Trump’s grassroots fundraising driven by 'huge' burn rate

Yesterday, the FEC released the August fundraising report for Donald TrumpDonald John TrumpAssange meets U.S. congressman, vows to prove Russia did not leak him documents A history lesson on the Confederacy for President Trump GOP senator: Trump hasn't 'changed much' since campaign MORE's campaign. The topline numbers are impressive and have attracted comparisons between the grassroots fundraising of the Trump campaign and that of Barack ObamaBarack ObamaCongress needs to assert the war power against a dangerous president CNN's Don Lemon: Anyone supporting Trump ‘complicit' in racism DOJ warrant of Trump resistance site triggers alarm MORE and Bernie SandersBernard (Bernie) SandersThe media couldn't be more blatant in distorting Trump's words on Charlottesville Road to renewable energy is filled with potholes of ‘magic thinking’ Bernie Sanders: Trump’s Charlottesville comments ‘embarrassing’ MORE.

Given this fundraising success, some have questioned why Trump continues to be notably outspent when it comes to voter communication operations like television advertising. As is often the case with Donald Trump, there is more to his grassroots fundraising program than his boasts would lead you to believe.

In July, the Trump campaign reported $12.7 million raised in unitemized, small-dollar contributions of $200 of less. At the same time, the campaign shelled out $8.3 million to Giles-Parscale, the marketing firm of Trump's Digital Director Brad Parscale. In August, this trend repeated itself, with Trump raising $12 million in small-dollar gifts while spending $11.1 million through Giles-Parscale.

Because of the level of investment and Trump's propensity for graft, there has been significant speculation about how these funds are being used. There does not, however, seem to be anything untoward — Parscale's claim that 90% of these funds are going directly to online advertising appears to be accurate.

To those of who work in digital politics, this implies one thing: the Trump campaign is running the largest, and perhaps least successful, direct-to-donate campaign that politics has ever seen.

Direct-to-donate is an online advertising strategy used by campaigns that has some similarities to the sometimes-maligned practice of direct mail fundraising. With a direct to donate ad, potential supporters who click on an ad are directed immediately to a donation page. This is distinct from email acquisition, a tactic more commonly used by campaigns, where individuals are directed to a landing page asking for their email address so that they can subsequently be communicated to and solicited through email marketing.

While it is theoretically possible that some of the Parscale-Giles payments are going toward persuasion advertising directed at voters in key states, a look at the display advertising that the Trump campaign is running would suggest otherwise. The third-party ad tracking service Moat has aggregated the ads that the Trump campaign is running and it would appear as though 100% of them are geared toward fundraising. Even those that appear to have softer asks like "I'm in" tend to lead to donation pages.

The issue with direct to donate advertising is the same as with direct mail fundraising: the burn rate is incredibly high. In order to make significant amounts of money, you have to spend large sums. The last two months of Trump fundraising reports indicate his campaign is doing exactly that, spending close to a dollar for each grassroots dollar raised.

This isn't to say these tactics cannot be effective. Direct-to-donate advertising, when implemented at key moments, can produce significant immediate returns. There is also evidence that this tactic, when used as a part of an integrated digital marketing program, can increase the yield of other channels. More broadly, email acquisition is in fact the most effective way for campaigns to scale their online fundraising programs. 

There are, however, two related issues with how Trump is implementing direct to donate advertising: timing and targeting.

Sophisticated campaigns begin list acquisition as early as possible for a reason: the longer you have an email address, the more email fundraising solicitations you can send them before election day. Because the Trump campaign did not take grassroots fundraising seriously until late June, they had to run the program they have to raise the unitemized sums that are traditionally used as a metric for success. 

Relatedly, because the Trump campaign has had to spend large sums monthly in order to raise a significant figure, their targeting has often been less than advanced. Scale tends to trade-off with micro-targeting: if you want to run a very large program in a short period of time, you inevitably have to target large swaths of individuals. The result, as has been noted elsewhere, is that very poor donor prospects, including Democratic operatives like myself, are regularly inundated with Trump ads.

Assuming they can work out the kinks with their email fundraising program, the July and August investment in direct to donate ads should eventually pay dividends. But in the meantime, the Trump digital program has netted very little revenue, further hamstringing a campaign that is being significantly outspent.

Jake Sticka is a senior marketing manager at Rising Tide Interactive, a leading Democratic digital agency.

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