Keye/Donna May Merge With a Seattle Ad Firm

One of the most creative but financially strapped ad firms in Los Angeles, Keye/Donna/Pearlstein, is expected to announce next week plans to merge with the Seattle agency Livingston & Co.

A deal has been signed which would rename the ad firm Livingston & Keye, according to well-placed industry sources who asked not to be identified.

Many--but not all--of Keye/Donna’s estimated 30 employees will be retained by Livingston.

The two agencies would work out of Livingston’s recently opened Los Angeles office.

“It’s a done deal,” said one top executive involved in the agreement, who asked not to be named.

Roger Livingston, chief executive of Livingston & Co., was unavailable for comment late Friday.

Over the past two years, three Los Angeles ad firms have closed their doors and several others have merged with competitors.

With clients advertising less and demanding more from their agencies, executives say the competition has never been so fierce.

To the general public, Keye/Donna may be best-known for its biting anti-smoking ad campaign, which features tobacco executives laughing over plans to enlist new smokers.

Livingston’s most familiar ads are for Alaska Airlines, featuring poor saps who are squeezed into plane seats.

Under the merger agreement, Paul F. Keye, chairman of the 22-year-old agency, will become a partner of the new firm, sources said.

But Leonard Pearlstein, who is believed to have negotiated the agreement, will not join the new agency, they added.

Keye/Donna’s financial headaches began two years ago when it lost its largest client, Suzuki, following a story in Consumer Reports that contended that some Suzuki vehicles were unsafe. The agency closed its New York office last year less than one year after opening it.