Fallout at Newly Merged Deutsch-Lowe: Tylenol, Zicam, Lunesta, Ikea Walking Out the Door

Last Updated Jan 12, 2010 2:40 PM EST

It appears that the fallout in the Lowe-Deutsch merger has begun, with Deutsch firmly in charge of Interpublic (IPG)'s new international ad agency. Adweek's Andy McMains reported on a meeting at the shop:
Deutsch chairman Donny Deutsch emphasized that there are no Deutsch people or Lowe people, only us. In the same meeting, New York office CEO Val DiFebo expressed confidence that the combined operation would succeed, although she acknowledged that staffers have to prove it and all eyes are upon them, said sources. No Lowe executives spoke during the half-hour gathering, ...
In case you can't read subtext: The exact opposite of Donny's bizarre statement that there are "no Deutsch people" is true. No one from Lowe was allowed to speak! About 100 Lowe staffers have been absorbed into Deutsch's office:
Days after the Lowe move, sources described the mood inside Deutsch's 8th Avenue office as upbeat and energetic, with Lowe staffers sharing offices and cubicle areas with Deutsch employees in a concerted attempt to foster collaboration. One source characterized the combination as a "mass assimilation thing."
The only thing Donny and DiFebo forgot to say was, "We are the Borg! Lower your shields and surrender your ships! We will add your biological and technological distinctiveness to our own. Your culture will adapt to serve us. Resistance is futile!"

To underline the point, here's the management picture:

  • Out at Deutsch: Mick McCabe, partner-chief strategy officer, who has defected to Kirshenbaum Bond Senecal & Partners. Peter Nicholson, former chief creative, "asked to leave" the merged shop (replaced with Greg DiNoto, a Deutsch alum from 1997.);
  • Out at Lowe: Mark Wnek, chairman-chief creative officer Vincius B. Reis, managing director, became CEO at Euro RSCG 4D Brasil. Peter Minnium, director of the Americas, "prepping to exit" Kevin Allen, vice chairman, "prepping to exit" Donna Wiederkehr, new business development chief
So far, so good. There's no point in two sets of management, and it will avoid a war if Deutsch is in charge and Lowe is not. However, it leaves Deutsch flying solo on any Lowe account where Minnium et al had the key relationship.

A look at both agency's websites indicates that no effort has been made to rebrand Deutsch as "Deutsch Inc., a Lowe & Partners Company," beyond a legal disclaimer in this press release, despite IPG's promises. (The new agency name is ridiculous and will be quietly dropped in a few months, if DiFebo has an ounce of sense.)

But all is not sunny at Deutsch. A commenter on Adweek's boards made this trenchant observation:

A Summary: Of the new era: - Lunesta, in review because of Tylenol. D'owe not in the pitch. Minus $100MM. - Zicam, in review because of Tylenol. D'owe not in the pitch. Minus $25MM. - Tylenol, in review. D'owe the incumbent, and incumbents win less than 10% of pitches. Minus $300MM - IKEA, in review. D'owe the incumbent, and incumbents win less than 10% of pitches. Minus $40MM. $465 million dollars in billing our the door in about two months. Don't unpack those boxes, guys.
So Interpublic fell on its sword over Lunesta and Zicam in favor of Deutsch's Tylenol business in the merger, and Tylenol went into review anyway. Considering that Lunesta was the largest drug ad account on the planet, sacrificing it to merge Lowe into Deutsch seems like a disastrous economy in hindsight.