MARKET FOCUS SAN DIEGO: The PR life in sunny San Diego. San Diego is no longer the Navy town it once was. But as David Ward discovers, PR opportunity has found a safe harbor in this big city with a small-town feel

In many ways San Diego is a business and public relations anomaly.

In many ways San Diego is a business and public relations anomaly.

In many ways San Diego is a business and public relations

anomaly.



While it ranks among the top six US cities in terms of population, San

Diego can’t crack the top 20 in media markets. Nor is it one of the

first cities that comes to mind when people talk about the booming

economy.



Well known for its sunshine and beaches, the city has struggled to shake

an image as a ’big small town’ dominated by the hospitality industry and

the military.



But in the past few years San Diego has begun to emerge as a major

hi-tech center in its own right. Led by companies such as Qualcomm, the

city is now a hot bed for the coming revolution in wireless

communication.



Local universities such as the University of California-San Diego and

University of San Diego provide fertile ground for recruiting the

top-notch talent needed for start-ups. ’I think the economy has really

grown up and the hi-tech community has emerged triumphant,’ says Jackie

Townsend, founder of The Townsend Agency, which, with $7 million in

billings, ranks No. 1 in the city’s rankings.



All this is having a dramatic impact on the city’s PR scene. Local firms

with a technical focus now compete for national and international

clients, while global PR firms such as Fleishman-Hillard and Porter

Novelli have either set up offices or acquired companies to better

compete for local clients. Other national and regional firms are poised

to move in as well - Technology Solutions has been head-hunting in the

area, one source says.



’There are so many big companies trying to get a foothold here,’ says

Lorraine Iverson, co-founder of Cooper-Iverson Marketing, which has a

roster of business-to-business companies, including Texas-based Alibre

and the Bay Area’s Comergent. ’There’s a lot going on and the big boys

want a piece of it.’



The arrival of these new PR agencies in turn causes other industries to

take another look at the region. ’We have a lot of statewide clients,

and our presence here does help them realize that San Diego is a major

media market and there are issues here that affect the markets in LA,

San Francisco and Sacramento,’ says Deen + Black senior account manager

Traci Verardo.



Certainly these are good times to be in the PR industry in San

Diego.



The eight firms in the city that reported their fee revenue to PRWeek

billed more than $17 million in 1999, up 29% from the year earlier.

Leading the pack are hi-tech-oriented firms such as Townsend and

Cooper-Iverson, which saw year-over-year growth of 126% and 72%,

respectively.



But it isn’t just hi-tech that’s on the upswing. The ever-cyclical

biotech market has rebounded from a local slump, and the area’s

healthcare business is also on the rise. Healthcare/medical specialist

agency PResence Euro RSCG set up shop here less than three years ago and

expects to do close to $450,000 in business this year, up 80% over 1999

- and all out of a three-person office. PResence executive VP/managing

director Ed Stevens says the company’s growth is partly due to the fact

that it is one of the few health specialists in this market. But Stevens

adds that it is also a result of finally being able to convince local

companies that they don’t have to turn to New York for experienced

health-related PR. ’Even though we’re in their backyard and we’re part

of a New York-based agency, it took some education to let them know that

by working with us they can have local contacts combined with the

resources of a national agency,’ he says.





A rising tide lifts all boats - almost



While the overall PR market has benefited from San Diego’s emergence as

a wireless tech center, not every firm is sharing in the growth. Indeed,

many of the long-standing firms that cut their teeth on local industries

such as real estate, hospitality and government saw flat to negative

earnings last year.



Most of the executives interviewed insisted this is primarily by

design.



’We made a conscious choice to focus in on two things, and that’s

branded products and agribusiness,’ says David Nuffer of Nuffer Smith

Tucker, which saw 2% growth to $1.28 million last year. Nuffer says

about half the company’s fee income comes from national accounts,

although it does have some high-profile local business, such as the San

Diego Zoo and the Del Mar Race Track.



While his firm has had a few Internet clients, Nuffer says it is trying

to resist the temptation to reinvent itself as tech-focused just to ride

the economic boom. ’Every PR firm I know has become a dot-com expert,’

he observes. ’The problem is that many of these dot-coms don’t have the

financial backing and so quickly go under, leaving you with a lot of

unpaid bills.’



Ron Schupp, vice president of public- and community-relations firm

Marsten + Marsten, echoed a similar theme, suggesting that while local

firms can quickly acquire the knowledge to compete in the dot-com space,

San Diego PR tends to be built on solid relationships, and those are

much harder to acquire in a few short months.



That’s why long-standing San Diego agencies such as Nuffer Smith Tucker

and Stoorza Communications (formerly Stoorza, Ziegaus & Metzger) still

have a great deal of local clout. Agency founder Gail Stoorza is former

chairman of the San Diego Chamber of Commerce and serves on the board of

the San Diego Convention Center. She is also a key strategist and

advisor on the city’s most dominant issue in recent years: the building

of a new downtown stadium for the San Diego Padres.



’Although the media doesn’t realize it, the PR business plays a major

role in running this community,’ Nutter observes. ’Behind every major

decision, there’s a PR firm giving counsel to somebody.’



This unprecedented access has made these local firms attractive

acquisition targets. ’We’ve been pursued hot and heavy over the years,’

says Stoorza.



’But we made a distinct decision to stay independent and instead decided

to bring in new leadership and expand our focus into technology.’



While most San Diego agencies bemoan the tight labor market, the city

does have several things going for it in recruiting, including its

quality of life. ’Getting new people is tough,’ Iverson concedes. ’The

only thing that seems to be helping right now is we’re getting some

interest from people in the Bay Area who have grown tired of that

scene.’



Iverson adds that in many cases local PR firms need very experienced

hands because many of their local clients are somewhat naive about what

it takes to run a national campaign. ’A lot of times you’re not working

with people who are as senior and as sophisticated as they could be,’

she says. ’So you end up teaching them everything from the ground

up.’



San Diego does have a local chapter of the PRSA, but several people say

the city lacks a PR community capable of luring and nurturing young

talent.



’I wish we had a better network, but frankly our local trade

organizations aren’t as strong as we wish they were,’ says Karen

Hutchens, head of Porter Novelli/NCG’s local office. ’We need it to

cultivate true public relations professionals.’





Gateway to heaven



By far San Diego’s biggest economic coup in recent years was luring

computer retailer Gateway to the area in 1998. John Spelich, Gateway

director of corporation communications, says the moving of its

headquarters had little impact on the company’s PR strategy, adding that

with modern tools, corporate communications can now be done from

virtually anywhere. But Gateway has hired Stoorza to help with strategic

planning and to manage smaller agencies doing its grass-roots PR in

other cities.



One area where most major San Diego firms have not been moving

aggressively is in ethnic markets. While the city is only a few miles

from Mexico, home of a great many NAFTA-inspired manufacturing

facilities, PR agencies have made very little inroads into the Hispanic

business. One exception is Stoorza, which has worked with the

Tijuana-based D’Garay agency on several cross-border campaigns,

including one for the San Diego Padres.



Others suggest the time may finally be right for more efforts. Nuffer

Smith Tucker recently lured a bilingual staffer away from

Burson-Marstellar’s Mexico City office with the express purpose of

reaching out to the Spanish-speaking community. ’We tried eight years

ago and failed,’ notes David Nuffer. ’But we’re trying again, and this

time I’m convinced we’ll succeed.’



Despite the progress being made in San Diego, the city still has a ways

to go to compete on equal footing with Los Angeles, San Francisco and

Seattle. Tom Gable, founder and president of The Gable Group, says, ’San

Diego has typically been a small to mid-size company market. There are

very few large companies based here.’ But, as Gable says, the area has a

large knowledge base, which makes it ripe for tech and biotech

start-ups. Unfortunately, many of those companies end up getting

acquired and relocated to other parts of the country. ’Sure we’ve got

Qualcomm and Gateway, but we need about 30 more of them,’ Gable

concludes.





Calm in San Diego: top eight PR agencies


Ranking    Agency Name                  Audit    SD income ($)    Growth

99   98                                          1999        1998    (%)


1    2     The Townsend Agency              7,000,350   3,100,000    126

2    1     Stoorza Communications           3,953,731   4,612,048    -14

3    3     The Gable Group                  2,210,658   2,131,079      4

4    4     Nelson Communications Group      1,867,930   1,774,747    529

5    5     Nuffer Smith Tucker              1,286,730   1,261,219      2

6    6     Cooper Iverson Marketing         1,253,545     729,934     72

7    N/A   PResence EURO RSCG                 250,000         N/A    N/A

8    N/A   Deen + Black                        19,158         N/A    N/A

           TOTALS                          17,572,944  13,609,027     29


Ranking  Agency Name                   US          SD%  US           SD%

99  98                                 income ($)  99   income ($)    98

                                       1999             1998


1   2    The Townsend Agency      7,000,350        100   3,100,000   100

2   1    Stoorza Communications   8,660,866         46   8,583,127    54

3   3    The Gable Group          2,583,366         86   2,324,328    92

4   4    Nelson Communications

         Group                    6,361,389         29   6,167,552    29

5   5    Nuffer Smith Tucker      1,286,730        100   1,261,219   100

6   6    Cooper Iverson

         Marketing                1,253,545        100     729,934   100

7   N/A  PResence EURO RSCG       3,500,000          7   3,031,447   N/A

8   N/A  Deen + Black             3,126,917          1   2,349,347   N/A

         TOTALS                  27,146,246         65  22,166,160    61

Note: Fleishman-Hillard’s San Diego office income of $1,758,000 was

included in the Los Angeles ranking.

Source: PRWeek 2000 Agency Rankings.

Auditing: denotes a full audit or review; compilation audit; unaudited

statements approved by either the CFO or CEO/partner. A random audit

process will be used for agencies providing unaudited figures.



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