06-22-2002

LOBBYING: Moving Beyond Attack Ads

Republican advertising guru Alex Castellanos is sometimes called the
father of the attack ad. Now Castellanos is looking to break the mold once
again-this time by creating a different kind of public-affairs
firm.


Historically, campaign media firms-the hired guns who craft hard-hitting
television commercials for political candidates and corporate clients-have
been among Washington's quintessential boutique businesses. To be
successful, practitioners must exhibit a rare mix of horse-race
sensibilities, a knack for the technical side of television production,
and the willingness to go for an opponent's throat. So media firms often
coalesced around unique personalities, such as Democrat Bob Shrum or
Republican Stuart Stevens, and retained an independent flavor.


But as part of a consolidation of the public-affairs industry in the late
1990s, a number of well-known media firms were purchased by larger
public-relations conglomerates. The advertising firm Goddard Claussen was
acquired by Porter Novelli; Murphy, Pintak, Gautier, Hudome was bought by
Cassidy; and Greer, Margolis, Mitchell, Burns & Associates was
acquired by Fleishman-Hillard. Each is owned by a huge multinational
holding company.


One reason for this buying spree was that executives wanted to lure
clients with "one-stop shopping" for PR services, lobbying,
polling, and advertising. Now Castellanos's Alexandria, Va., firm,
National Media, wants to tweak that model.


National Media intends to go it alone, offering clients one place to shop
by growing itself into a diversified, midsize firm, rather than by joining
one of the conglomerates. National Media founder Robin Roberts and
Castellanos, both 48, are pitching the company as a full-service firm, but
without any bloat.


"Our clients don't need an office in Hong Kong," Castellanos
said in an interview. "Because times are tough, clients are looking
for more value."


Currently, National Media-which began in 1981 and added Castellanos in
1989-employs 37 people. In recent months, the firm has hired a handful of
veteran public-relations and grassroots-advocacy specialists, and it may
add up to a dozen more after its makeover in September. By keeping
overhead low and the number of junior staffers to a minimum, the firm
hopes to attract clients who seek personalized attention from senior
strategists. Officials say National Media won't be on the purchasing
block.


"At the firms that have been bought out by publicly held companies,
the firm doesn't make a huge profit when the top guy bills his
clients," said James C. Courtovich, who was recently hired away from
the public-relations firm Ketchum to help oversee National Media's
expansion. "The lower employees are where the real profit lies, so to
make enough of a profit, the firms have to force their work lower down on
the food chain. And that's not the best way to do public
affairs."


Mark Schannon, Ketchum's Washington office director and Courtovich's
former boss, called National Media's strategy "a different but very
legitimate approach. Some issues and clients are going to want a small
specialty firm, and they don't need a lot of people to help with the
tactical stuff. Some campaigns require lots of arms and legs and a
national or international presence. So I think there's plenty of room for
both of us."


Ken Rietz, the worldwide chief operating officer of the PR firm
Burson-Marsteller, praised National Media and called Castellanos
"very talented." The biggest risk, he said, will be if bigger
firms suddenly view National Media as a competitor and begin pulling the
plug on subcontracting offers.


Castellanos, whose family fled Cuba in 1961, is admired by advertising
professionals and deplored by political adversaries for his aggressive
ads. Some criticized Castellanos in 1990 for making a campaign ad for Sen.
Jesse Helms, R-N.C., that dramatized the issue of affirmative action by
showing a white hand crumpling a job rejection notice. Castellanos took
heat again 10 years later when he made a commercial for then-presidential
candidate George W. Bush that attacked Democratic nominee Al Gore's
Medicare prescription drug plan and included a brief frame with the word
"RATS." Critics called it "subliminal advertising,"
which Castellanos denied.


National Media's new business plan did not come about overnight.
Election-related advertising-historically the firm's meat and potatoes-now
accounts for only about half of its revenue, officials say. Much of the
rest comes from corporate campaigns, including work for telecom giant
Verizon Communications, the American Forest & Paper Association, the
Federation of American Hospitals, and pharmaceutical companies. Some of
the firm's existing clients have already signed up for its new
services.


To be sure, National Media continues to do advertising work for both
candidates and corporate clients. The firm placed more than $500 million
in television, radio, and print ads over the past four years. Its clients
include three GOP gubernatorial candidates-John Sanchez in New Mexico,
Brian Sullivan in Minnesota, and Rep. Van Hilleary in Tennessee-plus Rep.
Gerald C. "Jerry" Weller, R-Ill., and Georgia congressional
candidate Barbara Dooley. Some of the firm's past meal tickets, such as
Sens. Strom Thurmond, R-S.C., and Phil Gramm, R-Texas, are
retiring.


Castellanos has turned over day-to-day oversight of the advertising
operation to Brad Todd, 31, and Monica Notzon, 29. For now, Castellanos
promises to focus on the firm's expansion. And in something of a shift,
the new public-affairs practice will be officially nonpartisan, though
always "pro-business," he said.


Courtovich, 36, served as vice president and group manager in the
public-affairs practice at Ketchum Communications between 2000 and 2002.
Earlier in his career, he worked for the PR firm Burson-Marsteller and
served as an aide to Gramm, Sen. Bob Smith, R-N.H., and former Sens. Bob
Dole, R-Kan., and Warren Rudman, R-N.H. Other newcomers to the firm
include Julie Rienzo, formerly a freelance producer with Fox News Channel
in Washington, and lawyer Deborah Haynes, who has worked in the finance,
insurance, real estate, and tax industries.


Despite the soft economy, Castellanos said he isn't concerned about the
risk of expanding right now. "This is the time to build something and
pick up market share," he said.


Louis Jacobson

National Journal