An hour and a half before the ball drops on New Year's Eve, Donny Deutsch has packed it in and headed to bed. After 10 days with his wife and some pals in St. Barts, he's battling a cold and is resigned to spending New Year's at home for the first time since his ad agency was a blip on the national radar. It's one of the few times all year that things have not gone as planned for the 45-year-old CEO.
Two days later, things are mostly back to normal. Dressed in a muted lavender T-shirt and dark slacks, Deutsch orders four egg whites and toast at his usual breakfast spot, a diner near his apartment on the Upper East Side. A half-hour later, he's riding shotgun in a Mitsubishi SUV as his chauffeur, who used to drive for Alfred Taubman of Sotheby's, zips down the FDR and across to the Deutsch offices on 15th Street and 8th Avenue in Manhattan's Chelsea district.
Arriving just after 9, Deutsch finds on his desk a pair of Phat Farm sneakers, sent by good friend Russell Simmons. It's a fitting present. Since it was acquired by the Interpublic Group in 2000, the shop hasn't lost an inch of vertical. Where Deutsch the man has his routines, Deutsch the agency does, too: Pitch. Win. Build brands. Grow. Repeat.
Last year the shop boosted billings by 31 percent to $2.4 billion and revenue by 35 percent to $272 million. (That follows revenue gains of 23 percent in 2001 and 50 percent each year from 1998 to 2000.) For its financial performance, its management team's unswerving focus and its varied and evolving creative product, Deutsch is Adweek's U.S. Agency of the Year for the fourth time in five years. (Ogilvy & Mather interrupted that run in 2000.)
After grabbing a cup of tea, Deutsch settles into his conference-room-style office, lined on one wall with photos, memorabilia and awards. After going through a small pile of mail assembled by his two assistants, he calls John Dooner, IPG's CEO, and puts him on speaker phone. Each gives the other a brief, jovial pep talk. "We're gonna have a good year, babe," Deutsch assures his boss.
COO Linda Sawyer stops by, and the talk turns to how to perform in a poor economy. The office decorations include a massive ball and chain sitting in a lump in the corner, but Deutsch is hardly restrained when it comes to critiquing his industry.
"When agencies are doing well in good times, do they credit the good economy? No," he says. "So when they're not doing well, they shouldn't blame the bad economy. ... We like this kind of climate, because it becomes a share battle, and we're good at taking share."
In 2002, the agency smelled blood and took that share from the wobbly D'Arcy Masius Benton & Bowles (Burger King), as well as from DDB (Starwood), Euro RSCG MVBMS Partners (MCI), Kirshenbaum Bond & Partners (Revlon) and IPG sibling Foote, Cone & Belding (Coors Light). When clients become smitten with Deutsch, the agency woos more business from them—for example, JP Morgan Chase (corporate card), DirecTV (CRM/pay-per-view) and Mitsubishi (the $25 million Canadian business, which enabled Deutsch to open in Toronto).
Like a good basketball coach, Deutsch consistently credits his starting team—Sawyer, Cheryl Greene, Kathy Delaney and Val Di Febo in New York, and Eric Hirshberg and Mike Sheldon at Deutsch/LA in Marina del Rey, Calif. (Unlike the NBA, there's no sixth-man award at Deutsch. All the managing partners get good minutes.) All six are here in the New York office on this first day of business in 2003. Last year already seems a little hazy to them (perhaps it's the lingering effects of the holiday), but the general feeling is that the war was won in 2002 primarily through surprise attacks.
"Patience was so important," says Sawyer, 41. "It was quieter on the new-business front, so we had to wait for the right opportunities and see them through."
Probably the best example is the clean sweep last fall of three Novartis brands: Diovan, Zelnorm and Lamisil. If Deutsch is a family, as it's often described, think of the Novartis review as an exhausting, six-month-long wedding-planning session. All across the agency, from the creative department to Fred Rubin's iDeutsch and directDeutsch groups to Bobbi Casey Howell's customer and data strategy people, everyone is still talking about it. The accounts, worth a total of $250 million in billings, join several Pfizer brands on Deutsch's roster of pharmaceuticals, a category that Deutsch says hasn't gotten its due creatively.
"We're still an industry of sheep," he says. "People all run to certain categories because they see them as great creative opportunities. Too many people look at [other categories] as they are or were instead of how they can be."
Even though it's a slow week due to the holiday, there is work to be done. Late in the morning, Hirshberg, 34, executive creative director in L.A., is found rummaging through videotapes in the AV room. He finds what he needs and goes next door to check in with Deutsch. They discuss an upcoming Mitsubishi shoot in Australia and creative concepts Hirshberg presented recently to Coors (and which evidently need additional work).
The fondness all seven executives feel for one another is palpable, and chatting with his partners, Deutsch is completely at ease. In recent years he has become less involved in the nitty-gritty of the agency's work (the sale to IPG has been a factor in that, as he now sits on the holding company's executive board). But he says he remains the "spiritual epicenter," weighing in on major new initiatives, checking the status of projects and always available for advice of almost any kind. "My role now is to be a big brother. Cheerleader. Once in a while, psychiatrist," he says.
"He can step back and ask that great question or make that great comment," says Sawyer, a 13-year Deutsch veteran who projects an air of calm at every turn. "His thing is sprinkling magic along the way."
Hirshberg is clearly excited about the Coors Light assignment, perhaps because the campaigns for most of L.A.'s top clients (Mitsubishi, DirecTV, California cheese) are already well-established. But he says it's fun to freshen up that work, too.
"It becomes like writing a sitcom," he says. "You've got so much history to work with. Once you have that foundation poured and dried, you can go in unexpected directions." Examples include giving the happy cows a few barnyard animals for company in the California cheese ads and using digital technology to get characters in classic movie scenes to make sales pitches for DirecTV. "You have to stay ahead of that curve before consumers are sitting at home and saying, 'You know, when are they gonna get rid of that Dell dude?' "
Hirshberg reiterates a point that Deutsch made on the car trip down after breakfast: that instead of imposing a style on clients, the agency lets the brand's voice emerge organically. "There's a house scent, there isn't a house smell," is how Hirshberg explains it.
Down the hall, chief strategy officer Cheryl Greene's door is open, as usual, and soon she is sharing her notions about how Deutsch's lack of privacy actually helps the agency thrive. An open atmosphere isn't hard to achieve here, considering that all the offices are separated from the hallway by glass walls. "The trick is to get into each other's offices and bounce unformed ideas off one another," she says. "We don't write memos. We rarely call each other. You can get a lot done without having to get on each other's schedules."
Greene, 58, thoughtful and measured, takes a moment to ponder what the partners could improve on. She decides they might learn how to enjoy their success a little better. But she's already thinking ahead to 2003, and has a fairly specific idea about what she's aiming for this year: "You always want one big new piece of business. Something fun and mass and household name-ish. Something everyone uses and loves."
One thing that's striking about a visit to Deutsch is how much it's grown in terms of staff. People crop up in places they never did before—and that's true in the L.A. office, too. Deutsch counted 1,021 staffers across both offices last year, up 14 percent from 2001. The 125 hires were made primarily to service the Burger King, Coors Light, Revlon and MCI accounts. Since the agency believes that people are culture and culture is what breeds success, management of the hiring process has become a major endeavor.
"We don't allow assholes here—bullshitters, prima donnas, ego-driven people out for themselves," says Sheldon, 43, general manager in L.A. He says the litmus test for a hire comes down to one question: "Is this someone you wouldn't mind spending six hours next to on a plane?" As a result, he says, "We have just about zero voluntary turnover. People know they can make a future here."
Everyone seems to agree that those who are hired are generally the ones who "get" the Deutsch model of high standards and insatiable curiosity. Only rarely does a new employee not work out.
"The key is finding the right people so they don't have to be micromanaged," says Delaney, 38, ecd in New York.
It's lunchtime in Delaney's office, and copywriter David Rosen and art director Scott Bassen are showing Snapple storyboards to Delaney and director of account planning Jeffrey Wolf. They've been approved by the client for the next leg of its "Personified Bottles" campaign. The men lie on the floor while Delaney munches a salad at her desk. Rosen and Bassen, both 32, explain why the executions are relevant to the 18-24-year-old target.
Says Rosen: "They're into a new set of experiences," such as backpacking through Europe, club hopping, marriage and its pre-ceremony rituals, and identification with particular sports.
The work must uphold the strategy of making the product feel approachable, made by real people, Wolf says. It must remain down to earth but keep the humor of previous spots, in which the bottles, sparsely accessorized, act like humans in typical situations. "This is independent film," Rosen says wryly about the Snapple work, which is shot on video with props that look makeshift. "The other [beverage makers] are Hollywood."
There are 30-plus Snapple flavors, and the agency is charged with envisioning scenarios that capture the personality of many of them. "It's like casting," Bassen says. "We have to decide not only creatively but from a business standpoint which flavors to put into which spots." Sometimes the scenarios are inspired by beverage color. An execution featuring boy Snapples spying on showering girl Snapples was born as Rosen and Bassen stared at a bunch of label-less Kiwi Teas, which happen to be pink.
Of course, it's not all fun and games, says DiFebo, 41, director of client services. In general, she says, before any ideas are pitched to any client, "we've already asked each other hard questions."
Back in his office, the lingering cold is getting the better of Deutsch, and he's about to duck out early. The agency will hum along, of course, under the watchful eye of the partners. And that raises one hard question in particular: Having gained so much—including a huge personal windfall—from the IPG sale, and with the machine firmly in place at the agency, is motivation ever an issue?
"Well, candidly, for me personally, possibly. But for everyone else, no. And that's why the place is still growing," Deutsch says. "You always want to be the best. I certainly as an individual don't have the same kind of financial stake anymore. But I was never driven by the money, so the motivation is still there."
Responding to speculation that he is restless, Deutsch says he will never leave his agency for good, even though he harbors ambitions to work on outside projects. "I want to expand my horizons as a businessman, but this will always be my backbone," he says. "I always see myself having one foot firmly planted here, no matter what I do."
As for the agency itself, Deutsch says it's a good sign that it's still seen as the "quintessential outsider" in the industry. "Being the underdog has a very different flavor for us now than it did 15 years ago, but it's still there," he says. "Now it's wrapped in these incredibly disciplined approaches to business. But there's still an anger here, there's still a passion, there's still a pissed-off-ness."
After a speech like that, you get the sense that the next New Year's should be as satisfying for Deutsch as this one was. Even if he has to stay home again.
Billings: Up 31 percent to $2.4 billion (est.)
Revenue: Up 35 percent to $272 million (est.)
Win/Loss Pitch Ratio: 7 out of 10
Accounts Won/Media Budget*
Burger King (value menu and field marketing), L.A./$160 million
Novartis (Diovan), N.Y./$120 million
MCI (consumer), N.Y./$100 million
Novartis (Zelnorm, DTC), N.Y./$100 million
Coors Light, L.A./$80 million
Revlon (consolidation), N.Y./$80 million
Novartis (Lamisil), N.Y./$30 million
Starwood, N.Y./$30 million
Mitsubishi (Canada), N.Y./$25 million
Accounts Lost/Media Budget*
Domino's, N.Y./$100 million
Verizon SuperPages, N.Y./$30 million
Bank One, N.Y./$20 million
Highlights: Named a total of eight new partners in New York and Los Angeles; opened Toronto office to handle Mitsubishi's Canadian business; expanded staff in Chicago and Miami; won more business from existing clients DirecTV, Revlon, Cadbury/Schweppes and FX Network.