New Era Dawns at Deutsch

What was once Lowe in the U.S. is now Deutsch. Last week’s move of about 100 Lowe staffers into Deutsch’s New York office marked the end of the Lowe name domestically and the beginning of Deutsch’s life as part of a global network.

The move came two months after parent company Interpublic Group merged the two shops, making Deutsch, which also has an office in Marina del Rey, Calif., the U.S. arm of Lowe Worldwide. And, after weeks of anticipation, packing and dual-agency social gatherings, the change was immediate: a call to Lowe’s longtime New York phone number was answered by an operator who said, “This is Deutsch,” references to Lowe’s U.S. offices on its global Web site had been rebranded “Deutsch,” and the suffix to e-mail addresses of Lowe staffers became “@deutschinc.com.”

During a brief combined agency staff meeting last Monday, Deutsch chairman Donny Deutsch emphasized that there are no Deutsch people or Lowe people, only us. In the same meeting, New York office CEO Val DiFebo expressed confidence that the combined operation would succeed, although she acknowledged that staffers have to prove it and all eyes are upon them, said sources. No Lowe executives spoke during the half-hour gathering, which took place in Deutsch’s “Commons” area and was followed by a buffet breakfast.

Naturally, the move resulted in some layoffs — about 20 percent of Lowe’s staff was let go, according to sources — and some top Lowe executives, including North American chairman and chief creative officer Mark Wnek and new business development chief Donna Wiederkehr, aren’t part of the combined operation.

Wnek, who held his dual roles for four-and-a-half years, is said to be mulling his next move. He declined to comment when reached on Friday.

The merger isn’t without client fallout either, though conflicts between the two shops were few. Lowe’s $25 million Zicam cold remedy account has gone back into review, just seven months after the client hired the agency, and Lowe’s $100 million Lunesta sleep aid business is looking for a new home at another IPG agency, said sources. Both accounts conflicted with Deutsch New York’s larger Tylenol business, resulting in IPG siding with Johnson & Johnson’s Tylenol, whose major media spending last year exceeded $160 million, according to Nielsen.

Not withstanding IPG’s deference to the J&J — one of its top global clients — the client earlier this month launched a review of Tylenol (and sister brand Motrin). Deutsch, the incumbent since 2003, is defending against at least two other shops: Omnicom Group’s TBWA\Chiat\Day in New York and IPG’s The Martin Agency in Richmond, Va. Final presentations are slated for the week of Jan. 18.

While IPG has stressed the strategic reasons for combining Lowe and Deutsch — global reach for Deutsch clients and a more robust U.S. offering for Lowe — the holding company also will realize an annual cost savings of nearly $8 million, said sources. Beyond a reduction in salary expenditures via layoffs, IPG will reduce its real estate costs.

Lowe’s old space at 250 Hudson St. will be filled by sister shop Momentum, the events and promotions unit of McCann Worldgroup now at 161 6th Ave. The lease on Momentum’s current space is about to expire and will come off the books after Momentum’s 165 staffers move into the Hudson Street location next month, sources said.

Days after the Lowe move, sources described the mood inside Deutsch’s 8th Avenue office as upbeat and energetic, with Lowe staffers sharing offices and cubicle areas with Deutsch employees in a concerted attempt to foster collaboration. One source characterized the combination as a “mass assimilation thing.” Another source noted that most of the extra capacity on the agency’s one-and-a-half floors is now filled. “We’re teeming, but it’s great,” the source added. “When you walk in, this place hums.”

See also:

“IPG’s Michael Roth on the Deutsch-Lowe Union”

“The Trouble With Mergers”