Thursday, Nov. 13, 2003 | 11:27 a.m.
R&R Partners, which has held the lucrative Las Vegas Convention and Visitors Authority advertising contract for the past 22 1/2 years, has won a five-year contract extension and a new option for five more years from the LVCVA's board of directors.
The board on Wednesday voted unanimously to extend R&R's contract, valued at $60 million a year. LVCVA officials said that includes payments to newspapers, magazines and television stations for advertising, but they did not have a breakdown of how much money actually goes to the agency.
If the LVCVA board was dissatisfied with R&R's work, it could have issued a request for proposals, conducted a competition, reviewed work and awarded a new contract beginning July 1.
Billy Vassiliadis, chief executive of R&R, and a team of company executives drove home the point that in its last 4 1/2 years as the LVCVA's advertising agency under the current contract, R&R has provided "the right message at the right time."
Vassiliadis explained that R&R was able to provide proactive as well as reactive ad campaigns in the face of declines in visitation following the Sept. 11 terrorist attacks and competition from Indian casinos in California.
Vassiliadis and his team then described the agency's efforts since it won a competitive bid for a five-year contract plus a five-year option in March 1999. He recounted how the city evolved following the opening of the Venetian, Mandalay Bay, Bellagio and Paris properties and the agency's "Las Vegas -- It's anything and everything" campaign.
R&R then developed its "Las Vegas -- What you want, when you want" campaign including street marketing and an intrusion strategy, with messages delivered to unsuspecting consumers in public places using unconventional approaches.
Vassiliadis also explained how the agency used grass-roots research to determine that visitors to Las Vegas identify their trips to the city as a way to manifest their freedom. That link led to an ad campaign espousing freedom, including a campaign for a fictitious presidential candidate belonging to the "Freedom Party" and the development of the vegasfreedom.com Internet site.
R&R also worked to beef up the convention business in Las Vegas with a campaign saying, "We work as hard as we play."
Then came the terrorist attacks and the resulting downturn in tourism and the agency went to a reactive mode. Vassiliadis explained how existing ad campaigns were abruptly canceled, but the agency huddled with LVCVA executives and refocused its message to regional audiences most likely to consider Las Vegas for short trips.
The return of visitors, which Vassiliadis called "the New Normalcy," was greeted with multicultural campaigns, the revamping of the LVCVA Internet sites and a new ad message illustrated with stories about tourists' adventures in Las Vegas and the tagline "What happens here, stays here."
Vassiliadis said the "Vegas Stories" campaign struck a chord with visitors nationwide and the agency plans more similarly themed ads. A USA Today Ad Track survey concluded that the Vegas Stories ads were the most effective of any TV ad campaign and the sixth-best liked on television.
He warned critics of the campaign -- who have said messages touting Las Vegas as a naughty place where anything goes are detrimental to the destination -- that the ads will only get more risque.
He noted that controversy over the content of the ads has only generated more publicity for Las Vegas. When British media rejected ads showing a look-alike of the queen at a craps table and the National Football League did not permit Las Vegas to advertise during the Super Bowl because of its reputation as a gambling mecca, the city's ad campaigns became the subject of talk-show hosts and front-page coverage in national publications.
The renewal of the contract Wednesday was not surprising, considering that the LVCVA's staff had recommended exercising the option for another five years. But what was surprising was that the LVCVA board approved adding a new five-year option at the conclusion of the current agreement. That means R&R could hold the contract for 15 years without a competitive challenge.
"R&R's done a fine job for the LVCVA and they have earned the right to the option if that's the way it was drawn in the original contract," said John Schadler, managing partner of Schadler Kramer Group Advertising, the No. 2 ad agency in Las Vegas behind R&R by billings.
"But it seems like 10 years is a long time to go without opening up a review with other qualified agencies both from out of town and in town," he said.
He said he was unaware the LVCVA board was going to consider awarding a contract until Wednesday morning.
Schadler called the prospect of R&R holding the contract for 15 straight years without a competitive bid "kind of extraordinary." But he concurred that the review process can be an expensive undertaking and not something the LVCVA should be requiring too frequently.
"These pitches are expensive to do," Schadler said. "But it's something we would have considered because we have 75 employees now and have grown considerably over the course of the last few years."
R&R had $173 million in capitalized billings in 2002 while Schadler Kramer had $47.5 million. "Capitalized billings" is a formula ad agencies use to reflect total revenue and includes media commissions, production billings and agency fees.
While the renewal of the ad contract for R&R was not surprising, it was by no means a slam dunk.
R&R for 16 straight years held the multimillion-dollar state tourism advertising contract awarded by the Nevada Commission on Tourism. But when the contract came up for renewal in June, the commission awarded the bid to DRGM Advertising and Public Relations.
A representative of DRGM could not be reached for comment Wednesday on whether the agency had hoped to be considered for the LVCVA contract.
After the vote Wednesday, Vassiliadis, who had 40 of his employees in attendance at the meeting, said there was no additional pressure in succeeding with the LVCVA in light of the Commission on Tourism's ad contract decision.
"We gave it everything we had," Vassiliadis said, "but we never worked less than as hard as we could."
He said R&R was in a pass-or-fail test with the LVCVA, which may have been harder than a competitive bid.
"If we would have been competing, I'm sure we would have put in more about what our vision is for the future, but for this, we wanted to highlight all the work we've done and the results we got."
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