REGIONAL FOCUS: Dry spell

The surging population has yet to bring big PR business with it.

The surging population has yet to bring big PR business with it.

Denizens of the desert Southwest know all about dry spells, but PR practitioners there aren't the only ones thirsty these days. Communicators in Arizona, Utah, Nevada, and New Mexico feel the international angst and tech drought affecting everyone else, but they enjoy a few sunny spots. People seemingly can't get enough of saguaros and Southwestern mountain ranges. Not only does this love for climate and scenery make tourism among the region's biggest businesses, it sends populations soaring. Nevada, Arizona, neighboring Colorado, and Utah ranked as the top-four fastest-growing states, respectively, from 1990 to 2000. Nevada's 66% boom and Arizona's 40% jump dwarfed New Mexico's healthy 20% population growth. Even in a down economy, home sales continue to rise. PR opportunities lie in the unglamorous realm of stuff people need: healthcare, education, and utilities. Real estate rules. Builders and developers populate the client lists of almost every PR firm in the region. Land-use issues rank among the most pressing public affairs topics, claims Jason Rose, president of Phoenix's Rose & Allyn PR. "We're growing so rapidly in metro Phoenix and other parts of the state, we don't have the utility infrastructure to support it," adds Sara Fluery, president of BJ Communications. Her clients include Arizona Public Service, and her community outreach work is expanding. Despite monumental growth, the population of the four desert states combined is about the same as Ohio. Although people flock there, big business and big media don't. Companies like Intel, General Dynamics, Raytheon, and Motorola have sizeable facilities in Arizona, but relatively few large companies are headquartered there. Even fewer national media outlets keep correspondents in the region, says Allen Maag, chief communications officer for Avnet. The Phoenix electronic-components and computer-equipment distributor is the largest public company headquartered in the desert Southwest. "You really have to work at PR because nobody's around," laments Maag. He thanks Business Wire and PR Newswire for occasionally bringing national reporters to town. Institutional oasis Institutions rank among the largest employers of communicators in the region, ranging from the Church of Jesus Christ of the Latter Day Saints, with nearly three dozen PR staffers in Salt Lake City, to the US Department of Energy's (DOE) nuclear research labs in New Mexico. The DOE contracts with the University of California to run the Los Alamos National Laboratory, which maintains and stockpiles nuclear weapons. It employs a public affairs staff of 23 and many more publications personnel, says media relations team leader Kevin Roark. And about 90 communicators work at Sandia National Laboratory in Albuquerque, NM, which Lockheed Martin runs for the government, reports VP of planning Rod Geer. Sandia's national-security research attracted much attention after September 11. Foam developed there was used to neutralize anthrax in the US Senate office complex, for example. Defense contractors also dot the region, with Raytheon Missile Systems ranking as Tucson, AZ's largest private-sector employer. Its 50-member communications team doesn't work with outside PR firms, and emphasizes internal communications. The pacifists who normally march once a month outside the gates paid an extra visit in February to protest the imminent war in Iraq, says media relations manager Sara Hammond. "What we do is provide weapon systems that protect America's freedoms, and that includes freedom of speech and freedom to assemble," Hammond says. "We are a business, and we don't debate what we do." In the hi-tech realm, General Dynamics bought a Phoenix division of Motorola last year, which produces government security systems. Brodeur Worldwide recently began working for that company, and also serves Avnet, says the agency's Arizona SVP Brian Chapman. Brodeur still leads the agency pack in the desert Southwest, although Phoenix revenue dropped to just below $3 million in 2002, and its Salt Lake City office closed last year. "The business has been very tough over the last two-and-a-half years," admits Neil Myers, president of Salt Lake City-based Connect PR, which specializes in networking and telecom clients. "We had 25 accounts, and within four months, 15 of our accounts had gone bankrupt." Salt Lake City-based Novell, a networking software pioneer, laid a hi-tech foundation there that could now use reinforcing. Novell's in-house PR team shrank more than 25% over the last three years to about 20 people, and the company seldom works with outside agencies now, says senior PR manager Kevan Barney. "While the downturn was happening in hi-tech, there was a very positive upswing as a result of the Olympics for those companies involved," says Alicia Bremer, president of Bremer Public Relations. Hosting the 2002 Winter Olympics coming so soon after September 11, Utah thoughts turned to security and emergency preparedness. "We wrote more crisis communications plans in 2001 and 2002 than in the five years prior," Bremer recalls. After the Olympics, some companies and agencies basked in an afterglow, while others suffered a PR slump, agency execs report. Throughout the region, a firm with 10 to 15 employees and $1 to $2 million in annual revenue is considered large, and agency PR often takes place within ad firms. With a few exceptions, national agencies haven't been able to take the heat or haven't chosen to weather it. Publicis Dialog's Salt Lake City office, for example, stopped doing PR in favor of direct marketing last year after its Olympic work played out. In fact, execs from a couple of out-of-market firms say their now-defunct outposts in the desert Southwest seldom courted local clients. San Francisco-based Phase Two Strategies, which recently disbanded and reformed as Connecting Point Communications, opened a Phoenix office during the tech boom strictly for back-office support. "We could not find good, qualified people who wanted those positions in the Bay Area," explains proprietor Chris Boehlke. "There were people [in Phoenix] who wanted long-term, stable positions." Similarly, Porter Novelli never had Arizona-based clients in the few years it ran an office there. Looking outside the region Even some of the larger, home-grown agencies work primarily for out-of-state clients. Connect PR gets more work from California and elsewhere. "Our goal is to beat our 2001 numbers this year, but that requires having a lot more clients outside the state," says Doug Turner of DW Turner & Co. in Albuquerque. "We've never had a strong local client base." Major organizations headquartered in the region - from PETsMART to the Mormons - often hire agencies from elsewhere. The slump benefits local firms, however. America West Airlines ended its relationship with MS&L for financial reasons, but has undertaken scaled-back PR with local firm Off Madison Avenue. Agency execs say clients that put PR on hold have begun returning to the fold and increasing budgets over the last few months, and they hope corporate America will wake up and realize that the 2 million-plus people who have moved to the desert in the last decade are onto something. "Phoenix is more of a big trading post than a corporate headquarters," Rose summarizes. "Hopefully, that will change in the future." ----- Gambling competition heats up With so many new players dealt into the gambling business, some Nevadans fear the table may get too crowded. Federal legislation authorized Indian gaming in 1988, and some cash-strapped state governments endorsed lotteries and slots in the early '90s. Even more now eye Lady Luck. Nevada isn't running scared, but it's not resting on its jackpots either. Reno has the most to lose, Nevadans say. It's a drive-market destination, and Indian casinos are multiplying in northern California. Accordingly, the Reno-Sparks Convention & Visitors Authority (RSCVA) and the Nevada Commission on Tourism launched marketing campaigns last year to highlight the state's outdoor sporting opportunities. "Everyone knows the neon, but not everyone is aware of the nature," explains Lt. Gov. Lorraine Hunt. Tourists can go sand-dune surfing or drop from a helicopter to ski virgin snow, she says. RSCVA PR coordinator Kristi Prentice calls Reno's approach "gaming plus," and is particularly excited about a kayak course being built downtown. Las Vegas feels less heat, but promotion has shifted from touting the '90s never-ending stream of casino openings to emphasizing the Vegas experience. Casino marketing tends to be ad-heavy. But Las Vegas enjoyed a PR bonanza when the NFL, which eschews sports betting, refused to run its campaign-debuting "Vegas Stories" ad during the Super Bowl. "Earned-media value far exceeded what the spot would have cost us," says Dale Erquiaga, brand services VP for R&R Partners, which represents the Las Vegas Convention and Visitors Authority. One camp sees the spread of gambling as a threat to Nevada, another as a blessing. "Nevada's going to see that a lot of people who used to come there to play blackjack will stay in Arizona," predicts Curtis Steinhoff, PR director for Reister-Robb in Phoenix. A voter-approved measure allowing blackjack at Indian casinos there just took effect. Harrah's, however, spends a lot of time convincing communities and elected officials that gambling is OK. "Every time you open in a new jurisdiction, you introduce casino entertainment to more people, and they decide they want to go to the center of the gaming universe, which is Las Vegas," opines communications director Gary Thompson. Harrah's operates 26 casinos in 13 states, including a few on reservations. Although some tribal casinos offer flashy resort entertainment, most are located in rural areas and draw local crowds. "Indian casinos are really becoming a boon for Nevada," Hunt agrees, "because they are creating sort of baseball farm team for our gaming."

DESERT STATES PR AGENCIES
Firm Name              Revenue  Increase  Staff   Location
2001                (dlrs) (%)
Brodeur Worldwide    3,859,000       -33     24   Phoenix, AZ; Provo, UT
Connect
Public Relations     3,366,868        13     15   Provo, UT
Publicis Dialog      2,537,263       -34     13   Salt Lake City, UT
CKPR                 1,580,000        -6     13   Phoenix, AZ
DW Turner
Public Relations       983,000        20      9   Albuquerque, NM
GCI Group/
APCO Worldwide         360,844       n/a      2   Scottsdale, AZ

Source: Council of PR Firms Auditing: No audit was required for
inclusion in the rankings. The CEO/CFO/principal was required to sign a
statement verifying the accuracy of the data and agreeing to possible
participation in a random audit Disclaimer: While every effort has been
made to ensure the accuracy of these figures, PRWeek cannot accept
liability for, nor make financial guarantees based upon the information
in this chart.

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