Payless Still Hasn’t Paid the Agency Behind Its Viral ‘Palessi’ Stunt

DCX spent more than $500,000 on the campaign, sources say

A woman holds Palessi bags.
The work earned millions of impressions on a tiny media budget. Payless
Headshot of Patrick Coffee

It was a massive success for the Payless chain that led to millions of impressions—nearly all of them earned. It provided the best media hit for Payless since the struggling company emerged as a “rare bankruptcy survivor” several months earlier. It was also Adweek’s most popular story of 2018.

Today, however, the agency behind the year’s top viral stunt has yet to receive the money owed for its work.

Last fall, Payless took over a former Armani store in Santa Monica, Calif., inviting a slew of fashion influencers to the opening of “Palessi,” a new kind of luxury footwear retailer where sleek Oxfords, pumps and “shooties” sold for as much as $400. The catch, as we now know, is that none of it was real. These were basic Payless products with prices closer to $20 or $40.

“We wanted to revitalize this iconic shoe retailer,” said Doug Cameron, chief creative officer at DCX Growth Accelerator, in a follow-up Q&A. “So we decided to push back against the current billionaire culture and get Payless to reassert its pragmatist approach and show its smart, savvy attitude.”

The making-of video below reveals that these markups went as high as 1,800 percent. More importantly, the stunt gave the public at large a chance to laugh at the expense of the influencer class, whose reactions upon realizing that they had been duped were, as the kids say, priceless.

Within days, the project scored coverage via Good Morning America, CNBC, The Washington Post, Vox and a slew of other broadcast and digital publications. While the 30-second ad ran regionally, the vast majority of this attention came free of charge for Payless. Forbes called it “a PR coup,” and it caught the attention of personalities of all kinds, from The Roots’ Questlove to Brit Hume of Fox News.

This wasn’t the first time a brand has pulled a fake-out move to score attention. In 2007, Pizza Hut ran an ad in which 50 New Yorkers attended a pasta tasting at Provence restaurant on Bleeker Street, which turned out to be a fiction of the QSR chain’s making. Nine years later, Fruit of the Loom and agency CPB launched a fake lingerie store to prove how fancy its products really were. Saturday Night Live even took inspiration from the former campaign for a 2017 skit.

All this aside, there’s no question that Palessi was entertaining. But it wasn’t enough to save Payless.

On Feb. 18, 2019, the Topeka, Kan.-based company filed for Chapter 11 bankruptcy protection and announced plans to liquidate all 2,100 stories in the United States and Puerto Rico. This marked the second such filing in two years for Payless, which also confirmed plans to wind down its ecommerce business.

According to several sources with direct knowledge of the matter who spoke to Adweek on condition of anonymity, New York-based DCX, which produced and created the campaign itself, has seen only a small fraction of its due compensation after spending several hundred thousand dollars on the Palessi experience several months earlier.

Multiple parties estimate the total amount owed by Payless to be approximately $500,000.

The other vendors involved in the project, including all photographers and (of course) influencers, have either been paid or are in the process of being paid for the work they did, with much of the money contributing to the total mentioned above. The agency, which was not on retainer, also submitted the work to multiple awards shows—including Adweek’s own—with the approval of Payless CMO Sara Couch.

But sources say DCX is now stuck in the legal minutiae of trying to obtain the money owed by its former client. One party claims that the agency had no idea Payless would fail to pay until a few days before news broke of its second bankruptcy filing. Now, it has been left with the check.

A DCX spokesperson deferred to the client. The PR firm representing Payless declined to comment but referred Adweek to a website containing information about the restructuring of the company.

Under the conditions of Chapter 11 bankruptcy, Payless cannot pay for services rendered before that filing without court approval. All vendors must file proofs of claim through the bankruptcy court’s case management system, currently overseen by claims agent Prime Clerk.

An automated reply to an email sent to the latter firm read, “Prime Clerk LLC is the proposed claims and noticing agent in the Chapter 11 case of Payless Holdings LLC and 26 affiliated debtors. As such, we cannot provide legal or financial advice. Your inquiry has been escalated to the appropriate party for response.”

Palessi provided a moment of amusement for millions, many of whom had most likely not considered the Payless name in years. Now, it serves as a cautionary tale for ad agencies who work under intense pressure to deliver on deadline and, ultimately, act on faith.

This story has been updated with additional information regarding the amount of compensation in question.

@PatrickCoffee Patrick Coffee is a senior editor for Adweek.