Last week the Boston Globe ran an article about BMW Direct, a conservative direct mail firm in D.C., accusing them of shady business practices. The article accused the firm of raising $700,000 on behalf of a congressional candidate in Massachussets and then keeping 96% of the money they raised for themselves.
Now there are some pretty shady characters in political fundraising on both sides of the aisle, but I’ll admit that I was immediately dubious of the article because I’ve known someone who’s worked at BMW for years and my impression of BMW is not just that they were a reputable direct mail firm, but a good one. Further, the way the article was written immediately set off alarm bells. First, the article notes that “BMW Direct’s chief executive, Kimberly Mellissimo [sic], and other firm members declined requests for interviews.” (FWIW, her name is actually Bellissimo.) Then later it says, “The firm issued a statement saying it stands by its handling of the accounts.”
But nowhere in the article does it actually quote the statement. So I spoke to my friend at BMW direct, and as it turns out the statement they gave to the reporter actually disputes the 96 percent figure by 13 percent. And yet, the reporter didn’t use it.
Now you’re probably thinking that keeping 83 percent of the money is still a lot. But it’s not, and you would understand that if the article didn’t demonstrate a pretty shoddy grasp of how direct mail fundraising works. The upfront costs in direct mail fundraising are pretty dang cost intensive; for example, BMW claims that though they raised $700,000 — $280,000 went to postage alone. Mike Krempasky over at RedState does a decent job summing it up:
1. Invest funds to prospect for potential donors. Very low response rate, very expensive to mail.
2. Lose money.
3. Invest more funds to turn first-time donors into repeat supporters. This mail often gets MORE expensive, since the 2nd gift is considered by many the most important. Hopefully, response rates go up.
4. Lose more money.
5. Go back to your donors (known now as your “house file”).
6. Make (some) money.
7. Repeat steps 5 and 6 for several cycles.
So it’s very possible that if the candidate doesn’t follow through with the fundraising efforts, whatever money was initially raised basically covers the sunk costs of prospecting without reaping the rewards. Also, these firms very often cover their costs through the fundraising rather than billing the candidate directly. So whether the candidate gets 5 perent or 75 percent — it’s basically free money to them. And lastly, there’s no shortage of direct mail firms out there and competition is pretty cutthroat. If a firm went around fleecing people, they wouldn’t be in business long.
Of course, the left-wing blogosphere has gone nuts over the story. (The usually reliable Talking Points Memo has beat the story to death, and the histrionic Keith Olbermann actually named BMW “The Worst Person in the World” over Karl Rove and a hospital that let someone having a seizure in the reception area die.) But I suspect that is because direct mail is still one of the few areas where conservatives and Republicans have a major fundraising advantage. If direct mail fundraisers were to become viewed by the general public as the used car salesmen of politics, they could then use it against any Republican who employed the supposedly shady fundraising method.