Deutsch Splits New York and Los Angeles Offices Into Separate Agencies

While recent years have seen holding companies combine agency offerings, IPG’s Deutsch is going in the opposite direction, spinning off its New York and Los Angeles offices into separate agencies.

“It felt intuitively like the organic next step for our respective agencies to go this way,” Deutsch New York CEO Val DiFebo told Adweek.

The move makes official an evolution that was already in place operationally. The groundwork was laid when Deutsch North America CEO Mike Sheldon left at the end of 2019, with DiFebo and Deutsch L.A. CEO Kim Getty leading their individual offices without broader oversight.

Officially splitting off into separate agencies allows each to pursue clients independently without concerns about the appearance of conflict of interest while leaning into individual strengths and cultures.

In a statement, IPG COO Philippe Krakowsky, who is succeeding Michael Roth as CEO in 2021, cited the “dynamic and independent leadership” of both offices.

“Kim has built on the Steelhead production capability on the West Coast, as well as further pivoting the agency into entertainment, tech and culture. Val continues to leverage our data, media and tech assets to enhance her agency’s strategic offering and business-building creative work,” he said.

Different personalities

“About a decade ago we made different bets as the world was changing,” Getty explained, with Deutsch L.A. investing heavily in its digital capabilities and Steelhead production facility, where the agency’s operations will be located when it returns from remote work.

Getty credited evp and head of production Diego de la Maza with building up the offering, including expanding into non-roster client relationships. “We believe production is creative. The closer we can put everyone in the building to the creating [process], the better.”

Deutsch New York, meanwhile, has built a reputation for being scrappy and gritty, according to DiFebo.

“What that allows for is grabbing brands that are at inflection points. We don’t hold back when we think there are things to say to make a brand pivot to an opportunity area or to reinvent themselves, ” she said.

DiFebo said Deutsch New York has invested in building up its data and technology services, including a recent focus on artificial intelligence, as well as media capabilities, while also leaning into remote content production since the pandemic’s onset.

Building a more inclusive culture

Both agencies claim to be investing significantly in diversity and inclusion.

In June, Deutsch Los Angeles fired CCO Brett Craig after an offensive email about casting Black talent resurfaced on Instagram.

“A really important job as a leader is to listen to the people in your agency. There was a tremendous amount of advocacy for us [to prioritize DEI],” Getty said.

Deutsch Los Angeles is 68.1% white, according to the EEOC diversity data shared on its website, updated in September, with 5.7% of employees identifying as Black or African American, including 2.5% of middle and 4.3% of senior management.

Getty admitted the agency has much room for improvement, but says it’s committed to change and has made significant progress this year, with 48% of new hires identifying as people of color and one third of senior hires representing Black talent since June. The agency also pointed to measures including increased recruitment efforts at HBCUs, becoming the first agency to partner with the Commercial Directors Diversity Program and a pledge to increase Black leadership to 13% by 2023.

Deutsch New York’s efforts include a scholarship to help Black students break into advertising, including paid internships at the agency, education and training initiatives and the implementation of a more equitable hiring system, which helped lead to the hire of evp and director of human resources Celeste Bell.

As of June, Deutsch New York is 67% white, with 9.8% of staff identifying as Black or African American, including 3.9% of mid-level and 7.7% of senior management. The agency plans to update its data by the end of 2020, and claims 60% of new hires since June have been Black women.

“We feel a tremendous sense of urgency around this issue. One of the reasons we hired Karen Costello was her passion … to put DEI at the core of how we operate,” Getty said.

A return to roots in a difficult year

When Karen Costello rejoined Deutsch L.A. as CCO in August, filling the vacancy left by Craig’s departure, it also marked the agency’s 13th hire elevated to the role of its creative leader.

“Karen, on her first day back at the agency, told the story of the beginning of Deutsch L.A., of 13 people sitting in this tiny room. The thing that really drove those 13 people was ambition,” Getty said.

“Karen walking back into our doors and reminding us and driving us with that ambition is a really exciting thing for all of us,” she added. “It’s going to do a lot to help reconnect us back to that entrepreneurial spirit that has allowed us to accomplish so much.”

Getty said the agency was able to bounce back from setbacks leading Deutsch L.A. to lay off or furlough 10% of staff in April and grow on the year, largely thanks to an expanding relationship with Walmart, including recent work on Walmart+.

Friendly competition

The divided agencies are now looking to grow in distinct directions.

“As we each lean into our entrepreneurial spirits,” DiFebo said, “each agency will try to get ahead of what clients need before they need it.”

For each agency, that will also mean capitalizing on the strength and talent of their locations.

“We’re at the place where culture starts and want to be using that for brands in a really powerful way,” Getty said, adding that Deutsch L.A. will continue to broaden production capabilities while also expanding its performance marketing practice.

While now distinct agencies, it’s possible Deutsch L.A. and Deutsch New York could team up to collaborate for a client.

At the same time, neither agency could rule out competing against each other for new business. “There are brands Val and I both have ambitions for and see ourselves as a good fit,” Getty said.

“It may happen,” DiFebo added.

Should it come to that, may the best Deutsch win.