REGIONAL FOCUS: Dark side of the boom

Despite its relative proximity to the make-believe world of Hollywood, the San Diego/Orange County region found 2002 was more like a hard dose of reality TV.

Despite its relative proximity to the make-believe world of Hollywood, the San Diego/Orange County region found 2002 was more like a hard dose of reality TV.

Despite its relative proximity to the make-believe world of Hollywood, the San Diego/Orange County region found 2002 was more like a hard dose of reality TV. Most of the major industries that reside in this 120-mile coastal stretch running from Los Angeles to the Mexican border are still being impacted by the national economic slowdown. And despite some bright spots, most notably automobiles and residential real estate, no one is quite sure when the overall business in the area will begin to pick up. If there was some good news, it was that most area agencies managed to finish 2002 with their doors still open, and a few even figured out ways to generate some healthy growth. But both corporate communications professionals and agency executives in Southern California stress that for the most part these remain challenging times for Southern California PR. "We placed an enormous amount of business last year to basically end the year flat again," says Michael Busselen, GM of Fleishman-Hillard's San Diego office. "Over the last two years, the amount of new business won and the level of revenue it brought in was just as strong as three or four years ago. Unfortunately, there's been a continued reduction in budgets of the clients we work with." Indeed, there is a growing reluctance among some companies in the region to commit to an agency on a long-term retainer basis. "We run a very lean corporate communications department," explains Bill Blanning, senior director of corporate communications at Irvine-based tech company Broadcom. "We do not use an agency per se." Another issue facing agencies is that while there are several high-profile firms in the area, such as Broadcom, Qualcomm, and Gateway, there may not be quite enough of them. "San Diego and Orange County for the most part have a lot of emerging small to midsize companies with budgets that are typically $10,000 a month, and generally that is perfect for the freelancers to handle," explains Jim Delulio, head of the Orange County-based PR Talent recruitment and freelance placement agency. "To build a large 30-, 40-, or 50-person shop in this market, you have to build a brand locally and then reach elsewhere." But others argue that what the region lacks in huge corporations, it makes up for in economic diversity. Orange County is the focal point for a surprisingly wide variety of industries, including medical diagnostic tools, a large chunk of the auto sector, and what's left of the aerospace business. What attracts companies to the area are the same aspects that make it a good location for a PR agency: affordability combined with easy access to major markets. "Our cost structure is lower, which gives us a bit of a competitive advantage," explains David Paine, president of Irvine-based Paine PR. "And frankly, there's a lot more business in Orange County than there is in LA. There are more companies. A lot of the work in LA is from companies that are not based there, but feel the need for a West Coast presence." Auto focus The industry that continues to provide work is automobiles. While Orange County received a scare recently when Lincoln-Mercury decided to move its headquarters back to Michigan, Jennifer McLean, VP/director of PR at Irvine-based O'Leary and Partners, says there's still plenty of car-related work for local agencies. "We've actually picked up two new [automobile] clients in the last year," she says. "Even if some of the marketing folks move back to Detroit, the engineering and a lot of the trends are still going to come from here." Christine Bock, managing director of the Costa Mesa-based wireless specialty shop Bock Communications, adds that Orange County continues to be a great location for an agency with a global focus. "It's very easy for us to hop on a plane in LA and go to London or Hong Kong," says Bock, whose client list has only a handful of Orange County companies, including Emulex. "And logistically, if we're working by phone it's good as well. If we're working with an Asian client we stay an hour or two late, and if we need to hit Europe we come in a little early." While they both share tourism as a major industry, San Diego and Orange County continued in 2002 to economically evolve along different tracts. San Diego got a bit of a boost earlier this year when it served as host city for the Super Bowl. But in many ways the city's economy has been a bit more fragile in that a few of its main industries - most notably wireless telecoms - continue to remain flat or down. Compounding the problem for PR professionals in the area is that the big companies that are located in San Diego don't necessarily look nearby for PR help. "There aren't a lot of big national companies headquartered here that hire a lot of local agencies," notes Michael Olguin, president of the San Diego-based agency Formula PR. "There's a perception out there that you can't get quality service locally. The way we combat that is by parlaying the national business we have to get access to those accounts." Formula recently used that strategy to win the account for cell phone handset maker Kyocera. Chris Romoser, director of corporate communications for Iomega, says his company works with an agency outside of the area, but stresses that's not a knock on local agencies. It's just that Iomega, like some other San Diego companies, were originally headquartered elsewhere and have continued to use the same PR agency they had before they moved to the area. Jackie Townsend, president of The Townsend Agency, says that flexibility has been the key to surviving as a San Diego PR firm in recent years. "We've been doing okay because we diversified," she says, adding 60% of her business is local. "We saw that the internet bubble was going to burst, so we shifted to wireless. But of course it's selling off at a similar rate. Right now our business is balanced between b-to-b and life sciences, which includes wellness, medical devices, pharmaceuticals, and biotech." Townsend says while the San Diego economy is by no means roaring out the recession, she is noticing some increased interest from potential clients in the past 10 months. But she noted that many of these new accounts are working with limited funds, adding, "What you have to do is scale the program to fit the budget, and a lot of that involves focusing more on the consulting and strategy side." Bill Trumpfheller, president of San Diego's Nuffer, Smith, Tucker, says his agency has been doing well in food and agricultural, as well as consumer products, adding, "A lot of the companies are based here, but the work is national." Tourism remains a PR bright spot Trumpfheller also notes that despite a weak economy and heightened security concerns that have made people reluctant to travel, tourism PR has actually rebounded and held its own. That sentiment was echoed by Courtney Simmons, director of media relations for the Legoland theme park, who adds that much of this renewed focus on tourism PR is coming without any increase in funds. "The 2003 budget was finalized last fall, so it's very hard to reallocate funds now," she says. "So there is no new money coming into the PR budget, but the expectations and tasking for the year have changed." Simmons adds this involves more than simply tweaking a mailing list to target media outlets within driving distance. "We've physically gone to markets such as Las Vegas, and with a couple of phone calls and some networking we did four morning-show in-studio appearances, three in-studio radio interviews, and have two very probable print placements," she says. Simmons argues that this type of a regional media strategy is a bit of a necessity in San Diego since there are only a finite amount of media outlets locally, and only one major newspaper (see sidebar). On the staffing side, corporate communications professionals and agency heads in the region say they still receive a huge number of resumes each week, but stress that the salaries for PR executives in the region seem to have stabilized. They add that an account executive with three or four years' experience can expect $45,000 to $55,000 annually, about the same level you can get in Los Angeles, although obviously less than someone with the same level of experience would get in New York. "The salary growth is around 5%," says Paine. "That's modest at best, but it's still an improvement over last year when there wasn't any growth." As for what the future holds for the region, the prevailing attitude is that it simply has to get better. "Companies that have done without marketing and PR for the past two years, they're starting to feel it, so I'm optimistic about the coming year," says Lisa Zwick, SVP and GM of Orange County's Benjamin Group, a Weber Shandwick company. McLean is more cautious. "I haven't seen a lot of clear and tangible evidence of a rebound," he says. "But a lot of companies are taking advantage of the lull to say, 'Okay, these are the things we need to fix now.' So there's opportunity in this lull, especially for firms like ours that are more strategic than general." ----- Limited local media opportunities One of the hurdles to executing PR efforts in the region is the limited reach of the local media. In San Diego, there are only a finite number of media outlets, and just one major newspaper, The San Diego Union-Tribune. And, as Courtney Simmons, director of media relations for the Legoland theme park, points out, there are only so many times in a year that you can pitch it. "In these times where we're all vying for the same placement, we need to really pick and choose our hits," she says. "Because it would be unfortunate to be to named only as a location in a story, instead of being the subject of a major feature." Orange County PR professionals face a similar situation in that there is only one major newspaper, The Orange County Register, along with a few lifestyle and business outlets. But the region does have the benefit of being literally at the doorstep of Los Angeles. "You can attract LA media," says Bill Blanning, senior director of corporate communications at Irvine-based technology company Broadcom. "The only issue is that I like to get into newsrooms, even if it's just to say hello to the people who cover us, and I can't do that as much as I like from here."

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