Advertising agency Draftfcb has cut staff, reduced the status of its Irvine office, and seen two key executives leave to start their own shop amid industry speculation that it will lose its mainstay account with Taco Bell.
The agency recently said a plan to boost its “West Coast presence and performance for current and prospective clients” includes a move from Irvine to “new Zen-like offices in Los Angles.” The plan calls for the fast-food chain’s account to be managed from Los Angeles, with the Irvine office—just a few miles from Taco Bell’s headquarters—in a support role.
Draftfcb executives last week denied industry speculation that the agency’s already lost the Taco Bell account to Deutsch LA, a sister agency under New York-based Interpublic Group of Companies Inc.
“This is a very competitive business,” said Rahul Roy, a longtime executive vice president and group management director at Draftfcb’s main office in Chicago who has taken the role of managing director for the new office in Los Angeles. “I worry every week that someone will take [the Taco Bell account] over.”
The cutbacks in OC have included the reassignment of approximately 20 staffers to Los Angeles and layoffs of a “number of talented people.” Draftfcb now has about 40 employees spread over its Los Angeles and Irvine offices.
Another significant turn came last week when two high-ranking Draftfcb executives left the Irvine office to form their own agency, which is called Collider LLC and will take on several “innovation and strategic marketing projects” for Taco Bell.
Collider’s founders are Ken Muench, who left his job as director of strategic planning at Draftfcb, and Jeff Fox, who gave up his post as executive vice president and managing director. The two helped develop the “Live Mas” slogan that’s been part of Taco Bell’s advertising for the past year or so, a period that has seen the chain roll out a number of popular menu items and rack up impressive sales gains.
Taco Bell is hosting the startup at its headquarters in the Irvine Spectrum until the agency moves to a new office in downtown Santa Ana next month.
Draftfcb’s status—whether in Los Angeles or Irvine—is a far cry from a year ago, when its local operations had an estimated $215 million in capitalized billings and employed 85 people here. The Business Journal ranked it at the time as the fourth-largest advertising agency in Orange County.
The agency has sustained a series of blows since then.
Last November, Draftfcb lost the media-planning portion of Taco Bell’s account to Paris-based Publicis Groupe’s Spark and the social, mobile and other digital marketing to Digitas, also part of Publicis, in July. MEC, an agency under the umbrella of U.K.-based WPP PLC in New York, now handles media buying on the account.
This year, Deutsch LA started creating ads for Taco Bell on a project basis.
The agency said it will “further diversify its client roster in Los Angeles” and that “Taco Bell will remain an important account for Draftfcb,” which has handled the chain’s account since 2000.
The agency put the departure of Muench and Fox in a positive light.
Said Michael Fassnacht, who is president of Draftfcb’s Chicago office and also oversees its Southern California operations, “Both Ken and Jeff are leaving here with our best wishes for success and the knowledge that we will continue to tap into their expertise in the future.”
