To subscribe to the monthly C&E email newsletter and event announcements click here.
If early estimates hold, California will experience another political gold rush this cycle with almost half a billion dollars set to be spent on state initiatives ranging from pot legalization to a gun control proposal to two questions on raising the minimum wage.
Out-of-state firms have been trying for years to break into California’s lucrative initiative market. In fact, there’s a playbook most firms follow. It starts by hiring a big-name consultant and opening a West Coast office. SKDKnickerbocker, for instance, recently made a California push by bringing on Obama-alum Bill Burton as a managing director to lead a Los Angeles outpost. East Coast firms Dixon/Davis Media Group and GMMB have also made pushes for California business.
One veteran California consultant put it this way: “Everyone sees gold in our hills, but I’ve never seen anyone actually succeed long term.”
In some cases where out-of-state firms landed major initiative contracts, the campaign crashed and burned. In 2012, Proposition 38, an initiative campaign bankrolled by the wealthy Munger family, hired AKPD Message and Media, the Chicago-based firm led in part by Larry Grisolano, to cut its campaign ads. It ended up getting heavily defeated with the “no” vote taking more than 71 percent. Meanwhile, Proposition 30, a similar initiative, but one backed by Gov. Jerry Brown, passed that year.
That’s the kind of performance that California-based consultants point to when those at the table running the initiative efforts consider sending the business out of state.
“I assume there’ll be somebody from out of state who gets some work [this cycle], but it’ll be tangential at best,” said Reed Galen, an Orange County-based Republican consultant.
Polling work often goes out of state or at least to East Coast firms that’ve set up a local shop like Benenson Strategy Group, which has an office in Santa Monica. Meanwhile, media, mail and petition work typically stays local. But that’s not to say there isn’t competition looking to move West.
“I get calls two-three times a year from someone saying, ‘I’m really interested in doing ballot work,’” said Galen. “I’ll say, ‘are you in treated in moving to California?’ If the answer is ‘no,’ then I’ll say, ‘forget it.’”
That’s because initiatives are a niche in the industry with a unique business culture.
Consultants describe the campaigns’ formation process as one where consultants need to be in on the ground floor to get any significant part of the business.
“Work is done differently here and folks look to a California sensibility that’s developed through residency,” said Douglas Herman, who runs The Strategy Group’s Los Angeles office. “The great thing for us Californians is that work in California is given to Californians.”
To wit, it tends to be the usual suspects who are rounded up each initiative season, consultants tell C&E. Now, Sacramento-based Gale Kaufman is working with the SEIU and California Teachers Association on a tax initiative. David Townsend is working on the California Medi-Cal Hospital Reimbursement Initiative and Ace Smith’s firm, SCN Strategies, is expected to get the gun-control initiative, if it reaches the ballot.
But come November there could be more than a dozen major initiatives with well-funded yes-and-no sides. If all those qualify for the ballot, the estimate of $452 million reported by the Los Angeles Times could prove conservative, according to Herman.
“California has always been a bit of a goldmine politically, and when you add in all the competitive congressional races, there’s a lot more activity in California than in years past. It’s turned into quite a bonanza.”
But for all the growth the California market is experiencing with competitive initiatives and its top-two primary system, the shingles getting the business have stayed constant, according to Richard Schlackman, a San Francisco-based consultant.
“Very little of this,” he said, “will go to out-of-state firms.”