U.S. Agency of The Year 2001

The big question mark for CEO Donny Deutsch as 2001 began was whether his agency’s “fiercely independent and iconoclastic” culture would be affected by the late-2000 sale to Interpublic Group. He got his answer when he visited the new two-story, 90,000-square-foot Deutsch/LA offices in March.

“The buzz, the energy, the ethos was very much Deutsch, yet I was a visitor,” the 44-year-old New Yorker recalls of the trip to Marina del Rey, Calif. “It was something I gave birth to but someone else had nurtured. … I realized we had this culture that was strong and special, and IPG could really turbo that and take that vision wherever we wanted.”

In its first year under the IPG umbrella, the agency was unfazed, boosting revenue by 23 percent (following three straight years of 50 percent gains), breaking into new categories and improving its already solid reel.

For those reasons, Deutsch has been named Adweek’s U.S. Agency of the Year.

“What should have been an incredible interruption was just a marvelous transition,” says Deutsch, who sits on IPG’s executive council. “I’d like to think that my main skill set now is being a maitre d’ to the group that runs this place.”

Deutsch’s new boss, IPG CEO John Dooner, is certainly happy with his $250 million investment. The agency, he says, “represents the highest quality that Interpublic can present, from its integrated offerings to its ability to help clients build their businesses to the quality of the people the agency can attract and retain.”

Deutsch himself credits the agency’s collaborative spirit for giving the organization its strength and resilience. Deutsch’s success, he says, is “a tribute to the core.”

That core team includes partners Linda Sawyer, chief operating officer; Mike Sheldon, general manager in L.A.; Val DiFebo, director of client services; Cheryl Greene, chief strategy officer; Kathy Delaney, New York executive creative director; and Eric Hirshberg, L.A. executive creative director. The agency is known for its executive loyalty, and while one partner, Peter Dra koulias, moved on last year, it was to run dRush, a youth marketing joint venture between Deutsch and Russell Simmons.

Some at Deutsch say they didn’t realize how well the agency performed last year until they stopped and looked back. “The highs didn’t feel that high during the year,” says Delaney, 37. “It was a series of small moments that defined the agency’s success.”

The highlights included saving the $100 million Domino’s account—replacing “Bad Andy, good pizza” with “Get the door, it’s Domino’s”—and upgrading creative for existing clients, including DirecTV and Snapple. For the latter, Deutsch launched the Elements brand with a quirky, slightly risqué animated campaign that ran exclusively on MTV.

Deutsch also developed a clever campaign for new client Verizon SuperPages, in which an overworked Lassie uses the on line phone directory to find a new family and the battling Three Stooges get counseling.

On the new-business front, Deutsch New York added to its pharmaceutical roster, securing the $70-80 million account of Pfizer’s anti-inflammatory drug Bextra. In February, New York landed the $100 million media account for all Revlon brands and creative on the Almay line, marking the office’s largest media win. About a dozen members of Deutsch’s 90-person media department worked on the Revlon pitch, which was presided over by chairman Ron Perlman and CEO Jeff Nugent.

The Revlon win points to how the agency keeps “upping the ante,” says Deutsch. “First we broke into the pharmaceuticals category [in 1999], now [we added more] media. It’s a great next step.”

Peter Gardiner, 45, the New York shop’s director of media services, says a systemic approach to integration gives the agency an advantage over competitors. “That’s the beauty of Deutsch,” he says. “Some clients use all of Deutsch’s advertising services, but others can benefit from just using a piece.”

Deutsch/LA—which opened in 1995 with four staffers and now employs nearly 300—won the network’s first high-tech business-to-business client last fall, securing J.D. Edwards’ $30 million account. Having built case histories for such sexy consumer brands as Mitsubishi and DirecTV, the agency had to delve into an enterprise-software company that competes with the likes of Oracle and SAP.

“We never look at ourselves as knowing it all. It’s always a learning experience,” Sheldon says. At the pitch, each finalist was allotted two hours for presentations, but Deutsch’s lasted for more than four when chemistry sparked with the client. Afterward, Sheldon says, “we had people walking out of the room saying, ‘Game over.’ “

While competing agencies presented campaigns that focused on J.D. Edwards’ product capabilities, Deutsch proposed highlighting the exemplary software support, which it saw as an extension of the Denver-based company’s integrity. (“That category is worse than the airlines for customer service,” says Hirshberg.) The campaign is scheduled to break later this month.

While the recession prompted many of its peers to chase every new-business opportunity, Deutsch remained selective. Accounts were pursued only when the management team believed the business was winnable and worth having. “We’re business people, not ad people,” boasts Greene, 57, of the shop’s approach.

Despite the stellar year, there were a few setbacks. In July, the agency shuttered the two-person Boston office it had opened in the summer of 2000. New York lost Reflect.com in February when Procter & Gamble took the business in-house. It also lost the Grand Marnier media planning and buying account in May; Brinks Home Security left in July, and the GNC contract expired in December. Those losses totaled $44 million in billings.

Deutsch’s shared profit-and-loss structure fosters integration among divisions and makes it less vulnerable to the steep cuts in ad budgets that were so prevalent last year. “Integrated services go on even if budgets are cut, and Deutsch has one P&L structure, so no one is fighting over a client’s dollars or staffing,” says DiFebo, 40.

Adds Sawyer: “We’re completely on top of managing our costs. We like to call ourselves lean and mean, no fat, and prudent in our investments.”

The lean-and-mean mentality is evident at Deutsch’s New York headquarters, which occupies an entire city block on the 14th floor of a Chelsea office building. The stripped-down industrial decor, done in clean lines of gray, black and white, conveys a steely frugality, the exposed concrete floors a certain urban toughness. Staffers whiz through the expansive corridors on scooters—less a show of hipness than of efficiency.

Sawyer, 40, also notes the expansion of Deutsch’s data-strategy team, which has grown from two staffers to 20 in the past three years and supports all clients on both coasts. The ongoing analysis of clients’ consumer data is part of Deutsch’s unflagging dedication to integration, she says, and key to the shop’s ability to retain sound accounts. It is also a major selling point in new business.

“Manage your business as if you’re going out of business, and then you won’t,” is how Sheldon, 42, sums up the management philosophy.

Looking ahead, Deutsch is poised for overseas expansion, perhaps in 2003, with the help of IPG’s resources. “It’s given us more of a worldwide perspective,” Deutsch says of the parent company that also owns McCann-Erickson, Lowe and Foote, Cone & Belding. “We plan to take the brand out and show what we can do with it.”

What IPG’s influence has not done is change people’s perception of the agency, Deutsch says. “We were an up-and-comer at $10 million, and we’re still an up-and-comer approaching $2 billion.

“What continues to excite me is that people still perceive us as an underdog. And that’s a great place to be, because the future is always ahead of you.”