Much-Hyped Data Firm's Promise Could Be Tested in Iowa

A U.K. Political Data Company Backed by Cruz Donor Has Its Believers and Its Skeptics

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By now political junkies have seen the Ted Cruz ad featuring footage in which his GOP primary rival Donald Trump concludes, "My views are a little bit different than if I lived in Iowa." It's a blatant message painted with a broad brush.

Yet the Cruz campaign and the PACs backing it, as well as the beleaguered Ben Carson campaign and John Bolton's PAC, have each invested hundreds of thousands of dollars in a novel form of voter data analysis and targeting that promises to apply intricate -- some might say nuanced -- political messages like so much filigree.

Some remain skeptical, but other insiders say the data crunching and voter segmentation provided by London-based Cambridge Analytica goes beyond what's been done before, even by President Barack Obama's 2012 campaign. The Iowa caucuses will be the first time in which the three-year-old firm -- which has moved aggressively into the U.S. political market -- and its data promise are put to the test in a U.S. presidential election.

Scoring voters for their likelihood to support a candidate or based on their beliefs regarding key issues has become commonplace, especially for statewide and presidential campaigns. The voter files used by parties and campaigns might label each profile with multiple scores from different data partners, and those scores can change depending on the election cycle.

Cambridge Analytica has a dozen or more online surveys running at any given time. The company uses responses to those long and short-form questionnaires and quizzes to build its models which determine partisanship, likelihood to vote, ideology, ethnicity, religiosity and stances on issues. The result is 5,000 or more data points on registered voters in the U.S., where lax privacy regulations allow the company to use data in ways that aren't always allowed elsewhere.

But it has garnered attention from political clients and media by touting its method of categorizing voters inspired by the classic five factor model for gauging personality traits. Otherwise known by acronyms OCEAN and CANOE, the five factors are openness, conscientiousness, extroversion, agreeableness and neuroticism.

The technologies surrounding data analysis are complex and often opaque to the campaign decision makers asked to judge whether they're even worth an inspection. Former Carson camp spokesman Doug Watts, who also oversaw advertising and social-media efforts for the campaign before exiting in late December, said he was receiving upwards of five proposals from digital-analytics firms per week when evaluating Cambridge Analytica. He is still a doubter.

"They approached us early on," said Mr. Watts, noting that despite his concern that the company was also working with the Cruz camp, the Carson camp chose to work with Cambridge Analytica. "I was always a skeptic that it was all that proprietary and unique," said Mr. Watts, regarding the company's data models used by clients to target nuanced ad messages to select voter segments. "They had a very sophisticated proposal. Everybody was British so that raised the level of the presence up a notch, well, because they did it with a British accent -- tailored suits, very formal," he said.

As of October, Federal Election Commission reports show the Carson campaign spent $220,000 with Cambridge Analytica and the Cruz camp spent more than $750,000 with the firm. The John Bolton SuperPAC, headed by the neoconservative stalwart and former U.S. Ambassador to the United Nations, spent at least $650,000 with Cambridge in 2014 and 2015. The company also works with the PACs backing Cruz, an assembly of organizations using iterations of the name Keep the Promise. Cambridge is doing different types of work for each of those PACs, according to the firm's CEO Alexander Nix.

The clientele's connections leave little to the imagination. Cambridge Analytica reportedly is funded by Cruz's magnanimous donor, hedge fund manager Robert Mercer. He not only has donated $11 million to Keep the Promise through his firm Renaissance Technologies, but he and his wife are also big money backers of the Bolton SuperPAC, which received $2 million in 2015 from the Mercers, according to the Center for Responsive Politics.

To comply with FEC rules preventing campaigns from coordinating with PACs, Cambridge Analytica separates staff working with each account and physically and electronically cordons off data and systems, according to Mr. Nix, who declined to discuss Cambridge's funding.

Mixed Results for High Intensity Carson Voters

The Carson camp used the company's scoring process to help isolate around 40,000 Iowa voters from a house file of 150,000; they were deemed "high intensity Carson voters," most likely to attend a caucus and support the candidate. The campaign used Cambridge's segments to help plan TV buys based on audience behaviors associated with certain shows. The Obama campaign famously bought TV based on viewing behaviors of voters in 2012.

"I think we did get a bump in the efficiency of our TV buys," said Mr. Watts, who's now back to focusing on his role as president of political consultancy Urban Media Group. However, when applying the Cambridge segments for fundraising and donor acquisition, he said, "We did not find their fundraising modeling to be all that productive for us."

Considering the relatively crowded field of data firms aiming for the same voter targets in early primary states, Cambridge's focus on human psychology could be an edge, said one Republican data pro regarding Cambridge Analytica. "In a crowded field it could potentially make the difference between winning or losing," he said, cautioning, "I'm not overly skeptical; I'm appropriately skeptical."

"You're fighting over very thin slices of the electorate," said Harris MacLeod, senior communications manager at SCL Elections; Cambridge Analytica is the North America-aimed offshoot of SCL. Mr. MacLeod's job is to provide guidance to clients and "spot political opportunities in the data." He added, "Right now we're studying persuasion…. There are studies that indicate there are other ways to persuade people that revolve around personality."

The company's software allows campaigns to export lists of voters for phone calls, door-to-door canvassing, direct mail lists, and for digital ad targeting. If used to the full extent, campaigns cannot only tailor video and TV ads to the perceived openness or agreeableness of each targeted group, they can provide different messages for volunteers to use when door-knocking and calling voters. In these final days before the Iowa caucuses, this sort of highly customized communication could have an effect.

The Bolton Test

Digital ad vet Becki Donatelli, whose firm Campaign Solutions counts the John Bolton SuperPAC and Cruz campaign as clients, wasn't sold right away on Cambridge Analytica's offering, but she was willing to put it to the test. Indeed, the former ambassador hoped his efforts could sharpen the GOP's oft-maligned data capabilities.

Working in 2014 with the Bolton SuperPAC in support of key Republicans in Arkansas, New Hampshire and North Carolina, the agency compared its traditional approach to digital video ad targeting with one aiming a variety of video executions to select Cambridge Analytica segments. As it has done with other political clients, Cambridge had staff embedded with the consultancy to ensure language used in emails and ads reflected the nuances designed to speak in the tones each voter segment would respond to. In the end, the Cambridge Analytica targets helped turn out voters in those three test states, according to Ms. Donatelli, president of Campaign Solutions. Two of the Republican candidates backed by the Bolton SuperPAC, Thom Tillis in North Carolina and Tom Cotton in Arkansas, won their Senate bids, while Scott Brown lost in New Hampshire.

"Similar to how FDR used radio, and JFK used TV, this was the GOP's opportunity to use big data to disrupt the Left's advantages online," reads a white paper the John Bolton SuperPAC published about the Cambridge Analytica test. "Republicans had to prove that they could not only match what Democrat campaigns achieved online in 2012, but had the technology and the techniques to go far beyond. And that's just what we did."

A collection of video ads placed by the Bolton PAC for those three 2014 midterm races rivals that of a presidential primary campaign in number. But many are the same spot tweaked slightly to appeal to different segments depending on varying degrees of openness, agreeability, neuroticism, etc. The PAC ran 15 different spots each in North Carolina and Arkansas and 17 in New Hampshire -- mostly online with some targeted directly to households using Dish and DirecTV. All were intended to push Mr. Bolton's national security agenda.

Ads backing Senator Tom Cotton included subtle distinctions. One variation of a spot entitled "Porous Border," for example, featured the statement, "Our borders are a laughing stock." Others did not. One version of the ad showed Mr. Cotton, a former U.S. Army Lieutenant who served in Iraq and Afghanistan, in his officer's uniform. Others showed him only in fatigues.

In all, 160 different personality clusters were identified in which each voter was analyzed based on between 1,000 and 3,000 data points. According to the Bolton PAC, the tiniest target was a group of just 449 voters in New Hampshire; the largest represented 118,673 North Carolina voters. Using the states' election results data, Campaign Solutions and the PAC attempted to measure whether the voters who were exposed to the targeted ads actually came out to vote.

Ms. Donatelli stressed that the Cruz campaign and other clients of the data firm are not necessarily applying Cambridge's models the same way the Bolton PAC did. The PAC still works with Cambridge, and may work with the firm to help propel Mr. Bolton's hawkish national security message in 2016, according to Sarah Tinsley, director of the John Bolton PAC and SuperPAC. Using Cambridge Analytica's models, she said, "We may end up doing an independent expenditure campaign in a state also where a presidential race is close."