Resort Commits To Ad Agency, Extends Contract In 5-2 Vote

OCEAN CITY – Following an extensive report and concerns over transparency, the City Council voted 5-2 this week to approve a continuation of Ocean City’s advertising agency’s contract.

On Tuesday afternoon before the Mayor and City Council, Ocean City Tourism and Marketing Director Donna Abbott summarized town and MGH are parties to an advertising agreement. The current renewal expires Dec. 31, 2014. MGH offered an additional two-year or three-year extension, starting on Jan. 1, 2015. All terms and conditions included in the original agreement would continue for this renewal, with no increase in fees. The current monthly rate is about $22,950 that is derived from the advertising budget, which is made up of room tax revenue.

The offer was presented to the Tourism Commission on June 12. The Tourism Commission voted unanimously to forward a recommendation to the Mayor and Council for review and approval of a three-year MGH contract extension of the MGH contract.

The council voted 4-1, with Councilmember Ashley opposed and Councilmembers Margaret Pillas and Joe Mitrecic absent, to approve a three-year extension of the MGH contract on June 24 in closed session. However, Mitrecic provided a letter of support that was read into the record.

Last week Pillas requested the matter return to an open session to be discussed before the public, disagreeing with the vote being taken in closed session.

This week MGH’s contract returned to the Mayor and City Council. Abbott submitted letters of support from the Tourism Commission and Tourism Advisory Board (TAB) member Todd Ferrante, Chamber of Commerce President Buck Mann and TAB Chairman Greg Shockley.

“MGH has done an outstanding job for the Town of Ocean City during their time as our advertising agency. They have brought us many successful advertising campaigns including our town mascot Rodney [the Lifeguard]. We are currently undergoing a five-year strategic marketing campaign and felt that until we finish that we should retain MGH as shifting gears before we know where we are going could be careless. In addition, they are willing to renew at the same price as they have for the last several years which is extremely reasonable when you look at agency costs in similar markets,” said Ferrante, who made the motion during the Tourism Commission’s closed session to extend the contract.

Mann seconded the motion.

“The chamber feels they [MGH] have done an excellent job in promoting Ocean City. … The extension will keep continuity in our marketing efforts and allow us to spend more money on direct advertising buys. MGH had proven to be very responsive to our ideas and requests and a good partner for Ocean City Tourism,” Mann said.

Abbott was before the council on Tuesday to represent the unanimous decision of the Tourism Commission to extend MGH’s contract for three years and provided an extensive report of the reasons in doing so.

Over the last four fiscal years through FY 2013, Ocean City’s room tax increased 15 percent to almost $13 million, which is an increase of almost $1.7 million. Food tax has also risen 10 percent over the last four fiscal years.

“If you look at our Tourism Economics Report that was prepared last June by the state, in the last four calendar years the total industry sales for Ocean City you see in 2009 we did have a decline due to the recession … but in 2010 there was an increase of 4.1 percent, in 2011 you see a 6.11 percent increase, and in 2012 you see a 8.2 percent increase … these are numbers are impressive,” Abbott said. “… we believe a change now would cost us a significant amount of money that could be used directly to market and promote Ocean City.”

Despite the report, Pillas made a motion for the town to go out for RFP for an advertising agency and Ashley seconded the motion.

“Today approximately 50 percent of our tourists are singles or couples, and the social network refers to Ocean City now as a party town,” Pillas said. “Clearly MGH advertising message has not been successful at retaining our family image. The responsibility of an ad agency is to create ad messages that target the permanent market. Most of the advertising budget should be directed to the family image that Ocean City was once well known for. By giving MGH another three-year contract gives the impression that this council believes MGH has had no responsibility in decreasing tourism over the last 11 years, and this council does not contribute to MGH any change of the tourism demographics for those who know visit Ocean City. I don’t believe another three-year contract with MGH will bring about any different results. I think it is necessary to put out an RFP to see what other agencies have to offer.”

Ashley ran the numbers as Pillas did, and argued the years before MGH’s contract Ocean City averaged about 113,000 more visitors per season than since MGH.

“I don’t see how the merchants can be happy with it, and the ones I have talked to are not. If you look out on the streets, you will see it. The people are not here. There has to be a reason for that,” he said. “It is our fiduciary duty to go out there and see what is available for advertising. MGH may be the best but I think we owe it to the taxpayers to at least take a look … What makes me suspicious is every time this comes up for RFP it suddenly disappears. What is the secret? What is the problem? If everything is so good then they should win this hands down. I don’t get it.”

Councilman Joe Mitrecic rebutted it isn’t realistic to compare 1992 to 2014, let alone compare 2010 to 2014.

“Things change,” he said. “To give what they give for the price that they give … overall MGH has done a very good job for us. To condemn them because our demographics on paper have changed or if our tourism is down is not very fair. You have to look at the whole package that we have to offer here in Ocean City, and their job is to bring people’s minds to Ocean City, not drag them here.”

Councilman Dennis Dare agreed times have changed looking back to the town’s advertising agencies prior to MGH.

“It is so much more now, and we found that out in the last go around of the interviews of the ad agencies,” he said. “It is traditionally what you think of as advertising but the second thing is public relations and the third is something they invented since 1980 and that is the world wide web along with the art of social media presence that is very important, and that is one of the things that stuck out with MGH at the time.”

“Time and time again they have showed creativity and talent,” he said. “The strategic plan we are embarking on is of paramount importance, and to go in and do that plan without our partner MGH with their history, and also be able to incorporate it, it would be an injustice not to do that. It will be much quicker to be able to enact and move forward. I suppose my glass is just half full and not half empty.”

After voting down Pillas’ motion, Councilman Doug Cymek made a motion to extend MGH’s contract for three years. Pillas asked Cymek to amend the motion to extend the contract for one year to which he denied as well as two years.

“The business community voted for three years,” Council Secretary and Tourism Commission Chair Mary Knight said.

Before the vote was taken, Mayor Rick Meehan addressed the tourism numbers discussed.

“You can make numbers look any way you want them to look but in the long run when you look at the success of Ocean City it is obvious to me that even in the worst periods of time we were able to step up,” he said. “During bad times we were able to maintain our place in the market place and we were able see our room tax stabilize and then continue to rise, and that is the fiduciary responsibility … I agree with the Tourism Commission and those who support this.”

The council voted 5-2 to approve the extension of MGH’s contract for three years with Dare, Cymek, Council President Lloyd Martin, Knight and Mitrecic in favor and Ashley and Pillas in opposition.

 

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