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Fallon McElligott resigned its $40 million Prudential Insurance Co. of America account last Friday, only a week after Prudential moved media and print creative responsibilities in-house.

"The nature of our relationship profoundly changed, turning us from a broad-based strategic partner into basically a vendor for TV production," said Pat Fallon, chairman of the Minneapolis agency, reached at his home Friday evening. "We're proud of the work we did. We contributed a great deal, and we remain grateful to [Prudential Chairman-CEO] Art Ryan for giving us the opportunity."

Prudential executives couldn't be reached for comment.


The real trigger for Fallon's resignation came a few months ago, when Prudential hired Fidelity Investments marketing executive Roger Lawson as exec VP-marketing and planning. At Fidelity, where most ads are produced in-house, advertising stresses product information over image, typically telling consumers about Fidelity funds' past performance and investing strategies.

Mr. Lawson's hiring led to the swift resignation of Elizabeth Krupnick, Prudential's chief communications officer and the executive who had hired Fallon in February 1995 to revamp its corporate image.

"I had an honest disagreement with Art Ryan about the way he was changing the organization," Ms. Krupnick said. "It was not what I wanted to do."

Hired two years ago to report directly to Mr. Ryan, Ms. Krupnick was then told she would report to Mr. Lawson. About two months after her resignation, Mr. Lawson moved media buying and planning in-house from Fallon and Deutsch, New York, agency for Prudential Securities.

Donny Deutsch, president-CEO of Deutsch, confirmed the shift in media responsibilities but said he would be surprised if Fallon or Deutsch lost any TV creative assignments. He said the status of his agency's print work is up in the air.

Unclear last week was whether Fallon had withdrawn from a review for Prudential's $20 million health insurance account. Fallon McElligott Berlin's hold on the $10 million Prudential money management account, however, is so far unaffected. The New York agency won that business in April '96.

Ms. Krupnick hired Fallon to recharge Prudential's tired "Get a piece of the rock" campaign.


The agency won a hotly contested review with a campaign bearing the revised slogan "Be your own rock" and featuring consumers talking about financial freedom and security.

It took a full year before Fallon and Ms. Krupnick built enough support throughout Prudential's management to put the campaign on TV. It tested well with consumers and received positive reviews from critics.

"I still think it's magnificent advertising," Ms. Krupnick said.

The insurer has been hit hard in the past couple of years by scandals involving the sales practices of some of its agents. Prudential reached a settlement with regulators earlier this summer that could cost it up to $1 billion.


For Fallon, resigning the account is a disappointment. The agency prides itself on its skill for rejuvenating well-known but rusted brands, and Prudential had been one of its biggest chances to do that.

Still, that setback was balanced by the agency's victory earlier this month in a review for the $30 million Holiday Inn account, giving Fallon a similar turnaround opportunity in the hotel industry. The agency is also a semi-finalist in the $100 million United Airlines review.

Contributing: Laura Petrecca

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