BFTP | Are Consultancies the Future of Marketing?
(Commentary by Farrell Tan)
The past few years has marked a flurry of consultant acquisitions and investment in some of the best creative agencies. The emergence of consultancies into the communications sphere has been bold and agency leaders have taken notice. There have been dozens of articles written about the potential impact of consultancies and how they will "change how the game is played". There has been even more written about how consultancies won’t be able to foster the creative culture that leads to good work. But right now, it’s almost all speculation, with a lot of the long–term impact yet to be seen.
Management consultants have a reputation for being expensive and firm negotiators. Unlike agencies, which in some cases have bent over backwards to land a big account, even if that means agreeing to fees that are almost unprofitable. For a long time, it's been a battle to get the industry to focus on value; and perhaps with the involvement of Accenture, KPMG and the likes, the model of value-based marketing will actually get traction, and allow agencies to step out of the cost arena.
Consultants already have C–suite access, and their upscale perception has much to do with taking the place of agencies as advisers to the CEO. The fact that consultancies have invested in the creative space seem to indicate they’re using the investment to understand the landscape from a creative point of view. Traditional communication networks aren't taking this lying down of course -- they're fighting fire with fire by launching new divisions to provide business transformation services like that offered by consultancies. You only have to look at these major moves to see consultancies have laid out the blueprint for how agencies will do business moving forward.
What's going to be interesting is when management consultants want to charge consulting prices for communication agency services. And likewise what would happen if these agencies really got serious in pricing their services based on value and price and not simply on cost?”. Will clients even bite? I don't know -- I guess only time will tell.
But in the meantime, do have a read on why Accenture's Purchase Of Droga5 Will Upend The Ad Biz.
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Why Accenture's Purchase of Droga5 Will Upend the Ad Biz
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| Jon Hamm – 60′s Mad Men Ad Guy (Photo by Jordan Strauss/Invision/AP) |
Having spent many years at WPP, a large agency holding company, having had Accenture as a client, and having worked with Droga5, one of Madison Avenue’s hottest creative firms, I predict with a high degree of confidence that Accenture recent acquisition of Droga5 is going to upend the marketing services industry. It is not just my personal experience that informs my prediction, but observations over many years of how agencies have been trying to evolve their business models to meet the evolving needs of clients.
Since shortly after the era of Mad Men, four or five decades ago, the advertising business has been largely dominated by large holding companies, Omnicom, Publicis and Interpublic among the other major players that have held sway with WPP. What these holding firms hold are lots of smaller agencies, each with one expert skillset or another, be it traditional advertising, package and retail design, digital marketing, public relations, promotions and media to name a few.
Suffice it to say, due to the ad industry’s rapidly changing landscape, along with significant shifts in consumer behavior, client requirements have expanded over the past few years. It’s no longer about just creating breakthrough ads, but providing a broader range of consumer experiences. This new landscape is creating two significant challenges for traditional agency holding companies, if not the entire marketing services industry.
First is their ability to seamlessly integrate the work of all these smaller disparate agencies in order to provide an integrated solution to clients. Territoriality, getting everyone to play nicely together toward a common goal, can be a real issue. The challenge has been further exacerbated by the cost-cutting often required to pay down the debt of purchasing these new companies which is a sure-fire way to cut creative time and thinking, having an impact on effective outcomes.
The second challenge faced by traditional-model agencies is their ability to maintain, if not downright gain, a voice in the client C-suite, a venue where business strategy, not marketing strategy, is the main conversation. As the marketplace has become increasingly complex and competitive, marketing firms have increasingly had to take their marching orders from business strategy firms. They are not as involved in setting a client’s strategic direction as they are in implementing it. More than this, while agencies may be able to win over potential client CMOs, they may not be in the best position to win over the CIOs and CTOs who increasingly oversee customer experience initiatives.
On the other hand, the challenge for most consulting firms who do control the C-suite is how to get into the creative arena, an area in which they haven’t historically known how to play. Accenture has always been good at both the C-suite strategy game and implementing things – mostly through technology. Further over the past several years – they have been learning how to add creative interactive agencies into their implementation mix. As such, unlike other consulting firms, they’ve set the stage nicely for the next level.
Accenture plus Droga5 represents a genuinely new agency model which truly goes top down, from high-end consulting and business strategy setting, to building out infrastructure in order to deliver cutting-edge customer experiences and, now, into the domain of branding and marketing agencies with the creative capabilities to bring all of these ideas to life in a way that differentiates the brand.
For years holding companies have been trying to build their way back up to the C-suite by integrating individual agencies and adding a consultative capability. They simply haven’t been able to “ladder up,” put themselves in a position similar to the one they had in the Mad Men days wherein Don Draper could sit down with the CEO and talk about both the company’s direction and its advertising.
Accenture is upending the agency model, in part, because they are already in the C-suite. More than this, they’ve demonstrated that they can pivot from saying what to do, to actually doing it. While they can consult with a CEO on business direction, they’ve proven to CEOs, CIOs and CTOs that they can operationalize strategy through technology and systems management. The addition of first-class creative capabilities is the icing on the cake, giving them the authority to tell the client’s story in a powerful way during the Super Bowl.
Accenture’s strength, what makes it such a successful global management consulting firm, is its ability to know what to do, how to do it and then to get it done. With the acquisition of Droga5, Accenture, will now be able to go “head-to-head” with ad agency holding companies, especially as clients seek more integration of technical and data expertise. For years, Accenture has built a strong operational capability enabling them to take a strategy and bring it to life by embracing technology. As a company statement made clear, adding a powerhouse creative capability to the mix, “represents an evolution in Accenture journey to build a new agency model – one with the power to engineer transformative brand experiences, and infuse those experiences with the emotional and inspirational power of brand thinking and creativity.”
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