$181 mil account: Old Navy to keep it quirky with Deutsch

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Old Navy hired Deutsch, Los Angeles, as its first advertising agency last week, but that doesn't mean it's changing its image.

"The smile and wink in our brand is critical to who we are," said Susan Wayne, exec VP-marketing.

The Gap Inc. unit handed its $181 million account to the Interpublic Group of Cos. shop, besting Havas' Euro RSCG MVBMS, New York, and WPP Group's J. Walter Thompson, New York. Pile & Co., Boston handled the review, which began in early February.

Old Navy plans to stick with its tongue-in-cheek image, built with ads spoofing vintage TV shows and using offbeat spokespeople such as rapper Lil' Kim, Ms. Wayne said. The ads played into the retailer's turnaround and with the brand in "a position of strength" it was a good time to seek out a long-term strategic and creative partner, she said. This is one of the first major shifts on Ms. Wayne's watch, who joined Old Navy from Publicis Groupe's Leo Burnett, Chicago, last June.

"We really have a lot of reverence for what they've done, because it has been so successful," said Mike Sheldon, managing partner-general manager of Deutsch, Los Angeles.

Deutsch's first work will be a back-to-school effort in August, but the team will work with Old Navy's in-house agency as it readies a summer effort breaking next month. The in-house team will also continue to handle the retailer's in-store advertising, customer relationship marketing and store circulars, which it will coordinate with Deutsch's creative, Ms. Wayne said.

Improvement

Old Navy spent $181 million on measured media last year, according to TNS Media Intelligence/CMR. Gap spent a total $509 million advertising its three brands in 2003, a 3% increase over 2002. Advertising expenditures in 2004 are expected to be $560 million for all three brands.

All the Gap brands have shown improvement in sales during the holiday season and first quarter, with Old Navy reporting an 11% increase in same-store sales in March. But analysts have warned April could be a slight letdown, given last year's late Easter. In a note to investors, Credit Suisse First Boston retail analyst Richard Baum noted the company is up against a tough comparison in April, when same-store sales rose 20% last year.

Mr. Pressler has focused on upgrading the marketing functions at all of Gap's brands, including the hires of new head marketers at all three units. Old Navy is also due for a new creative head, since Dennis Leggett will step down as senior VP-creative director after the transition to the new agency is complete.

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