POLITICAL MARKETING

Takdir Ali Mukti, M.Si.

IKOM-UMY-2014
The Rise of Political Marketing
 The nature of the electoral system
 The elected public offices
 The development of the mass media
The main aims of this study
Turnout

3
1

Marketing Strategic
Vote?
The secondary aims of the study
1. Does the effectiveness of the marketing
variables vary across the states?
2. If yes, does the resource allocation reflect
the heterogeneity in the effectiveness?
3. What is the real impact of marketing on
turnout?
4. Do candidate maximize their winning
probability?
Related literature

Marketing Politik: Antara Pemahaman dan

Realitas, Prof. Firmanzah, Ph.D, Buku Obor,
Jakarta, Oktober 2012
The effect of marketing variables on turnout
 Freedman, Franz and Goldstein 2004
Marketing budget allocation
 Manchanda, Rossi and Chintagunta 2004
The political participation puzzle
and marketing

Ron Shachar
(Tel Aviv and Duke)
The first puzzle: why vote?
 The basic model B  V  C
 The problem: unless B is bigger than C, the
participation rate should be close to zero. Why?
 Because π is basically zero
 The value of winning in Alaska (1960) should be 2.5 million
dollars
 The probability of dying in a car accident on the way to
the polls is higher
 What about the probability of getting hit by a lightning
on the way to the polls?
 Behavioral explanations
 Difficulty to assess probability of unlikely events
 Regrets
It is an absurd idea…

 “Saying that closeness increases the

probability of being pivotal [in
elections]. . . is like saying that tall
men are more likely than short men to
bump their heads on the moon.”
(Schwartz 1987)
The consumption approach
 This leads to the consumption approach to
participation
 People vote because they enjoy it, not because
they are concerned with affecting the outcome
 For example, people vote because of a feeling
of civic responsibility
 In other words, we need to rely on B being
larger than C and ignore the πV factor
But wait. The pivotal fights back
 The consumption approach suggests that
“people vote because they enjoy it, not
because they are concerned with affecting
the outcome”
 However, the participation rate tells a
different story
The effect of the strategic
variables

Thus, neither approach is

consistent with the data
Follow-the-leader story
 Shachar and Nalebuff (AER 1999): The
population is organized in social groups
 There are two types of people in the population
 Leaders
 Not necessarily political leaders
 Consider strategic aspects
 Followers
 Do not consider strategic aspects of their vote
 Leaders effort increases the participation rate of
followers
 An equilibrium model in which the strategic
variables affect turnout indirectly – through the
effort of the leaders
However
 SN did not have data on effort, and thus
were not able to show that the strategic
variables affect turnout only indirectly
Marketing to rescue
 This study claims that
 Marketing activities depend on the strategic
variables
 Marketing activities affect political
participation
 When accounting for marketing activities, the
estimated effect of the strategic variables on
turnout would be zero
 In other words, the strategic variables affect
turnout only indirectly – through the marketing
variables
Order of presentation
 A model
 Data
 Preliminary results
 Structural estimation
 Implications
 Conclusion
Game Voters Parties Equilibrium

The rules of the game

 Two candidates, R and D, compete on the
presidency
 The elections are being held in S states on
the same day
 The candidate that gets more votes in state
s wins all the electoral votes of that state,
vs
 The candidate that gets more electoral
votes wins the elections
Model Data Results Implications
Game Voters Parties Equilibrium

Sequence of events and choices

 Step 1 (beginning of the campaign): The
two parties D and R decide on
 Allocation of the ad budget
 Grassroots campaign
 Step 2 (election day): people decide on
 Participation
 Which party to vote for

Model Data Results Implications

Game Voters Parties Equilibrium

Participation and voting choices

 Assumption: marketing does not change
voting intentions
 Consistent with previous studies
 Given our data, it is just a normalization
 Thus, voters first decide which party to
vote for and then decide whether to
participate in the elections

Model Data Results Implications

Game Voters Parties Equilibrium

Voting choices
 The share of democrats in the population (of each
state in each election year; ds) is a random
variable with mean z s and variance  d
2

 The variables in zs include a liberalism index of

the state, the composition of the state legislature
party division, etc
 The realization of ds is unknown prior to election
day
 Actually it is unknown also on election day…

Model Data Results Implications

Game Voters Parties Equilibrium

Participation
 The share of supporters of the candidate of party j
who participate in the elections is:
 ( a j ,s , c j ,s , xs ,  s )  expxs    sa a j ,s   sc c j ,s   s 
where xs    sa a j ,s   sc c j ,s   s  0
Number Additional
of ads factors (e.g.,
rain)
Party Marketing
contact effectiveness

Model Data Results Implications

Game Voters Parties Equilibrium

Participation assumptions
 The marketing variables affect the participation
rate
 There is heterogeneity in this effectiveness across
states
 The strategic variables do not affect the
participation rate

Model Data Results Implications

Game Voters Parties Equilibrium

Constraint and cost

 Ads: national allocations => budget constraint

 Contact: local activists (resources) => cost
function

Model Data Results Implications

Game Voters Parties Equilibrium

Ads and spending

 The number of ads depend on the spending (expenditure)
of the parties a  a
a j ,t  e j , s n j , s
 The cost is convex 0   a  1
 γa <0: For example, reaching the same proportion of voters in
California is more expensive than in Rhode Island
 The two parties have the same budget in each election
year  e j ,s  E for each j
 Consistent with the data s
 Focus on the main issue at hand

Model Data Results Implications

Game Voters Parties Equilibrium

Contact and grassroots

 The proportion of contacted voters depends on the
grassroots effort of the local activists
c c
 The cost of effort is: Cost ( c j ,s )  c j , s ns
 γc > 0: for the same reasons
 The cost function is convex in effort  c  1

Model Data Results Implications

Game Voters Parties Equilibrium

Information and objective

 Information: when deciding, the parties do not
know the realizations of the random variables,
but they do know the distribution functions
 Objective:
1. Market share
 and thus electoral votes
2. Victory
 and thus the pivotalness probability of the state

Model Data Results Implications

Game Voters Parties Equilibrium

The objective function

max
{e j ,s , g j ,s }
 c c
 s p j , s ( ed , s ,er , s ,cd , s ,cr , s )  c j , s ns
s

s.t.  e j ,s  E
s

Model Data Results Implications

Game Voters Parties Equilibrium

The equilibrium strategies


 f (0.5 | z ) n 
1
a a 1 a
* *
e e  d ,s r ,s
s d s s s

  f (0.5 | z ) n 
1
a a 1 a
k d k k k
k
1
  sc  c   c 1
cd* ,s  cr*,s  0.25 s f d (0.5 | zs ) ns 
 c 
 The marketing variables are indeed a function of the strategic variables
(electoral votes, voting age population and predicted closeness)
 The marketing variables are also a function of their state-specific
effectiveness
 which was ignored previously
 Unlike the grassroots efforts, the ads spending is a function of the attributes
in all the states

Model Data Results Implications

Game Voters Parties Equilibrium

Spurious effect of strategic variables


Turnout s ,t  s ,t , f d (0.5 | z s ,t ), ns ,t ,... 
 exp  a a *
s , s , t
c *
 c
s , s , t  x s ,t   s ,t 
 As expected the strategic variables have an
indirect effect on turnout
 Thus, if the marketing variables are excluded
from the empirical analysis it might seem that the
strategic variables affect the participation rate

Model Data Results Implications

Data

 State-by-state 1996-2004 presidential elections in

the USA
 Results: share of Democrats
 Turnout
 Advertising
 Contact

Model Data Results Implications

Results Turnout Advertising Grassroots

Share of Democrats

 The exogenous variables (Campbell 1992)

 The Democratic share in the national Gallup poll
(September)
 Home state (for the presidential and v.p. candidates)
 A state liberalism index which is based on the ADA
and ACA ranking
 etc

Model Data Results Implications

Results Turnout Advertising Grassroots

Turnout

 The exogenous variables (SN 1999)

 The percentage of eligible voters who moved into the
state in the year before the elections
 Income
 Education
 etc

Model Data Results Implications

Results Turnout Advertising Grassroots

Advertising

 The number of ads sent by the two candidates in each

state between September 1st and election day (CMAG)
 A comprehensive record of every ad broadcast in each of
the nation's top media markets
 Including where and when it aired.
 Aggregated the data along two dimensions – time and
place
 aggregated the market level data to the state level using the
population size in each market
 The number of minutes per day

Model Data Results Implications

Results Turnout Advertising Grassroots

Advertising (sum statistics)

 The number of states with almost no ads (less

than 2 minutes per day) was 16 in 1996, 26 in
2000 and 21 in 2004
 The median (among states with more than 2) was
42, 62 and 73
 The mean 40, 62 and 68
 Thus, on average the each candidate aired 30
minutes of ads per day

Model Data Results Implications

Results Turnout Advertising Grassroots

Contact
 The share of eligible voters who were contacted by a
representative of one of the parties to encourage turnout
(ANES)
 Respondents were asked (in each election year) whether a
person from one of the political parties called or visited to
discuss the campaign
 The share of respondents that were contacted in each state
serves as our measure of grassroots campaign
 When for a state-year there are fewer than 5 respondents,
the data is coded as missing
 32 observation are really missing (i.e., zero respondents)
 18 more are dropped due to the above rule

Model Data Results Implications

Results Turnout Advertising Grassroots

Contact (sum statistics)

 The number of missing observations was 9, 2 and

21 in 1996, 2000 and 2004, respectively
 The number of states with more at least 5
respondents were 15, 13 and 22
 The median contact share in these elections was
0.28, 0.38 and 0.49
 The mean was 0.31, 0.38 and 0.49
 The number of states with more than 0.25 (0.50)
contact was 25, 29, and 26 (3, 8, and 10)

Model Data Results Implications

Results

 Results 1: preliminary non-structural

 Predicted share of Democrats => predicted closeness
 R2 = 0.84
 Turnout is a function of strategic variables
 Ads is a function of strategic variables
 Contact is a function of strategic variables
 Turnout is not a function of the strategic variables
when the marketing variables are included!
 Results 2: structural estimation

Model Data Results 1 Implications

Issues Advantages Results Conclusions

Measurement errors and missing data

 Problems:
 Measurement errors in the marketing variables.
Thus the marketing variables are endogenous
 There are 50 missing observations for contact
 Solution: the marketing variables are not
used as independent variables in the
estimation. Instead, we are using the
equilibrium values

Model Data Results 2 Implications

Issues Advantages Results Conclusions

Segmentation and clustering

 Problem:
 The number of combination that one needs to
a c
integrate over is huge s , s
 Thus, even advanced integration methods (e.g.,
simulation integration with importance
sampling) cannot work efficiently
 Solution: a new structural clustering approach

Model Data Structural Results Implications

Issues Advantages Results Conclusions

Main result
 The model gets a strong support from the data

Model Data Structural Results Implications

 Indirect Closeness

Implications
 Without marketing the number of voters in the 2004
elections would have decreased by 14 million
 For 2000 and 1996 the numbers are 9.5 and 6.4
 For 2004: Grassroots – 11.5. Ads – 3
 Candidates seem to maximize market share rather than the
winning probability
 Heterogeneity plays a significant strategic role (which was
ignored previously)
 The R2 increases are
 Turnout: 70 to 96
 Ads: 45 to 62
 Grassroots: 39 to 45

Model Data Structural Results Implications

Conclusion
 The source of the political participation
puzzle is marketing activities
 Marketing plays an important role in
elections
 Grassroots is more effective than advertising
 Heterogeneous response plays an
important role in marketing allocation
decisions
Conclusion
Future
 Dynamic
 Information and signaling
 The effect of marketing on election results

 Political marketing

Conclusion