- Ads from politicians and campaigns accounted for at least 3% of Facebook's estimated third-quarter U.S. revenue, according to data from Facebook's ad library and the Center for Responsive Politics.
- Google has dramatically limited targeting for political ads and Twitter banned them altogether, leaving Facebook as the only game in town for many campaigns.
- "For better or worse — mostly worse — Facebook is the de facto place you go," said Nick Fitz, CEO of online donations site Momentum, which powers the Defeat by Tweet campaign.
Anti-Trump super PAC Defeat by Tweet launched in June and has run up an advertising bill of more than $800,000 with an online campaign that encourages people to automatically donate money every time the president tweets.
Thanks to Trump's habitual tweeting, the group has parlayed its spending into about $3 million of fundraising. However, none of that ad spending has been on Twitter. Instead, it's taking place exclusively on rival social media site Facebook.
Defeat by Tweet is far from alone. Scores of political candidates and outside groups have loaded up on Facebook spending ahead of next month's election. That's partly because Facebook reaches over a quarter-billion users in North America every month and has a family of popular apps, including Messenger, Instagram and WhatsApp. But it's also because many other ad-supported sites have retreated from politics, leaving Facebook as the only game in town.
Google, the largest internet advertising company, limited the ability for campaigns to target users with political ads. Twitter banned political advertising altogether after CEO Jack Dorsey proclaimed last October that "political message reach should be earned, not bought." TikTok also forbids political ads, and Snap has promised to fact-check them.
Facebook CEO Mark Zuckerberg, meanwhile, has been steadfast in his refusal to put fact-checking measures in place, arguing that they could interfere with free speech. Facebook also allows political advertisers to use the same kind of targeting tools as corporate advertisers, giving them precise tools to reach relevant voters and potential donors.
Facebook's most dramatic move came last month, when the company said it will stop showing new political ads in the seven days before voters head to the polls on Nov. 3 to choose between President Donald Trump and Joe Biden.
Nick Fitz, CEO of online donations company Momentum, which powers Defeat by Tweet, says digital campaigns now rely almost entirely on Facebook, regardless of how the people running them feel about the platform.
"For better or worse — mostly worse — Facebook is the de facto place you go," Fitz said. "It's the cheapest and most effective way to get in front of the right people."
Adding up money shelled out for the presidential contest, the congressional and gubernatorial races and from third-party groups advocating for candidates and causes, political advertisers in the U.S. spent at least $264 million on Facebook in the third quarter, according to CNBC's compilation of data from the Center for Responsive Politics and Facebook's ad library.
That comes to about 3% of Facebook's estimated total U.S. revenue in the third quarter. Zuckerberg said last October that ads from politicians (not including third-party campaigns) would account for 0.5% of Facebook's revenue in 2020.
Facebook declined to comment for this story or confirm the accuracy of CNBC's analysis of the data. The company is scheduled to report third-quarter results on Oct. 29.
While Facebook has become the dominant advertising platform for political campaigns, the company faces intense criticism from lawmakers, regulators and even investors for enabling the spread of false information and for letting political groups take advantage of the same types of targeting tools used by corporate advertisers.
In a report this week from the House Judiciary subcommittee on antitrust, the Democrat majority staff wrote, "In the absence of competition, Facebook's quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform."
Facebook has made some changes around the edges with political ads. It disallows ads that lead to voter suppression, attempt to delegitimize the results of a contest or prematurely insinuate a candidate has won. The company also made all political ad spending public through its ad library.
Facebook made another update on Wednesday, announcing that it will stop running political ads in the U.S. after polls close on Nov. 3, and keep them halted for an indefinite period.
Defeat by Tweet encourages Trump critics to become donors, giving a penny, nickel, dime or more every time Trump tweets. That money, which Fitz expects to top $5 million by election time, gets divided among a collection of Black-led organizations that are working to defeat Trump in nine swing states.
Fitz said that Defeat by Tweet takes advantage of Facebook's "look-alike audience" tool, which looks at who signs up to donate and then shows ads to people who behave similarly on the site in the targeted geographies.
Other campaigns build a list of people based on voter files or previous donors, upload that list to Facebook, and then show ads to those Facebook users as well as people who have similar characteristics. Advertisers who spoke to CNBC said Facebook can hit that list with 70% to 90% accuracy.
Pacronym, a progressive super PAC running a pro-Biden campaign called Four is Enough, has employed six ex-Facebook employees, including one who helped Trump's campaign in 2016, to run ads against the president in six swing states.
Tara McGowan, CEO of Acronym, the nonprofit that runs the super PAC, said the group licensed a national voter file and used that to help build a model of persuadable voters like "soft Trump supporters." It spent over $1.3 million on Facebook in the past 90 days.
"It's incredibly expensive to reach voters," McGowan said. "With limited resources, you want to reach people in the states that are going to tip this election."
Pacronym and other liberal groups say they also have to be prominent on Facebook to respond to misinformation that spreads organically when large swaths of people post and repost made-up stories designed to look like news. To battle for undecided voters, you have to "make sure you're countering misinformation in the same place," McGowan said.
On Tuesday, Facebook took action against one of the leading spreaders of false information. The company classified the QAnon conspiracy theory movement as dangerous and began removing related groups, pages and Instagram accounts.
The presidential campaigns were by far the biggest political advertisers on Facebook in the quarter.
The Trump campaign spent $48.7 million, while Biden's campaign allocated $45.4 million to Facebook ads.
In the battle for the Senate, which the Republicans hold by a 53-47 majority but are in danger of losing, the heftiest spending is tied to the South Carolina race. Democratic challenger Jaime Harrison spent $4.9 million on ads in the quarter as he tries to defeat incumbent Republican Lindsey Graham, who spent $2.7 million. The ads have targeted potential voters in the state and donors in places like California, New York and Florida.
Some of the top political spenders on Facebook are outside groups. Stop Republicans, run by the Progressive Turnout Project, spent about $9 million in the quarter on ads, largely focused on defeating Republican senators in close races, including Graham. Republican Voters Against Trump, a group of conservatives supporting Biden, spent over $4 million.
"We've built predictive models to score all voters in the key swing states based on their likelihood to be conservative, but hesitancy to vote for Trump," said Tim Miller, political director for RVAT and former spokesman for Jeb Bush. Miller said RVAT will try and reach those people wherever they are, but "Facebook has the most robust suite of in-platform targeting options combined with the largest audience."
On the other side of the spectrum, the Club for Growth Action spent over $1.4 million on Facebook ads in the quarter, supporting Trump as well as congressional candidates in about 18 competitive races.
David McIntosh, president of the Club for Growth, said the group runs test ads to see how well people respond and then spends money on those that perform the best. Its top ads include one focused on Biden's supposed opposition to charter schools and parental choice in education, and another that claimed Biden would wreck the economy through $4 trillion in tax hikes.
McIntosh said it's unfortunate that Facebook is the only site left for effectively targeting users.
"It means less information is out there for people to absorb and learn," said McIntosh, a former congressman from Indiana. "One of my biggest concerns right now is the drift towards censorship of information."
For congressional candidates, Facebook can be a powerful fundraising tool even in races that aren't close.
Two of the biggest spenders in the contests for the U.S. House are Republican challengers in heavily Democratic districts. In Minnesota's 5th Congressional District, which includes Minneapolis, Lacy Johnson is taking on Rep. Ilhan Omar, who was elected for the first time in 2018 and quickly became a prime target for the right.
In California's 43rd Congressional District, covering the southern part of Los Angeles, Joe Collins is up against Rep. Maxine Waters, a 30-year veteran of the House and chairwoman of the Committee on Financial Services.
Johnson and Collins each spent over $740,000 on Facebook ads in the third quarter. Omar spent $188,000, and Waters spent nothing. Representatives for Waters' and Omar's campaigns couldn't be immediately reached for comment.
According to RealClearPolitics, neither incumbent is at risk of losing, but both are firebrands that rile up Trump and his supporters. Trump has said Omar hates Israel "and all Jewish people," and he called Waters an "extraordinarily low IQ person."
Johnson, helped by an endorsement from Trump, has tapped into that anger, soliciting small donations from people across the country who would like to see Omar defeated.
"We attract a lot of small donors who can't necessarily give a lot but they are very motivated by Lacy's message to replace his opponent who is so inflammatory to so many people," said Anton Lazzaro, finance chair for the Johnson campaign. "We're really targeting the entire district except for people who we know are extremely hard Democrats."
Collins, a Navy veteran, said his message is resonating because Waters has done very little for her district's economy and schools. However, only seven of his 30 top individual donors are from California, according to data from the Federal Election Commission. His ads, labeling Waters a "radical leftist," are reaching donors in Texas, Florida, New York and Ohio.
Collins said his campaign raises $3 for every dollar it spends on Facebook. His digital staff, consisting of about a dozen outside contractors, targets people by specific ZIP codes based on their likelihood of voting or contributing.
"I do a lot of studying, looking at a lot of campaigns to see who is raising money, figure out what they're doing and where the money coming is coming from," Collins said.
The Democratic Governors Association spent more than $3 million on Facebook ads during the third quarter to solicit donations from users deemed likely to support the party's gubernatorial candidates across the country.
The organization uploads a list of email addresses of previous donors to Facebook and then uses the look-alike audiences feature to find people with similar characteristics. Laura Carlson, DGA's digital director, said Facebook represents a large part of its ad budget because of its scale and the high level of engagement among users.
"We really let Facebook take the lead as it starts to learn what type of folks tend to support Democratic governors," Carlson said. "It helps us expand and scale that reach in a big way."
There's always the chance that Facebook suddenly pulls the plug on political ads because of overwhelming public or government pressure. Carlson said the DGA has joined with other progressive organizations to build an expansive database of supporters and their contact information in case Facebook imposes such a dramatic pullback.
"It's a more sustainable platform should the rules change again," Carlson said. Still, if Facebook were to cut off political ads, "it would be a real decisive shift in the way our politics look," she added.
While Facebook is a much bigger piece of the overall ad pie for most political campaigns, there are a few standouts becoming less reliant on the social media giant.
NextGen America, founded by billionaire former Democratic presidential candidate Tom Steyer, is spending only 20% of its ad budget on Facebook, down from 30% to 50% in previous cycles, said Tegan O'Neill, the group's director of digital communications.
O'Neill said NextGen's audience is primarily people ages 18 to 35 in the battleground states of Florida, Michigan, Wisconsin, Pennsylvania, Arizona and North Carolina. The group is looking for people with no record of voting and who are thus ignored by most other campaigns.
NextGen is targeting them with messages about Biden's position on free public college, affordable health care and the climate crisis. The younger demographic has largely moved away from Facebook, O'Neill said.
"Facebook is not where our audience is going for our entertainment," she said.
So NextGen is spending the bulk of its current $11 million advertising program across an assortment of streaming services like Roku, Hulu and Pandora. It's also lured influencers, who have large social media followings on TikTok and Instagram and can get messages out organically by posting videos.
According to O'Neill, NextGen has to employ a more thoughtful strategy beyond just how it spends ad dollars. It has to find the people who can get out the message.
"What we can do is work with thousands of influencers to make sure that young people have the correct information," she said.
— CNBC's Michelle Gao contributed to this report.