The business of mobile democracy

1Executive Summary

In the 2008 election, social media was the key to increasing voter turnout. President Obama’s team used the power of social media to amass 13 million emails, 4 million donors, 2 million members to the MyBarackObama.com social network, and thousands of volunteers who formed the foundation for a new kind of net-centered democracy.

This year political and nonprofit organizations are increasingly turning to mobile democracy platforms that integrate social media, the mobile web, SMS, and big data to connect citizens with candidates and causes. These mobile platforms promise to help campaigns reach constituents more effectively and conveniently than ever before.

But have these mobile democracy platforms led to greater civic engagement in America in 2012? And what does the market look like for companies seeking to capture some of the $6 billion projected to be spent on this year’s campaign election cycle?

The politics of mobile fund-raising

The holy grail for mobile democracy is mobile fund-raising. As conventional wisdom goes, those who raise the most money have the most impact.

Consider the Red Cross’ campaign for relief in Haiti in 2010: It was a stellar example of what can be done with effective mobile fund-raising. The mobile campaign raised more than $32 million from over 3 million donors (more than 95 percent were first-time donors to the Red Cross). Through a simple SMS text, anyone could donate $10 and have the charge added to their phone bill. The campaign proved how simple, convenient, and powerful it can be to mobilize citizens through their phone.

As of late August, both presidential candidates began accepting donations via text message, thanks to recent legal changes by the Federal Elections Committee. The opportunity to bring in text message donations from small-time donors is noteworthy, both from a civic engagement and fund-raising perspective. Given the ease of texting and the impulsivity factor, first-time donors will likely increase. And those who donate are more likely to vote.

So, how effective has mobile fund-raising been for the presidential candidates thus far?

A new study by Pew Research Center’s Internet and American Life Project reports that since August, nearly 1 in 10 presidential campaign donors has given money to the candidates through their cell phone. This is a commendable number, given how late in the election cycle this feature has been offered.

Democrats have been more successful in the mobile fund-raising space than Republicans. Fifteen percent of Democratic campaign donors have contributed via text message or cell phone app, compared with 6 percent of Republican donors. Overall, Democrats are more likely to give donations either online or through a cell phone, and Republicans donate more often through traditional mail, over the phone, or in person.

While some think the differences reflect the natural giving habits of the two parties, we would be wise to look at the business-development side of mobile-democracy platforms to account for the discrepancies.

Consider Payvia, for example, a relatively new company with an exclusive contract to process mobile donations to the Obama for America campaign. The company was previously known as m-Qube, a transaction and carrier billing network for mobile-entertainment services. Now it is leveraging its history and experience in the mobile-services field for political campaigns. Payvia is particularly effective in this area because mobile carriers consider a political donation to be a PSMS (premium SMS), similar to a ringtone or wallpaper content.

Many mobile carriers (Verizon, Sprint, and T-Mobile) currently take between 30 percent and 50 percent of the donation for these transactions. However, AT&T recently considered a lower transaction fee for the service, which is said to be in the single digits. Regardless, for both mobile businesses and carriers, political donations have the potential to be quite profitable, creating a considerable economic impact.

Moreover, mobile businesses offering services to political candidates continue to work with the FEC to make mobile giving in larger amounts possible. In September 2012, Revolution Messaging won a request from the FEC to raise the amounts allowable to the maximum $2,500 per candidate per year allowed by campaign-finance law. (It’s worth noting the company is led by Scott Goldstein, who headed up Obama’s social media campaign in 2008.) Revolution Messaging is also working with the FEC to eliminate carrier surcharges in the future.

Of course, SMS is not the only game in town. With the increase in smartphones and faster connectivity, companies are able to offer candidates mobile apps and responsive web solutions to increase mobile fund-raising efforts. For example, NGP VAN, an integrated campaign-technology platform tailored for Democratic and progressive campaigns, has created both smartphone apps and responsive websites so that citizens can contribute directly to select Democratic candidates.

“We’ve made it easy for the public to give to candidates in this way by storing and replicating payment information so that they can give to multiple Democratic candidates in their area,” said Stuart Trevelyan, the CEO of NGP VAN.

In other words, whether through SMS, native apps, or the mobile web, companies who simplify the process of mobile fund-raising have the most to offer candidates and their growing campaign-financing needs.

However, mobile fund-raising is still an emerging trend. The changes to FEC regulations have occurred relatively late in this election cycle, but we can be sure that this platform will be much more important in future cycles.

Big data for mobile organizing

It was only a matter of time before companies started using this gold mine of information in political campaigns. For example, NGP VAN is using big data to streamline political organizing to better target swing voters and take advantage of volunteers’ time.

NGP VAN is composed of two companies that merged in 2010. NGP provided fund-raising, compliance, and new media software to Democrats. VAN specialized in providing database software for voter contacts, volunteer management, and organizing tools to Democrat campaigns and nonprofit organizations.

“VAN was one of the first companies to take advantage of mobile in 2003 with the PalmPilot. It replaced the soggy clipboard volunteers used to carry around when canvassing neighborhoods,” said Trevelyan. In the 2008 election, VAN worked with the DNC to collect 223 million new pieces of data into its voter database.

The VAN is the centerpiece of what is referred to as “crowdsourced organizing.” Any supporter, for example, can download the Obama app and register to access the dashboard, which provides real-time data on nearby undecided or wavering voters. Based on the demographics and related information available through the system, it provides volunteers with a tailored script to use with the undecided voter. The volunteer can then log in and enter the responses of the voter directly into the app, which is then logged into the VAN.

“No matter where you are, you can canvas whenever it is convenient for you. So if I woke up this morning and flew to Kansas, I can pick up my phone and see the homes that need canvassing and go out there to reach them. It also takes advantage of the time capital: If the campaign asked me to come out for 8 hours, it would be difficult for me with a family and kids,” Trevelyan said.

With this type of platform, it is little wonder why more Democrats are more active on mobile platforms. To date the Romney app has no big data functionality, and the Republican party has no VAN equivalent. In future cycles, though, a conservative-leaning NGP VAN equivalent will likely emerge to bring mobile democracy to Republican voters.

The beauty of SMS engagement

As it turns out, mobile-democracy platforms may not need all of that fancy technology and data to increase civic engagement across the country. Sometimes the simplicity of SMS is the best way to reach citizens for political and civic engagement. Take, for example, the mobile-marketing platform Mobile Commons’ recent work.

“Text messaging is the most prominent form of communication in the world right now. All of the candidates have apps . . . but the barrier to entry through text is much lower,” Ben Stein, the CTO and co-founder of Mobile Commons.

Mobile Commons worked with Tumblr on the “Protect the Net” campaign in November 2011. Using Mobile Common’s mConnect application, ordinary citizens were linked directly to their state representative’s office line, and the campaign generated over 87,000 calls to legislators in one day.

For the 2012 election, Mobile Commons is working with campaigns to increase voter turnout through its mobile polling-place-locator campaign. By texting “where” to 877877, anyone can receive a text reply with information about their nearest voting location.

“A lot of people don’t vote because they don’t know where to go, especially with recent redistricting. One of the most cost effective ways to increase voter turnout is to get people to the right place,” said Stein.

The emerging business of mobile democracy

The year 2012 is not a full-fledged mobile election cycle. Mobile platforms have yet to get the kind of investment that political candidates spend on more-conventional television, radio, and internet ads ($900 million to date). Although no real data exists on how much money or votes have been gained through mobile platforms in 2012, we can reasonably venture that these numbers do not come close to what has been spent through other channels.

But this field is set to grow in coming election cycles. The recent FEC regulation changes, the increasing sophistication of mobile-software and mobile-data companies, and the quick uptake of citizens to use mobile platforms for political engagement are all positive signs that mobile democracy is afoot.

“The share of the [political campaign] wallet going towards mobile technology is increasing fast. The predominant old way of advertising via television is less effective and the market for other digital and mobile campaigns is on the rise,” said Trevelyan.

In 2016 mobile fund-raising may be the norm. Mobile apps with big data capabilities will most likely be available for both parties and will have much richer functionality for engaging voters. And SMS and mobile-app platforms will continue to play a prominent role for both candidates and citizens.

Those organizations that recognize the signs of an emerging market now will reap the financial and electoral benefits in the future. After all, the mobile disruption of the political-campaign market has only just begun.

 

 

Relevant Analyst
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Shannon Arvizu, Ph.D.

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