Downsizing at Deutsch Follows Sprint’s Decision to Move More Production Work In-House

By Patrick Coffee Comment

When Sprint finally confirmed that it had chosen Deutsch as its new creative agency of record back in 2014, AdAge wrote: “The shop will also open what it calls a fully functioning broadcast production company to serve Sprint.”

Over the past few months, however, the telecom company has been cutting its overall operational costs, and one aspect of that shift involved moving more of its creative work to an in-house production unit called Yellow Fan Studios.

Today we learned the move has facilitated a wave of layoffs at Deutsch’s Los Angeles office, which handles the Sprint account.

Last October, Sprint announced that it would aim to reduce its overall expenses by $2-2.5B over the following six months and told media outlets like Bloomberg that “It is likely that some jobs will be impacted.” We later learned that the company also planned to freeze all pay raises, reduce severance packages for laid-off workers, devote less to its employees’ out-of-pocket healthcare costs and eliminate a free snacks and water program. It then demoted its CMO and hired a replacement from the Brazilian offices of Italian telecom giant TIM.

Redditors caught on to the visible effects this shift had on Sprint’s advertising some time ago as one observant user noted company CEO Marcelo Claure linking to an unlisted promotional video attributed to Yellow Fan Studios in a message that he tweeted late last year.

yellow fan studiosSo far, the organization’s YouTube page remains sparsely populated by product demos, interviews with the company’s COO and UCG-style promos like this one of a large man doing a cannonball to celebrate his new phone.

Yellow Fan, however, has been doing an increasing share of Sprint’s advertising work. We learned today that the in-house production unit made last week’s controversial “real consumers” spot, which did not involve Deutsch, DigitasLBi or any other external agency partners. Sprint quickly pulled that ad after a bunch of people brought attention to the awkward fact that it featured a white woman referring to chief rival T-Mobile as “ghetto.”

A Deutsch spokesperson declined to comment for this post, but one source describes the layoffs as “huge,” and another tells us that the agency had to part with individuals working across the Sprint business including its production, accounts and possibly creative teams.

The number of Deutsch employees who are no longer with the agency is unclear at this time, as is the precise date on which the layoffs occurred. (One reliable source puts the total at 30 or more.)

The agency made “minimal” cuts to its VW team in February ahead of the FTC’s decision to file a complaint in federal court over “widespread, demonstrably untrue claims” from a series of ads promoting that client’s now-discredited “clean diesel” line.

In more encouraging news, Deutsch also won two Shorty Awards last week for its work on Krylon’s “First Ever Pinterest Yard Sale” project.

Updates when they come in.

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