The January 3 Iowa caucuses and the January 8 New Hampshire primary showcased the 2008 presidential campaign’s ongoing political dogfight as candidates battled for their parties’ nominations. Under the surface, however, the scrum represents a tipping point in the use of the Internet as a campaign tool, say experts at Wharton.

In many respects, the 2008 race resembles any sophisticated Internet marketing campaign that, by using what has been termed “Web 2.0” technology, lets consumers swap information and connect with friends via sites like MySpace and Facebook. Candidates can aggregate supporters based on interest and demographics, raise money, publish information and urge action through email. And they can communicate instantly with supporters. Following his success in the Iowa caucuses, Democratic presidential hopeful Barack Obama sent the following email with the subject line: “Turn on your television.” His message was: “We just won Iowa, and I’m about to head down to talk to everyone. Democrats turned out in record numbers tonight, and Independents and even some Republicans joined our party to stand together for change.”

Individuals who signed up through his website to support Obama immediately received a personalized response that included a link to his victory speech, a thank you message and a button to click marked “Donate.”

The Internet features used by campaigns mimic those of sites like Facebook, YouTube, Google and, but instead of generating a sale or linking to an advertisement, candidates are pitching supporters, picking up fundraising leads and potentially landing votes.

“There are many aspects of social marketing in these campaigns,” says Wharton marketing professor Jonah Berger. “Web 2.0 allows candidates to organize and raise money, but it also allows people to feel more connected to a candidate. People are more involved. There’s a definite feeling that this is the year for the Internet and that future campaigns will use the Internet even more. The American populace is paying attention.”

Michael X. Delli Carpini, dean of the Annenberg School of Communication at the University of Pennsylvania, agrees. “There’s a definite tipping point since the last election where all candidates accept that if you run a campaign these [Internet marketing] tools have to be a part of the way you do it. I think this has a huge upside, but no one knows for sure — except with circumstantial evidence — whether these tools could make or break a candidate.”

For their part, candidates have shown no reluctance to embrace the Internet. As of September 30, Democratic presidential candidate Barack Obama had raised at least $74.9 million for his primary run in 2007 courtesy of a grass-roots Internet campaign. Leading up to the Iowa caucus, Obama nearly hit the 500,000 donor mark. Rival Hillary Clinton showed her humorous side with a video showing her and husband Bill chatting in a diner — spoofing the final episode of the television series “The Sopranos.” Now Clinton is using web-based videos on a site called “The Hillary I Know.” On the Republican side, Ron Paul raised $20 million in the fourth quarter and has spread his message on YouTube. Other Republican candidates are using the web to grab donations and build communities, including John McCain, whose McCainSpace allows users to build their own sites hosted on the John McCain 2008 site.

Wharton management professor David Hsu says candidates are following the voters. “As people of all demographics get more familiar with using the web to conduct their daily transactions, such as shopping, banking, communications and news, I see no reason why getting and being influenced by political information will be any different,” says Hsu. “The real challenge for the candidates will be to harness the web to reinforce their positive public opinion or to overturn negative sentiment among voters.”

It’s unclear whether these Internet marketing techniques can turn interest into actual votes, but experts at Wharton say the latest crop of candidates has built on Howard Dean’s web success in 2004. Dean was an early front-runner in 2003 for the Democratic presidential nomination, spreading information through blogs and using his site to finance his campaign and rally supporters before quickly fading — the result of several speaking gaffes and a screaming speech that quickly became fodder for late-night television comedians. In 2008, politicians are mimicking sites like Facebook and using online tools such as web videos and blogs. By the 2012 presidential election, the web should become established as a major — if not preferred — method of delivering a message, say experts at Wharton. These experts also note that new web-based campaigning tools are likely to emerge in the next four years. After all, Facebook and YouTube, launched in February 2004 and December 2005, respectively, weren’t even on the radar screen of candidates during the last election cycle. Berger speculates, for example, that information is likely to become more mobile, with cell phone messages and videos.

“The Internet has always had the potential to transform democracy and government and we are finally seeing it [starting to] happen,” says Kartik Hosanagar, a professor of operations and information management at Wharton. “I believe that this will be the election where the web will start to matter. However, I doubt this will be the election where the web will determine outcomes.”

Why? Hosanagar notes that candidates like Paul may only play to those who heavily use the Internet, such as college students. For those voters who don’t routinely use the web for their information, Paul’s message will still need to be delivered by mainstream media outlets such as TV and newspapers.

The Making of a President

Although experts at Wharton agreed that the 2008 election cycle has focused on Internet promotion alongside television and other mediums, they say more study is required to determine its impact.

For instance, while the Internet is clearly a good way to raise money quickly, Hosanagar questions whether popularity on the web translates to votes. Will the importance of the Internet change as it reaches more demographic groups? Will the political process — through outreach efforts such as debates on YouTube — be changed forever? Can the Internet boost voter participation and turnout rates?

“Clearly you can raise money and mobilize a base of supporters on the Internet,” says John Lapinski, professor of political science at the University of Pennsylvania. “What’s not clear is whether [these Internet efforts] can get people to vote who never have before.”

Hsu suggests that the outlook for Internet campaigning is promising, but the jury is still out on its impact in the current election cycle. “It is likely that YouTube, Digg and similar channels will appeal more to a younger, more web-savvy demographic, while candidate web sites and more mainstream web sites — like CNN and the New York Times — will probably appeal more to an older demographic,” says Hsu. “Of course there is still a large part of America that is either unwired or needs political information pushed to them by TV or newspaper, and so the ‘pull’ type of media on YouTube may not get on their radar screen.” The demographics behind heavy Internet users are likely to reflect the general population over time, he adds, but for now it’s unclear whether web marketing reaches the masses.

However, Internet marketing affords underdog candidates an avenue to get into the broader discussion and pick up mainstream media attention. Hosanagar notes that Paul’s success on the web is what got him noticed. “Every time I go to YouTube and look at the top videos of the week, there is invariably a Ron Paul video. In contrast, the mainstream media barely covered him until a few weeks back.” Lapinski agrees that the Internet can be a boon to candidates who wouldn’t have been noticed otherwise. “Clearly, you can mobilize attention,” he says. “The web is an equalizer.”

Yet there is also is a downside to web marketing. Negative news travels just as fast as positive information. “Since candidates are always being watched and voters are much more involved,” points out Berger, “there is much less room to hide when things go wrong. The interconnectedness of voters means that news and movements can build much more quickly, leading bad things to snowball out of control extremely fast.”

‘Pumping for Money’

As candidates run for office, the Internet becomes one of the more cost effective ways for these individuals to market themselves, say experts at Wharton.

According to Berger, a candidate can essentially bypass mainstream media and save money on television advertising by marketing on the web. “A lot of this is about free advertising,” he says, pointing to amateur videos on YouTube that have helped Obama gain fame, including one in which a woman sings, jokingly, about how she has a crush on the candidate. As of December 28, more than 4.3 million people had watched that video.

Delli Carpini agrees. “Candidates are always trying to figure out ways around traditional media. It’s expensive to get TV ads. Social networking sites and viral emails are a cheaper way to get the direct message out. If a candidate does a viral video, it still gets picked up by news media. That’s a double bang.”

Indeed, marketing a candidate isn’t much different than selling any other high-end item, argues Berger. The goal is to create an emotional attachment and find evangelists to spread word-of-mouth marketing. The web makes political marketing more efficient. “It’s similar to marketing a high involvement [product],” says Berger. “It’s like BMW marketing to a BMW user group.”

Delli Carpini acknowledges the similarities between marketing a candidate and any other good or service. In all those cases, the goal is to stand out from the pack. Meanwhile, brand loyalty and community are big factors in a product’s success just like they are for candidates. “These similarities are important, but part of me cringes at saying that,” says Delli Carpini. “I don’t want to see [the electoral process] as just selling something, but there’s a heavy element” of selling involved.

He cites one big difference between marketing a candidate and marketing a product — the time frame. A company like Coca Cola has years to build its brand, but a lesser known candidate only has a few months. With Internet marketing, the process is sped up to the point where an underdog like Ron Paul can gain a following in a relatively short time.

What remains to be seen is how web marketing techniques change as the field is narrowed to two primary candidates. According to Lapinski, it’s likely that web marketing will become more targeted to specific groups based on geography and interest as the electoral process develops. “Once this becomes a two-horse race, the web will be used extensively for geotargeting since it could become a war of turnout,” he says, noting that instead of launching TV ads in one state like Ohio, a candidate could do just as well with an email campaign. “Things will become more targeted to specific groups, but candidates will still … be pumping for money the whole time.” It’s likely that the web will also be used to court volunteers, cater to a candidate’s core constituency and counter a rival’s claims, Lapinski adds.

Hosanagar predicts that citizen participation might rise as Internet access — which currently reaches roughly two-thirds of the population in the U.S. — becomes pervasive. “The web will create a participatory culture and unprecedented levels of civic engagement. The web itself is becoming more decentralized with user-generated content and open platforms. I think that the same sort of culture will spill over into how this segment wants to engage politically. Citizens [these days] want to create and distribute political messages themselves, endorse candidates and spread those messages they find most appealing. I think these trends will have a lasting impact on politics.” Or, as Lipinski says: “Anyone not paying attention to the web for this election and future elections has his head in the sand.”