Last week Sprint surprised some (but definitely not all) in the industry by moving its account from Deutsch to Droga5 without a review.
In a development that was somewhat expected given that the client spent more than $700 million on paid media last year, Deutsch followed the loss by laying off some staff across departments.
A spokesperson declined to comment on the news, but reliable sources tell us that 16 employees were let go yesterday. Most came from the production team including but not limited to those working at Steelhead, the internal unit launched after the Sprint win.
There’s a perception that the 48,000 square foot facility was created strictly to handle production duties for Sprint, but it has already been credited on campaigns for VW and Pizza Hut despite the fact that it is still under construction. AdAge reported in its Agency A-List writeup that Steelhead had seen “117% annual revenue growth and developed 250% more content for clients” over the past year. (At this time, Deutsch continues to work on the Sprint account. Its contract ends on December 1.)
In addition to the production staff, members of the accounts, digital and design teams were also let go.
Sources tell us that Deutsch still plans to open Steelhead in February 2017 and that it continues to produce work for VW and other unnamed clients.
The Sprint move was, again, not a complete surprise as the client had been moving more of its production work in-house throughout the year, thereby forcing multiple rounds of layoffs. Tipsters told us several weeks in advance that the state of the account was in flux, and we hear that Deutsch was not made aware that Sprint had been talking to Droga5 before the announcement came down.
According to another source, the announcement came while a writer for L.A. Magazine was touring the facilities for a forthcoming feature.
Deutsch has recently recorded some significant new business wins. Uber picked the shop as its first creative agency partner in August, and A-B InBev awarded the New York office lead creative duties on its Busch and Busch Light brands later that month. Last month Campaign also reported that Booking.com was testing Deutsch work against that of its current AOR Wieden + Kennedy, but we’ve yet to receive any updates on that development.
The agency may have delayed this round of departures while waiting for the results of the General Mills review, which ended with a win by MDC Partners’ 72andSunny and Redscout.