Hasta La Creative!

Publicis agencies Leo Burnett Detroit and DigitasLBi Detroit will soon merge, creating a new unit called Engage M-1 that will be dedicated to serving their shared General Motors accounts.

From a Publicis spokesperson:

“After years working together on General Motors in Southeast Michigan, DigitasLBi and Leo Burnett will come together as a united  partnership—Engage M-1 (reflecting the central roadway of Detroit)—serving our General Motors clients including Buick and GMC.”

The spokesperson told us that, while the soon-to-be-united team “shares a mission of providing world class work to our clients,” both agencies will retain their separate brands and office spaces.

This shift follows an April Adweek report in which sources speculated that a “blind RFP” making its way around Detroit-area agency circles amounted to the launch of a creative review for the Buick and GM accounts. General Motors declined to confirm the news at the time, telling Adweek that Leo Burnett and DigitasLBi remained its agencies of record and stating, “We don’t comment on rumors and speculation or on the particulars of our agency projects.”

That said, the client did move its Chevy Silverado truck line business from Leo Burnett to Commonwealth//McCann last year in a shift that led to a round of downsizing at the latter’s Detroit office.

The Publicis spokesperson did not provide more information regarding any staffing changes that might accompany the merger or clarify when any related operational changes will take place.

Factory Design Labs of Denver has been through a few major changes in recent years, most prominent among them the departure of former CEO Scott Mellin, who was demoted to chief brand officer and replaced by predecessor and agency founder Jonas Tempel.

The company also recently pivoted from being a design agency to also providing media services to both clients and advertisers. But according to a story that ran in the Denver Post over the weekend, “the agency has left several magazines with unpaid bills and raised the ire of media outlets and at least one company that paid Factory to place ads.”

Staff reporter Jason Blevins writes that Factory told multiple outdoor sports publications that it would be unable to pay for ads it had placed on behalf of its media clients, many of which are area ski resorts or producers of outdoor sports equipment. An ad sales executive from an unnamed national magazine said:

“They have a lot of outstanding balances and delinquent payments with us for all my clients that had media managed through Factory … I was flabbergasted when (a client) shared with me that they had indeed paid Factory and Factory was not paying us for those bills.”

The accusation, then, is that the agency accepted full payment from its clients before telling the media companies that ran the ads that it would be unable to fulfill its part of the agreement and attempting to negotiate alternate deals that paid as little as 8 cents on the dollar, according to Snow Magazine publisher Barbara Sanders. As one anonymous media executive put it, “Where did the money go?”

Blevins contacted various media executives who declined to comment on the record. Agency president Bob Reimer also did not say anything for the Denver Post story, citing unspecified “confidentiality and non-defamation agreements.”

We recently spoke to a source with direct knowledge of the matter who claimed that Factory Design Labs made repeated attempts to spin the story told by these media partners as one for which the agency is not to blame.

According to additional sources who spoke to The Denver Post on condition of anonymity, Factory blames its inability to honor business agreements on the loss of The North Face account. It’s true that the shop had been AOR on that business since 2007, but rumors of a split began circulating almost two years ago when Mekanism took over responsibility for the outdoor gear company’s TV campaigns. The first such effort launched in November 2014, and Mekanism officially became the client’s lead creative agency partner with the “Never Stop ____” campaign less than a year later.

Regarding the alleged non-payment, Sanders told the Denver Post, “…no one is talking about it in public. It’s like it didn’t happen.”

Publicis Groupe officially updated the long-rumored talks between itself and Samsung regarding ownership of the latter’s agency network Cheil Worldwide…by stating that it is no longer involved in those discussions.

This morning, spokespeople for Maurice Levy’s holding company told Reuters and other outlets that talks regarding a “possible investment” in the network, which owns some or all of McKinney, The Barbarian Group and London’s BMB, have collapsed.

Samsung remains a Publicis Groupe client, however, and the latter’s statement aims to dispel any rumors about that pairing:

“The strategic relationship with Samsung is as strong as ever and we will continue to work daily with Samsung and Cheil Worldwide to make the brand even more successful.”

When reading that statement, remember that Samsung concluded its late 2014 global review by sticking with Publicis and adding Rosetta to its agency roster.

The Publicis/Cheil talks were first reported in January–a time when the holding company was in better financial shape prior to losing the P&G media review. As recently as February, rumors held that Samsung would soon accept Publicis’ offer to become Cheil’s largest shareholder with a 30 percent stake. (Samsung Electronics and its engineering wing C&T currently own approximately 25 percent.)

It’s unclear why the talks broke down at this time, because The Korea Times reported yesterday that Samsung still very much wants to sell the Cheil organization to someone. From that report’s anonymous source:

“At least three investors including one Chinese real estate company showed keen interest in acquiring the stake in Cheil. Working-level discussions are underway. The key issue is price.”

Note the last line and the fact that both of Samsung’s U.S.-based agencies have struggled in recent months. McKinney lost its biggest account, Nationwide, to Ogilvy in February and went through a significant round of downsizing afterward. Still, the North Carolina shop has been producing a steady stream of work: it recently won headlines for a stunt based on North Carolina’s infamous “bathroom bill” and picked up the TuneIn account without a review.

The Barbarian Group is also in the midst of a significant restructuring following the departures of its CEO, founder, owner, chief creative officer, head of talent, head of accounts and more under the leadership of former Cheil executive Peter Kim.

In barely related news, we are sad to report that Mr. Levy has yet to make any public jokes about the “colossal” size of Sir Martin Sorrell’s (pay) package.

72andSunny has confirmed tips we’ve been receiving regarding a round of layoffs at its Los Angeles office. According to the agency’s statement, the L.A. office will be the only one impacted and the cuts don’t appear to be connected with any account changes but rather allow the agency “to continue to focus on…overall, long term health as a robust, modern agency moving forward.”

Here’s the statement from 72andSunny:

“Today we are parting ways with 2% of the staff in our LA office. No other office will be affected and we don’t foresee any additional adjustments. This is something that we take very seriously and saying goodbye to friends and family is extremely hard. We are deeply committed to everyone here at 72andSunny and this adjustment allows us to continue to focus on our overall, long term health as a robust, modern agency moving forward.”

Several weeks ago, the legal teams of JWT, WPP and former CEO/chairman Gustavo Martinez each filed a motion to dismiss Erin Johnson‘s lawsuit against Martinez. Unsurprisingly, Johnson’s lawyers responded today by filing a memorandum in opposition to Martinez’s motion to dismiss the complaint, contending that JWT and WPP’s response to Johnson’s complaints show that “if you complain of discrimination, you will be attacked publicly, be branded as a liar and ostracized.”

The 23-page memorandum attempts to refute the various arguments made in the aforementioned motion to dismiss the case. Among the arguments in that motion for dismissal, Martinez’s lawyers contended that a text sent by Johnson to Martinez ten days before her legal team let WPP and JWT know that they would be filing a suit was evidence that Martinez’s behavior did not create a hostile work environment. In the message, Johnson told Martinez she had turned down a job offer, choosing instead to stay loyal to him and JWT. Johnson’s lawyers reject the “snippets of a text” as invalidating her argument that Martinez created a hostile work environment.

“There is no question that “going along to get along” is common in these cases,” they wrote in the memorandum. “Plaintiffs decision not to quit in reaction to a dispute with a more than decade-long employer is neither unusual, nor relevant to this motion.”

Regarding the text in question, the memorandum adds, “Discovery will show the full texts, emails, and the like among many relevant individuals and a jury can decide the significance of this text at that time, with a full record.”

The document also objects to the notion that there weren’t enough instances of offending behavior on Martinez’s part to constitute a case against him. “Corporate defendants list six such incidents [of offensive comments by Martinez],” the document states. “That behavior, without more, could state a claim for a hostile environment. In addition, however, defendants ignore that those allegations are far from describing isolated incidents, but instead are examples of sexist, humiliating and threatening behavior that was typical of Martinez.”

Johnson’s legal team also alleges, contrary to Martinez’s claims, that “despite Johnson’s repeatedly following ‘her employer’s well-established discrimination prevention policies,’ the discrimination continued, escalated and provoked retaliation and defendants’ ridicule.” (In the motion for dismissal, Martinez’s team claimed to find it “‘fascinating’ that Johnson did not use “her employer’s well-established discrimination prevention policies.”)

The memorandum also addresses the claims made by Martinez’s legal team that Martinez’s behavior didn’t amount to sexual harassment which created a hostile work environment by stating his comments, including retaliatory remarks made when Johnson objected to his previous behavior by stating “The sex-based nature of Martinez’s offensive comments and conduct frequently was explicit.”

“For example, when Johnson told Martinez that his comments about rape were not acceptable in the workplace, he responded by telling her that ‘American women are too sensitive,’” the document goes on. “Shortly thereafter, he grabbed Johnson around the neck with his arm, telling her to come to him so that he could rape her in the bathroom.” 

Additionally, Johnson’s lawyers address the claim that “all of the ‘complained of adverse actions occurred in 2015’ before plaintiffs first protected activity in February 2016.”

“Of course, just because Martinez says something does not make it so,” the document states, alleging that there were “multiple instances of protected activity in both 2015 and 2016, and many examples of adverse actions thereafter.”

For more on the most recent filing in the case, see Adweek’s coverage, which includes the document in full.

Several people who rightly chose to remain anonymous talked to The Wall Street Journal about the Association of National Advertisers’ eight-month probe of the relationships between ad agencies and their media partners. The piece just went live, and it is a mess.

Seems that quite a few agencies receive “rebates” or kickbacks from certain unnamed media companies as long as they spend a given amount to place ads in those publications. According to the sources mentioned above, “The group found that the practice was widespread within the sample it studied.”

That sample was approximately 150 people interviewed by the investigative firm K2 Intelligence.

The ANA declined to discuss the report with the WSJ prior to its release, and a spokesperson for the 4A’s told us today: “We cannot at this time comment on anonymous sources… we have not seen the study , have always preached full transparency to our members and will act accordingly when the details are released.”

For context, this sort of scheme is common and essentially accepted in Europe and Latin America…or so we hear. Some of the specific behaviors aren’t necessarily in violation of existing contracts–they’re just completely lacking in transparency. And it’s not just digital, either.

As for the reasoning behind the trend, unnamed “ad executives and marketers” blamed the “enormous pricing pressure that marketers have placed on their agencies,” a la the ongoing McDonald’s creative review.

Despite the fact that this sort of thing is accepted throughout most of the world and that the legal implications of the behaviors documented in the forthcoming report are not clear, spokespeople for Havas, Dentsu, Omnicom, IPG and WPP’s GroupM gave some variation of “we do not participate in kickbacks” statements to the WSJ. Publicis Groupe declined to do so.

Unfortunately, the report ultimately will not name names or organizations. For that reason, it’s not at all clear whether it will lead to “jail time,” as sources told Business Insider last month. But at the very least, this sort of development is all but guaranteed to damage relationships between agencies and clients who may believe that the former are driven primarily by their own self-interests.

Get ready for some audits.

Two weeks ago, we reported that MDC Partners’ Anomaly had won the global Beats by Dre creative review.

Today AdAge published a piece announcing the same development. Interestingly, this story does not include any sort of official confirmation as Anomaly, Beats and R/GA representatives declined to comment just as they did for our earlier coverage.

The most interesting part of the piece is the revelation that Anomaly will open an L.A. office to handle the Beats work and “several” other, unnamed clients. CEO and co-founder Carl Johnson will run the new operation.

R/GA was not involved in the review and sources close to the matter told us that Anomaly’s win will not affect its relationship with the client, but the development is notable in that both that agency and Anomaly have now opened offices specifically to handle the work related to this account. (R/GA L.A. and London led creative on previous campaigns.)

As reported in earlier coverage, marketing VP Jason White (formerly with W+K) led this search for a new agency partner to help the premium headphone brand expand overseas. CMO Omar Johnson will also reportedly play a larger role in the brand’s creative efforts moving forward.

The big question now is what sort of work Anomaly will be producing and how the account will be divided between R/GA and the MDC shop, especially in terms of international and domestic campaigns. AdAge’s sources claim that Anomaly could be working on everything from TV spots to experiential executions.

R/GA and MDC Partners again declined to comment for this post. The Beats organization never responded to our earlier emails.

What did your agency do for its 10th anniversary? Do you even remember it clearly?

You probably don’t. But employees of Dallas-based Greenlight (which has Gold’s Gym, La Quinta Inn & Suites and other clients) will, because the agency is documenting the date in a video series that will live forever and ever on YouTube, amen.

The little mini-profiles have been debuting today at a one-per hour clip as part of a project called “10 for 10”: 12 10-second videos celebrating 10 years, released by the hour throughout the day.

We don’t know a whole lot about the agency, but the first effort shows us that they do sometimes rely on the most traditional forms of communication.

The next entry is probably why you clicked on this post.

That was not as provocative as you’d hoped, but the agency seems to have a sense of humor about it. They also love spit takes.

The most impressive entry to us so far is this one, which involves an inhuman amount of Big League Chew. Remember that stuff from when you were 8 or so?

Here’s one in which light bulbs ponder fate as they plummet toward their kind-of deaths.

We do hope, for Greenlight’s employees’ sakes, that they don’t really have to work in corners posing as cubicles.

All in good fun.

The press release tells us this project is better than a press release, which is true. “Agency Celebrates Its 10th Anniversary” is about as exciting as “Agency Recognized By Local Organization” if we’re talking potential headlines.

This week we hear that Publicis Groupe’s DigitasLBi and SapientNitro or Publicis.Sapient will soon share a space in Boston.

One source with direct knowledge of the matter tells us that the rumor is “absolutely true.” The location of this future shared space is unclear, though another source says that the DigitasLBi Boston team will be moving into SapientNitro’s office, which is less than a mile away.

The reasons behind the move are also unclear at the moment. The larger DigitasLBi organization has parted ways with several high-ranking members of various departments in recent months including GCD Kenny Rennard, chief media officer Baba Shetty, SVP/creative Greg Kaplan, Chicago-based GCD Bill Matznick, president Norman de Greve and EVP/ECD Rob Rizzo.

This reads like a standard round of agency revolving door, though we hear that other creatives have left DigitasLBi Boston and none of the executives mentioned have been replaced to date with the exception of Rizzo (Doug Schiff now leads creative across the agency’s Boston and Detroit offices).

A Digitas spokesperson declined to comment for this post.

In what looks like the last chapter of the fallout over the “Ghetto Day” email controversy, the Detroit offices of Campbell Ewald went through a round of downsizing earlier this month and last month.

The move was directly related to the losses of U.S. Navy and USAA, which cancelled its contract with Campbell Ewald right before parent company IPG fired C-E chief executive officerJim Palmer. At the time, USAA told us that it would be “searching for a new agency that aligns with USAA’s culture and core values.”

That agency was MullenLowe, which opened a new San Antonio office to handle the business.

The official statement from a Campbell Ewald spokesperson:

“As part of a restructuring, we have had to lay off some of our staff. Though we worked to minimize layoffs we sadly could not forestall all. While headcount at the Los Angeles and New York offices has grown, the USAA dedicated office in San Antonio was obviously affected and the loss of the Navy account has contributed to some layoffs in Detroit.”

The Navy loss occurred almost exactly one year ago when the account went to Y&R, but the winning agency only recently began working on the business due to an ongoing series of appeals filed by Campbell Ewald lawyers. Last month Y&R announced plans to open a 50-person office in Memphis to handle the account after the dispute was resolved by the court system.

It’s unclear at this time exactly how many staffers were let go, though we hear that the layoffs began in April and continued through last week. We also hear that a few members of the team that handled USAA for Campbell Ewald have moved to MullenLowe to work on the business; according to our sources, the total number is in the single digits.

Very little information about MullenLowe San Antonio exists online, though the group’s website does currently include a blank listing under the URL “lowe-campbell-ewald-san-antonio.”

The news follows the April promotions of Kevin Wertz to replace Palmer as CEO and Jo Shoesmith to replace outgoing chief creative officer Mark Simon as Campbell Ewald’s first-ever female CCO. In an internal memo, Wertz called the promotions “a new chapter in Campbell Ewald’s history.”

We reached out to MullenLowe for more information on USAA and the San Antonio office but have yet to receive a response.