PR spending may be rising
West Bancorporation Inc., the bank holding company that has made two acquisitions in recent months, plans to boost its investments in other areas this year, too.
The parent company of West Des Moines State Bank expects to spend about 22 percent more marketing itself this year than it did last year, according to Katy Mackay, the bank’s vice president of marketing.
The bank plans to increase its outlays for advertising and direct mail. About half of the new money will go toward public relations, and the bank recently hired West Des Moines-based Hanser & Associates to handle the new tasks.
“It’s a very strategic initiative and it’s the right time to do it,” Mackay said. “We value our relationships with our customers, investors, employees and the community. Good communication with them is important.”
Though Mackay declined to say how much the percent increase equaled in dollar figures, any sign of a turnaround in corporate marketing spending would be welcome news for Central Iowa’s public relations and advertising agencies. The industry has been among the hardest hit by the economic downturn, the worst for that industry since World War II.
Last year, CMF&Z, once the state’s largest public relations and advertising agency, closed its doors, a victim of client defections, staff departures and workforce reductions. The Meyocks Group, a Des Moines-area agency that is owned by Hy-Vee Inc., has also had to cut staff due to lost clients. Other agencies have struggled.
The shift in spending for some comes as U.S. economic indicators show improvement. On July 24, the Labor Department said that initial jobless claims fell below 400,000 per week for the first time since February. Most economists consider 400,000 initial claims to be the dividing point between a job market that is improving and one that is in decline.
Earlier this month, the National Bureau of Economic Research declared that the recession that began with the bursting of the Nasdaq Stock Market bubble in March 2001 ended eight months later. That news was greeted with little fanfare, however, because of the large number of unemployed people across the country.
The Integer Group, which is currently the state’s largest public relations and advertising agency, has won customers and hired workers to handle the new accounts, according to Frank Maher, its president. Overall, the agency has increased its staff by about 25 percent in the past 10 months and now has more than 100 employees. In recent months, the agency has won new business from such existing clients as Maytag Corp., Pella Corp. and Garst Seed Co. Integer has won new accounts, too, from Meredith Corp., Wolfe Clinic, Dice Inc. and Dairy Management Inc.
“There’s not a whole lot of secrets to how agencies can be successful,” Maher said. “All it really takes is having the very best people at the right place and the right time. We’ve been mining people in Iowa and across the country to attract and hire the best people we can.”
One of those new hires is Delaney Lynch, whom Integer brought on last week as executive creative director. Lynch had been with BEN Marketing in New York City, and had worked on strategic development, art and writing for such Fortune 100 clients as Coca-Cola Co. and American Express Co.
Another is Tom Gahm, who came to Integer from Meyocks. Gahm is Integer’s vice president and director of public relations.
Though Integer’s business has improved in recent months, Maher was skeptical that the outlook for his industry was changing. He said Integer’s fortunes have been helped more by hard work than a better business climate.
“It’s a very difficult time,” Maher said. “You’d be hard pressed to find anybody who would buy off on the fact that the (advertising) recession has officially ended and that all is green clover ahead. The fact that we’ve been fortunate enough to increase our revenue and our staff is testament to all of the solid blocking and tackling we’ve been doing.”
Nationwide, advertising dollars appear to be flowing back into the broadcast television market, but not into print media, especially newspapers, according to a recent story in The New York Times.
Further hurting newspapers has been rising rates of unemployment, which has lowered their revenues from sales of classified help-wanted advertising.
Ron Hanser, president and co-founder of Hanser & Associates, said businesses are increasingly turning to public relations professionals to repair reputations that have been damaged in recent years and because mentions in news stories is seen as more credible media exposure than purchased advertising space.
“Chief executives and marketing executives are saying that it’s time to kick their company’s marketing efforts into high gear,” Hanser said. “Public relations is increasingly seen as an excellent way to build brands and reputation.”
In addition to West Bank, Hanser & Associates has won more business from RSM McGladrey. The consulting firm plans to spend 25 percent more on marketing than it did last year, according to Marketing Director Connie Benning.
A recent survey showed RSM executives that most Iowans associated the firm with the accounting and tax-related services it provides. Many survey respondents weren’t aware of RSM’s other capabilities.
“We’d like people to know that we do human resources consulting, information technology consulting and strategic planning,” she said. “It’s not something we can do with advertising alone.”
For whatever reason, the company is getting more exposure. Last month, it was featured on the cover of Iowa Commerce magazine. Benning said RSM has is hiring more experienced marketing executives, and that its marketing department now has three workers based in Iowa. RSM hired Hanser last fall, she said.
West Bank is hoping that the increased spending will give it more exposure, leading to more customers.
“We’re getting more opportunities to tell our story,” Mackay said.