When TeleSign, a fast-growth Los Angeles security startup, went searching for a new PR firm late last year, it skipped over some of the area’s largest agencies in favor of the small and midsize ones that seem to thrive on the West Coast.
Sondra Magness, TeleSign’s director of corporate communications, who has worked with larger firms in the past, didn’t see it as a good fit this time, she says.
"We wanted to be a priority client," Magness explains. "We were looking at that smaller to midsize firm that has a bench they can pull from to fully support us, but not so much that we’re getting lost in the crowd. As a smaller company, you definitely want a partner that is going to meet you where you’re at."
That’s an attitude many say prevails in LA, the country’s second-largest city by population, but at best, a third or fourth market for the communications industry. Lacking a significant number of Fortune 500 global headquarters that enrich places such as New York and Chicago, the sprawling metropolis has remained a challenge for some of the world’s largest PR firms.
"LA has always been more of a boutique-dominated marketplace and the big agencies have always struggled to grow beyond a certain level," says Dave Chapman, who leads Ketchum’s Los Angeles and San Francisco offices as partner and director of the Western region. "All of us are in the same general area from a size stand-point and we’re still competing with the boutiques."
Local expertise matters
Magness ultimately chose Method Communications this January, a midsize firm that only recently gained a toehold in Los Angeles by scooping up Carolyn Guss, who was running her own boutique, Kindling, after moving to the city about a decade prior. Method’s expertise in security, as well as its knowledge of the LA tech scene "was just a huge positive for us," notes Magness.
Guss says clients tell her local expertise matters.
"When they realize we’re here with a local team, focused on the LA market, they say, ‘Wow, I’ve been searching for you,’" she adds. Guss credits a 30% revenue growth in LA from December to January with that successful combo, but also a hot new business pipeline.
The proliferation of startups such as TeleSign in Western Los Angeles, dubbed Silicon Beach, and recent real estate grabs in the area by the deeper-pocketed Google and Facebook, combined with an improved California economy, and the rich content-creation expertise from the omnipresent entertainment industry has gotten some excited about the potential for an LA comms boom.
"The area has exceptional potential in the next few years," says Chapman, who is trying to hire 10 to 15 people between the firm’s Los Angeles and San Francisco offices. "The comms sphere is moving toward having content at its core and LA has the foundational resources, people, systems, and networks in the creative community."
Larger firms seeking higher budgets to sustain their growth often service global clients from LA looking to reach key constituents in the area or as a hub for APAC. Chapman estimates the business led out of the 35-person LA office is 55% non-local companies. Where boutiques tout personal service and subject-matter experts, larger firms brandish global capabilities that are attractive to more sizable or growing organizations.
When Valencia, California-based Sunkist Growers consolidated its PR account under Edelman two years ago, it did so because of the global giant’s reach, combined with its local presence that ensured "face time" when needed, as well as its digital chops, says Joan Wickham, the company’s manager of PR and advertising, who handles global marcomms.
"We were looking for a global team that could be hubbed out of LA," she says. "Our main export markets are in Asia and when we’re looking at emerging markets and see who has a presence where and if the offices are fully owned or affiliates, that list gets smaller in terms of who would be good partner."
As an independent, Edelman, with nearly 150 people in LA, can also compete for startup dollars by restructuring its accounts.
"A startup today is a big company tomorrow and we want to partner with them all the way," says Deb Kazenelson Deane, EVP, group head of the corporate practice in LA. "Depending on the project, we’re able to have more flexibility in how we price it. They might not have the ability to do an ongoing retainer."
Staffing remains a challenge in LA, especially at the mid-level. The city’s entertainment scene is a double-edged sword, too. Content creators and digital storytellers are easy to find, but senior strategists more difficult.
"There is a war for talent here on an ongoing basis," says Jim Delulio, founder of PR Talent and resident Angeleno. "The challenge here is finding people who have that big-brand experience, who have that sophisticated, strategic thinking as their underpinning."