San Diego and Orange County: Watching the OC

Though near LA, San Diego and the OC have unique PR scenes.

Though near LA, San Diego and the OC have unique PR scenes.

San Diego and Orange County are neighboring regions that lie to the south of Los Angeles and often find themselves in the shadow of that ever-expanding city. While San Diego is itself a growing urban community, best known for its Navy ties, it's still small enough that it's hard to tell where the coastal enclaves and pristine beaches of the OC give way to their matching counterparts in San Diego County.

The areas resemble one another in more than just natural beauty, however. Both rely on a strong base of small- to medium-size business as the core of their economic engines and boast only a handful of large companies. That, says San Diego-based Allison & Partners director Megan Dyer, means it's "definitely a unique market" for PR shops.

The agency business

Like the companies they service, agencies in San Diego and Orange County tend to be small to midsize, with a healthy supply of solo practitioners. The characteristics that most share are strong community ties and a long presence in the market, making business here more about relationships than introductions. During the dot-com boom, the regions became a hotbed of activity for tech firms. But, of course, that business plummeted with the crash, forcing many agencies to downsize or even close. Last year found many PR shops hopeful of signs of recovery, and that promise seems to be growing in 2005.

"People are less cautious" than they were about hiring an agency even a year ago, says Tim Wheatcroft, business development director of Lewis PR.

Corona-based Euro RSCG Magnet EVP Chris Perez agrees, adding, "The news across the board is that everybody is feeling pretty optimistic."

Some agencies are even reporting huge growth over last year. San Diego-based Formula PR says it has achieved 38% growth over last summer, "and this year is looking equally good, if not better," says CEO Michael Olguin.

Gable-Cook-Schmid partner Tom Gable offers up even more impressive statistics, reporting his agency has grown 60% over the past year from clients including the San Diego County Regional Airport Authority and the San Diego Film Festival.

Most agencies say that they are seeing an increase in new business activity as well, with Dyer adding that clients "are calling us, which is very refreshing."

Bailey Gardiner president Indra Gardiner adds, "We have literally had new business inquiries every week for the past two months. We don't follow through on all of them, but it does show how the market has heated up."

That increased activity has also driven a need for hiring. Almost every firm in the area says it is looking for key people, especially those with mid-level career experience, who can be hard to find.

"It's a little difficult," admits Olguin. "There's a shortage of people that have that three-to-six years' agency experience."

For those with their r?sum?s at the ready, though, that's good news. The increased demand has pumped up salaries in the past year, even for the entry level, as more agencies seek to grow their own talent. Even small shops are starting out new team members in the $30,000 range.

"You used to be able to pay 'sunshine' dollars," jokes Olguin, pointing out that the beautiful surroundings often offset lower salaries. "You can't do that anymore."

That's especially true, says Fleishman-Hillard GM Melissa Schoeb, because "the cost of living is so high," with the median housing price in Orange Country recently surpassing the $600,000 mark, and San Diego coming in at $488,000, according to DataQuick Information Systems.

Dyer says the reality is that, "in order to get someone in mid-management, you have to pay more."

The corporate sector

While Southern California is home to a handful of Fortune 500 companies, it is far more reliant on smaller, local businesses to feed its PR community. Such industries as real estate, construction, restaurants, and hospitality are especially hot. In Orange County, PR shops also compete for professional services clients, such as law firms. In San Diego, the area around PETCO Park, the new downtown ballpark that is home to the Padres of Major League Baseball, continues to expand, giving agencies a host of new opportunities. Dyer says that, as more restaurants and hotels move into the area, clients are seeking PR to help them differentiate themselves.

The areas are also seeing a resurgence in the tech arena, "particularly in consumer technology and digital entertainment," says Hill & Knowlton GM Bonnie Goodman.

"There is a strong feeling that the tech market is coming back," confirms Magnet's Perez. But many firms are still hesitant to load up on clients in this sector, which caused so much havoc only a few years ago. And many of these companies are still in their beginning stages, meaning that what PR work exists is often more focused on IR and helping companies prepare to go public or promoting niche technologies.

That's the case for San Diego-based Maxwell Technologies, which has increased its PR work over last year, but keeps its focus narrowly on b-to-b marketing for its electronic components.

"We're doing more PR, but it's a reflection of where we are in our business," says Mike Sund, Maxwell VP of communications and IR. "We hadn't used an outside agency for a while. But it's time to step up our activity."

Despite those signs of industry-specific upticks, in general most agree that the regions lack a strong enough business basis to make consumer PR a hot spot.

"Consumer is not booming," says Perez. "Orange County is a tough place for that."

However, both H&K's Goodman and Fleishman's Schoeb say that they see clients from other offices increasingly doing work in the area.

"A lot of our national clients are looking to get more visibility here in the San Diego market," says Schoeb.

Goodman adds that the trend is especially true for clients seeking to tap into younger demographics, who often follow So Cal lifestyle trends such as surfing and skating.

"The [Orange County] market continues to drive tends, as typified by the youth and surf culture," she points out. "Much of our work is in that area."

Another area where local corporations are heating up PR activity is in multicultural marketing. The demographics of Southern California are rapidly changing to reflect not only an increasing Hispanic population, but also many other Asian ethnic groups, giving businesses the need to reach out to consumers in new ways.

"There has always been a joke about Orange County regarding [a lack of] diversity," says Perez. "But there has been a lot more awareness."

Another new development on the corporate scene is a more streamlined approach to hiring an agency.

Last year, many shops reported having to go through multiple rounds of pitches over weeks or even months. Now, Wheatcroft says, "shortlists are getting shorter. You don't feel you're one of a large number of agencies" competing for the business. "The decision-making time has definitely gotten shorter," he adds.

Along with that, more corporations are increasing their PR budgets and even the scope of the work. Maxwell's Sund confirms that by highlighting that his company began working with its PR shop on a 90-day trial basis for a single project and has since "expanded the scope of the work."

The local media scene

Sticking with their small-town feel, both Orange County and San Diego have limited media markets. Each has only a single major newspaper - The San Diego Union-Tribune and The Orange County Register. Orange County also has a local edition of the LA Times.

The upside of the limited media market is that "they do cover more localized, feel-good stories," says Allison & Partners' Dyer. However, Perez points out that there is "virtually no radio and [only] one public TV station," meaning most major broadcast coverage is dependent upon getting crews and reporters to travel from Los Angeles, which is no easy task.

"We tie all of our media to LA media," confirms Perez. "It remains primarily a print town for us."

Many agencies say that their clients are after exposure on a larger level anyway, making the small, local media market less of a concern.

"We do deal with local media on a case-by-case basis for some of our local clients," says Dyer. But, "most of our clients look at national coverage."

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