Airbnb’s multimillion-dollar blitz was key to killing measure aimed at short-term rentals.
Fear, disinformation, deception. That’s what San Francisco voters were bombarded with last fall through record-setting, multimillion-dollar TV advertising crafted to crush progressives, defeat restrictions on short-term rentals and reshape the city’s housing map for decades to come.
The 2015 election united the political clout of two rich, powerful industries that will exert an enduring influence across the city, Bay Area and nation: real estate and technology.
The campaign demonstrated that despite a changing society increasingly consumed by social media and online video, television remains a potent, persuasive force, even for disruptive tech giants like Airbnb.
The record off-year campaign spending — which totaled $27.8 million for all measures and candidates — also offers a preview of what is expected to be an even bigger media onslaught this year, as a presidential election draws more voters to the polls. In November, multiple seats will be up for grabs at the city’s Board of Supervisors, and at least one likely ballot initiative threatens the soda industry, which has a history of throwing big sums into local elections to protect its bottom line.
By Election Day 2015, more than $6.4 million had been poured into TV advertising alone for five ballot initiatives and three candidate races: Propositions A, D, E, F and I, as well as the contests for mayor, sheriff and District 3 supervisor. The vast majority of that money went to defeating Proposition F, which tried unsuccessfully to expand regulations on short-term rentals of homes and apartments.
The “No on F” campaign, funded chiefly by San Francisco-based Airbnb, outspent proponents on television 45-to-1, buying nearly two hours of opposition advertising for every minute of “Yes on F” ads, based on a San Francisco Public Press review of TV advertising, which included national and local stations.
Shaped by national political consultants, the big-money campaigns created an echo chamber, aided by local broadcasters. Superficial TV reporting parroted claims in the ads, which were notable for distorting or obscuring facts, attacking a candidate’s character or conjuring menacing images of Big Brother intrusions into people’s bedrooms and personal information.
Misrepresentations big and small pervaded the airwaves:
Claims inaccurately attributed to the official ballot initiative text of Proposition F;
An attack on District 3 challenger Aaron Peskin, who was seeking to regain his old seat from the supervisor Mayor Ed Lee had installed. The ad portrayed the Board of Supervisors’ former president — and mayoral foe — as an aggressive late-night caller;
A questionable claim that Lee’s $310 million housing bond, Proposition A, would not cost taxpayers anything.
“Campaign ad makers aren’t interested in accurate sources, but they want those facts in there, they want a newspaper quote, they want some sort of backup information,” said Michael Franz, co-author of “The Persuasive Power of Campaign Advertising.”
“They might cite some sort of voting records, but you’re not going to get the exact citation that would let you easily track down the information,” he said. “It’s a feature of our ads — there’s too much info in politics today to fact-check all of this.”
To Franz, that information overload poses a challenge to democracy.
“Organized groups are sending out information at light speed, and in a sense this is a crisis of journalism,” he said. “How to help voters sort through it.”
Analyzing the Ads
The Public Press collaborated with the Internet Archive, a San Francisco-based nonprofit that catalogs electronic media worldwide, to analyze 27 distinct TV spots that aired on 11 stations during the fall campaign. We looked closely at five Bay Area stations that accounted for more than half of the airtime for the ads and virtually all the televised news coverage of the election: KPIX, KRON, KGO, KTVU and KNTV. Ads also ran on Chinese-language station KTSF but were not reviewed.
All told, almost 26 hours of ads ran on these five stations from after Labor Day until Election Day, compared with a total of 3.5 hours of TV news coverage — a ratio of about 7-to-1. Of the total ad time, “No on F” dominated with about 20 hours, compared with 16 minutes for the “Yes” effort — a 76-to-1 imbalance.
By far the most contentious citywide issue was Proposition F. Sponsored by ShareBetter SF, the initiative tried to toughen the ordinance, passed and signed in October 2014, that legalized short-term rentals and established a system of registration and taxation.
Though renters still widely outnumber homeowners in San Francisco, many from both groups are united in the opportunity to reap windfalls from short-term rentals, even though they may contribute to rising costs and the overall housing crisis.
The campaign to defeat Proposition F pitted Lee, Airbnb, real estate interests, tech venture capitalist Ron Conway and some labor unions against tenant activists, neighborhood groups, hotel unions and wealthy property owners, who were badly outgunned and outspent on all media.
Airbnb led the “No on F” television blitz, ponying up $4.7 million in TV buys alone to beat back broader control of its business model, according to city data. The “Yes” campaign mustered only about $104,000 for television, and about $1.1 million overall.
All told, Airbnb spent more than $9 million to be victorious. That number has been exceeded only once since San Francisco began reliably tracking campaign finances online in 1998: when PG&E spent $11 million to defeat a renewable-energy measure in 2008.
“The campaign had all the modern bells and whistles you would expect of an effort backed by a Silicon Valley giant,” “No on F” consultant Nicole Derse, co-founder of 50+1 Strategies, wrote in the online journal Campaigns & Elections in January.
Casting doubts on Proposition F
Crucial to victory were several slick, 30- and 15-second TV spots that skillfully — if misleadingly — sowed doubts about Proposition F.
To craft more than a dozen complementary TV ads, San Francisco for Everyone — No on F, funded primarily by Airbnb, turned to noted Democratic strategist Joe Slade White & Co. Based outside Buffalo, N.Y., the firm has deep ties to the party and top Democrats, including Vice President Joe Biden, Gov. Jerry Brown and state Attorney General Kamala Harris. White worked on George McGovern’s failed 1972 campaign against President Richard Nixon. Biden’s sister, Valerie, is the firm’s executive vice president.
Joe Slade White has also handled media campaigns for AT&T, Uber and other corporate heavyweights. It boasts that it has not lost a ballot initiative in 18 years.
Following the firm’s much admired playbook — “9 Principles of Winning Campaigns” — No on F proponents worked to create uncertainty about the measure before going in for the kill.
“We start with the simple notion that campaigns cannot move a ‘No’ to a ‘Yes’ or vice versa,” Joe Slade White declared. “You must first move initiative voters to undecided. Only then can you persuade them the rest of the way.”
Vice President Biden has called White “the preeminent storyteller” who “makes voters want to listen.”
In July, a poll by David Binder Research, which was hired by the “No on F” campaign, showed public opinion was almost evenly divided.
In September, “No on F” cranked up the volume, running 12.5 hours of ads, about 60 percent on local stations. The “Yes” campaign was silent, airing not a single spot all month, the Public Press analysis found.
The barrage paid off, according to Binder polling in mid-September. “No” led by 16 points.
“After just three weeks our ‘No’ vote jumped to a dramatic double-digit lead while the ‘Yes’ vote dropped like a rock,” Joe Slade White’s website said.
“In Prop. F, we focused on a broad theme that the proposal was ‘just too extreme,’” Ben Nuckels, senior vice president of Joe Slade White, told the Public Press. “Strategically, we had undermined the ‘Yes on Prop. F’ before our opponents could react. That made it ultimately impossible for them ever to fully recover or to ever regain the lead.”
The “No on F” blitz hammered home the idea that the measure was “just too extreme,” a “new threat” that would “violate people’s privacy,” encourage “spying on your neighbors” and result in “thousands of new lawsuits.”
The ads capitalized on growing concerns about privacy, personal rights and government intrusion following revelations that the National Security Agency was amassing phone and email data on Americans in its efforts to thwart terrorism.
Lee and his predecessor, Lt. Gov. Gavin Newsom, smoothly reinforced the themes that the measure “goes too far” and “is just too extreme.” Allied with five supervisors, the Democratic and Republican parties, the Chamber of Commerce and others, they trumped a long list of influential “Yes on F” backers that included Sen. Dianne Feinstein; former mayor Art Agnos; five city supervisors; Democratic clubs; teachers, nurses and hotel workers unions; tenants rights groups and neighborhood associations.
“The way people learn is through endorsements,” said Jason McDaniel, a political scientist at San Francisco State University who specializes in urban politics and voting behavior.
“People are generally skeptical of ballot propositions if there is opposition. That’s the endorsement thing. It’s not the ad, it’s the endorsements,” he added. “You can spend a lot of money to make those endorsements obvious, or that conflict obvious. Then people are skeptical and it fails to pass.”
‘Leave spying to the movies’
Beyond endorsements, memorable Joe Slade White spots turned to the dark side to cast Proposition F as a sinister Big Government effort to monitor residents’ bedrooms and create personal dossiers.
One depicted a “creepy neighbor” peering through night-vision-like binoculars at Victorian houses, followed by images of aerial surveillance video and a “data scan” of a palm print. “Let’s leave the spying to the movies, not the neighbors,” the narrator said over a James Bondian soundtrack of surf guitar.
Another spot showed shadowy fingers on a laptop keyboard as the narrator warned that the initiative would “allow the government to collect people’s private information.”
Voters were never told that the existing ordinance already required hosts to register with the city and maintain quarterly records of their residency and rentals, thereby compelling them to share certain “private information”: demonstrating “primary residency,” the number of days they occupied their unit, and the dates and the duration of each short-term rental.
As it stood, last year’s ordinance required that the city create a “registry” of short-term-rental hosts and that the information “shall be available for public review to the extent required by law” — with one exception: “to the extent permitted by law, the (Planning) Department shall redact any Permanent Resident names from the records available for public review.”
San Francisco is not alone: Portland, Ore., officials may subpoena much more personal information to enforce the city’s short-term-rental laws, including phone, tax, vehicle and real estate records.
Another notable ad was called “Night,” featuring the simple imagery of a half-asleep woman between crisp white sheets.
“What if the government required you to report when you’re sleeping in your own home, or even in your own bed?” a gravelly male voice narrated over the tune “Lullaby and Goodnight.” “If Prop. F passes, San Francisco will be the only city in the country where residents will be forced to do just that.”
The ominous warnings in both ads were attributed to the “Official Text San Francisco Measure F” and “Consumer Watchdog” — a nonprofit advocacy group listed as an ongoing client of Sheri Sadler, the media buyer for “No on F.”
MANIPULATION AND MESSAGING
The truth, however, was something else.
Nowhere in the official ballot text — which amended the existing code covering short-term rentals — did it require hosts using Airbnb, Homeshare or VRBO to report when they were sleeping in their own homes or beds. Proposition F reiterated the language from the ordinance backed by Lee, approved by supervisors and enacted in February 2015: quarterly reporting of the number of days a primary residence was “occupied” and the days it was rented out. No bed checks.
Consider that if you go out of town for a weekend or two months, you are still considered to be legally “occupying” your home or apartment, even if you were away or let friends or family “occupy” it in your absence.
Certainly, not all San Francisco residents read the official ballot text or the new ordinance that took effect months earlier. The initiative just went further, too far for a majority of voters who turned out.
Some of the most controversial provisions called for cutting annual short-term rentals from 90 days to 75; banning use of in-law units; tightening registration and reporting, and bolstering the neighbor complaint process and enforcement by bringing Airbnb and its rivals into the process. Additionally, residents would have needed permission to operate as a bed and breakfast for rentals beyond 75 days.
The “No on F” campaign apparently persuaded many voters to believe that it would be the ballot measure that would make already existing provisions law. And Airbnb disguised two of its biggest concerns, which it had fought to keep out of the ordinance Lee signed in October 2014.
Not surprisingly, the “No” campaign did not point out that the Proposition F would have required Airbnb and its competitors to closely monitor listings and remove illegal units and those that had been rented out for more than 75 days over the course of a year. Failure to do so could have resulted in fines up to $1,000 a day per listing, potentially costing Airbnb and the others tens or hundreds of thousands of dollars.
Proposition F also would have cleared the way for residents and other “interested parties” — neighbors and landlords among them — to directly sue Airbnb and its competitors, which under the current law can be done only by the City Attorney’s Office.
The opposition took no chances on finding the most potent message. “Yes” ads were also created to test against focus groups watching “No” spots, said Nuckels, of Joe Slade White.
“There was one ad we produced to test for the ‘yes’ side that would have likely won the race for them had they aired it,” he said, without revealing the ad’s content. “Our opponents’ greatest strength was the simplicity of their message” — the housing crisis — “and, frankly, they swung and missed.”
The “Yes on F” campaign mustered only one TV ad. It claimed that “illegal Airbnb hotels” were “evicting thousands of San Franciscans from their homes and causing rents to skyrocket,” citing news articles in the San Francisco Examiner and the New York Times. Neither article contained the ad’s wording, however, and its claims have not been established conclusively.
Nearly three-quarters of San Francisco units are covered by rent control, and it is illegal for landlords to evict tenants and begin renting to visitors. Although evictions jumped between 2011 and 2014, the Rent Board reported, it is not known whether the units were subsequently rented out to visitors or to new long-term tenants at much higher market rates.
In a May 2015 report, the San Francisco Budget and Legislative Analyst’s office estimated that Airbnb listings may have been responsible for removing between 925 and 1,960 housing units from the residential market, based on data from 2013 and 2014. That could represent between 11 percent and 23.2 percent of the city’s vacant housing units, the report said, noting that its estimates and conclusions were “conservative” and “understate the full short-term rental market by an unknown amount.”
Regardless of the accuracy of the ad’s claims, it was virtually invisible compared with the “No” onslaught. For all of October, the “Yes” ad aired a total of only 16 minutes.
Ultimately, the No on F ads epitomized the art of political persuasion and spin. “Night” earned industry recognition and awards for the campaign team — Joe Slade White, 50+1 Strategies, San Francisco media buyer Sadler Strategic, campaign manager Patrick Hannan and senior adviser Chris Lehane, Airbnb’s head of global policy and public affairs and an adviser in the Clinton White House.
TV was not the only vehicle the campaign used to drum up opposition to F, however.
“We sent 16 pieces of mail to a universe of approximately 100,000 households and made sure it mirrored the content of the TV ads,” wrote Derse, of San Francisco-based 50+1 Strategies. “We put up massive campaign billboards around town using the same binocular image of the spying neighbor that voters saw in the TV ads and in their mailboxes. And we ran a robust online campaign led by Social Stream to reach those same voters digitally.
“We also ran one of the most aggressive field campaigns San Francisco has ever seen,” she added. “Over the course of 11 weeks, our staff and volunteers knocked on more than 300,000 doors, made some 300,000 phone calls and had over 120,000 conversations with real voters.”
Two key voting blocs were targeted: Chinese-Americans, who she said “disproportionately owned and occupied” the in-law units that would be banned, and young voters, “our largest group of supporters,” though one with a historically low turnout in off-year voting.
Airbnb’s roughly 138,000 users in the city played a big role, Derse explained, “hosting house parties, organizing their friends and neighbors, and leading dozens of earned media events.”
In the end, Proposition F was trounced, 56 percent to 44 percent.
Airbnb did not reply to questions about its ads.
For privately held Airbnb, with an estimated value greater than $25 billion, the ads were money well spent in its hometown, the poster child for tight, expensive housing. The results demonstrated Airbnb’s popularity and growing influence in spite — or because — of the housing crisis.
As the company extends its reach, driven by a new generation, technology and an economy in flux, the campaign may offer a blueprint for success.
‘Mad Man’ attack on Peskin
“No on F” wasn’t the only campaign that used a combination of well-funded research, technology and distortion to create a negative image.
In the District 3 battle, incumbent Julie Christensen and her allies slightly outspent Arron Peskin to try to prevent him from reclaiming his seat, which he had held from 2001 to 2009. In the end, the race cost $2.1 million, a record for a supervisorial contest, according to San Francisco Ethics Commission data.
The Committee for a Progressive and Affordable San Francisco Opposing Peskin for Supervisor 2015, backed mainly by Conway, spent $313,380 in the failed bid to take down Peskin, according to Ethics Commission filings.
Mark Armour of Armour Media was hired to create an anti-Peskin spot. He modeled it after the hit show “Mad Men.”
Armour used Peskin’s past behavior — notably instances of bad temper and apparent intoxication — to undermine his bid, albeit unsuccessfully.
In the ad, Armour cited a San Francisco Chronicle column that had quoted Lee, criticizing Peskin for his reputedly aggressive behavior with his City Hall colleagues (see “The Most Misleading Political Ads of 2015”). The mayor had appointed Christensen to a vacancy and was pulling out all the stops to get her elected to a full term.
Taken out of context, the quote was, at best, misleading.
“As a creative guy, I have two messages,” said Armour, whose work includes campaigns that elected presidents Obama and Clinton, and Sen. Barbara Boxer. “One, this is a candidate who has a history of drinking and going off on city employees, and two, I’ve got a narrative about a throwback to the past — a former supervisor who had gotten out of office versus a new candidate.”
And while the ad didn’t stop Peskin — who had vacated the seat because of term limits — from winning the campaign, it presented him as an obstructionist, a characterization that Armour believes will stick.
“His opponents should be emboldened from the campaign because it was such a narrow win,” said Armour, whose “Mad Man” won an industry award for the “Best Ad for Independent Expenditure Campaign.” He added that bringing up Peskin’s previous mistakes forced him to express “contrition about his past and pledge to operate differently.”
Peskin’s team fired back, hitting Conway’s contribution to Armour’s attack.
“Tech billionaire Ron Conway says Aaron Peskin is a ‘mad man,’” the rebuttal stated, as a segment of the “Mad Men” ad played in the background beside a photo of Conway looking off into the distance. The spot claimed that Conway had spent “$128,250 to smear Aaron Peskin.”
Peskin regained his seat, handily defeating Christensen by 9 percentage points, a bitter defeat for the mayor, Conway and their allies.
Misleading claim for Proposition A
One other major measure also relied on misleading information to persuade voters.
Proposition A ads claimed that the mayor’s $310 million housing bond would not raise taxes.
The “Yes on A” campaign ran 10.5 hours of ads on stations that aired in the Bay Area. There was no opposition on TV.
The claim that Proposition A would not raise taxes was reinforced in a commercial narrated by Lee, who reassured viewers that the proposition would build “critically needed homes for low- and middle-income San Franciscans without raising taxes.”
But according to a July report from the city Controller’s office, the no-new-taxes claim would be nearly impossible to keep.
The report states that if implemented, Proposition A would cause the city to raise property taxes from fiscal years 2015-2016 through 2038-2039 by an annual average of $8.09 per $100,000 of assessed valuation, according to the city controller’s “best estimate.” That would be an additional $89 a year for a $1.1 million dwelling, the median home price as of May 2016.
In the Public Press/Internet Archive review of Proposition A coverage, only one TV news segment we identified, “Reality Check With Sam Brock” on KNTV, addressed its discrepancies. For four minutes, Brock deconstructed the ballot initiative, stating that Lee’s promise of no additional taxes was unfounded.
The segment, which first aired Oct. 23, was repeated eight days later. It was the most comprehensive look at any of the 2015 propositions by the five news stations, our research found.
Former KTVU political reporter Randy Shandobil, who worked on Airbnb ads early in the campaign, said it has become more difficult to be a watchdog in the news environment of today because of staff cuts at TV stations, increased competition from digital sources and a near-24-hour news cycle.
The stations are still profitable, but “they’ve got to feed the beast because their costs are higher,” he said. That includes political reporters, who are more expensive than their general-assignment counterparts.
“They could spend more money on hiring staff but they don’t,” he added.
Because news programs are driven by ratings and increasingly forced into short, simple formats, Shandobil said, it is easier for a campaign to bamboozle voters.
“Who’s there to police?” he asked.