Things are tough all over these days, and that's not just some slogan dreamed up in an ad agency boardroom.
In fact, executives at several Utah advertising and public relations firms readily admit that the past few years have been a struggle.
When the dot-coms turned dot-gones and the economy headed south, advertising budgets often were the first places companies looked for cuts. The result for many local PR/advertising agencies has been layoffs, closures, consolidation and buyouts by national or international firms.
But many agencies have survived, and they've done it by finding solutions as diverse as the businesses they serve.
Bill Paulos, chief executive officer of the Summit Group Communications in Salt Lake City, estimated that a dozen local agencies have laid off 200 or more people in the past 18 months, and several of them have landed in his 30-person shop.
"From that, I deduce that things aren't going that great overall," said Paulos, calling the local advertising/PR market "stagnant."
"It's not a sterling market right now."
But Paulos and others in the industry say that if the economy recovers sooner rather than later, the future should have more luster.
Keeping perspective
Paulos' agency is celebrating its 20th birthday this year, which gives him some perspective on the twists and turns of Salt Lake's advertising and PR market.
"As other agencies have become more boutique-like . . . we were gathering resources internally and becoming more broad to be a full-service communications firm," he said. "I think that is one of the things that has helped us survive."
He said the departure of several corporate headquarters from Salt Lake City hurt many local firms, leading them to shut down or sell to national agencies. That process accelerated when the dot-com boom of the late 1990s went bust.
A couple years ago, Paulos said, the Summit Group lost a handful of employees to hot new firms focusing on Internet and technology companies. Out-of-state agencies also tried to establish themselves here, playing to the Utah tech industry.
"They're all gone now," Paulos said.
"We avoided the dot-coms intentionally. I questioned our business strategy at that time . . . (but) it was a classic case of being lucky."
Finding a balance
At Salt Lake-based Richter7, a downturn in advertising revenue has been balanced by a surge in other areas of the business.
Richter7 is a full-service agency that employs 40 to 50 people and ranks in the top five in billings among Salt Lake agencies. But it has seen changes, starting 31 years ago when Bob Fotheringham founded Fotheringham and Associates, which evolved into FJCandN as new partners came on. The firm became Richter7 last year.
Agency partner Peggy Lander, executive vice president of client services, said the arrival on the local scene of national and international agencies has not caused much of a problem for Richter7, because it competes more for regional clients. The 2002 Olympic Winter Games and the national recession had a much larger impact, she said.
"We saw a tremendous surge of activity leading up to the Olympics, and then right after the Olympics, as an industry, we saw kind of a down-surge," she said. "In the last couple of months, we have seen a resurgence as companies are trying to build market share and brands."
Partner Tim Brown, Richter7's executive vice president of public relations, said that side of the agency has been "going crazy with business" as executives have realized they need help with everything from publicity to labor relations and crisis management.
Lander agreed. "Just by the economy alone, (companies) have had to cut some of their advertising dollars, and in order to still have some awareness in the market, they're turning to public relations. They don't want to go completely dark."
Pooling resources
Publicis-Dialog of Salt Lake City faces different challenges. A 35-person office with $50 million in billings, it is part of a Paris-based international agency that purchased the local EvansGroup about 3 1/2 years ago.
Connie White, executive principal managing director for Publicis-Dialog, said she does not deal with many local accounts, but she has seen changes in the last few years.
"I don't know anybody that hasn't been affected by the downturn," White said. "We eliminated our PR division last year and merged with our New York office for direct marketing and public relations, so that has helped us, because we've been able to pitch with our other offices."
The switch meant layoffs, she said, but "you just have to do that to have the fluctuation with the economy."
White said she thinks the recent shakeout has led the local PR/advertising industry to fragment into smaller shops.
"There's a lot of little creative boutiques that you compete against, and the big shops have, for the most part, remained stable. . . . There are a lot of small high-tech firms that can support these little creative boutiques," she said.
Bringing it together
Although probably not small enough to qualify as a "boutique," Salt Lake-based Axis41 has dealt with questions of size, competition and growth.
Steve Wiest, an Axis41 partner, and Ron Pynes, managing partner, joined with Reed Wright to start the business a couple years ago after they represented different disciplines on a product launch for Novell Inc.
"As we launched this product, we had our individual agencies that we were working with, and by the end of it we nearly killed each other, because we were trying to cross over and trying to make sure the look and feel and consistency was there," Wiest said.
"After the launch, we kind of sat back and said, 'Wouldn't it be nice if an agency could take care of all of our needs and truly integrate marketing?' That's how we got the concept."
Axis41's core concept is that all marketing and communications are tied together, Pynes said. Its concept has attracted clients and employees despite the downturn, and it is now a 15-person shop.
Wiest said Axis41 is growing because more businesses are realizing that now may be a particularly good time to spend money on advertising and public relations.
"In working with our clients, those who are really putting the money and the investment toward advertising at this time are really seeing the benefit, because of a lack of noise out there," Wiest said. "We are trying to push our clients to take this time to get out there and see the strengths in the industry, and they will reap the rewards a year or two later."
Narrowing the focus
Another small firm that has survived 20 years in the Salt Lake market is Zabriskie and Associates. Company president Dale Zabriskie and vice president Michele Zabriskie said their five-person shop has done well by focusing only on public relations.
"At one point, we were 12 people thinking, 'Gosh, how big can we be? We could be the size of a big ad agency in town.' And we just realized, wait a minute, life is too short. We were at the point where we had to take on accounts just to feed the overhead," Michele Zabriskie said.
"We enjoy what we're doing . . . so we changed our mindset and our focus. We haven't wanted to get bigger. We haven't wanted to be a part of an ad agency."
She said her experience has shown her the PR industry moves in cycles, and while it is at the tail end of a downturn now, she thinks the future looks good.
Looking down the road
But the Summit Group's Paulos said the industry's pain is not over yet — and that's not just a slogan, either.
"I think we're probably looking at a couple of rough years . . ." which could mean more consolidation, he said. "I think there are too many of us, and I think that's been an accurate statement for some time."
Publicis-Dialog's White said she is optimistic — but not giddy — about the future.
"All of our clients are moving forward cautiously," she said.
Richter7's Lander said Salt Lake City's rising presence on the world stage will help local agencies, as will the area's large pool of talented PR and advertising professionals.
"I think we'll continue to have eight, 10 or 12 large agencies in town, and then some medium-sized or some smaller agencies to accommodate clients that need that," she said.
Despite the industry's challenges, Wiest of Axis41 said he is looking forward to the next few years.
"There's no question that over the next two to three years, it's going to be interesting in our arena," he said. "I think we're really excited about the state of advertising and where it's going."
E-mail: gkratz@desnews.com