Council Rejects TAB’s Opinion, Wants Search For New Ad Agency

OCEAN CITY – As the town’s advertising agency’s contract nears renewal, the majority of the City Council made it clears it’s looking to the fall season to allow someone else a shot at marketing Ocean City.

Tourism and Marketing Director Donna Abbott presented the Mayor and City Council with the renewal of Ocean City’s current advertising agreement with MGH, which has been the town’s advertising agency for 10 years. Ocean City last conducted an agency review in 2009 and selected MGH to continue out of a field of several advertising agencies that submitted proposals.

According to Abbott, the current agreement commenced on Jan. 1, 2011 and was for a two-year period that ends Dec. 31, 2012. The agreement renews automatically for additional one-year periods unless terminated by either party with 120 days’ notice prior to the termination date. The agency’s current monthly fee is $22,958, averaging out to an annual expense of about $275,000.

The Tourism Advisory Board (TAB) recently met and discussed MGH’s contract and voted unanimously to support MGH contract renewal for a one-year period. TAB added that it also believes it is important to continue with the Rodney campaign for another year as well. Rodney is a destination marketing campaign that features an actor portraying Rodney the Lifeguard, who saves people from their mundane everyday lives and brings them to Ocean City to vacation.

“I appreciate the fact that we did go out to bid when the contract came up and I would like to do that again,” Councilwoman Margaret Pillas said. “I think it is important to know that we need to look at our tourism base from a more practical point of view. I know that numbers have not really changed that much … I know that we are getting a lot of hits on the web but I don’t see the changes in town.”

Pillas reminded the council that Rodney, although a concept created by MGH, is owned by the town and the decision to move forward with the marketing campaign is irrelevant to MGH’s contract.

Councilman Brent Ashley asserted that the 10 years prior to the last decades working with MGH Ocean City’s tourism numbers were higher.

“I think it is a good idea to take a good look and get some fresh ideas and look at things a little differently,” Ashley said. “The whole idea of increasing our advertisement budget and Rodney was to bring more people to town. Judging by our figures that hasn’t happened, so I think we need to look at the entire theory that we are operating under.”

At this point, Councilwoman Mary Knight said she was confused and pointed out that the council has respected TAB’s recommendations in the past, as recently as approving $100,000 to help produce a movie, “Ping Pong Summer”, in town this fall.

“I am very confused as to why we respect what TAB said two weeks ago and then all of a sudden we become micromanagers again because we don’t like what TAB suggested,” she said.

Knight furthered that she has a different outlook on Ocean City’s tourism figures and stated that year-to-date room tax is up 6.5 percent and food and beverage tax is up 4.6 percent. She recognized the fact that tourism figures are based on room and food tax and demoflush numbers are estimations on the population in Ocean City based on wastewater flow from Ocean City provided by the Ocean City Wastewater Division and calculated by the OC Tourism Department.

“I think part of the whole confusion here is there aren’t any real good metrics … and maybe instead of going out again and looking at a new agency, lets renew this, lets challenge somebody, perhaps the HMRA, to come up with a new metric system,” she said. “Until somebody can tell me why we should not base on facts and not on conjuncture, my vote is to extend it for a year and stay with Rodney … and continue this road of success.”

Councilman Joe Hall took a look back to the year 2000 when he first started on the council. He said demoflush figures for the summer season were 4,278,000 and the advertising budget for that year was $1 million. He then jumped ahead to last year when the demoflush figure for the summer season was 4,086,000, almost 200,000 less, and that was with a destination marketing budget of almost $5 million. He added that the town’s spending on special events has also quadrupled in that span of time.

“It is just not good enough,” Joe Hall said. “I support the motion to put MGH on notice that we are going to reserve a right to go out to bid. I see that happening in the fall. As far as I’m concerned, we can let the election happen when the new body is in place at that time, and let them make the final decision.”

Mayor Rick Meehan agreed that the town had more money to spend on advertising today compared to 10 years ago but that is because in working with the Ocean City Hotel-Motel-Restaurant Association (HMRA) room tax was increased by .5 percent just as the economy was going down and that increase was dedicated to destination marketing.

“That was probably one of the best moves we did in conjunction with our business community because as everyone else’s visitation in tourism was falling ours remained steady and started to rise,” he said. “Was there a cost to it? Yes, but we were able to maintain a success.”

Meehan added that the increase in room tax is due to increased occupancy, not an increase in rates, and the hoteliers have taken it upon themselves to offer the deals to keep their occupancy on the rise.

“If you talk to the business community, and those that are successful and work hard for their businesses, last year was the best year that most of them have ever had, and when I talk to most of them this year they are telling me they are having a good year. too,” the mayor said.

Ashley interjected with his 10-year theory and the mayor responded that it would be difficult to have tourism figures be close to what they were 10 years ago because there were 5,000 less condominiums and at least 2,000 less hotel rooms.

Ashley disagreed that hotel rates haven’t increased and referred to the Smith Travel Report that shows for May there was a 5.3 percent increase in the Average Daily Rate (ADR) for motels/hotels in Ocean City. For the month of June, the ADR increase was 7 percent, according to Ashley.

Meehan asserted the Smith Travel Report is based on a limited number of lodging members in Ocean City and condominiums are not included.

“I have confidence that Ocean City can carry itself in many ways,” Meehan said. “Our advertising agency is just a conduit to be able to do that, but we have been fortunate to have an agency that I think is recognized in the state as one of the best, give us service and is here continuously with the principles of the company to meet with the business community and have really developed a relationship. I see us moving forward, I think it would be unfortunate if we didn’t allow this. I think it is short sighted by the council but it is your decision.”

The council voted 4-3, with Brent Ashley, Jim Hall, Joe Hall and Margaret Pillas in favor and Doug Cymek, Mary Knight and Lloyd Martin in opposition, not to renew MGH’s contract but to go to a RFP process next season to select an advertising agency.

Cymek later agreed with the mayor that the council erred with this decision and said it’s unlikely if the RFP process results in a new ad agency being chosen that it will want to use the Rodney campaign created by MGH, as Pillas maintained earlier.

“At this point, it is what is, but I think it was a mistake, based off the numbers that we are seeing. The numbers don’t lie,” Cymek said.