When London-based data firm Cambridge Analytica burst onto the U.S. political scene last year by signing on with Ted Cruz's presidential campaign, it was only a matter of time before the firm made an equally splashy move on the corporate stage.
In D.C., Cambridge Analytica Not Exactly Toast of the Town
Next month, the company's directors will welcome guests to celebrate their new Manhattan home in the famed Charles Scribner's Sons Building on Fifth Avenue. The 1913 Beaux-Arts structure, famous for its façade of windows and ironwork, is perhaps an even-more fitting residence for the British firm than its charming D.C.-area digs on the Potomac in Old Town Alexandria, where beltway clients are less accustomed to the flashy salesmanship and upper-crust accents Cambridge Analytica has become known for there.
As the firm sinks its sharp sales chops into New York, it leaves behind a mixed reputation in Washington, D.C. where several Republican strategists who have worked with or met with Cambridge in the past year see the company as a curiosity, an intellectually-advanced interloper that never really "got" American politics. Sources say the company bit off more than it could chew and failed to deliver some of the technology and analytics services it sold or meet crushing election-season deadlines.
Even so, it has been widely-reported that Cambridge Analytica now is working with Mr. Cruz's primary nemesis, Donald Trump, whose GOP presidential campaign has been woefully devoid of a serious data team. GOP insiders interviewed for this story affirm recent reports that Cambridge now has staff embedded with Donald Trump's campaign. Cambridge Analytica won't comment on it.
"I think they're not Americans, and they have a little bit of trouble understanding the American political systems and how things work," said one of eight GOP political consultants interviewed for this story under condition of anonymity. The consultant believes Cambridge's voter-data modeling is sophisticated and effective, but also complained that the firm is more focused on its sales and marketing efforts than actually fulfilling core analytics work promised to clients.
"Everyone universally agrees that their sales operation is better than their fulfillment product," said another consultant who has worked with the company. "The product comes late or it's not quite what you envisioned."
"What's the old saying?" asked another source, conjuring up a metaphor to describe Cambridge Analytica. "All hat, no cattle?"
Cambridge's voter data innovations are built from a traditional five-factor model for gauging personality traits. The company uses ongoing nationwide survey data to evaluate voters in specific regions according to the OCEAN or CANOE factors of openness, conscientiousness, extroversion, agreeableness and neuroticism. The ultimate political application of the modeling system is to craft specific ad messages tailored to voter segments based on how they fall on the five-factor spectrum.
Former U.N. ambassador John Bolton's Super PAC has worked with Cambridge Analytica recently to deliver an array of customized ad messages on behalf of New Hampshire Senator Kelly Ayotte and Joe Heck, a congressman from Nevada, two Republicans battling in tight races this year.
The company is helmed by Alexander Nix, a former financial analyst-turned psychological consultant on international elections and government initiatives. Mr. Nix was crowned one of "25 geniuses" who are creating the future of business" by Wired Magazine in April, which certainly could be evidence of Cambridge's PR machine, which helped generate lots of media hype as the primaries kicked into gear.
Mercer Money Pressure
Cambridge Analytica has funding from a particularly influential hedge fund analyst and enigmatic conservative political donor, Robert Mercer, who is widely reported to be a key investor in the firm, though the company will not discuss its investors. It's easy to draw the connection to Senator Cruz -- the primary horse backed by Mr. Mercer, who donated millions to Cruz super PAC Keep the Promise. The hawkish Bolton SuperPAC has also been the recipient of Mercer cash. According to the Center for Responsive Politics, the PAC got $2 million in 2015 from the Mercers.
"There's a lot of pressure to not speak up against this organization," said one consultant regarding Cambridge Analytica, citing the threat of alienating a magnanimous Republican donor. "You wouldn't want to take on the Rickets and you wouldn't want to take on the Mercers," he continued, alluding to prolific conservative donors Marlene and Joe Ricketts, who also own the Chicago Cubs. Calling Cambridge Analytica "very litigious," the consultant added, "Everyone knows what's happening but no one talks about it because it's not worth it."
Now Cambridge hopes its newly-applied American political veneer will emanate a glow that draws corporate brand and ad agency clients in New York. The company has undoubtedly looked towards the far-more lucrative corporate consulting market since it arrived in Washington, D.C; a Cambridge sales rep was spotted at a corporate data industry event by Ad Age in February of this year.
Whether Cambridge Analytica has succeeded in wooing any big name corporate brand clients yet is unclear because the company won't name any. Yet, it is still working in U.S. politics, mainly serving congressional campaigns and PACs, despite the failures of Mr. Cruz and another presidential primary client, Ben Carson.
It has also been reported that the company handled psychographic message targeting for the successful Brexit "Leave" campaign, though Cambridge Analytica will not discuss that.
Spinning prominent political work into corporate clientele gold is not exactly a new concept, particularly in the political data sector, where talent and analytics skills are highly appealing to brands attracted by the promise of quants wielding databases of targetable consumer segments. Famously, Civis Analytics, founded by 2012 Obama campaign Chief Analytics Officer Dan Wagner, counts Google executive chairman Eric Schmidt as its sole investor and has worked with corporate clients including Discovery Communications. Other political data firms including Optimus and Deep Root Analytics also serve corporate clients.
Presidential politics gets your foot in the door of the corporate world, said one Republican consultant. "I don't think it's a bad strategy."
Cambridge's approach may go over better in New York than it did further south in D.C. One of its key selling points is its embed service, which puts its PhDs in seats at campaign HQs, helping campaign staff to massage ad creative and language to best apply Cambridge's signature psychographic targeting to television and online video ads in addition to other campaign messaging.
The Cruz camp paid for the high-end hand-holding. Other current political clients still do. The Carson camp, on the other hand declined to use Cambridge's embeds, despite what one campaign consultant called a "kind of hard sell" by Cambridge. "They were trying to sell sort of the Bain consulting agency approach," he continued. "It was a very corporate approach which is very British -- not very American."
One current political client called the embedded Cambridge staff "like an extra wheel," suggesting that the American political campaign vets at his firm do a better job of interpreting Cambridge's data when crafting ad copy. "But the core product is still excellent," he stressed, speaking of Cambridge's voter data modeling.
The client was referring to recent experiences with Cambridge's embeds; however, Mr. Nix suggested, "That may have been true back in 2014….There were some cultural differences just due to the fact that some of our staff were not Americans." Since then, he said, "The needle has moved and [Cambridge Analytica] is almost entirely U.S. and people who have a strong political background." Some of the firm's technical staff are not American, though, he added.
Cruz Camp Realizes the Truth
In November, political data reporter Sasha Issenberg called Cambridge Analytica's promise "to segment the American electorate not only by ideological predisposition but also by individual psychological characteristics…the most audacious new analytical innovation foisted on American politics this year." He wrote in a Bloomberg feature about the company, "Cruz for President has relied on Cambridge Analytica as a ready-made data-science department that spares the campaign the challenge of having to hire (and compensate) its members individually."
Around the same time, though, the Cruz campaign began to realize Cambridge Analytica wasn't all it was cracked up to be. While the data scientists the company installed with the campaign were top notch, the company hadn't come through on key technology and media-related services. The Iowa caucuses were less than two months away in February, and the Cruz campaign decided Cambridge just wasn't well-equipped or properly-staffed to handle its digital ad targeting and buying needs.
"They told us they had internal digital capabilities. They did not," said a former Cruz campaign staffer.
"There's some truth in that," admitted Mr. Nix, Cambridge Analytica's CEO, noting that the firm has expanded its digital team since that time.
"Their biggest problem is not their quality of the data, it's that they say, 'Yes, yes, yes, yes,' and there's no there there," said one consultant who has worked with Cambridge.
What others see as overpromising and under-delivering, Cambridge Analytica sees as growing pains and a company adapting to the evolving needs of a client.
"As Cruz gained momentum and his team started to grow, his requirements for digital expanded," said Mr. Nix, adding that partnering with other vendors made sense for the Cruz camp.
But the Cruz campaign also had problems with the data platform it paid Cambridge Analytica a hefty monthly fee to access. A Cruz campaign consultant claimed Cambridge was employing its monthly retainer fees to develop the very database that was a main product it believed had already been fully built.
"You find out your $16,000 monthly fee is being used to pay them to develop it," said the consultant.
Multiple sources said that during the early primaries the dashboard interface for Cambridge's pricey data platform was so simple it was reminiscent of antiquated technology. "This was not what I was expecting," said one.
According to Mr. Nix, the data platform situation was another example of Cambridge needing to develop and enhance its capabilities as the Cruz camp grew. "We developed the platform, a really good platform…it was a really serious piece of kit," said Mr. Nix. However, the Cruz campaign needed to rapidly ramp up to a national database as the candidate moved up the primary ranks and opponents dropped out.
It had been working from the system originally built for 2014 clients intended to be used on a state-by-state basis. "That was the platform that we integrated into the Cruz campaign as we started working for them," said Mr. Nix. As the Cruz camp evolved and required a more homogenized database and platform, he said, "We agreed with the campaign to develop this for them."
It wasn't easy, he added. "That caused a few problems because changing existing code is obviously more difficult than developing something from scratch."
Cambridge continues expanding its capabilities. The company recently formed a partnership with Comscore-owned Rentrak to connect its psychographic data to information about what TV shows people in desired audience segments view. Some consultants said Cambridge purported to have Rentrak data long before it became reality, and that the company claimed to have more robust TV targeting services than it actually did. Mr. Nix denied that and said clients had never complained to him about the company's TV ad services.
Regarding scrutiny from his clients, Mr. Nix said, "Any CEO who didn't address critics like that very seriously would be remiss." He continued, "There's always an element of aspiration about where you want to take a product or services, but I would not say that the cart has been leading the horse."
When Ted Cruz won Iowa, Cambridge Analytica published a press release congratulating its client and praising its own services. "By combining advanced data analytics with psychological research based off the five factor model for gauging personality traits, OCEAN, Cambridge Analytica helped the campaign identify likely pro-Cruz caucus voters and reach out to them with messages tailored to resonate specifically with their personality types," stated the press release. "This method provided the Cruz campaign with the edge it needed to spread the candidate's message and drive a come-from-behind victory in the first primary of the 2016 election."
Yet one consultant who worked on the Cruz campaign suggested that the campaign did not always employ Cambridge's psychological data to devise distinctive ad creative to target specific voter segments. Building multiple ad variations "created so much more work and you could never justify the lift," he said.
The Cruz campaign used Cambridge's psychological data to build and target digital ads and direct mail, but after Iowa and New Hampshire, it ditched the data all together. By the Feb. 20 South Carolina primary the campaign stopped using Cambridge's data.
Playing an American Game by British Rules
Cambridge Analytica emerged in 2012 from British firm SCL (Strategic Communication Laboratories) Group, where Mr. Nix serves as director. SCL is in the business of mind-bending, working with global clients, managing political campaigns, developing psychological approaches to conflict resolution, and creating what it calls "behavior change campaigns" for government clients and NGOs.
Several sources who have worked with or met Cambridge Analytica execs have called the company's sales team, primarily Mr. Nix, among the best they've seen. "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," one Republican consultant told Ad Age earlier this year.
Another source said Mr. Nix is "probably the greatest salesman I've ever been in the room with."
But many consultants have been rubbed the wrong way by the firm's disregard for American political industry norms. Cambridge had no qualms about placing bets on several ponies in the primary race. The company managed to score the Carson campaign as a client even after it signed on with the Cruz camp.
And it didn't stop there. The firm made the rounds, meeting with at least two other GOP presidential primary campaigns in the hopes of garnering their business.
"It always made me uneasy," said a former client.
The approach is almost unheard of in American politics, where consultancies and vendors handling strategic work for political candidates don't go out and pitch their opponents.
"They don't seem to have any reservation about doing that," said one GOP consultant. "One of the unspoken rules is you hit your horse, and if you're successful, you're successful."
Mr. Nix explained the firm's unorthodox sales approach. "I look at the problem differently, in fact completely differently," he said. "We don't really see it as taking sides. We see it as helping everyone to do better and to raise the game across the board. If all vendors had this attitude and had their skills disseminated across the board…I think it would help the Republican party."
Though some current clients say they believe Cambridge Analytica's core data product is of a high caliber and can be applied to ad targeting to produce better results than other types of voter data models, others who have met with or worked with the firm say they were not impressed with Cambridge's data product, and called it too expensive.
"I don't think we raised jack using their approach," said one consultant who worked with Cambridge for campaign fundraising. "We had better luck using Facebook," he said.
"I'd like to think that you get what you pay for," said Mr. Nix. "We hire the brightest and the best." He added, "We're not churning out segments of a voter file or doing some other sort of list analysis that some companies are doing, we're doing hard data science. This is extremely complex."