Has Obama Already Won in Online Fund-Raising?

Armed with "widgets," Obama campaign supporters swarm through the Web's social networks, bundling donations

Four days before Senator Hillary Clinton conceded the Democratic nomination to Senator Barack Obama, she made a final, thinly veiled appeal to her supporters for cash. "I hope you'll go to my Web site," she said. "Share your thoughts with me, and help in any way you can."

The request hinted at a key failing of Clinton's online fund-raising strategy (BusinessWeek.com, 3/5/08). Obama wasn't asking supporters to come to his Web site to give money. His campaign was bringing donation tools to sites where Web surfers already hung out: YouTube, Facebook, MySpace, blogs, and wherever else supporters could post Obama's campaign slogan and a bit of code.

The result is that donating to Obama's campaign has become impulse-buy easy. Feeling inspired by an Obama speech on YouTube (GOOG)? There's a place to donate up to $1,000 right beside the video player on his YouTube channel. Been meaning to get more politically involved like your friends on Facebook? Just click on the Obama picture next to their social network profiles to go straight to a donation site on the social network.

"This is the first year—with Web 2.0—that candidates gave the tools to the voters allowing them to help raise money," says Ravi Singh, CEO of ElectionMall.com, a nonpartisan software-as-a-service firm that helps candidates raise money online. "That is a big paradigm shift."

The Obama-Everywhere Strategy

Obama's campaign was among the first to embrace shareable Web programs, known as widgets, that allow users to host the equivalent of "donate here" buttons on their site. The Obama campaign's social network, MyBarackObama.com, includes a page that specifically invites users to copy codes that install campaign logos, photos, and icons on their personal Web sites, which then link back to a campaign donation page. Members of Obama's social network also share widgets that are often created on such other sites as ChipIn.com, and that can collect money for their candidate without making donors visit another page.

The Obama-everywhere strategy is a big part of why the candidate raised more than $105 million in the first six months of the year, compared with Senator John McCain's $76 million, according to the Center for Responsive Politics. In July, Obama's fund-raising nearly doubled that of his rival, generating $51 million. In campaign filings with the Federal Election Commission, candidates need not report whether the money comes from online donations, mailed-in checks, or personally delivered cash. But Obama's campaign said earlier this year that as much as 88% of donations stemmed from online sources.

"Online money in politics is a product of community," says Andrew Rasiej, founder of the Personal Democracy Forum, a nonpartisan group that tracks the influence of politics and technology. "If you haven't built the community, you won't raise a lot of money."

Copycat Politicians

Obama's success in turning the Web into a cash cow has spurred other politicians to try to emulate his online strategy, says Singh. He says his business has grown more than 400% over the past year, thanks in part to politicians' hunger for tools that enable their supporters to hit up friends, family members, and acquaintances for online donations. Singh's tools are collecting money for more than 700 campaigns.

"Everybody wants to copy the Obama style," he says.

McCain is among those seeking to give supporters more ways to spread his message. Although he was among the first to collect substantial donations online, his campaign has trailed Obama's in using social networks to spur people to collect money. Now trying to catch up, McCain in February launched "McCain Space," which enables users to create their own pro-McCain sites, complete with user profiles and friends (BusinessWeek.com, 06/27/08).

Can McCain Close the Gap?

McCain volunteers also recently launched a social network using tools from Ning. The site, which has 222 members, includes widgets that users can install on MySpace, Facebook, and other social networks that link back to McCain's site and donation pages.

For its part, the Republican Party has encountered few problems raising money, having generated more than $457 million to the Democrats' $417 million. It too is moving to turn more online supporters into "baby bundlers" capable of collecting donations from their social networks. The Republican National Committee recently redesigned its Web site to highlight such social networking tools as MyGop.com and sharable widgets that link back to its site and donation pages.

But it may be too late to gain enough momentum online, says Rasiej. "McCain hasn't had enough of a runway to build an online base of support that can distribute and use these tools in a robust manner," he says.

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