When the real estate market collapsed, Mark Paolucci’s marketing firm came close to crashing with it.
That was because Paolucci Communication Arts in Palos Verdes Estates specialized in marketing luxury real estate sales, such as homes in the master-planned community of Lambert Ranch in Irvine.
When two of his major development clients, John Laing Homes in Stevenson Ranch and SunCal in Irvine, filed for Chapter 11 bankruptcy reorganization in 2008, his firm held more than $1 million in unpaid billings as a result.
Revenue fell from a high of $9 million in previous years to $2 million in 2008. Clients’ marketing budgets shrank and in two years the firm’s staff of 40 was cut to 16 employees.
“It was this careening off the edge, just free fall for a while,” Paolucci said. “Even clients that you did do work for, it was a struggle to even get them to pay.”
So Paolucci diversified, adding clients in the hospitality sector, signing Terranea Resort in Palos Verdes Peninsula and CostaBaja Resort & Spa in La Paz, Mexico. He also targeted the health care industry, signing St. Mary Medical Center in Long Beach.
Revenue has climbed to $3.5 million, the staff size is now 22 and the company opened a San Francisco office last year to serve new clients based there.
“Now, we’re gaining our mojo back, and I tell people that I’ve learned more in the last five years than the previous 20,” Paolucci said.
Chris Manning, professor of finance and real estate at Loyola Marymount University, said diversifying wasn’t an obvious call, because hospitality is a distinctly different business calling on different skills.
“This area of hotels and lodging, that’s different,” he said. “They’re their own little world.”
But it now looks like the right call.
“It was one of the roughest markets to go through that we’ve seen for decades,” Manning said. “Losing clients and having billings going unpaid, that was very common. There are many companies that didn’t diversify, and they’re not here.”
At start
The firm was founded by Brooks Roddan in 1989; two years later, Paolucci came on as partner. Roddan and Paolucci had worked together earlier at another marketing business. The firm took the name Roddan Paolucci Roddan; the second Roddan was Brooks Roddan’s wife, Leann. The couple retired in 2009.
The transition from real estate marketing began when the firm in 2008 landed a tourism account to market La Paz as a destination spot for travelers. It was also marketing luxury high-rise buildings in Dubai for Emaar Properties in the United Arab Emirates.
Paolucci said the real estate market is cyclical but the crash of 2008 was beyond that.
“That’s why I call it the ‘economic tsunami,’ ” Paolucci said. “Because by the time you realize something is wrong, you’re already in it and it’s coming through sweeping a lot of things away – relationships, net worth and clients.”
The firm took a leap into the medical field working on a two-year branding campaign for St. Mary. A print campaign featured lines such as “We’ll take care of your heart, so you can follow it” and a silver-haired surfer gazing out on a still ocean.
“We have this term called ‘place making,’ ” Paolucci said. “The place can be a hospital, but it’s still a place that people will want to be compelled to go to – in this case, for medical reasons.”
Brighter future
The firm now has a roster of 10 clients in real estate and hospitality. Those include a mixed-use development at the site of a former horse-racing track, Bay Meadows, in San Mateo; Tahoe Mountain Resorts in Lake Tahoe; and New Home Co. in Aliso Viejo. PCA takes care of its clients’ needs in advertising, public relations, interactive Web and social media.
Paolucci said he still feels apprehensive when making business decisions such as opening the San Francisco office, which handles clients in that city, Grosvenor Americas, a developer, and Fairmont Heritage Place, a private residence club.
Steve O’Connell, vice president of development for Grosvenor Americas, said his company sifted through a large number of candidates before selecting PCA to market its boutique building in the Pacific Heights neighborhood. The 39-unit building is slated to open next spring.
Joan Marcus-Colvin, vice president of sales, marketing and design for New Home, has known Paolucci for nine years. She said that they began working together when she was heading sales and marketing for the luxury division of John Laing. She wanted to bring Paolucci in for projects when she started working for New Home because she was familiar with his work and style, which fit the company’s high-end aesthetic.
The developer opened its latest community, Villa Metro, two weeks ago. Rather than print more than a 100,000 brochures of the new single-family homes, Paolucci helped the company create a mobile app. It is available on iTunes and provides information about the community from floor plans, neighboring schools, local retail shops and restaurants as well as a map for users to get directions and see traffic conditions.
“They provide us a seamless approach,” Marcus-Colvin said.
