Money Talks...If You Know How To Listen – Stephen Aaron (527 Tracker)

Stephen Aaron:

There's a big difference between somebody spending 4 million in a week and 7 million in a week, and we needed to figure out what were the accurate numbers and we were able.

Eric Wilson:

I'm Eric Wilson, managing Partner of Startup Caucus, the home of campaign tech innovation on the right. Welcome to the Business of Politics Show. On this podcast, you are joining in on a conversation with entrepreneurs, operatives, and experts who make professional politics happen. Today we're joined by Steven Aaron, the founder of 5 27 Tracker, a new website that aggregates, analyzes and alerts users to superPAC spending in real time. He also runs prospective strategies, a public affairs firm based in Washington dc He's got a long background in the policy and communications side of politics. And our conversation, we learned more about what 5 27 Tracker is seeing ahead of the midterms, how Steven became an entrepreneur and what he's learned from building software. Steven 5 27 Tracker is doing something I haven't seen anywhere else, which is tracking super PAC spending on things like mail and canvasing. So explain for us how are you able to collect that data?

Stephen Aaron:

It kind of started with a problem where I needed to figure out where for my clients, where another superPAC was spending against us. And I just couldn't find good data on it. I couldn't find good aggregation on it. I couldn't figure out, you know, over what periods of time they were spending, who they were spending it with. And so I just began to go look for these databases and there's actually a lot of information out there. What I figured out was the information was available, it just never been aggregated. And so what we did was we just started pulling it all together. And, and kind of what makes 5 27 Tracker different is we are able to pull in things like canvassing spend, mail spend, you know, real numbers on digital, things like that. But another one of the big things that really makes it powerful is we aggregate it all into a platform and our algorithms have been able to develop a plum line.

So we're able to figure out exactly what these spins are. These are not just numbers that are being pulled from broadcasters and other places. We force all the numbers to reconcile. One of the things that we learned early on was that the data is actually really, really dirty, and it's very hard to actually figure out exactly what the spend is. And you know, there's a big difference between somebody spending $4 million in a week and $7 million in a week, and we needed to figure out what were the accurate numbers and we were able to build an algorithm to do it. It,

Eric Wilson:

So what, can you elaborate on that a little bit more? When you say the data was dirty, what does that mean?

Stephen Aaron:

Well, you have a lot of, a lot of spends change over time. So, you know, whether it's a TV spend or a digital spend, you know, you might, you might reserve in a certain amount of time and you might make an outlay for a certain amount of time, but that can change because of dynamic races. You know, you, we've, we've seen one October surprise this week in the Georgia Senate race, and one of the things we're watching inside the platform is does this force people to change their spend? Are more groups coming into spending more money? Are there some groups that that were spending money that are not anymore? But all that to say, it's, these numbers aren't static. So when a number comes in, you have to understand how this number's gonna move and you have to be able to track with its movement if your numbers are gonna be accurate. And so we had to develop some pretty elaborate algorithms to, to move with these numbers so that we were able to get live accurate numbers in real time for every federal race in the country.

Eric Wilson:

Got it. So our listeners are probably familiar with, you know, some of the public ad libraries that are available with Facebook, Google, and then certainly fcc. But what are you looking at to, to determine mail and, and canvasing? Well,

Stephen Aaron:

There, there, there's really only a couple places where those numbers come from. And those numbers are generally available out of the fec. And so, you know, that's, we can pull those numbers there and add them into our algorithm. That's generally where they come from.

Eric Wilson:

Got it. It's fascinating. It's, it's something that no one else has ever thought to taught to organize because these independent expenditure committees Super pacs have to report their activity in, in real time, and you're bringing that all together. I'm curious, what are some of the tactics that you are seeing with these super pacs this cycle? Where are they spending their money?

Stephen Aaron:

The, the vast majority of the spend, for not surprisingly, is being spent in the Senate races is probably a little under a third that's being spent on the house races. The rest of it's being spent in the Senate. When you begin to aggregate these numbers, you can begin to see a move over time. So, you know, we, we, television spend is always very heavy. That's not surprising, but literally this week we're, we're seeing what we were just talking about. We're seeing an enormous amount of money move into canvas and mail because that's a surefire way to contact a voter. When, when you're, when you put an ad on tv, you don't know if there's gonna be an eyeball on it or not. You can, you can target well on TV and you can target well on you know, some of the cord cutters Hulu and others, but it's not like putting a piece of mail on somebody's mailbox where every, every American in the country has a mailbox and they check it. Same thing with knocking on somebody's door like you're gonna talk to a voter. So we're seeing, we're seeing a money move from the advertising into the more voter contact of canvasing and and mail.

Eric Wilson:

So you're starting to see them shift over into get out the vote mode.

Stephen Aaron:

Absolutely. There's still some persuasion happening and there still is time for that, but you we're seeing an, an enormous amount of money move into exactly that to get out the vote effort.

Eric Wilson:

You mentioned cord cutters and streaming platforms. What, what kind of trend or or proportion are you seeing? Are superPAC spending more on that front and, and pulling back TV buy, Or is it just getting more expensive across the board?

Stephen Aaron:

It's more expensive across the board. And, and you know, specifically we called, we named this the 5 27 tracker. Cause it tracks specifically independent expenditure groups. You know, in five 20 sevens is the original superPAC. That's the, you know, the, the IRS code for it. So that's why we named it the 5 27 Tracker. TV broadcast TV is still the base of all campaign operations, but there is a lot of money that is moving into the more online streaming platforms.

Eric Wilson:

And one thing that our, our listeners will probably remember from other conversations is that you as a superPAC or a 5 27 are spending essentially commercial rates. Candidates get a discount on their, their broadcast TV buying superpacs don't get that. So they're, they're actually paying more for the same amount of TV that a candidate would get.

Stephen Aaron:

Right. But the, the amount so that there's been some write up on that. There's been a little bit of p I've seen a few articles being written about the distinction between the two, but the amount of money that's flowing through these Super pacs is so beyond what campaigns can make up or even spend that it just, it's almost not even relevant to the conversation. Right. You've had here, we'll just pull the fresh numbers right now, but SL F has spent,

Eric Wilson:

That's our Senate Leadership Fund. That's the Mitch McConnell aligned superPAC

Stephen Aaron:

Senate Leadership Fund. That's exactly right. Mcconnell Align Pack, I'm just gonna pull the numbers for you. I watch all the numbers after Labor Day because that's when the spend really starts. And on the front page of the homepage we actually do a live graph of spend over a seven day moving average. And you can see it explode on Labor Day. So it's a really interesting visual if anybody wants to go see that. Cause you can see how much money begins to move in these races. But since Labor Day, the Senate Leadership Fund has spent 114.89 million.

Eric Wilson:

Wow.

Stephen Aaron:

That's in 33 days there's spent 114 million. And

Eric Wilson:

That's tv, that's digital, that's everything.

Stephen Aaron:

It's everything. There's been since Labor Day 487 million spent total, that's across House and Senate races across every superPAC 487 million.

Eric Wilson:

That's really interesting. And, and one of the things that we've seen in some of the academic literature is i, is sort of evidence of the earlier you spend, the more impact your advertising has, where, you know, people start to make up their minds really early. So there's an actually interesting kind of cultural shift where you see the left likes to spend really early where they try and define their candidates, define their opponents. The right takes a view of people aren't paying attention until after Labor Day. And, and so you just see these, these huge numbers come in once summer is over.

Stephen Aaron:

Yeah. It's and we're gonna, we're gonna figure out which one is right here shortly, that there's been a <laugh> as people have been paying attention. There's been a big debate going on inside the N rsc cuz Rick Scott calculated that early spend would be more impactful. And so he spent a lot of the N RSC money trying to define the playing field, trying to define the issues that were gonna be talked about in the election. I think there's a lot of evidence that it worked early, but then things began to change over the summer. Narratives changed at, you know, these races are very dynamic. And so it, the issues began to move and it was not as such a favorable environment for Republicans. And so now the sl f the Senate Leadership Fund is making up an enormous amount of spend on the Republican side, where the N RSC has not been able to spend as much cause they spent so early on. So we're about to find out how short is the American memory.

Eric Wilson:

Yeah. So what are some of the other things that the data you're monitoring are, are telling you about the midterms that we are not hearing in the media?

Stephen Aaron:

Well, that's one, one of the things that makes this platform so special is there's nobody who is aggregating this data in real time and making it available through analysis. So I can go in there and see, and well, anybody can so open to the public. But the 5 27 tracker allows you to go in and see what these, how money is moving these races. So one of the things that's really interesting is watching where money is not being spent. And so up until about a week and a half ago, there was very little to no money being spent. The Senate races in Washington, Oregon, in Colorado significant money moved in last week into the Colorado race. And there was some mon there was about $2 million that came into the Washington race. The Colorado one was really interesting because the Democrats do not have the advantage in the outside spend.

Senate Republican Fund, Senate Leadership Fund is going to outspend the Senate Majority Pack the Schumer Align Pack. We'll see what it looks like at the end of the day, but right now it's probably, there's probably spending a third to twice as much money as, as the Senate majority Pack. So all that to say's a longwinded way of saying Democrats don't have the luxury of spending in places where they don't need to spend. And on paper Senator Bennett is up by eight points. And so if that is really the case, why did Democratic groups spend five and a half million dollars in one week in Colorado last week? And the answer is probably cause they're seeing something that we can't see. So they feel like they need to go in and burnish his numbers and, and provide a little overhead cover, try to push down Joe oday because they feel like Joe Day is, they see something that is causing them to feel like ODAY is gaining ground on Bennett I had a reporter asked me yesterday is the, is the New Hampshire, is the New Hampshire Senate race something that is not being fully covered yet.

So I went and looked at the numbers and I said, you know, probably not. There is some Republican money being spent in New Hampshire, but that's not surprising. They do have the luxury of spending in places where they don't need to. So it, that looks like an effort to expand the map at the moment, not a, not a race that has already come online. Yeah. And those are the types of things that you can see when you, when you can get these numbers aggregated in front of you and you can sort 'em, you know, by time or by committee if, if you wanna come in and see how much is the Senate Majority Pack spending inside a certain timeframe with a certain vendor in a certain race. It'll tell you that in three seconds.

Eric Wilson:

Yeah. One of the things that I always remind people of is when you have these midterm elections that are governed by sort of sentiment for or against the, the party in power, the map expands in some odd ways, I think back to 2010, right? The, the midterms right after Barack Obama was first elected, and, and there were races that were suddenly coming on the map in October that had not been on anyone else's radar all year long. And it's just the nature of the environment. And I think we're starting to see some of that, as you point out, places like Colorado and Washington State, where it's kind of surprising that Republicans are competitive there and putting up a fight and we may just win. So I think that's really interesting when you see that coming in the data, because that's the spin and the messaging that gets reported on is one thing, but where you're spending your money, where you're putting your dollars down really says more about your strategy.

Stephen Aaron:

That's it. That's why I use the hashtag all the time money talks cause <laugh>, it's exactly that. You can go on, you can have your spins on talking all day about how the Oregon Senate race is gonna become competitive or has become competitive or where you're seeing the polling, but we all know that you can pay for polling to do what you want it to do. But whether or not there's millions of dollars being invested in the race is where the, the rubber really hits the road. And, you know, there, there isn't much spend happening in Oregon right now, but like I said, right, I've been surprised to see Democratic, Democratic Senate aligned groups spending money against Smiley in, in Washington and O Day in Colorado because that means they're seeing something. Right. But I have not yet seen money moving into the New Hampshire Senate or Democrats moving money into the Hampshire Senate race, which would indicate that they believe Hassan is in trouble.

Eric Wilson:

And, and I will just play devil's advocate there, which is there are also cases where donors come to a superPAC and, and with no data <laugh> packing it up and say, Oh, I wanna spend in this state, or I wanna spend in this race. So, you know, they, they could be seeing the potential for dollars <laugh>, right? Whether, and it may not be, be aligned with data,

Stephen Aaron:

That that is certainly true. That certainly does happen where you have a donor just invested in a certain race and they just want to see they just want to either protect that seat or there's, there's some message that they wanna see penetrate into that state. And, you know, they'll, they'll stand up a superPAC or give to a superPAC that'll go do it. So that that is certainly possible. And that's exact, that gets to the exactly the point which is, you know, I haven't seen more money move to Colorado. So let's see, as of today, there's been $9 million spent in Colorado since Labor Day, and there is no new money that has been spent against Joe oday,

Eric Wilson:

Right?

Stephen Aaron:

So that, that spend of five and a half million dollars that was outlaid a week and a half ago, there's not been anything to backfill that. So it could have been exactly that, where a donor came in and said, Hey, I, I want, I wanna make sure we're taking care of Senator Bennett run this against oday, and they did. Now, if we start seeing more expenditures show up against Ode, then we know that there really is a belief that Senator Bennett could be in trouble.

Eric Wilson:

It's a really fascinating chess match. And one of the things that I think gets underappreciated is oversaturating races, right? Where, you know what, you take a look at the Georgia runoffs in in 2021, right? Where you just, you literally cannot buy another second Yeah. Of TV advertising <laugh>. Right. and so what are some of the signals that you look for in your data to see that erase is becoming over saturated with that outside 5 27 spending?

Stephen Aaron:

You know, I, it's kind of hard to figure out exactly where that tipping point is, especially when you've got some of these groups particularly on the Republican side like the NRA or or Americans for Prosperity who have really good ground games and can spend money in different places. It's very difficult to stand up a ground game and really employ people on the ground. That takes a lot of

Eric Wilson:

Pride. This is people door knocking, volunteering, making

Stephen Aaron:

Calls, door knock. Exactly. These are the volunteers on the ground going door to door, that takes a lot of time and a lot of planning. It's also very expensive. So, you know, from that standpoint, you don't really hit an oversaturation point there, but you literally, as you just mentioned, you can buy every point of tv, you can even buy all of the inventory on digital. It can happen. Right. And I think they probably hit that in the South Carolina Senate race last year as well, between Lindsey Graham and Jamie Harris, where, you know, they spent almost 200 million just amongst

Eric Wilson:

You run out of internet. Yeah. <laugh>, you

Stephen Aaron:

Literally run outta internet. And so, you know I, it's interesting question. I'll have to be watching to see if these buys, if the advertising buys slow down. Cause if they do, it means we probably hit a saturation point. But I hadn't thought of analyzing the data that way. But that's, that'll be a very interesting thing to look at. You know, for example, we, since September 4th, we have spent, not we, but there has been spent $48,928,000 in the Pennsylvania Senate race. That's a lot of money.

Eric Wilson:

<Laugh>. Little bit. Yeah.

Stephen Aaron:

And that's just in outside spending, that does not count what odds or Fed are spending and much less

Eric Wilson:

The, the C four s and

Stephen Aaron:

Yeah, yeah, the C four s and others. And that spending is, is, doesn't compare to the outside spending. Federman and I, I haven't seen their numbers come out, but they're gonna spend, you know, in the, in the tens of millions of dollars over the entire cycle. And we've got tens of millions of dollars being spent in weeks. And we're still 32 days out from the election today, so, you know, we might see another 50 million come into this race before it's over, which would, <laugh> is just an insane amount of money.

Eric Wilson:

You're listening to the Business of Politics Show, I'm speaking with Stephen Aaron, founder of 5 27 Tracker. I'm curious, Stephen, what drove you to build 5 27 Tracker? You mentioned at the top that you were trying to solve your own problem, but obviously you took this a step further and turned it into a product.

Stephen Aaron:

We launched prospective strategies earlier this year and, and it was kind of an, it is, we launched 5 27 Trackers a product of prospective strategies because the point of building the company of prospective strategies was just a belief that there is a smarter, better, more informed way of engaging DC and creating real influence. And that's what this whole thing is about is how do we, how do we understand how this very dynamic political situation affects companies, affects businesses, the way that they make decisions, How does that affect their bottom line? And the five twenty seven tracker was born out of exactly that. I had a client that had somebody spending against them and it was creating real problems for 'em. And so, you know, the first thing we had to do was figure out when they were spending, how much they were spending, where they were spending why they were spending.

And so it took a lot of information and data to figure that out. And it was not data that was readily available and I couldn't figure out, I knew all the data was available, but it wasn't aggregated, It wasn't easy to understand. I couldn't figure out why, because it's very valuable data. And so for this, for this one project, we just aggregated the data up and laid a little analysis on top of it and everything just popped and it became crystal clear and it was very easy to understand and we were able to begin to build strategies around that. And so, so

Eric Wilson:

Those are my favorite kinds of startups, right? Where there, there's a clearly identified problem that someone out there is, is solving with their own spreadsheet. And yeah, Build Software

Stephen Aaron:

Was an Excel sheet. Once I had all the data in Excel sheet, I could make it do exactly what I wanted it to do. And so I realized that that, you know, whether if you're a campaign manager, and that's one of the other things that 5 27 does, is you can go in and set alerts. So if you're a campaign manager and you've got staff spending time understanding where other superpacs are spending against you, making sure that you're aware of all the spends that are happening, that takes more, more

Eric Wilson:

Likely you're not even doing that.

Stephen Aaron:

You may not even be doing it. You're probably not. And if you are, it takes a lot of time. And what this does is it makes it all very easy, simple. It's right in front of you and it'll send you an email anytime somebody is spending against you. Or if you wanna set an alert and you wanna see any time the Senate Leadership Fund is spending with a certain vendor in a certain race between $10,000 and a hundred thousand dollars, it'll send you an alert for that.

Eric Wilson:

Yeah. So once you aggregate the data, you can do lots of stuff on top of it. So what in this process has surprised you the most about building software? You know, your background is in politics and, and communications and policy. What, what's been the biggest learning from you building software?

Stephen Aaron:

Ki probably it was two or three different things. The first one would be how difficult the data is. Cuz like I said, when you first think about it, you're like, Oh, so a superPAC is gonna spend X or has spent X on a certain day and on another day they spent y on another day they spent Z we can just add it up and it's all easy and it's right there in front of you. And we, and until we got into the data, we didn't understand how dynamic it was how dirty the data was, how many errors are in it, even from the people spending the money <laugh>. And so we had to go in and figure out, all right, how do we create a baseline against which we can measure these spins so we know exactly what they are? And that was really the tricky part, was creating that baseline so that we could figure out, you know, the true numbers, because numbers aren't worth anything if they're not accurate.

Like I said earlier, if somebody's spending $7 million against you, but the numbers you're getting are four, then that's a big problem. You're off by almost 50% and your reaction, your response to somebody spending seven versus four against you is gonna be dramatically different. So, and the other big thing I learned is just the power of having the data aggregated. Just seeing how with the speed with which you can move these numbers around. I mean, you've heard me do it right here. If I wanna see what's in the Pennsylvania Senate race, it takes me three seconds. Or if you wanna see, you know, a certain vendor in a certain race and on a certain day, it's very, very powerful from a number of different perspectives. Once we started aggregating these numbers, what popped was we now see all the errors, and we didn't expect that.

So, you know, I get an email every day that tells me all the different groups that have errors inside their spending because I can see it because we force all the numbers to reconcile <laugh>. So, you know, there's just, there, it, it just popped how big and how many use cases were out there, You know, whether it's media who just wants quick access to easy data or a campaign that just wants to know exactly when somebody is spending against them. And exactly how much they probably don't care for the, the broader playing field. They just wanna know when somebody's spending against them. And that's it. There's a ton of universities and researchers and things that are gonna want to use this as a part of their analysis. You know, there's betting platforms that this what seeing how this money moves a race you know, if you're playing on predicted, you're gonna have a lot better analysis of where these races are moving if you are watching the spend. Right. So, you know, it, it's, it's, it's a very, that was what was surprising to me was just how powerful this data became once you began to aggregate it.

Eric Wilson:

Yeah, I think that's really the power of some of this early work in the digital transformation of politics, right? We don't fully understand how people might use this data once it is put together. So for example, you know, we were talking about oversaturation. One of the things that, that you can now do is say, Look, I'm, I'm, I'm looking at this race and we know from studying past races that once you hit $10 million a month, <laugh>, you're, you're getting diminishing returns. So let's go to another state where that extra two or 3 million could make an outsize difference. And so you've already shared some of these ways that people are using the data to drive their action and their decision making. Are there some other use cases that you're hoping to see on the horizon? Well,

Stephen Aaron:

I, I think it's probably gonna be a little bit of just continuing to discover what people do with this data. You know, I had a conversation yesterday with somebody who had just picked it up for, for their firm and they were considering using the data in a way that I had not even considered. And so, you know, I think there's gonna continue to be people who create new ways of using this analysis for purposes that we never even envisioned or designed. And it's gonna be really fun to watch that come out. And like you just said, you know, I hadn't even thought about analyzing how does this spend move as some of these races like Pennsylvania probably hit saturation on the advertising side. I have to imagine we're pretty close to that point already. And so does the money slow down and move somewhere else? Cause there's no more bad space to buy, or do they start trying to do more mail? It'll be really fun watching some of

Eric Wilson:

That. Well, Steven, thank you so much for joining us for this great conversation. Visit 5 27 tracker.com to see all of this data that he's talking about, and we'll include a link to that in the show notes. If this episode made you a little bit smarter or gave you something to think about, all that we ask is that you share it with a friend or colleague, you also look smarter in that process. Remember to subscribe to The Business of Politics Show wherever you get your podcast. You'll never miss an episode that way. And if you prefer, you can also get email updates on our new website at business of politics podcast.com. With that, I'll say thanks for listening. We'll see you next time.

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