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I'm a partner in the advanced analytics group at Bain & Company, the global management consulting firm. My primary focus is on marketing analytics (bio). I've been writing here (views my own) about marketing, technology, e-business, and analytics since 2003 (blog name explained).

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September 14, 2008

Electoralmap.net: Pragmalytics and the Presidential Election

Lately we've been asked a lot about what metrics to pay attention to in digital marketing channels. A central piece of this is finding, at any given point in time, those few places in your business where stakes, uncertainty, and degrees of freedom for action are highest, and then focusing your reporting and analytics improvement efforts on those places, while tuning out all the other places that call for attention but don't have the same leverage.

A good public-sector example of excellent reporting on the right issue, relevant to all of us right now, is electoralmap.net. This service uses state-by-state contract prices from Intrade, the world's largest public prediction market, to predict the outcome of the Electoral College vote.

Reading Dailykos and Michelle Malkin have me convinced that regardless of how any of the candidates perform over the last month and a half of the campaign, 99.9% of the voters have already made up their minds. And right now, according to electoralmap.net the election appears to be a dead heat, with only Colorado's 9 electoral votes hanging in the balance. Looks like the DNC was fairly prescient in choosing Denver for its convention!

Should we believe it? This analysis suggests we can. Further, in prediction markets, market volume is a proxy for sample size. A closer look at the trading in Colorado (in the left-hand nav, go to "politics", then "US Election by State", then expand "Alabama-Florida" and look at the Colorado contracts, where it currently looks like Obama trades at $5.30 for a $10 payoff, and McCain trades at $4.70) indicates a total of about 2600 contracts in the market, for a total contract value traded of $26,000. That's not too much, but with a 3-point bid-asked price spread on the Obama and McCain Colorado contracts, it's enough I'd think to begin to attract trading by folks with inside local knowledge away from the main contracts ("2008 US Election" in the left hand nav), which collectively have $12 million in contract value traded, but where the bid-asked spreads are only 10-20% what they are in the Colorado contracts.

So, this is a fancy way of saying that, if you follow the money, "It's Colorado, stupid!" It will be interesting to see if the national election coverage in major online outlets begins to highlight places where things are really tight and selectively aggregate news and opinion from them.

And congratulations to the electoralmap.net guys for creating one of the most imaginative, useful, and usable mashups for following and filtering the election. But may I suggest a widget, or a FB app, to boost traffic? At only 6k uniques a day, you're really missing a big opportunity! Then maybe call Disney about a sponsorship to support its release of Swing Vote on DVD.

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Comments

Nice post. I'm a big fan of electoralmap.net.

Our own electoral map (http://www.hubdub.com/election_map) which is based on Hubdub prices on markets for each state is showing Obama leading by 259 to 227 with 52 undecided.

One thing to note is that the presidential markets have shifted dramatically in the past 3 weeks. There is a distinct possibility that they will shift again.

But what drives Intrade? How do people decide what bets to place?

Try www.fivethirtyeight.com for the best analysis I've seen of the polling data. I'd love to see correlations between movement on poll-based prediction models like 538 or www.realclearpolitics.com and movement on Intrade. Intrade swung pretty much in tune with the movement of the post-convention bounces - movement that 538 discounted but other models did not.

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