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Pizza Hut Taps Deutsch to Take Over Creative Duties From McGarryBowen

Surprise Move Comes as Chain Battles Sales Slump

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Pizza Hut has tapped Deutsch Los Angeles to assume creative duties on its account, just 10 months after naming McGarryBowen in Chicago its lead creative agency, the chain confirmed on Thursday.

McGarryBowen, part of Dentsu, picked up the account in September, after a review that included the incumbent since 2009, the Martin Agency.

"The Pizza Hut business is evolving and we're looking to align with partners to help us with that evolution," a spokesman said in a statement. "Deutsch has great familiarity with Yum! Brands having done some breakthrough work with our sister brand, Taco Bell, and we're excited about bringing their creativity to Pizza Hut. We got a lot accomplished with McGarry Bowen, and change is never easy no matter when it happens, but sometimes it's necessary. This great brand deserves to have everything working as hard as it can for us and we feel our go forward plan is the best one for Pizza Hut."

Deutsch's lead creative agency role on Taco Bell came gradually, starting with an assignment that led to subsequent jump-ball pitches against Interpublic sibling FCB, which had been the lead and introduced the "Live mas" tagline. With Pizza Hut, Deutsch is taking over immediately.

"Pizza Hut is an American power brand that is poised for significant growth," Deutsch L.A. CEO Mike Sheldon said in a statement provided by a spokesman. "We are excited to partner with them to take their business to the next level."

McGarryBowen said it was proud of the work it did with Pizza Hut and their accomplishments together. "We wish them all the best," the agency said in a statement.

Pizza Hut CMO Carrie Walsh named Publicis Groupe's MRY as its digital agency in March following a review, but bringing Deutsch on is the biggest move since she rose to the top U.S. marketing post in January. She succeeded Kurt Kane, who became Pizza Hut's global chief marketing and food innovation officer.

Yum Brands also said in May that Taco Bell CEO Greg Creed would succeed David Novak as CEO of Yum on Jan. 1. Mr. Creed ran Taco Bell as the chain transitioned much of its creative work from FCB to Deutsch. An executive familiar with the business said that Mr. Creed had largely been happy with Deutsch's work and had a hand in Deutsch's impending appointment to Pizza Hut.

Major ad effort planned
Pizza Hut is struggling to turn around a sales slump. Second-quarter U.S. sales tumbled 4%, following a first-quarter slip of 1%. Mr. Novak said on an earnings call this morning that Pizza Hut's performance was disappointing, particularly in the U.S., which he noted had poor results.

Mr. Novak added that the company is optimistic about Pizza Hut's business in the long term and noted that the chain in the fourth quarter will launch a number of significant initiatives including a major advertising effort.

Last year Pizza Hut's U.S. stores open for a year or more posted a sales decline of 2%, compared with a 2% decline at sibling KFC and a 3% increase at Taco Bell. In 2012, Pizza Hut's U.S. sales were up 3%.

The chain tried to elevate its image in January with a reformulated version of its popular hand-tossed pizza, one that has "imperfections" that executives hoped consumers would view as signs of gourmet authenticity.

Pizza Hut spent $247.4 million on U.S. measured media in 2013, according to Kantar Media. In 2012, the company spent $239.2 million on measured media.

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