What Business Can Learn From the Obama Machine

NEW YORK ( TheStreet) -- I have covered political technology since the Web was spun. I covered it for Netguide Magazine in 1996 and for Pete DuPont's Intellectual Capital site in 2000. I saw Howard Dean make 2004 the year of the blog and watched Barack Obama's 2008 campaign scale that intimacy.

If the president wins re-election today Republicans will call him a "machine" politician. He is, but in a brand new way.

The Obama machine is a networked data center, with new software for determining whom to target and how. With Republicans focused on TV and more traditional techniques, with polls tight, this is a grand marketing experiment done in real time.

It began years ago with the work of the Analyst Institute.

Formed in 2007, the group focused on testing the effectiveness of campaign messages in 2008, as Slate reported.

By this fall it was targeting email messages to specific individuals, combining them with personal contacts from people the targets trusted on Facebook, as Politico reported.

It's this combination of personal targeting, and the use of social networking, that is most relevant to business. Restaurants like the Cheesecake Factory ( CAKE) want to know who on their email lists might call for a reservation tonight.

Knowing your target market by name, and running those targets down a sales funnel using email and social networking, can yield big gains at relatively modest cost. It's better than mere advertising.

The Analyst Institute has also used randomized field experiments to learn how people choose a candidate and how they decide to vote. (These are separate questions.) They created a "persuasion model," showing the likelihood of winning specific voters, focusing both messaging and personal visits on those most likely to switch allegiance, as Slate wrote recently.

That's something a Ford ( F) or General Motors ( GM) dealer might like to have.

The Obama campaign has offered some numbers on the results of its cloud strategy. A memo issued last week told Obama campaign workers that 5,117 neighborhood get-out-the-vote centers had been opened in battleground states, with 698,799 full-time volunteer shifts created for the final four days of the campaign. It said 1,792,261 new voters were registered in those states, and 28% had already voted by last weekend.

The best test of the techniques is North Carolina, which most analysts expect to go Republican. I don't. As a liberal DailyKos diarist wrote over the weekend, the Obama cloud focused on sporadic, unlikely, and newly registered voters there in the early vote, so that while the President may have "won" that vote by only 142,623, based on party registration, half the margin came from people who didn't vote in 2008 and 2010, and a quarter came from people who registered at the same time as they voted.

By focusing early vote efforts on unlikely voters, the President was left with a pool of Election Day voters more favorable than polls suggested. By identifying difficult prospects months ago, and by getting them to vote early, the campaign maximized its chances of gaining a winning share. By having a detailed database in advance, and by soliciting volunteers throughout the year, the President could have the best chance of victory.

What an Obama victory in North Carolina would tell business is that the new techniques of randomized message testing, database marketing, email targeting and social networking can win a dominant market share, even if you're being outspent on media.

The marketing battleground has shifted, from TV to the Internet, and to computing in all its forms. Businesses that understand this and act on that understanding, can prosper in any political environment.

At the time of publication, the author was long F

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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