The conglomeration of Democratic digital firms isn't worrying Republican consultants. While some on the right see mergers and acquisitions as a way to keep pace with their Democratic rivals, others say the greater obstacle is getting campaigns to fully embrace data and analytics.
Between 2011 and 2015 there were few blockbuster M&A deals in the political consulting industry. That changed when Stagwell Group, the investment firm founded by Mark Penn, began a buying spree that started with its acquisition of SKDKnickerbocker last October and continued with research firm NRG and digital agency Code and Theory.
Against that backdrop, Bully Pulpit Interactive acquired The Incite Agency in another major deal last week. The deal was backed with private equity money from Svoboda Capital Partners LLC.
Meanwhile, Trace Anderson, president of CFB Strategies, a data management firm, thinks that Republicans need a two-pronged solution to counter the Democratic conglomeration.
He pointed to the absence of a firm like NGP-VAN on the right and suggested that the Republican equivalent could be formed through M&As of existing Republican firms. “There is enough talent to combine a lot of data and [other] technology firms into one monolithic operation,” he said.
But that would only address part of the right's problem, added Anderson.
“The biggest challenge is getting people to wrap their heads around good data management,” he said. “Our biggest competition is an Excel spreadsheet -- especially for a smaller campaign."
Anderson’s firm consulted for Ted Cruz’s presidential during the GOP primaries and he noted that Republicans would be far better positioned digitally had he won the presidential nomination. Cruz’s campaign, led by manager Jeff Roe, full bought into data analytics and digital targeting. “If it was Hillary Clinton versus Ted Cruz, I don’t think you’d be saying that Clinton has the better data operation,” he said.
While Clinton’s analytics team of some 60 mathematicians and analysts led by Elan Kriegel is likely to spawn dozens of new digital and data firms after the election, there will likely be few offshoots from Trump’s operation, according to Michael Turk, a Republican digital consultant who heads Opinion Mover Strategies.
“Typically in a presidential cycle what you see is the presidential campaigns spend a ridiculous amount of money building new technologies, experimenting with new technologies [and] creating new platforms,” he told C&E during a recent interview. “Typically those platforms get tested at the presidential level, perfected at the national cute level, and then passed down to all the state parties and congressional campaign committees."
That’s not happening with Trump, he said. “You’ve got arguably the least beneficial, from a party infrastructure standpoint, campaign we’ve ever had on the republican side.”
Another challenge facing Republicans when it comes to growing their firms through M&As is that many of those operating below the large and mid-level firms are shops too small to gobble up.
“We’ve looked at a couple of [M&A] opportunities here and there,” said Chris Wilson, CEO of Wilson Perkins Allen Research. “The challenge that exists is that there’s a lot of 10-person or less firms, and they’re all LLCs.”
While Democrats have courted masters of finance or have Silicon Valley backing, Republicans have few patrons capable of shepherding the kinds of deals that are now making headlines, Wilson, who also worked for Cruz, argued.
Instead, he predicted the Republican model would look more like how i360 was formed: deep-pocked backers funding a specific project designed to serve a digital need among Republican campaigns.
“I don’t think it’s anything to be concerned about," Wilson said of the Democratic dealmaking. "We’re so far behind as it is."