Ad agency wins three-year contract with Vegas

15 April 2009

LAS VEGAS, Nevada -- The Las Vegas Convention and Visitors Authority on Tuesday approved a new three-year advertising and marketing deal with R&R Partners, creators of the "What happens here, stays here" advertising slogan.

The new deal is shorter than two previous five-year pacts with R&R but comes with an option for a three-year extension in 2012.

The unanimous vote in favor of the deal followed a nearly 90-minute presentation by R&R Partners CEO Billy Vassiliadis.

It came without an open bidding process that would have allowed other agencies to pitch their case for the contract, which in the past five years has generated nearly $400 million in spending by the authority.

"We don't have the time to do on-the-job training for another agency," Rossi Ralenkotter, president and CEO of the convention authority, told the board.

The new contract will go into effect July 1, with the details yet to be approved by the authority's audit committee and board of directors.

The contract isn't based on a stated dollar value but instead covers a scope of services and will be paid from the authority's marketing and advertising budget. In the current fiscal year that budget is nearly $125 million -- about $91.2 million goes through R&R and the remainder is spent through an in-house marketing and sales department.

By 2012, the relationship between the authority and R&R will have lasted more than 30 years.

Ralenkotter said the long-term relationship with the advertising agency has worked in the publicly funded authority's favor.

He compared it to the relationship between advertising agencies and companies that market household-name item brands like Nike and Coca-Cola.

"There are a lot of companies in the United States who have a long relationship with their advertising agencies," Ralenkotter said. "Those agencies understand the brand. That's what R&R does."

Ralenkotter recommended a three-year deal but board member and Henderson Mayor James Gibson suggested adding the extension.

Mesquite Mayor Susan Holecheck concurred.

"I don't want to go through the bid process again at that time," she said.

Neither Vassiliadis nor Ralenkotter nor any board members specifically addressed myriad allegations by a conservative public policy group that's been hounding both the authority and R&R over what it says are loose accounting standards.

The group, Nevada Policy Research Institute, hired an investigative reporter to sift through public documents and publish findings online.

The group highlighted documents it said suggested an overly casual approach to accounting for authority money spent through R&R.

Among them were advance billing statements R&R submitted to the authority for production work by Airwave Production, a company owned by Vassiliadis.

Nevada Policy Research Institute contends the advance bills represent loans from a public agency to a private entity, a practice prohibited by state law.

Vassiliadis, in an earlier interview, called the allegation absurd and said his companies didn't benefit from advance billing.

The money, he said, was needed for deposits and other big-ticket, up-front costs associated with television production.

He also said the money went directly to vendors and advances didn't benefit Airwave or R&R.

"We don't do short-term investments with client money," he said. "We are on very short billing and paying and schedules."

The issue didn't come up Tuesday during discussion of the contract. But a draft contract that was to be presented to the authority's audit committee does include language covering, "pass thru" goods and services.

The contract language says, "the Provider shall obtain ... two written quotes for the 'pass thru' goods and/or services."

However, the audit committee meeting was postponed because the board meeting ran longer than anticipated.

During his presentation, Vassiliadis recalled highlights of the "What happens here, stays here" campaign as well as myriad "adult freedom" spots that came before the ubiquitous slogan appeared on the scene.

He reminded the board that in 2007, Las Vegas became the second-most recognizable brand in the country, behind only Google.

And he pointed out instances in which R&R Partners helped push Las Vegas into the national media spotlight by cultivating the town's rebel image.

Vassiliadis said when the Super Bowl refused to accept a paid ad for Las Vegas, it was R&R that brought the issue to the attention of national media outlets and generated $6 million worth of free publicity for the destination.

More recently, Vassiliadis said R&R convinced Sports Illustrated to do its first-ever consumer launch event for the magazine's annual swimsuit issue from Las Vegas.

The effort cost $1 million but generated $19 million in national media attention for Las Vegas, he said.

"While this has been a very lucrative advertising contract, it has never been that we could just go buy America," Vassiliadis said. "We've always had to be very targeted, very strategic."

In addition to video highlights of past ads and the descriptions of how R&R generated a return on the authority's investment, Vassiliadis invited several dozen R&R employees who work on the Las Vegas account to stand up.

He said many of the workers grew up in Las Vegas and others moved to Nevada to work on the Las Vegas account.

"This is a team that works tirelessly," he said. "We do take very, very, very seriously that this is a public account."

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