Regional roundtable: Los Angeles

PRWeek launched its second annual round of Regional Forums on March 11 in Los Angeles. These forums, which this year will also take place in New York, the Bay Area, Chicago, Texas, Washington DC and Atlanta, provide an invaluable opportunity for PRWeek's editorial team to meet and network with key PR professionals in each city.

PRWeek launched its second annual round of Regional Forums on March 11 in Los Angeles. These forums, which this year will also take place in New York, the Bay Area, Chicago, Texas, Washington DC and Atlanta, provide an invaluable opportunity for PRWeek's editorial team to meet and network with key PR professionals in each city.

As with last year, GCI Group is the sponsor of each region's cocktail party networking event that follows the editorial roundtable discussion.

To see the roundtable as it appears in PRWeek, click here.

To see party pictures, click here.

FULL TRANSCRIPT: LA Roundtable Julia Hood (PRWeek): Thank you all for coming. I think I've met everyone here, but I am Julia Hood, editor of PRWEEK. This is our second LA Roundtable. We did our first about a year ago right now and we are very excited to be here. Last year certainly helped Anita (Chabria) and the rest of us in New York who don't get to work with you every day get to know the market better and understand the challenges you are facing both from an agency and non-agency side. So I'm hoping we can get into more depth this year. It's a new group, obviously a new perspective. And a little side departure from last year. We will take a little time at the end to go off the record and turn the recorders off just in case there is something you think we should know. Just in case there is something you would rather not have us quote you on but that can give us some inside info on what actually goes on in this market. I'm thinking LA is quite a challenging market to understand so definitely, as far as Elly (Trickett) and I are concerned, assume we know a little more than last year but still not everything. And with that let me introduce you to Elly Trickett who is our deputy editor and features editor, and of course, you should all know Anita Chabria, our Los Angeles Bureau Chief. So I will be guiding you here. I'll launch us off into the discussion and I will call on you. Please feel free to ask questions yourself because you guys know this market much better than I do. We could start with the economic picture here. Both the agency and client perspectives are of interest here. Budgets from our non-agency friends - what you're seeing in terms of economic trends in this region? It seems quite a different picture from what I'm hearing anecdotally from what's going on in New York. So I don't know if anyone would like to start us off, maybe from the agency side? How's the new business pipeline looking? (responses will be attributed by initials and company represented)

Jake Drake (GCI Group): We've found in our opinion LA budgets are still tight. People aren't throwing money around, but certainly trends we are seeing are positive. The last couple of years there are, you would get a lot of project work. From the clients perspective, they're more confident in how solid their numbers are going to be and planning for the future in terms of what they will commit to.

JH (PRWeek): Have you seen that from January? Or the end of last year, maybe the beginning of the year?

JD (GCI Group): No, I think the beginning of the year was softer mainly because, we saw greater growth last year. We had a lot of project work, a lot of budgets that came in the second half of the year. So you're almost artificially high. So you had to be careful with your staffing because you knew the money wasn't...but it's getting more predictable and we feel very positive.

JH (PRWeek): What about from a client, corporate perspective?

James Williams (Ogilvy PR): I think it depends on the sector you're working in. Because considering what's going on in the state of California right now, our public affairs clients are really expecting more of a return on investment and there is currently a big RFP out for the state of California. It's nutrition RFP, Five A Day, and I've never seen more agencies involved in the process. Agencies I didn't even know existed. Agencies from outside of California are pitching California business. So I think it really depends on the sector.

Anita Chabria (PRWeek): How about the rest of you? Every time I call you are frantically busy. Are there any new clients to show for it?

Susan Tellem (Tellem Worldwide): I think from our perceptive we have seen it take very much longer to close the deal and I can tell you that I've got some that have lingered as long as six months and still not made up their mind. So I think if anything, that seems to be the biggest problem. Although business feels good and looks better than it did certainly the year before last, its just not coming to closure here like it used to. So they haven't said no but they haven't said yes, and I have an aging analysis that defies reason, so I think you know, based on today and yesterday in the stock market, I'm not sure...that's going to even elongate more. So anyway that's the problem that we're facing. It's not that we don't have the clients, prospective ones. It's not that we haven't had really good feedback. It's that nobody is reaching into their pockets.

Ray Durazo (Durazo Communications): In our little niche business is good. We continue to see the benefits of the interest in the Hispanic market, which is our specialty. But I would have to agree with Susan. There seems to be a hesitation, a reluctance to commit and it does take a lot longer to get the contract signed and the work started. And we hear more, I wouldn't call it budget cutting, but budget sensitivity. Everybody saying, 'we're really being held accountable. We really need to make every nickel go as far as it can go', which is code word for 'you better be able to justify everything you do or we are not going to pay for it.'

Donna Andrews (LeeAndrews Group): Yes, it's really been interesting on the client side to hear people talk about the link between what you do on the PR side and the results, including accountability issues. And the money part is being watched and you really have to show a direct link between the PR and the results, and that you are really showing a success. Which is probably from our perspective why its takes such a long time...because of the justification and re-justification for each dollar that is happening again and again and again.

Sean Fitzgerald (Ketchum): I think the big difference for us is that as client budgets have solidified over the past two years, they've been somewhat shaky, but as they've solidified, we have been much more discriminating about the new business that we are spending time on. There are a lot of companies out there that are on fishing expeditions and it's not always easy to find out who is fishing and who is truly committed to forward momentum with a program. And we are finding that the people who are truly committed to hiring an agency make a decision within forty-eight hours. So I think what Susan was talking about, maybe some of those people are just testing the waters and are just somewhat indecisive not only about PR but just about their business direction in general and we suffer for that.

JH (PRWeek): How do you weed them out?

SF (Ketchum): You use every available resource. You certainly try to find people who are aware of that particular client and their operations. Hopefully find someone inside and get the story on it.

John Stodder (Fleishman-Hillard): There is an RFP that we have been working on, responding to, and we're not clear at the end of the day whether there is a budget. The budget may not even be there.

JH (PRWeek): We've been hearing a lot about that. What about a stated budget that actually ends up quite different than what's been discussed all along?

RD (Durazo Communications): Well, I think what John refers to is RFPs that come out of state agencies. JS (Fleishman-Hillard): No, also private sector.

RD (Durazo Communications): Private too?

JS (Fleishman-Hillard): Our internal probe leads us to understand that the profits that are going to an agency have not necessarily been given...a commitment prior to the search, the budget isn't funded.

RD (Durazo Communications): Oh, I see what you are saying.

SF (Ketchum): I think that is one of the warning signals both in the private and public sector. If they are unwilling to attach a budget to the program then what is the point of pursuing it? It's kind of 'we'll know it when we see it.'

RD (Durazo Communications): Because on the government side you literally have agencies that are proceeding as normal with business but that are run by people who aren't sure if they are going to have a job next month let alone a budget.

Paul Pflug (independent entertainment publicist): And there is something I wanted to add in... I've been fortunate or unfortunate enough to be on both sides of the desk so to speak, and the other thing I have learned is that the client side is getting much more in tune and more involved and much more knowledgeable about what an agency does and what a good agency does. And they are starting, because of these dollar crunches, to really pay attention. Long gone are the days of 'well, we got enough out of them and we like the people so we'll keep going.' They understand what they reading and they don't just look at the bottom and say 'wow, look at all these impressions.' They are saying 'where were these impressions coming from and how did you get them?' Or they even know themselves. And a lot more companies are hiring, and this has happened a lot as of late, people from the agency side into the client side because they are worried about covering their behinds.

DA (LeeAndrews Group): That's a good point. Because what you're doing now is that you're not negotiating with someone who doesn't have the.... you're negotiating with a former agency person who says 'I did that.' Where as before it was like 'ok, we're the expert.'

PP (independent entertainment publicist): Right, it used to be the marketing person more knew PR as a function they need to have but it's not the focus of their day or initiative, so they kind of let things go.

JH (PRWeek): How about those of you who are retaining PR firms? What's going on inside?

Simon Sproule (Nissan): I think we are, I speak just for Nissan, every program has to be cross-function approved. And I have a budget that I am given at the beginning of the year, but in each individual project, over a certain budget has to go to a cross-functional review. Now that's not typical. I think every company has its own methodology. We very much involve the agency in that process because these are sort of the gateways to the program and the group. So unless the agency is fully engaged in the process and the group then I don't think we're going to get the maximum out of it. But we have to justify internally every dollar we spend. But I do think the opportunity is there. I really do. I think the...I mean we were discussing in a meeting the effectiveness of advertising and how it continues to be under attack, and how the third-party word of mouth continues to be seen as a more credible form of communicating, and so that's our business. So we do have the opportunity. And I believe that any CEO with his head screwed on straight will give funding for well thought out programs that will deliver results.

Gail Becker (Edelman): Just going off on what Simon said, one of the things that I think has been one of the drivers of the new engine, which I think is pretty active right now, is that there are a lot of clients who are looking at PR either A, as people who didn't really before consider it as a option or who are really looking at it in a very smart and strategic way to sort of make up for what is happening in the advertising industry right now. They are looking for more buzz campaigns or more lifestyle campaigns. And I think that has really been a terrific thing for us because those are really the kind of programs we excel at doing and it really also elevates the whole notion of public relations because in some more traditional companies public relations was sort of put off to the side. And what we are noticing today is that a lot more companies are looking at public relations in a different light and I think that is great for the whole industry.

James Boyd (Singapore Airlines): On the corporate side, with the airlines, there is much more of an expectation from PR than we have ever seen. There is also a lot more of a buy-in at top management levels in terms of what PR can accomplish. So management believes, which is great. But at the same time, correspondingly, we're not seeing break through in budgets. In fact last year, SARS was stifling...I think we went though a four year period where there was some hugely devastating event whether it was a war, a build-up to a war, SARS, economic crisis, September11th, etcetera. And with aviation, the change in consumer behavior is almost instant. So the budget changes can be almost instant, which is may be different from other businesses, perhaps not. So the expectation is still there. Management believes in what PR can do to help address the problem but we're still working off of budgets that were cut post-September 11th. We're still working at that same level. Interestingly enough, though, agencies that step up to the plate are delivering a better result for those lower dollars, and that's also because we are watching every dime. We are looking at every single document that comes through. It's a much more careful process.

JS (Fleishman-Hillard): The flip side of it, Gail was saying, I think if you are looking for new business you have to be significantly more entrepreneurial in how you conceive of a new business approach. If you are waiting for RFPs, there certainly are more of them than there have been maybe a year ago. But there still aren't enough. They're far more hotly competed for. And again, underneath those RFPs, there may not be the budget, there may be less than meets the eye. We have a good reputation so a certain amount of work comes over the transom but beyond that the strategy we are pursuing particularly on the public affairs side is that I am working with people and hiring people who can envision the kind of business we would like to do and start making approaches. And I've actually had more success with that, getting people to think about what PR can do for them in a way they hadn't thought about before. I think in the long run that is probably the most effective strategy to build clients. I still think there is a giant gap between what we all are capable of doing and what the market understands we are capable of doing. There again compared to other forms of communication, there is so much more value to what we do but I think there is a huge landscape that has not been trod upon before and people need to understand the value of what we do.

JD (GCI Group): I think that one of the benefits of this period for all of us, all of our agencies are investing in measurement, are investing in predictability models in terms of being able to show in advance what you can deliver in programs. And I think we're putting a lot more attention into that today and certainly over the last couple years than the four or five previous ones. And the outcome of the corporate environment really focusing on every dollar makes us more accountable, and I think over time it can elevate what we do, and elevate our presence in the market.

Marie Kennedy (Amgen): I'd like to offer some perspective on that from the client side in terms of a couple of ROI questions. I think there is a little bit more to it and it's going to vary from client to client. But a lot of times what happens is your corporate communications people understand the value of it. They know how we can work with you. They know how important you are to be an extension outside. But a lot of times you are dealing with senior level management that's never even been in a communications function or run a commutations function so you don't instantly get the same prestige as a BCG or another type of consulting. So the challenge is educating executive as to why you need outside counsel, and why you can't just do it yourself. And I've seen actually over the years how its not that the PR work is going away, as a few of you mentioned...Its about the expectation that 'why don't we do this with our own people? We should be having people that can think this way. Why do we need the outside counsel?'

PP (independent entertainment publicist): Tell them how much it really costs to hire somebody like that.

MK (Amgen): That's the challenge for your senior level communications clients, is giving them the tools, the information, and the proof of why and when you need outside counsel.

JH (PRWeek): Are the corporate teams getting any bigger, staffing up?

SS (Nissan): We're hired. I wouldn't say staffed up. We've certainly added.

PP (independent entertainment publicist): It's an obvious statement, but I think it's important; it's a buyers market. When I'm interviewing potential agencies for a small piece of business we're getting all kinds of input and firms that aren't even in our space are in it. And all the sudden, even from last year, the fee is half. And they are even coming in with a fee structure. Not even pitching the business, but saying, 'we can do this and here is what it is going to cost,' and there is no, there is not a lot of negotiation or 'lets wow them first and then see what we can get as a fee structure.' Its 'we know you don't have a lot of resources and we want the business and here is our offer.' And that's different. And a lot of firms are just getting undercut and they don't even know it's happening to them because it's an aggressive way to handle it. It's not the majority giving you a fee structure right away, but it's happening a lot more.

MK (Amgen): The positive side is there are a lot of talented agencies out there. And we just went through a corporate search a while ago and I wanted to hire everybody. And I say that seriously, because I've been through lots of searches where you didn't, you were kind of making lots of compromises about who you hire and you all have a lot of competition out there. There are some really good agencies out there, lots of experience, lots of good people. So it's a tougher decision for the clients to make and there is lots of choice. So you are making decisions based on other factors like relationships and knowledge of the industry and all kinds of things that maybe make it easier for you to get started.

JH (PRWeek): And that's a change in your mind? What has changed there, has the quality overall gotten better?

MK (Amgen): I think our industry has come a long way, there are a lot of professional people with a lot of experience now. We're an experience-based industry. You can go and get a degree in communications but until you've really been out there...and PR is becoming a more important part of every business and we are all getting more experience and so we have that many more experienced counselors out there.

DA (LeeAndrews Group): That's a very good point because it leads to the second question which is we find a lot of clients looking for subject matter expertise. It's not a matter that you can communicate and know all the tools, but that you understand the subject matter. So that's a good point. And you have a lot of people who would not be considered PR people because they have backgrounds that are very heavily in technology or whatever their subject matter is, but that have gone into the communication of that expertise and one or two or three person firms.

JH (PRWeek): So what is the talent pool like, for those who have hired in the past six months or a year? What are you finding? Are you finding quality people?

JS (Fleishman-Hillard): I've made two fantastic hires in the past few months. Both VPs. And I was thrilled to get them. And what I was saying earlier that what I like about them in addition to being very skilled and experienced, is that they have a lot of energy and imagination and I thought that once they got their feet wet they would be able to help me conceptualize and go after new markets in addition to being able to help me service the clients we have. One of the things I have definitely found true since I came into this situation about two years ago, I am the second most senior person in the group I took over, is I think the clients want to see more senior people. I love hiring and mentoring and bringing up these young people and I've done that most of career, but just lately, I really need to throw people out there who have a lot of experience and depth. And I'm finding them.

JH (PRWeek): From other agencies?

JS (Fleishman-Hillard): I have to admit, the two people I hired, one of them had a small agency of his own. The other one had worked in a corporate capacity but had an agency background as well. And then I looked at some other people...including, I have the budget and there were people out there to hire that were maybe not quite the right fit but I can see...but I'll keep looking so I can hire all the great people I want.

JW (Ogilvy PR): There is an enormous pool of freelancers out there from people who have been down-sized from agencies and a lot of them are happier doing that. And then there are others that I get constant emails and phone calls from asking if there is anything opening up, etc. There are a lot of really talented people out there, and they just can't find the right opportunity.

MK (Amgen): Our challenge is a little different because we happen to be an industry where I rarely find somebody that has worked in the biotech industry or maybe the pharmaceutical industry. So you sort of know who those folks are, it's not a huge pool. And the challenge is to really find people who have content based experience versus being in places where they've gotten nice titles and we need content. But we've had success with people who come from other agencies. It's just a much longer assimilation process but we've had great success there. It's definitely an employers market right now in terms of hiring. I can't even count the candidates I've interviewed in the last year. There are an enormous amount of people out there looking for work, wanting to get into our industry. But I've made some incredible hires. I feel really great about the people we've brought in and it sort of re-enforces that there are great communications people out there and if you take the time and look deep enough and not get stuck on their title and really look at the kind of work they did, you find some really talented people out there.

SS (Nissan): We've taken, up to this point; the people we have brought into the department have actually been in-house. I think there has been a turning point, and this goes along with the credibility of the industry, that PR was the dumping ground for failed marketing-sales people, which I've seen that at other companies, it's sort of the sleepy end of the building. But at the same time if you look at a large organization like the one I work for, the meeting people's expectations is very tough.... And we so we've been looking laterally at having people come on to PR from other departments on assigned time rotations and having people go out to other functions on assigned time rotations. And we've reached down; we've got a couple recently that have been very successful. And it also spreads the word of communications to other areas, so we recently had a guy in sales, and he came in and he's been really good, and he's been preaching the word of communications to his organization, so credibility for communications has gone u pin that area.

JH (PRWeek): Anyone else? Not so much on the agency side then?

GB (Edelman): Well we've had a lot of hires and I pretty much agree that the market has been really, it's an employers market. The quality of people out there is really impressive and its even senior people looking at jobs that are more junior to them, but they really want to get back in for whatever reason. From that point of view it has been very encouraging. You know, we always put all of our money into our people because that's our business, so it's been really great.

JH (PRWeek): What about senior resumes coming your way from people that are in jobs? Is that happening? Is there a lot of looking around going on now that things are looking up?

Debra Nakatomi (Nakatomi & Associates): I've seen a lot of senior level consultants that want to do joint projects. Mine is the smallest firm, also, and there are a lot of very qualified people that are looking for work, are looking for clients, are looking for new connections in the industry. And people with resumes with ten or fifteen years in PR corporate side as well as agency side.

JH (PRWeek): We've been hearing a lot about this in NY, so we're curious if it's the same thing out here. We keep hearing about senior level people, especially on the agency side, jumping around.

AC (PRWeek): Maybe we'll jump around a bit. With Martha (Stewart) maybe heading for jail, I'm curious what your bosses think about corporate communications these days? Are they a bit more nervous or relying more on your counsel? Or are they just keeping quiet and ducking for cover?

Chris Petrikin (William Morris Agency): In my world Michael Eisner has had more effect than Martha Stewart, because we are in the odd position of being a service business, but communications in a service business, so that is one of our buyers. So the fear of the instability that could cause is much more... I mean I don't hear anyone talking about Martha other than the day she was convicted.

AC (PRWeek): In terms of corporate scandals, do you find that the agents around you are more nervous about talking to the media, or do they just feel that it doesn't have anything to do with them?

CP (William Morris Agency): I'm kind of the odd duck here because we are a privately held company and traditionally very close to the vest. My position has only existed for what, twelve years I think. And especially because I've seen both what Paul said about the sophistication, and they realize the need for me. I'm no longer a luxury item. There is a purpose for us all and they are starting to see where that can pay off. Especially in our business, a service business. I don't think corporate scandal has, because we're not publicly traded I think we generally have the senior people be the spokespeople or tend to talk. And again, there are more things influencing the state of our business than the scandals out there. I mean knock on wood, if there is some huge David Begelman scandal again, or Heidi Fleiss or something...

PP (independent entertainment publicist): I do think regardless for anybody in any field of media relations whatever their purview is, that is another example you can put into your arsenal when you're pitching a piece of new business or dealing with your client in-house about the fact that there are pitfalls and if you behave a certain way, its going to come back and get you - whether we look at how things have played out in the entertainment arena in the last few weeks to Martha Stewart, etcetera. I've even had conversations with executives who have said to me if 'I were her counsel I would do this,' and that's a good thing. They are thinking about it and that allows me to use it as a tool and say 'look, we know if we do this we have a prime example recently that its going to nail us or what have you.'

CP (William Morris Agency): It's a good lesson in honesty.

PP (independent entertainment publicist): Or a good lesson in getting out in front of your own story. There are many things to take from it.

JW (Ogilvy PR): There will be case studies about it. She did everything wrong, I mean from the get-go she did everything wrong.

MK (Amgen): She probably got really good counsel and ignored it.

JH (PRWeek): There's a story on Monday about that.

MK (Amgen): Well, corporate governance, the whole corporate governance has really been, has not really been fair to corporate America. I mean, I think as counselors we can all say that. I mean, what's happened in, there has been so much focus on the scandals it is not really representative of corporate America. And it would behoove corporate America to speak out a little bit more and be willing to talk about good corporate governance, that it is actually the norm not the exception. And I am fortunate to work for a CEO who feels pretty strong about that. The problem is the executives are a little timid about getting out there and speaking on it, because God forbid they get out there and speak on it and then they find out that there is a problem. But I actually work for a CEO who decided, 'I would like to be vocal about good corporate governance and why it is important, our relationship with the board of directors and why that is so important,' and we've been out there talking about corporate governance. But its, the hard part is the media has chosen to spend much ink and time and energy talking about these stories because they are horrific stories. But the challenge is the media is not going to write about good corporate governance. That is not a story. And the Martha Stewart situation, there are lots of little people who get punished everyday for doing the same thing, its just what the media can do with that story versus the story of Martha Stewart. The challenge is to try to get the media focused on good companies, good corporate citizenship, philanthropy, the great things that our companies are doing.

SF (Ketchum): What's unfortunate for those of us around the table is that the media and people in general are far more interested in corporate irresponsibility as opposed to corporate responsibility, so it's a constant challenge for us.

SS (Nissan): I see a real rise is CSR. I'm hearing it every day now, and I think it's a great opportunity for us to actually be central in our organization, driving good standards. You mentioned Martha; it's a uniquely American case. You know, I work for an international company with its head office overseas and so any scandal anywhere in the world can affect anywhere. So that's one of the risks that we face, that our industry faces. With the new market open in China, there is going to be a lot more focus on what China. And it certainly behooves all of us to really make sure that the companies we are partnering with and the suppliers and so forth, knowing what they are up to. It would be very easy for a 60 Minutes film crew to go to China and start poking around with suppliers and unearth the fact that our alternators are made by three-year-old children or something.

JD (GCI Group): This is the kind of thing that continues to help us expand our industry. Talk about corporate governance or the off shoring of jobs, you look where we can connect what we do directly to return on investment and directly to corporate strategy. I mean, off-shoring jobs, you have to do it to respond to Wall Street pressures to reduce costs. There are certain things you have to do that from the back end attract the media and the public eye. Our ability to come in and make the connections with communications helps our business to continue to get in front of the right people in corporations. CONTINUED: 1/2

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