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What Entrepreneurs Can Learn From The Obama Campaign: Big Data, Social Media and a Risky Bet.

November 9, 2012

Since we are all about winning new markets, we wanted to reflect on the President’s reelection tactics to see if there’s anything we might learn.

Creating awareness, interest, desire and action within your target market is job 1 in sales & marketing and Obama did it better because he won.  We’ve been piecing together unique things that set Obama’s campaign apart and found two stories, published over the past couple of days, that offer fascinating insight for New Market Entrepreneurs.

As the puzzle pieces are beginning to be assembled, this campaign, and– specifically– the marketing tactics it deployed will redefine the business of big-time politics.  It seems like politics is heading the way of  Wall Street… ‘gut decisions’ are being replaced by big data aided by sophisticated quant-jock models.  But as the story shared below will illuminate, none of it would have been possible if not for a gut, bet the house decision by our President re-elect.  Whether you are happy with the election outcome, or in deep despair, there is some great learning here.  {Update 11/10:  Please see the footnote at the end of this post describing new revelations concerning an epic tech-fail in the Romney camp}.

First, let’s start with the end result:  Mitt Romney and most Republican strategists never believed the polling numbers going into Tuesday’s election.  Rather than the neck and neck situation the blended polling suggested, they believed the prize was Romney’s.  In fact, it has been widely reported that Romney was so confident that he would win, he never prepared a concession speech.  But as election results began to come in Tuesday night, a dark fog of stunning despair set in.  The Obama turnout in key swing states far surpassed the Romney Camp’s expectations.  And key-market demographics came out in droves to support their man… in much bigger percentages than the Romney camp predicted in their worst-case scenarios.  To make matters worse, many supporters Romney was counting on never even showed up to vote.

The power of this operation stunned Mr. Romney’s aides on election night, as they saw voters they never even knew existed turn out in places like Osceola County, Fla. “It’s one thing to say you are going to do it; it’s another thing to actually get out there and do it,” said Brian Jones, a senior adviser.

How did Obama do it?  Big Data, Social Media and a risky bet.

Let’s take a look at the first two, Big Data and Social Media.  Followers may recall this post back in June which observed that O was up to something big with social media.  In this post: Great Marketing Whether Or Not You Agree With The Message/Messenger we observed, “Simple messages.  Compelling images.  Clear calls to action.  All are the hallmark of strong web advertising.   Now, coupled with the marketing data machine we recently tweeted about, (story found here)… make no mistake, these ads are showing up with intentionality.  And we bet they are getting huge results.”

Actually, we had no idea.  It was bigger and cooler than we ever imagined.

Time Magazine’s 11/19 issue (I know, who reads Time?!), features a riveting account of the machine behind what we were observing in June.   Inside the Secret World of the Data Crunchers Who Helped Obama Win tells the story of “The Cave”, a sealed top-secret room filled with quant-jocks at Obama’s Chicago HQ, and how they used big data and social medial to identify their target market personas to will the election.  Some excerpts:

In Chicago, the campaign recruited a team of behavioral scientists to build an extraordinarily sophisticated database packed with names of millions of undecided voters and potential supporters. The ever-expanding list let the campaign find and register new voters who fit the demographic pattern of Obama backers and methodically track their views through thousands of telephone calls every night.

That allowed the Obama campaign not only to alter the very nature of the electorate, making it younger and less white, but also to create a portrait of shifting voter allegiances.

Exactly what that team of dozens of data crunchers was doing, however, was a closely held secret. “They are our nuclear codes,” campaign spokesman Ben LaBolt would say when asked about the efforts. Around the office, data-mining experiments were given mysterious code names such as Narwhal and Dreamcatcher. The team even worked at a remove from the rest of the campaign staff, setting up shop in a windowless room at the north end of the vast headquarters office. The “scientists” created regular briefings on their work for the President and top aides in the White House’s Roosevelt Room, but public details were in short supply as the campaign guarded what it believed to be its biggest institutional advantage over Mitt Romney’s campaign: its data.

On Nov. 4, a group of senior campaign advisers agreed to describe their cutting-edge efforts with TIME on the condition that they not be named and that the information not be published until after the winner was declared. What they revealed as they pulled back the curtain was a massive data effort that helped Obama raise $1 billion, remade the process of targeting TV ads and created detailed models of swing-state voters that could be used to increase the effectiveness of everything from phone calls and door knocks to direct mailings and social media.

A large portion of the cash raised online came through an intricate, metric-driven e-mail campaign in which dozens of fundraising appeals went out each day. Here again, data collection and analysis were paramount. Many of the e-mails sent to supporters were just tests, with different subject lines, senders and messages. Inside the campaign, there were office pools on which combination would raise the most money, and often the pools got it wrong. Michelle Obama’s e-mails performed best in the spring, and at times, campaign boss Messina performed better than Vice President Joe Biden. In many cases, the top performers raised 10 times as much money for the campaign as the underperformers.

Chicago discovered that people who signed up for the campaign’s Quick Donate program, which allowed repeat giving online or via text message without having to re-enter credit-card information, gave about four times as much as other donors. So the program was expanded and incentivized. By the end of October, Quick Donate had become a big part of the campaign’s messaging to supporters, and first-time donors were offered a free bumper sticker to sign up.

The magic tricks that opened wallets were then repurposed to turn out votes.

It was this database that helped steady campaign aides in October’s choppy waters, assuring them that most of the Ohioans in motion were not Obama backers but likely Romney supporters whom Romney had lost because of his September blunders. “We were much calmer than others,” said one of the officials. The polling and voter-contact data were processed and reprocessed nightly to account for every imaginable scenario. “We ran the election 66,000 times every night,” said a senior official, describing the computer simulations the campaign ran to figure out Obama’s odds of winning each swing state. “And every morning we got the spit-out — here are your chances of winning these states. And that is how we allocated resources.”

Read-more

Probably the most impressive of the “quants in the cave” many cutting edge tech tactics was the use of Facebook’s Open Graph (FOP) to their advantage.  We have written extensively about how the FOG is a secret weapon for marketers.   We believe Obama’s quants won him the election with it!  They were able to tap into a myriad of data  of supporters who downloaded the Obama Facebook app as well as their friends and cross reference this data with what they already knew from other databases to refine their marketing.

Online, the get-out-the-vote effort continued with a first-ever attempt at using Facebook on a mass scale to replicate the door-knocking efforts of field organizers. In the final weeks of the campaign, people who had downloaded an app were sent messages with pictures of their friends in swing states. They were told to click a button to automatically urge those targeted voters to take certain actions, such as registering to vote, voting early or getting to the polls. The campaign found that roughly 1 in 5 people contacted by a Facebook pal acted on the request, in large part because the message came from someone they knew.

The other story that will resonate with New Market Entrepreneurs ran the day after the election in the Wall Street Journal.  As entrepreneurs we make bets every day based on imperfect information.  This story lays out the facts behind a bet-the-house decision Obama was asked to make last Spring– and did– to spend almost the entire war chest against conventional wisdom) to go on the offensive to define Mitt Romney on their terms…

One Sunday in May, Mr. Messina, the manager of President Barack Obama’s re-election campaign, went to the president along with other top advisers and proposed an unorthodox strategy. The campaign, he said, wanted to spend heavily, starting immediately, on ads blasting away at Republican nominee Mitt Romney.

The idea, explained to the president in a PowerPoint presentation in the Roosevelt Room, was to shape voters’ impressions with a heavy expenditure before Mr. Romney had the money to do it for himself. The plan defied conventional wisdom, which said a campaign should start slowly with a positive message and save money for the stretch run. And it could leave the president exposed later.

“If it doesn’t work, we’re not going to have enough money to go have a second theory in the fall,” Mr. Messina said, according to people in the meeting.

The president gave his approval. And within weeks the Obama campaign was blasting away in a late-spring offensive, forcing Mr. Romney to respond to charges about his business record and personal finances rather than making the president defend his record.

Mr. Obama won his re-election battle, amid persistent economic anxieties, in significant measure because of that bet on defining Mr. Romney early.

Read more–

Key take-aways…   Social media and big-data are changing everything.  While the Obama campaign had over a billion dollars to make it hum, New Market Entrepreneurs operating on lean budgets can take a similar approach and not break the bank.  If you aren’t, there’s probably an “Obama” in your market who is who will kick your butt!   Second, it’s ironic that even in these days of big-data-driven decisions, it still seems that many success stories have as at their essence a big bet based on a gut feeling.   Always trust your gut… especially when you have the best quant-jocks in the business making the recommendation!

Full disclosure:  I am one of those who is in deep despair over this election.  But I believe in giving credit where it is due. 
Update: 11/10-  Since publishing this post several accounts have surfaced regarding a Team-Romney project code-named Orca that appears to be the polar opposite of the ‘Quants-in-the-Cave’.  Read here, and here for well documented accounts of the Orca ‘mobile app that wasn’t’ and how it caused chaos on election day get out to vote efforts.

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