Here's How Leo Burnett Says 8 Execs Allegedly Sabotaged The $710 Million Kellogg Account

Leo Burnett CEO Tom BernardinLeo Burnett CEO Tom Bernardin

Photo: Leo Burnett

In papers filed as part of a lawsuit in Cook County, Ill., Leo Burnett has described in detail just how much trouble it is in on its Kellogg account.Go straight to our blow-by-blow retelling of the walkout >

Kellogg spent a total of $710 million last year on ads, according to Ad Age, and Burnett regards it as one of its “flagship” pieces of business. (It has served the company for 60 years.)

But on Friday, Nov. 2, eight staffers working on the customer relations management portion of the business resigned en masse — and Leo Burnett then sued them, alleging it was an act of sabotage.

The executives who left were Amanda Ashley, Nate Buechler, Allison Chaplain, Jeremiah Dy-Johnson, Kristy Gibbs, Lisa Hamming, David Rasho and Matthew Johnson.

The complaint — obtained by Business Insider today — goes into detail about how the resignations went down, and how much financial damage there could be. Among the allegations:

  • The agency and its Arc Worldwide unit has lost svp Kristy Gibbs, the only executive at Leo Burnett who actually understands how the Kellogg CRM database works.
  • Gibbs was pitching other clients for Leo Burnett, and the agency may now lose that business, too.
  • Also resigning was director of optimization David Rasho, who holds the key client relationships with Kellogg’s CRM staff.
  • That Leo Burnett believes it may lose the CRM business as Kellogg has not guaranteed it will stay with the agency.
  • And that the agency believes Kellogg cannot tolerate a delay on its CRM assignment.
  • Leo Burnett waited four days — across a weekend — to tell Kellogg what had happened.

We’ve compiled a blow-by-blow account of the resignations, the financial impact it could have on Leo Burnett, and the agency’s confession to Kellogg from the lawsuit. We were unable to reach the defectors for comment; they have not yet filed papers in their defence. Currently, we only have Leo Burnett’s side of the story. Presumably, the eight have a different interpretation of events. Nonetheless, this is the most detail available on what the agency describes as the “crisis” that hit on Nov. 2.

At 2.41 p.m. on Nov. 2, the alleged mutineers walked into the office of Steve Grosklaus, evp/director of optimization, and resigned.

In total, seven of the 11 people running the business resigned by the end of the day, plus a colleague working on another client.

Here's why they have the agency over a barrel: svp Kristy Gibbs is allegedly the only person in the shop who understands how the Kellogg CRM database works. The agency claims it may be unable to fulfil its obligations to Kellogg without her.

Gibbs is so senior she's on Burnett's pitch team for other clients — and Burnett may now lose that business too.

Here, Leo Burnett accuses Gibbs of lying about her intentions to start a competing business.

Leo Burnett admits it has lost director of optimization David Rasho, who knows the key client executives the best. The ad biz runs entirely on relationships, so this could be potentially disastrous for the agency.

Burnett alleges the resignations were a deliberate sabotage of the account — and that it may lose the business because of it.

Leo Burnett did not tell Kellogg what happened until after the next weekend — and the agency got no guarantees that it will stay on the business.

Kellogg's patience will expire in less than 6 months, the suit alleges.

But Leo Burnett is fighting to keep the business.

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