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Lobby cash goes underground in PR boom

Greg Nash

Lobbying money has gone underground in Washington with the rise of public relations firms that play the “outside game” to influence policy.

While traditional lobbying revenue hit its lowest point in four years in the first months of 2014, according to the Center for Responsive Politics, industry insiders say those statistics miss the hundreds of millions of dollars that are flowing to firms that aren’t registered to lobby. 

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“The money is still going somewhere,” said someone in the public affairs industry who asked not to be identified in order to speak freely. “That’s evident with the amount of advertising — both print and television — that you see running in Washington around big debates.”

Companies and industries are increasingly using public relations for a broad array of tasks, from placing paid advertisements to building coalitions to conducting polling and research.

They are also getting help with advocacy by the grass roots and local community leaders that aims to build public pressure for government action.

Unlike lobbyists, public affairs firms are not required to report their clients, specific activities or revenue, so the amount of money they take in is hard to determine. Still, leaders in the industry say their balance sheets are healthy and growing.

“It’s, in part, a reflection of a lackluster legislative environment,” said Mike Tuffin, the managing director of APCO Worldwide’s Washington office, “but I think there is increasingly a recognition that there is a need to marry the inside game with the outside game.” 

Tuffin said the services provided by his firm complement the work of K Street.

“While traditional shoe-leather lobbying will have its place, advocacy organizations need to be able to marshal all the forces that influence those debates … in an environment where every citizen is empowered through social media,” he said. 

Some organizations have dramatically shifted their spending toward PR firms, spending millions of dollars more on media, consulting and other services than they do on traditional lobbying.

The American Beverage Association, for example, spent about $31.7 million on “professional services” to outside consultants at GMMB, Goddard Gunster and the grassroots firm Dewey Square Group, according to the most recently available filings with the IRS in 2011. 

That same year, the Beverage Association spent less than $1 million on lobbying activities, according to disclosures filed with the Senate.

Christopher Gindlesperger, the association’s senior director of public affairs, said the spending was tilted toward public relations because roughly 30 states and cities considered a tax on soda between 2010 and 2011. None of them were approved.

“That’s why our spending was where it was. It’s expensive, but it’s necessary to be able to educate consumers and lawmakers … about the impact of certain policies,” Gindlesperger said.

The “educational” efforts can go beyond specific pieces of legislation. The Beverage Association has also created a campaign to promote government efforts to remove sodas from school vending machines.

“There’s a very public debate going on about obesity. It’s our responsibility to play a significant role — and take a leadership role — in that conversation,” Gindlesperger said.

The American Petroleum Institute (API) is another heavyweight group that spends heavily on PR efforts. The trade group invested more than $85.5 million on public affairs in 2012, according to IRS filings, while spending only $7.3 million on direct lobbying. 

The group holds various events, from rallies that gather thousands of its supporters to smaller, more intimate get-togethers in people’s homes, according to Eric Wohlschlegel, the API’s director of media relations. 

In 2012, the API paid Edelman, one of the world’s largest public relations firms,  $52 million to help coordinate and promote some of those events, according to Wohlschlegel.

“We have been quite successful in getting our grassroots network to call and write the administration and members of Congress” about issues from Keystone to the impact that the oil and gas sector has on jobs in the United States. 

Other groups that have reported spending more on public affairs than lobbying include the Business Software Alliance, the Corn Refiners Association and the American Chemistry Council.

While some lobby firms contract out public relations services, other firms such as BGR Group, Levick and the Podesta Group have integrated those services into their businesses.

Levick’s president, Mark Irion, has made several changes to the firm since taking over last year.

So far this year, the firm has purchased public relations firm Purple Nation Solutions, added a team of lobbyists from Dow Lohnes Government Strategies and launched a business intelligence group.

“It really is about looking at this and how is persuasion evolving,” Irion told The Hill. “It’s evolving because of the democratization of technology. It has not only changed our personal lives but it has also changed how advocacy works.”

“You can see that in the biggest issues of our present day — fracking, SOPA and PIPA [copyright legislation], Keystone XL pipeline, the [proposed] telecomm and airline mergers — none of those issues are being solved alone by going to the chairmen of relevant committees and asking them [to vote a certain way],” Irion said. “Those are national conversations. The masses aren’t sitting idly by.”

Jeff Birnbaum, a president at BGR Public Relations, said no modern lobbying effort is complete without a public affairs component.

“The two work hand and hand all the time,” he said. “That’s why BGR Group does both public relations and government affairs.”

Podesta Group included a PR component since its founding more than two decades ago, and has seen that part of the business boom even as lobbying fees have remained relatively steady.

While lobbying represents more than 65 percent of the firm’s revenue, the public relations side of Podesta’s business increased 132 percent from 2010 to 2013. It took in nearly $7.4 million in PR profits in 2013, according to O’Dwyer’s PR firms database.

Beekeeper Group, which specializes in digital media and metrics, has seen year-over-year revenue growth of 60 percent each year since its founding in 2010, according to Matthew Zablud, a partner at the firm.

“We’re a little bit more cost-effective. The infrastructure costs are lower and we’re metrics heavy,” he said. “It’s very easy to report back to you board or your constituency or your members to show the value and to show [the campaign] it’s working.”

In turn, lobbyists can use those figures to “inform politicians of the groundswell of support behind an issue.” 

Though Zablud and others view PR as having a collaborative relationship with K Street, some told The Hill that there can be a strain between lobbyists and public affairs firms in a “zero sum game” of getting a client’s influence dollars.

“There is very much an ‘old guard’ that is kind of clinging to a traditional way of advocacy and you see that play out in issue after issue and within industry after industry,” said a consultant at a large public affairs firm. “This used to be the exclusive province of a relatively small number of people who have relationships, and that’s all changed.

“Buttonholing a member of congress at a fundraiser is one thing, but if you have 10,000 constituents lighting them up on Facebook on an issue, that’s a pretty easy calculus for that member to make.”

 

This story was updated on May 8 to reflect the current name of Goddard Gunster. A previous version contained incorrect information.