Fresh Start to Calif. Review Has Shops Weighing Odds

California ad executives had a range of reactions as the state lottery prepares to kick off its third review in two years—bitterness, hysterical laughter and mock horror among them.

“Please, no!” said Harold Sogard, partner and general manager of Omnicom Group’s Goodby, Silverstein & Partners in San Francisco, which does not plan to participate. “We’re not gluttons for self-punishment.”

But a number of agencies also expressed the belief that this time around, things could be different. Their hopes are buoyed in part by changes in the draft RFP and the extent to which the client has tried to involve them in the process.

“The playing field has truly been leveled this time,” said Ruth Amir, director of planning and new business at independent davidandgoliath in Los Angeles, which had not been open long enough to participate in the earlier reviews. (The agency age requirement had been five years; it is now two.) “Through everything they’re doing, it seems like they’re looking for fresh input and … reaching out to a greater group of agencies.”

The lottery in early August asked agencies for feedback on past RFPs, encouraging participation from shops that were not involved in prior reviews. Those contests have been subject to protests by agencies over issues like the validity of competitors’ submissions and hamstrung by technicalities such as a requirement that responses had to be delivered in hard copy, not by fax or e-mail. (Foote, Cone & Belding in San Francisco got bounced after it sent a fax during a rebid of media last March.)

On Oct. 10, the lottery posted a draft RFP to its Web site, asking shops for input on the document before the lottery issues the final RFP for its four-year, $100 million account.

“They’re going overboard to take people’s input on the process, but I have the feeling the output is going to be as convoluted,” said Greg Stern, CEO of independent Butler, Shine, Stern & Partners in Sausalito, Calif., a finalist in the lottery’s 2001 review. “They let the process get in the way of content.”

The final RFP is tentatively scheduled to go out Nov. 7. The lottery now expects to select an agency by March, which would be two years and five months after the original state- mandated process began.

“Obviously, we anticipate this to be a smooth process,” said Jim Hasegawa, director of marketing at the lottery in Sacramento, Calif. “We’ve given agencies every opportunity to forward their comments and feedback on the old process and on this draft.”

Incumbent Grey in Los Angeles—which has held on to the account for two additional years because of the various snags—will participate in the latest review, said sources. Other shops that may participate, sources said, include Interpublic Group’s Dailey & Associates in West Hollywood, Calif.; independents Heil-Brice Retail Advertising in Newport Beach, Calif., and Ground Zero in Marina del Rey, Calif.; WPP Group’s J. Walter Thompson in Los Angeles; and davidandgoliath.

Omnicom’s DDB in Los Angeles, which won the business in the first review only to have it yanked away, remains undecided, sources said.

Some agency officials who are still wary of the process, including Sogard and Gardner Geary Coll president Bob Gardner, put their hope for a revamped lottery process in incoming state Gov. Arnold Schwarzenegger, who has the authority to appoint a new lottery director. Under outgoing governor Gray Davis, lottery director Anthony Molica was named to replace Joan Wilson Sept. 2. Molica was director of sales for the lottery before leaving for a year to oversee the Washington Lottery.

Agency officials said they were not sure how Molica might change the situation. Molica was unavailable for comment. Hasegawa said Molica had been briefed about the RFP’s changes and has endorsed the process.

Changes in the draft RFP include swapping a numerical scoring system for one that includes scoring options such as “superior,” “meets [requirements]” or “does not meet [requirements].” And the lottery will be able to accept a shop’s cost proposal or “establish a competitive range and hold discussions with each agency in the competitive range,” according to the RFP.

Those discussions, the RFP says, “will be undertaken with the intent of allowing each agency the opportunity to revise its proposal.” They also “may include bargaining,” it states.

“It’s very off-putting,” said one source. “You’d think they’d want to make it more appealing [to agencies], rather than less.”

Among the unchanged elements are the state department’s disclosure requirements, including shops’ names and addresses of its officers, directors and stockholders. Agencies’ failure to do this has stymied past reviews. The lottery is providing shops with an overview of its disclosure requirements, and its legal staff will be available to discuss the issue.

Yet skepticism remains. “This is still one of the biggest laughingstocks in the industry,” said one source. “But I’m sure it’s going to draw a good list.”

Said another source, “As they say in the lottery world, ‘Hey, you never know.’ “