Deutsch takes the Initiative with new deal

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Deutsch will tap into the media-buying clout of its new sibling, Interpublic Group of Cos.' Initiative Media North America. The two are forming a joint venture, Initiative@Deutsch, to handle national TV buying for all the ad agency's clients. Estimated billings of the new group are $250 million.

Mitsubishi Motor Sales of America is Deutsch's biggest client and spends most of its ad dollars on TV. The car marketer spent $130 million in network TV alone last year, according to Taylor Nelson Sofres' CMR. Deutsch's Los Angeles office handles the account. Deutsch's other clients include Coca-Cola Co., Cadbury Schweppes' Snapple Beverage Group, General Nutrition Cos. and Expedia.


Interpublic bought New York-based Deutsch last November for $265 million in stock.

"Since we are now part of IPG, we are looking for areas in which we can make ourselves better without changing what Deutsch is about," said Peter Gardiner, exec VP-director of media services. "This gets us the best of both worlds. We do full-service media, but this is a way to give us more clout."

Under the new arrangement, the existing Deutsch network group comes under the Initiative umbrella. Wendy Hart, Deutsch's national broadcast director, reports both to Mr. Gardiner and Arthur Schriebman, Initiative's exec VP-director of national broadcast.

"This is not a shift in the way we do media," said Mr. Gardiner. "It's a connection for buying for Deutsch and Initiative, which is why we are leaving our people on site here."

However, Lou Schultz, chairman-CEO of Initiative Media Worldwide, said the new group will move soon into the agency's New York offices under Mr. Schriebman. Mr. Schultz also said the venture will only buy national TV for now. "But longer-term, as things evolve," said Mr. Schultz, "it's possible it will be more than that."


Steve Gough, marketing director at Mitsubishi, said his company and Deutsch conceived the plan. "The thinking was, `How do we utilize this merger of yours so we're getting the best of both worlds?' We get IPG's global power, but Deutsch still retains control [of our account]." Deutsch will continue to handle media planning.

"We will be capitalizing on Interpublic's acquisition of Deutsch, which provides us greater leverage on media buys," said Mr. Gough. "We're always looking at what to do to save money."

Interpublic also handles media buying for General Motors Corp. through General Motors Mediaworks, a dedicated buying agency that operates separately from Initiative.

Deutsch has always prided itself on its full-service media department, and as Mr. Gardiner put it, on the agency being "a very highly integrated place, very different from most agencies you encounter. So, to us maintaining that tightness of all the pieces is very important." But this new venture appears to be a step toward unbundling those pieces, or at least sharing them, with its new Interpublic owners.

Mr. Schultz said such a move has been a part of his strategy since he arrived at Initiative from Interpublic's Campbell-Ewald, Warren, Mich., 18 months ago. "Part of my strategy was to have three target groups of clients," said Mr. Schultz. They include Initiative's direct clients, such as Walt Disney Co. and Home Depot; non-Interpublic agencies for which it buys media; and Interpublic shops. Within that last group, Initiative has media-buying relationships with Mullen, Wenham, Mass., and buys locally for Campbell-Ewald and Gotham.

Stay tuned for similar deals from Initiative. Said Mr. Schultz: "There will be more to come in a few weeks."

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