Wednesday, Dec. 9, 1998 | 11:43 a.m.
Nearly every member of the Las Vegas Convention and Visitors Authority board of directors praised R&R Advertising's handling of the agency's marketing and advertising.
But when it came time to decide between a contract extension or putting the deal out to a competitive bid, board members opted for the option that would produce less political heat.
After acknowledging they would need R&R's expertise more than ever in the difficult months ahead, the board voted 9-2 to issue a request for proposals for a new multiyear advertising contract -- a pact that has grossed millions of dollars for R&R in the past 18 years.
The board rejected the advice of the LVCVA staff, which now has to draw bid specifications and contact potential bidders in the next three months. And, the board defeated a motion that would have authorized a three-year extension of the ad contract, a compromise to the usual five-year extensions that had been given in the past.
The bottom line for the board: that the momentum that could be lost in a potential transition from R&R to a new agency would be worth improving the public perception of the LVCVA's relationship with its ad agency.
Critics have long maintained that R&R has had a sweetheart deal with the LVCVA. A contract that R&R Chief Executive Billy Vassiliadis said this year generated $26 million to his company and some estimate could total $45 million next year has been put to bid twice in more than 18 years.
Since the original three-year agreement was reached on July 1, 1980, the deal was extended three years each in 1982 and 1985. In 1989, a contract was approved to R&R after three agencies made presentations. In 1993, there was a review of R&R's work before giving it a five-year extension.
Ironically, it was Vassiliadis who recommended that the contract be put to a bid this year. In a letter to board members, Vassiliadis said the credibility of the LVCVA and his agency were at stake.
"I would not want R&R or the authority to be cast in a negative light driven by adverse public perceptions," Vassiliadis said in a Dec. 2 letter.
He acknowledged there are critics who will continue to say the letter and the board's action are an elaborate charade to blunt criticism of a relationship that will continue after a temporary setback. He specifically named Venetian resort developer Sheldon Adelson and members of the press as being the conduits of that criticism.
Although R&R will have to bid for the job -- Vassiliadis said his team was going to go to work on it that day -- board members and LVCVA staffers made it clear they were happy with the job R&R was doing. Much of the debate in Tuesday's LVCVA board meeting was a philosophical discussion about the merits of business people making decisions in the best interest of their companies vs. elected officials deciding what's fair when spending public money.
Board member Don Snyder, an executive with Boyd Gaming Corp., led the charge for extending R&R's contract while Las Vegas Councilman Michael McDonald countered with a plea for putting the issue to a bid. Snyder ended up convincing two elected officials to see his point -- Clark County Commissioner Mary Kincaid and Mesquite Mayor Ken Carter. Banking executive Dave Smith, a private-sector representative on the board, also voted with Snyder.
But it wasn't enough. After the proposal to extend the contract failed, the motion to seek bids was approved 9-2, with Snyder and Carter dissenting.
The favorable comments about R&R throughout the meeting prove the company is still the favorite when the bid competition begins. But at least two companies expect to give R&R a run for its money despite the long odds.
Joe Merica, president of The Merica Agency; and Michael Mayes, president of DRGM Advertising, say they haven't officially decided whether they will bid -- a process that could cost about $50,000 -- but they're studying it. Merica and DRGM are among the largest local advertising agencies behind R&R.
"The fact that they've had it for so long, the fact that they've fully integrated their firm into what the Las Vegas Convention and Visitors Authority does," makes R&R a formidable competitor, Merica said.
"I absolutely think the LVCVA ad contract is one of the plums in the whole western United States," Merica said. "The stakes are very high for the city. And, the fact that you're dealing with the most powerful people in the state are a big benefit to having that account."
Mayes said his company would only submit a bid if it were invited, since the company's ethical stance rules out making a pitch for any company already served by another ad agency.
"It's going to be hard for other agencies to take that business away," Mayes said. "In all fairness, they must have done something right to have that contract for so long."
Mayes also said R&R would have the advantage of knowing the current ad campaign and what the LVCVA likes. R&R also should be able to devote resources to the proposal easier than its challengers.
"It's all going to depend on how the RFP (request for proposals) is put out," Mayes said. "If this is about strategic thinking, we have a chance. Everybody is excited about the Convention Authority making this decision because we'll get to showcase our talent and show what we are capable of doing."
Since companies submitting proposals have to have a local business license, some have speculated that local companies may team up with national advertising powerhouses to compete with R&R.
"We're proud of what we've done for the (tourism) industry," Vassiliadis said. "We're ready to prove what we can do. Let's get it on."
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