Industry Analysis: Multi-Billion Dollar Elections
Divya Ojha
XLRI'26 - PGDM BM | Ex - Hindustan Zinc, Vedanta | NIFFT'21 - Metallurgy and Materials Engineering
Spending Trends in Indian & US Elections
Upon analysing the financial landscape of elections in India and the US, both reveal the same story of high expenditure. In the 2024 Lok Sabha elections in India, Meta and Google estimated the political ad spending in India to the tune of Rs 102.7 Cr between Dec’23 and Mar’24. Although this is direct spending, there are instances where political groups often reroute ads through other commercial or social organizations to dodge public scrutiny. The US, on the other hand, is expected to be spending a total of around USD 322.11 Billion on media advertising spending[4][3]
On ground, rallies play a pivotal role in election campaigns in both countries. In India, parties like the BJP and INC organize grand events leading to total spending of ?20 crores for such rallies. Similarly in the US, Democratic and Republican rallies are marked by high-profile speakers, multimedia presentations, and strategic data-driven approaches to optimize voter engagement, with the cost of conducting these rallies amounting around $500,000[3]. This underscores the scale of the election juggernaut, and it is not surprising that this industry has become a fertile ground for tech-based entrepreneurial disruption
New Tech and Inflammation of Bias
The Cambridge Analytica scandal reshaped political campaigning by highlighting data privacy, digital marketing, and electoral politics. The firm acquired and used data from millions of Facebook users without consent, compromising the privacy of around 87 million individuals, to micro-target voters with personalized ads during the 2016 Trump campaign. The 2018 scandal led to public outrage, stricter Facebook privacy measures, and a $725 million settlement in 2022.?
As the U.S. gears up for upcoming elections, IT cells play a crucial role, using data analytics and social media to influence voters, emphasizing the need for accountability and transparency in protecting democratic processes. A very similar trend is seen in India, where the pervasiveness of BJP and Congress’s IT Cells is seen even on personal messaging apps like WhatsApp
Businesses: A Stakeholder in Elections
In the list of major stakeholders in the elections, the common public seems to be of the least importance. After the political parties, it is the large businesses whose fates are dictated by the results of an election, primarily through shifts in government policies.
Uncertainty about election results can lead to market fluctuations and affect business confidence, as seen during the 2024 Lok Sabha elections, where stock market volatility increased at various stages of the process. This uncertainty can prompt investors to withdraw their investments, potentially harming companies. Additionally, major policy decisions and projects are often delayed until after elections, slowing growth. Post-election, new government policies can disrupt the existing business landscape. Changes in taxation, such as adjustments to capital gains tax, directly impact business finances and investment strategies.?
领英推荐
Also, governments may favor certain companies due to lobbying or electoral bond funding. This creates a biased regulatory environment, giving select businesses advantages like tax breaks, more access to contracts, or lenient regulation enforcement. Businesses of today are faced with a murky ethical dilemma, the choice between stepping back and letting the public voice be chosen, or supporting friends in power who might make things easier for them. We rarely see a party that has both of the above characters.
Does Money Always Win?
In the US, campaign finance issues arise from wealthy donors and Super PACs, who can spend unlimited funds due to the 2010 Citizens United decision, raising fairness concerns. Lobbying by corporations skews political priorities, and a lack of transparency can lead to corruption. In India, weak enforcement of spending limits gives wealthier candidates an edge, and vote buying undermines integrity. However, there seem to be some happy aberrations. High spending can boost electoral success but isn't a guarantee. In the US, Joe Biden's significant expenditure helped him win (albeit by a thin margin) in 2020, yet Alexandria Ocasio-Cortez won in 2018 with grassroots support. In India, BJP's 2019 victory involved heavy spending, but the Aam Aadmi Party's success in Delhi (2013, 2015) came with less funding. Smaller parties like TRS have also made impactful gains through focused local support.
Whom Do Businesses Support in Elections?
In the US, businesses typically back candidates favouring lower taxes and deregulation, often leaning towards Republicans but also donating to both parties for strategic reasons. In India, businesses support parties promoting economic stability and growth, with significant backing for the BJP due to its economic policies, while also maintaining ties with other major parties like the Congress to ensure favourable relations across the political landscape. A healthy balance is hence observed, but the scales are tilted towards the incumbency
What Shape Does the Future Take?
In a utopian world, businesses would work for the masses and fund the parties which by and large support the growth and development of the public. This does not seem to happen, as seen from the exponentially rising inequality indexes of developing democracies[6]. How is it then can we expect the powers to listen to the people? - The answer seems to lie in a controversial element of our lives - Social media. Despite its many pitfalls as discussed earlier, social media is our greatest equaliser (No coincidence that we’re posting this on LinkedIn). Brands and Parties have only discovered its potential earlier, but with the right amount of tweaks and some moderation, it can play the part that print media once did. Democratic institutions as well, especially the Judiciary, have proven that the people lie at the heart of democracy. As future tech and business leaders, it hence falls upon us to make this ever-growing industry work for the greater common good!
Citations:?