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Romney loss: Big bucks, but less bang

Personal ties faulted in outlays

- The Washington Times - Monday, November 26, 2012

Mitt Romney's presidential campaign paid millions of dollars to companies led by top advisers and, by many measures, the campaign got less to show for it than in-house staffers performing a labor of love for President Obama's campaign, expenditure records show.

The Romney team spent twice as much as the Obama campaign on direct mail and telemarketing, paying tens of millions of dollars to two companies tied to Romney aides. Republican operatives said that resulted in a potential conflict of interest that could explain why the party's nominee relied heavily on those tactics, and not enough on the kinds of grass-roots efforts Mr. Obama rode to victory.

"The problem is the Republican consultants have a very incestuous relationship. They're sending money to companies they all control at a profit, and they're telling donors this is what wins elections. And I think they were exposed badly" on Election Day, said Drew Ryun, a former Republican National Committee official whose brother runs American Majority, a nonprofit that helps train Republicans to organize volunteers.

SCM Associates Inc., a company bearing the initials of close Romney associate Stephen C. Meyers, billed $48 million for direct mail, according to the records. FLS Connect, which counts as a partner Romney political director Rich Beeson, charged $36 million for telemarketing and robocalls, the records show.

Through Oct. 17, Mr. Romney and the RNC spent $130 million on direct mail, far more than the $80 million their Democratic counterparts spent, according to an analysis by The Washington Times of Federal Election Commission records. The largest portion of that money went to Mr. Meyers' company, which has been sending mail solicitations on behalf of Republicans since 1991. Mr. Romney and the RNC spent $60 million on telemarketing, compared with $25 million by Mr. Obama and his allies, with most of it going to FLS Connect, which also performed non-telemarketing work.

The campaign focused on SCM and FLS Connect's offerings despite evidence that the tactics are increasingly ineffective, Mr. Ryun said.

"It's statistically proven that face-to-face contact is most effective, and that it drops off dramatically on live phone calls, and then the bottom completely drops out with direct mail," he said.

Salaried employees

The majority of Mr. Obama's fundraising and digital operations were performed in-house by salaried employees. Among major telemarketing and direct-mail vendors for Mr. Obama were AB Data, at $37 million, and Telefund, at $8 million, but neither appeared to be owned by Obama advisers.

The Obama campaign has, however, paid $3.4 million this election cycle to Benenson Strategy, the company of the campaign's chief pollster, Joel Benenson.

Andrew Boucher, a Republican consultant and former political director for former Sen. Rick Santorum's presidential campaign, said the Romney campaign paid consultants rather than investing in mundane expenditures such as coffee and doughnuts for neighborhood volunteers, reached a saturation point with direct mail and calls, and failed to get neighbors knocking on doors.

"No one has figured out how to make a 15 percent commission when they hire a field representative to line up county commissioners and precinct captains and, shockingly, we do too little of it," he said. "The fact that someone's making money from a specific type of voter outreach has got to at a certain point affect their judgment."

The complaints are being expressed as Republicans assess how they lost what many assumed to be a winnable race, given the economic climate and questions about Mr. Obama's record.

After the election, Mr. Romney blamed his loss on an Obama strategy of doling out "gifts" to various demographics and interest groups, but many Republicans rejected that explanation as insulting to voters.

Political pros instead have looked to Mr. Romney's failure to connect with voters, coupled with his reliance on outdated campaign strategies, as key reasons for why he lost.

Tim Phillips, president of the conservative Americans for Prosperity, said off-the-shelf activism has shown to be a poor substitute for an on-the-ground effort to enlist believers.

"Everyone's gotten that phone call from a person who's just a reading a script for their job. We need people who actually care," he said.

SCM Associates declined to discuss its work for the Romney campaign. FLS Connect also declined, but issued a statement saying, "2012 was the fourth presidential campaign cycle where FLS played a key role in voter-turnout efforts and their hundreds of employees again provided top-quality service to their clients, including Gov. Romney's team with whom they've worked since 2006."

Meanwhile, as Mr. Obama employed a state-of-the art technology team in-house, Targeted Victory, a company led by Romney digital chief Zac Moffatt, received $67 million, with only $1 million being described in disclosures as paying for advertising.

But on Election Day, the campaign's get-out-the-vote technology, Project Orca, failed. Officials have said Orca was a project of Mr. Beeson's political department, rather than Mr. Moffatt's digital department, but FEC reports do not appear to contain disbursements to consultants for the project, emblematic of the outsourcing to multiple layers of for-profit contractors that characterized the campaign.

Targeted Victory did not return requests for comment.

'Finance consulting'

VG LLC and SJZ LLC, two companies tied to Spencer J. Zwick, Mr. Romney's finance chairman and a business partner of Mr. Romney's son, Tagg, billed a combined $24 million for "finance consulting." Neither company appears to have ever done work for any federal candidate except Mr. Romney.

The Romney campaign declined to comment.

The Times analysis showed that largesse extended to top staffers on the Romney payroll, who had sizable bonuses written into their contracts. Seventeen Romney staffers made more money than Mr. Obama's highest-paid staffer, despite not commencing work until months later, with Mr. Beeson making $360,000, Matt Rhoades making $330,000 and Lanhee Chen making $320,000.

Mr. Obama had 1,800 staffers work a combined 17,000 months for $56 million, while Mr. Romney's 870 staffers worked a combined 6,400 months for $31 million, meaning Mr. Romney spent 45 percent more per staff-hour — money that could have gone toward beefing up his army.

American Rambler Productions LLC, run in part by Romney strategist Stuart Stevens and named after a car produced by the now-defunct American Motors Corp. when Mr. Romney's father was company president, was paid $173 million, most of which passed through to TV stations. But the Obama ad-buying machine was more efficient, paying a lower price per ad on average, according to Federal Communications Commission records and the Wesleyan Media Project.

The Romney campaign bought ads only days ahead of time, even in the final weeks of the race.

The Obama campaign paid AKPD Message and Media, which was founded by Obama adviser David Axelrod and has employed White House adviser David Plouffe, $1.4 million for media production. AKPD did not respond to an inquiry about whether either man had a current financial stake in the company.

The majority of its media buys were made through longtime Democratic ad-buying firm GMMB, which purchased $314 million in ads, including the commission it takes on the buys.

But Bully Pulpit Interactive, a firm founded by staffers of Mr. Obama's 2008 campaign, purchased $79 million in online ads for the president this cycle, also taking a commission. Its founder, Andrew Bleeker, earned only $16,000 in 2008 as a staffer for the campaign, and has since springboarded his success into a profitable business for a variety of clients.

Fundraising commissions on big-dollar checks also were paid to a Romney associate by the Romney super PAC, Restore Our Future, which raised $130 million. Podium Capital, a firm established in April 2011 by Steve Roche while he was the Romney campaign's finance director, was paid $5.2 million for services, including $1 million described as commissions.

Treasurer Charlie Spies said he was proud of the committee's fundraising overhead rate of 5 percent.

Priorities USA, the pro-Obama super PAC, had a similar rate, raising $64 million and paying $500,000 for fundraising consulting plus $2.4 million in payroll.

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