Death of an Advertising Agency:Part 11 of 12 - A Death Sentence Delivered

Posted on August 31, 2007
Filed Under Death of An Advertising Agency |

As Diversified Recruitment Advertising was discovering the true solution to Nevada’s critical labor shortages, the Review Journal was discovering that our solution would have a direct impact on their bottom line. Although we were looking out for the best interests of this community, the RJ was looking out for the best interest of their shareholders (who do not even live in Nevada).

Our discovery of a solution started with the nursing shortage. Our experimentation with LVNurses.com was providing better than expected results. Each day we were attracting nurses from around the country, wanting to relocate to Las Vegas. We found a new supply which is exactly what needed to be done.

Word traveled north to the offices of the Nevada Hospital Association (NHA). NHA members had been battling the nursing shortage for years and were losing the battle. Members were recruiting from each other, luring talent with sign-on bonuses and increased wages - which did nothing to solve the true problem, but created a new problem: a spike in the cost of labor and lower retention levels, leading to a weakened continuity of care.

The nursing shortage was not only a problem in Nevada, but the entire country. Nevada, however, had the lowest nurse-to-population ratio in the United States. With a half dozen hospitals in construction or pre-construction stage, something needed to be done. We had developed the needed solution, one that the newspaper did not want (as they benefit from the ad wars common in critical shortage areas).

Leadership of the NHA approached us to see if we would consider expanding our solution from just Las Vegas, to the entire state of Nevada. After several meetings, we accepted and began transforming LVNurses.com to NVNurses.com. A series of seminars were scheduled where we presented our solution to the healthcare community. At these seminars we would reveal the solution and lead the initiative.

We also began to expand the idea into other industries, focusing next on technology. A partnership was formed between Tech Tuesdays, a technology networking event that Diversified Recruitment Advertising started along with TBAN, the Greenspun Media Group (IN Business) and the Nevada Development Authority. Our technology solution would focus on attracting tech professionals from the Bay area and other tech-savvy cities to Southern Nevada. Our media event to release this solution was planned – the date: September 11, 2001.

Needless to say ,when I was meeting with a VP of the Nevada Development Authority on the morning of 9-11 for the final planning and we witnessed the second plane crashing into the World Trade Center, we knew we would need to cancel the event.

On Wednesday, September 12, 2001, as I drove down Las Vegas Blvd. and realized I was the only car on the Strip, I knew that the business of ‘recruitment advertising’ would soon change. With a fear of travel, which was sure to follow, the casinos would not need the army of workers they had assembled over the years.

My prediction was right, and within a few days the gaming industry laid off in excess of 19,000 workers. Those layoffs created another round of layoffs in the industries that supported gaming. When the dominoes stopped falling, we estimate well over 40,000 people were laid off in Las Vegas.

With 40,000 new jobseekers on the street, employers would not need to do the volume of advertising they once did (as jobseekers would be knocking on their doors looking for work) and we knew our advertising agency would be deeply impacted as a result.

Little did we know – the Review Journal would use the September 11 tragedy to deliver a bomb of their own. On September 20, 2001, we received a letter signed by Sherm Fredrick, the publisher, himself. The letter stated something to the effect of…

”There has been a policy change within the classified department of the Las Vegas Review Journal. Effective January 1, 2002 the Las Vegas Review Journal will no longer recognize agency commissions.”

What did that mean to us? We would no longer be compensated for the hard work of managing the relationship between the client and the Review Journal. We would no longer be commissioned to ensure that the ad copy was placed properly and scheduled to run when the client wanted it.

Bottom line: The RJ was firing their number one sales person (as we were their largest advertiser). Without compensation for our work, we could not serve the client like we did, the client relationships would transfer back to the newspaper, the clients would again have to deal with poor customer service and be subject to the brainwashing ways of the newspaper (that results would be driven by larger ads, in more areas of the classifieds, placed additional days of the week, with bold and yellow backgrounds. And when that did not work, do more of the same).

Ted Stepien warned me of this exact behavior when we entered our relationship in 1995. He had experienced the same behavior from the Review Journal in the 1980s when he owned Nationwide Advertising Services (now known as NAS Recruitment Communications) and assured me they would do it again, even though their director of advertising had promised Ted they would not.

What the RJ had just prescribed the ad agency was a death sentence.