Deutsch dominates

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Donny Deutsch makes a fist with his right hand and flexes his bicep. "I have the best body of any advertising CEO in the world," he says proudly.

It is impossible to know for certain if the claim is true, but Mr. Deutsch, with characteristic, irrepressible boldness, backs up his assertion with strong evidence.

Standing in his office, the 45-year-old chairman-CEO of Interpublic Group of Cos.' Deutsch pulls his white T-shirt over his head, and naked from the waist up, holds his arms out at his sides, palms up, as if to say, "See?"

His bravado, some call it arrogance, is deeply ingrained in the agency's culture, and has clearly played a role in its success- something even critics of his brash style are forced to admit.

Deutsch the ad shop in 2002 was just as robust as Deutsch the adman. Mr. Deutsch asserts that the agency, under his leadership and with significant help from a 14-member executive team, in the past 12 months "cracked the integration model," continued to grow, ran a good business and offered a superior product.

WINNING STREAK

There's strong evidence for his words: In 2002, Deutsch logged $600 million-plus in new billings and created integrated campaigns for clients in industries from pharmaceutical and cosmetics to automotive and beverage. Despite the past year's status as one of the worst in decades for new business, Deutsch won an assignment in a long-coveted category, beer-Coors Brewing Co.'s Coors Light. The agency also snared three separate accounts from drugmaker Novartis for direct-to-consumer advertising, an area regarded as one of the ad industry's few bright prospects. The evidence also includes Deutsch's selling Mitsubishi Motors North America with music, successfully tapping into pop culture and increasing the automaker's sales and brand recognition among Generation Y, people aged 16 to 20.

The year 2002 provided numerous examples of the agency's unorthodox approach to media buying, such as its multimillion-dollar deal with Viacom Plus, Viacom's cross-media unit, through which a campaign featuring "personified bottles" for Cadbury Schweppes' Snapple broke on Viacom's TV, radio and outdoor properties. The TV media buys came in unusual 5-, 10- and 20- second increments, as well as conventional :15s, as a way to capture viewers' attention.

For all those reasons, Deutsch is Advertising Age's 2002 Agency of the Year. Donny, as he's frequently referred to within the industry even by people who've never met him, is widely identified with the agency his father, David, founded in 1969 with silverware maker Oneida as a client and billings of less than $1 million. In 2002, its billings were $2.2 billion, and the agency had more than $200 million in gross income.

"I could see us being three times this size," says the younger Mr. Deutsch. Outgoing and extremely comfortable with the media, he generally represents the shop in print reports and, increasingly, on TV, where in the past year he's fielded questions not only about Deutsch but about its troubled parent, Interpublic, which acquired the agency in November 2000 in an all-stock deal.

Mr. Deutsch in January 2001 filed with the Securities & Exchange Commission to sell a large chunk - 4.8 million of the 5.4 million shares he owned - after the sale of his agency. Assuming all the shares sold, his take based on IPG's closing price of $44.56 on Jan. 16, 2001, was $215 million. Today, IPG shares trade around $15, and Mr. Deutsch says he's still a shareholder.

Despite public perception that Mr. Deutsch alone is in charge, a close-knit group of six managing partners and eight partners is highly involved in the agency's operations. These executives also are critical to developing and maintaining the agency's unique culture.

"People who thrive in it are kind of crazy workaholics who like to work and to play with each other," says Linda Fidelman, president of agency review consultancy ADvice & ADvisors. "It is intense, but populated by people who have a real passion for the business."

Clients say Deutsch also respects their businesses and strives to determine how marketing can best help reach clients' goals. Greg O'Neill, president-chief operating officer at Mitsubishi, says it wanted a partner, "someone we could get into the boardroom, who could, quite frankly, provoke us."

"They are very agile and open-minded," adds Rochelle Udell, exec VP-creative development and design at Revlon, which in 2002 consolidated all creative work for its Revlon brands at Deutsch. The agency was assigned creative work for Revlon's Almay and media buying for all Revlon brands in 2001. "They're able to think about things in unexpected ways that would lead to results."

ANALYZING MEDIA

Deutsch's Customer & Data Strategy group and its in-house media-buying group collaborate for Revlon and other clients to analyze historical consumer spending and media allocations. "A client might say, `We need a bump in sales,' " says Bobbi Casey Howell, partner-director of customer and data strategy. "We figure out how much to spend and where to spend it."

Deutsch management thinks strategically about its own growth as well as clients.' After winning the direct-to-consumer advertising business for Pfizer's allergy medication Zyrtec in 1999, Deutsch capitalized on being one of the first general agencies in the area. "It is rare that you get the chance to write the rules of the game," notes Cheryl Greene, managing partner and chief strategy officer. The agency honed its creative and strategic abilities, as well as its experience creating integrated campaigns, and has aggressively pursued more business.

After reviews, Pfizer awarded additional accounts to Deutsch in 2000 (Zoloft) and 2001 (Bextra). Pharmaceutical giant Novartis tapped Deutsch as its agency for three separate accounts: Deutsch competed against others for Diovan and Zelnorm, but Novartis moved Lamisil to Deutsch with no review.

Kurt Graves, Novartis senior VP-general manager of commercial operations, says, "When you're with Deutsch, the one thing you leave the room thinking every time is `What creative firepower.' "

Despite its creative reputation, several 2002 campaigns sparked debate about originality, particularly Mitsubishi's "Are you in?" ads.

Some critics call them plain vanilla, but Eric Hirshberg, managing partner-executive creative director of Deutsch Los Angeles, says the ads don't conform to a general formula. Both he and Mike Sheldon, managing partner-general manager, who joined Deutsch Los Angeles in 1997, say the Mitsubishi campaign is based on the idea that everyone really wants to look good in their car.

Deutsch's success in tapping into the hearts of young adults helped win additional clients in 2002. Coors asked the agency to pitch ideas against Interpublic sibling Foote, Cone & Belding Worldwide, Chicago, on Coors Light to reel in the young male consumer, finally adding Deutsch as a second creative agency in September.

"Deutsch really understands today's young adult culture and exhibits a comprehensive methodology for keeping up with that demographic," says Ron Askew, chief marketing officer at Coors.

As the agency has expanded, Linda Sawyer, a 13-year employee of Deutsch, has assumed many operational responsibilities and capital investment decisions formerly handled by Mr. Deutsch. Deutsch in 2002 opened a new office in Toronto, a result of additional business from client Mitsubishi, and also expanded to Miami for Burger King.

Deutsch expects to hire as many as 80 em-ployees thanks to new business. Expansion while keeping current clients happy is the agency's goal for 2003, say Mr. Deutsch and Ms. Sawyer. Yet in building Deutsch beyond its New York roots, management has scored some success (witness Los Angeles) as well as some failures. A Boston outpost was short-lived, as was an urban-marketing joint venture between Deutsch and entrepreneur Russell Simmons, called dRush, which closed last fall.

Deutsch has the street smarts and intellect to win new clients, but significant expansion remains elusive. "It'll happen," says Mr. Deutsch, "I anticipate it will happen in the right way."

Though he's non-committal on details. Maintaining Deutsch's culture as it grows is, says industry recruiter Sharon Spielman of Jerry Fields Associates, "the tall order."

It's possible that Interpublic is behind Mr. Deutsch's unusual reticence. Management at the parent has thus far unsuccessfully tried to have him play a larger role.

"Because of his strength, as well as his management team's, there is probably more that Donny and that Deutsch can do," says John Dooner Jr., chairman-CEO of Interpublic. "They're also making great contributions just by doing what they are doing. Healthy expansion is great."

contributing: alice z. cuneo

RECENT WINNERS

2001 Ogilvy & Mather Worldwide

2000 Goodby, Silverstein & Partners

1999 McCann-Erickson Worldwide

1998 Deutsch

1997 TBWA/Chiat/Day

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