DONNY DEUTSCH SAYS NO TO REVEALING AGENCY SALARIES

Tells 4A's Audience Why He Refused to Continue Pfizer Work

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NEW YORK (AdAge.com) -- Sharply criticizing the demands of some marketers and review consultants for ad agencies to reveal their employees' salaries as part of a
Donny Deutsch talked about his agency's split with Pfizer.
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review process, Donny Deutsch today called the idea "truly insane."

The chairman and CEO of Interpublic Group of Cos.' Deutsch delivered his remarks at today's American Association of Advertising Agencies' New Business Summit. His directly referred to his agency's February decision to cease handling Pfizer's advertising account rather than reveal internal agency financial data to a compensation review consultant.

"Let's all keep an eye on the ball and not start filling the room with procurement people," he said.

'You're going to lose'
"If you totally take your pants down, you are going to lose," he told an audience of several hundred agency, consulting and marketing executives gathered at Manhattan's Millennium Hotel.

He characterized his agency's split with pharmaceutical giant Pfizer as a "tremendous cautionary tale" and said the incident represented a "loss for Deutsch, Pfizer and our industry."

Splitting with Pfizer
In February, Deutsch severed its ties with Pfizer, giving up more than $100 million in ad billings on the drug brands Zyrtec, Zoloft and Bextra rather than provide internal financial data to the consulting firm hired by Pfizer to review all of its agencies' compensation.

"If we had played that game," he said, Deutsch would have "turned out an inferior product for Pfizer" because the agency would have been forced to use mediocre employees willing to accept lower pay scales.

"We did breakthrough work," he said. "The [client-agency] relationship was fantastic. Then the consultants got involved," he said.

Taking care not to name and insult Pfizer's consulting firm -- New York-based Beekman Associates -- Mr. Deutsch asked all consultants and audience members to consider several things. "Consultants, step back: Ask yourselves, 'What am I in this business for?'" he said, arguing that in the effort to help clients maximize cost efficiencies, consultants are hurting agencies by forcing them to change the business practices that have enabled those same agencies to deliver top-notch work.

Who runs the agency?
Mr. Deutsch warned agencies that agreeing to client and consultant requests for proprietary information on cost structures and employee salaries is foolhardy. He said every agency has a unique business formula that includes a compensation-and-cost structure, and that to allow clients and consultants to tamper with that is in effect allowing them, rather than agency management, to run the agency's business.

The pointed comments on the practice of compensation reviews came at the end of Mr. Deutsch's keynote talk on winning new business. He also touched on topics including:

  • New-Business Dept. "It is not one person but a group on equal footing with every other department from account management to creative to media planning in the agency," said Mr. Deutsch. "It reports directly to the CEO. That sends a signal that new business is important."

  • Prospecting Find fresh triggers for agency change at potential clients -- such as negative Wall Street news. "When might a CEO, a CMO, be pissed off and ready?" he asked.

  • Agency brand "Stand for something," Mr. Deutsch said. "Forget bullshit buzzwords that 'we do breakthrough advertising.' Don't use that stuff. Define a persona."

  • Compensation After an agency credentials meeting, do not let [the client and the consultant] out of the room without talking about compensation. "This is common sense," Mr. Deutsch said.
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