When we last looked in on Peter Arnell and Ted Bickford, whose ad agency once defined downtown, they were putting together a book party-cum-fashion show for Donna Karan, the designer they, even more than her black silhouettes, made famous. At the same time, Arnell/Bickford was welcoming S&H Green Stamps into its fold.

Seven years of coolly glamorous, sensuous advertising later, Arnell is still producing Karan’s ads, though she has also set up an in-house ad unit. S&H, one of A/B’s first mainstream accounts, is no longer with Arnell, and no longer mainstream. And Arnell/Bickford has reinvented itself — minus Ted Bicklord, who left to run Grand Street Records, a downtown record label— as Arnell Associates.

This fall, it set up a joint venture with International Creative Management to collaborate on projects. It created a new subsidiary, H2H — Human to Human to help clients negotiate their way through the tangle of interactive and multimedia choices. (The French company Matra-Hachette was the first client to sign on.) Arnell also formalized a joint venture with Dentsu, Japan’s largest agency, to handle Karan’s advertising in Asia. (Arnell does the creative; Dentsu buys the ad space and administers the account.) The agency has also aligned itself with Hachette Filipacchi to customize magazines and other media for advertisers. HFA’s next big project: The TV Car Showroom two hourlong infomercials, underwritten by Pontiac, that will run in November and December on the Home Shopping Network.

Over the summer, when Arnell and Bickford parted ways, Peter Arnell installed a professional team to run the agency and share in its profits. Murray Loecher, his longtime lawyer, joined as President, and Malene Waldron came aboard from Vogue as co-Creative Director with Sara Arnell, Peter’s wife. Others within the agency took on new responsibilities: Charles Rose now oversees client services in addition to directing finances, and Bruno Asselin moved from client services to become Director of Marketing. Soon, the agency will scrap its grungy SoHo loft for more stylish, upmarket but downtown quarters nearby.

Long ago, A/B tried to distance itself from traditional ad agencies. “Call us power branders, a creative factory, but please don’t call us an ad agency,” pleads Arnell, the 34-year-old grand master of some of marketing’s more dramatic mood pieces. (All of Arnell’s work bears the agency’s name — a practice common in Europe but not here.) “We’ve always staked a claim on acknowledging the consumer rather than persuading him or her. Now we’re staking a claim on creating bonds with people. Most advertising is too hard to navigate because the creators aren’t thinking of the human dimension. We’re not technocrats, we’re technocraftsmen— folks who are grabbing hold of the new technology and bending it to our communication purposes.”

The split with Bickford, his partner of many years, was traumatic for Arnell. The pair had been a team in the office of architect Michael Graves in 1979: Arnell arrived at Graves’s door, and applied to join his then — nine member team, after earning a high school equivalency diploma (he’d failed Spanish) and spending four months as a part time student at Columbia, where he’d heard Graves lecture. Bickford, meanwhile, was apprenticing with Graves while studying architecture at Princeton. Later, while Arnell was studying architecture in Rome, the Galleria Nazionale d’Arte Moderna asked him to curate a show about American architects. With Bickford he produced the first exhibit — and the catalogue, a book based on the catalogue, four books on architecture competitions, and other books on topics including David Hockney’s photo collages, houses of the Hamptons, Charles Gwathmey and Robert Siegel, Frank Gehry and Aldo Rossi, for a total of sixteen books.

All of this led to A/B’s designing a surreal, Magritte-like poster for Bergdorf Goodman, which led the New York Times to christen Arnell/Bickford an ad agency in 1984, which led to the retailer’s moving all of its advertising from in-house to A/B’s house, which piqued the interest of Donna Karan — then a designer at Anne Klein — who hired A/B when she struck out on her own. A/B gave Karan a fast focus urban image, a stream-of-consciousness promotional video, and a 36-page minibook (sponsored by the Wool Bureau), which established the cult and personality of the designer.

The wool-book campaign was the forerunner of Arnell’s joint publishing venture with Hachette Filipacchi. Four months ago; Arnell trekked across America for two weeks, snapping 40,000 shots — 300 of which became the backbone of a new, highly graphic magazine called Ray-Ban Sun Magazine. (The sunglasses-maker is sponsoring the annual about how to live with the sun.)

“For about four times what it cost to run a one page ad in another publication, we’re placing a 120-page magazine in the homes of 1.3 million readers,” says David Whalen, a vice-president of marketing at Bausch & Lomb, Ray-Ban’s parent company. (Half the names on the subscription list came from Hachette’s data base and half from Ray-Ban’s warranty cards. The best potential buyers of any brand of sunglasses are those who already own that brand.) Ray-Ban has enough timeless images in its bank to create another three issues. “This is a very effective use of our money,” says Whalen.

Then there’s Sony Style, the tech entertainment company’s third magalogue, which looks strikingly like Hachette’s Elle. On its own, Hachette has produced Know How, a riveting how to take responsibility manual for women that is backed by General Motors; Tell, for teens, a joint venture with NBC; Mary Kay Cosmetics’ Beauty, which is now a quarterly; and Jenny Craig’s Body Health, “We’ve got the distribution capability and editorial know how,” says Hachette president and CEO David Pecker. “Arnell adds the spark.”

Indeed, that spark helped ignite Donna Karan’s $270 million business — on the verge of going public. (Arnell also does the advertising for Hanes’s DKNY hosiery and Bausch & Lomb, but its other work for Donna Karan is the most visible.) Among its most memorable ads: an eight-page spread called “In Women We Trust,” in which Karan — well, actually her younger, slimmer alter ego, Rosemary McGrotha — runs for president and is featured in a confetti calvacade, amid flags and bodyguards in sunglasses; at a pizza strewn party headquarters; and at the swearing in. In a more recent high profile spot for Karan’s new Bath & Body line, a model is coiled in a tub.

Those ads and the powerful style they represent is what attracted 1CM. The superagency had represented Arnell as a photographer, director, and marketer for six months before developing a joint venture this fall to “custom publish and in other ways power brand properties,” says 1CM chief Jeffrey Berg. At Al, as the joint venture is known, projects may range from concepts 1CM comes up with elsewhere to projects Arnell Associates devises and produces itself. “Arnell has unique beats on different aspects of the market,” says Berg. “He’s a wellspring of energy; our challenge will be to channel it.”

And harvest it, says Hachette’s David Pecker, “No one has tried home shopping with an $18,000 item.” If the GM-sponsored car show (produced by consultant Jack Myers of Myers Reports but citing Arnell as Creative Director) “succeeds in driving qualified consumers into dealer showrooms,” adds Pecker, “we hope to turn it into a 24-hour cable-TV channel in April 1995.”

“All these new arrangements demonstrate that we can be partners with a client instead of a vendor,” says Arnell. “We’re not about just marketing products; we’re about creating them, too, in relationships that aren’t based on media commissions. That’s very Japanese thinking to create the product, as well as market it.”