RESTRUCTURING?: DDB Needham Detroit May Make Major Changes This Week

DDB Needham Detroit will most likely announce a major restructuring of its office, perhaps as early as this week, according to more than one source close to the agency.
The office has been the target of rumors and speculation about its future since Needham moved creative services for its anchor Volkswagen account to New York last year, and appointed Needham, New York president Andy Berlin to run the account. Account services for the Audi division business was moved to Chicago last year as well, to join Audi creative, which had been based in Chicago for some time.
One persistent rumor has been that Needham’s management here, including co-presidents Bruce Duffey and Peter Saad, as well as senior vice president John McLellan, have been negotiating to take the non-VW accounts and merge with an existing local shop.
Duffey called those rumors unfounded. And Needham spokesperson Lou Tripodi in New York said he knew of no forthcoming restructuring.
Robert Klepinger, president of Bailey, Klepinger & Medrich, Troy, Mich., said last week that some Needham executives had been to the agency for ‘a walk through.’ He denied that any deal to merge with Needham is in the offing. ‘But I have heard the rumors,’ said Klepinger.
Outside of VW, the only active accounts for Needham here, according to sources, are Standard Federal Bank and Health Alliance, a regional health maintenance organization. The agency is also agency of record for the Detroit Tigers. But the Ilitch family, which bought the team last year, is expected to handle advertising in the future on a project basis.
The agency is said to be billing less than $15 million.
That leaves Needham with a long-term, expensive lease in office space they moved into just last year in Troy, and just two active accounts, plus some VW dealer and collateral work to pay for it.
Needham bought Baker Advertising in Troy in 1990, so that it would have a full-service presence here. But several accounts have gone dormant.
Needham apparently no longer wants a full-service agency, and would rather run a small service office in Detroit for VW. The agency’s reluctance to discuss its intentions last week may be due in part from recent events in its San Fracisco office. Three San Francisco staffers who were dismissed last week, filed suit last week against the agency for breach of contract and wrongful dismissal, charging that Needham renegged on an agreement to sell them the operations, which are losing money because of an expensive real estate burden.
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