By  on February 11, 1994

NEW YORK -- Though they're calling their parting "amicable," separate conversations with Donna Karan and Peter Arnell this week indicate that all is not sweetness and light between the former collaborators.

Karan has brought her $14 million advertising and marketing effort in-house under the direction of Trey Laird, creative services director, who formerly worked for Arnell.

Reports had been circulating for more than a year that Arnell, chairman of the Arnell Group, was growing increasingly frustrated with an account that kept moving further and further in-house.

"I felt stifled," Arnell told WWD. He noted that there were many ideas he had for Karan's company, but that he was held back by financial restraints.

"In order for me to do what I do, I need a tremendous amount of funds and opportunities throughout the year to grow the business," he said.

Meanwhile, Karan executives acknowledge the success of the collaboration but view the change as a healthy one for the company. They were also upset at the ever increasing cost of employing Arnell.

"The more things he would generate, the more it would be profitable for his business," said Karan.

Karan's firm will now save not only on Arnell's personal fees but the 15 percent commission on media buys as well as the 17.65 percent commission tacked onto every advertising expenditure paid to the Arnell Group, said sources.

"Peter had brilliant ideas, but we have to do one thing at a time. We can't have marketing run the company," said Stephan Weiss, Karan's partner and husband.

But, in Arnell's opinion, it was "the real idea stuff that would move the market."

"You can't deny," Arnell added, "that some of the greatest ads Karan was known for were complete experiments," citing the pictures of New York City by Denis Piel, the thumb through the pantyhose photograph by Arnell and the DKNY WALK campaign to launch the shoe company, shot by Francesco Mosto, Arnell's photo assistant.

Though initially innovative, some industry observers charge that Karan's ads had become repetitive and needed freshening up.

But Arnell questions whether an in-house ad department is the solution."You need distance if you want to be objective. Ads are not created over a table in an office in New York. They're made on location as the spirit moves them."

The fact that Arnell often photographed the ads himself became a point of contention. "Peter is the photographer and the graphics person, and it's very difficult to criticize his own work," Karan said.

And the designer also stressed the important role she's always had in developing advertising.

"It has always come from here. Every season it's about how we feel. Our ads have been so emotionally driven. I don't think we shoot clothing; it's about the psyche of the person. Our campaigns reflect exactly where I was at that [particular] time in my life."

For example, she explained, "the presidential campaign" was conceived when Karan was in the midst of designing "all these suited looks."

"What was more 'executive woman' than the President?" said Karan.

As for the new setup, Weiss explained, "We're creating the dynamics here that allow us to have brainstorming sessions and develop the images for the campaigns." Weiss said that he'd like to model the creative services department after the Karan beauty company's organization.

Weiss added that the company has invested heavily in a state-of-the-art computer graphics system to help it with product development, layouts and packaging, prompting Arnell to crack, "A computer is like a typewriter. Just because you sit down in front of it, doesn't make you Ernest Hemingway."

Arnell is also quick to point out that his agency has a number of new clients, including the entire Ray-Ban account, ICM and Daniel Filipacchi.

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