spent more than any of them — $13m — in the same period, according to Bully Pulpit data.

Facebook, with more than 1.5bn daily active users and the ability to micro-target audiences, has claimed the lion’s share of the spending. The social-media giant can reach more specific demographics than TV ever could, digital experts said.

Google is the second-favorite choice because of its ability to target “hand-raisers,” or individuals who have used the search engine to learn more about a candidate, online ad experts said. Twitter so far has not seen much action because most of the candidates are focused on fundraising over brand-building and raising visibility, Twitter’s strengths.

Some candidates have mastered the social media fundamentals better than others. Julian Castro, the former housing and urban development secretary and San Antonio mayor, turned to Facebook to drum up fresh donors following a widely praised June 26 debate performance. Because he dominated a discussion on immigration, he targeted ads at users who clicked on video clips of those exchanges, spending nearly $600,000 between June 29 and July 6, according to Bully Pulpit.

That amount was well above the $70,000 to $100,000 per week that other Democratic candidates had spent on the platform, according to Acronym, a digital strategy firm for Democratic campaigns. “Stand with Julian, let’s get him to the next debates!” said some of the ads, which came with a “chip in” button.

His campaign believes it was money well spent: On July 8, Castro announced he had hit the 130,000-donor target to make the September debate. Altogether, he spent $1.2m on Facebook and Google ads over the six months ending July 13 — about 25% of the $4.1m he has raised since announcing his candidacy in January, according to Bully Pulpit data and Federal Election Commission filings.

Not everyone is having a positive digital-ad experience. Federal Communications Commission rules require candidates to get the lowest available rate to buy airtime on TV, but no such regulations exist for the internet. And while TV ad rates are broadly predictable, social media prices are not.

When a candidate is trying to reach specific voters in highly coveted target groups, “the prices these campaigns pay on average may rise significantly,” said Conor Gaughan, a senior adviser to Acronym, which ran digital campaigns during the 2018 midterms and is not affiliated with any 2020 candidate.

Facebook uses a cost-per-thousand impressions metric, or CPM, which means the rate is based on how often an ad appears on 1,000 users’ news feeds. Candidates set their target audience parameters — males aged 21-35 living in Michigan who have expressed interest in the Democratic Party and trade policy, for example. Then the rate a candidate pays is determined by the level of demand for similar ad space.

Rates ordinarily range between $10 and $25 for 1,000 Facebook users, said Acronym’s Gaughan, but sometimes they spike to dizzying levels. For ads seeking donors, the “effective CPM” — a number that allows comparisons between ad campaigns with different audience targets and goals — jumped as high as $100, he said.

“I had never before in my career seen a $100” rate for a display ad on Facebook, he said. “That is so far outside the realm of normal.”

In the weeks preceding milestone events such as debates, many of the 2020 candidates sought to maximize their exposure, driving up the cost. Between June 23 and June 29, for example, the Democratic candidates spent $3.7m on Google and Facebook ads, almost 78% higher than the previous week, Acronym data show.

The campaigns are also grappling with the fact that the highest bidder is not always the one who wins the auction. To maintain traffic, Facebook’s auction algorithm considers whether a user will click on an ad.

Generally, campaigns must pay more for ads that ask for e-mail addresses versus ones that simply try to get people to like or share something. Ads that target donors, especially first-time donors, cost even more.

These rules have resulted in some candidates paying more to reach the same people — and at times have made political advertising seem like a futile exercise. Kirsten Gillibrand, who has raised $5.3m since entering the race in January, spent about $1.9m on Facebook ads through July 13. Yet her polls barely register 1%. Similarly, Amy Klobuchar, who has raised $9.1m since she jumped into the race in early February, has spent $1.6m on digital ads and is averaging 2% in polls.

“This is not a system that’s set up to encourage political discourse, it’s a system set up to optimize political spending,” Nolan said.