The continued rise of the consultancies

NYT has a new ad out by Droga5, an Accenture company.

Before the coronavirus hit, perhaps the biggest existential threat to the advertising world was the rise of the consultancies. 

Three years ago, Ad Age saw the winds change in ad land. It noted in its annual 10 Largest Agency list that for the first time, four (Accenture Interactive, PwC Digital Services, IBM iX and Deloitte Digital) cracked the top 10. 

These consultancies are rising fast by gaining a foothold in marketing departments and wooing chief marketing officers with their vast array of strategic and data analytics solutions to big business problems that traditional advertising can no longer solve alone. And in some cases, they are layering on creative services and content marketing, putting them solidly on the same turf as traditional shops.

In 2019, WPP pointedly called out the consultancies in its annual report, saying 

Consulting firms have expanded rapidly into areas in which we compete. We need to recognize that new competition, be ready for it and promote our existing consulting and technology capabilities more effectively.

Over the last three years, the consultancies have gone on a spending spree, picking up creative houses (e.g., Accenture shelled out $475 million for Droga5 in 2019) to give clients a one-stop-shop. Why not add creative messaging to all the management and turn around services you already provide?

(Image via Albert Gea/Reuters)

Forrester’s principal analyst, Jay Pattisall, wrote after the Droga deal that the fact consultancies are going after creative agencies is less about competing against the holding companies but more about “creativity.”

Many may interpret this move as another omen for the agencies. Headlines that obsess about the “consultancies versus agencies” narrative, however, are missing the point: Accenture Interactive’s acquisition of Droga5 cements a renewed emphasis on creativity in marketing.

Indeed, Accenture picked up Droga after it failed to nab MDC Partners (parent to CP+B, 72andSunny, and Anomaly). 

In February, the FT wrote:

Casting itself as “an experience agency”, Accenture now does marketing work for clients such as hotel groups Marriott and Radisson, Wendy’s fast-food chain, and Kimberly-Clark’s baby and childcare products. Other consultancies including Deloitte or PwC also have marketing arms but they are smaller in scale than Accenture and less acquisitive.

And how have the creative results been?

Let’s look at an ad that dropped yesterday from the New York Times. 

Take the two minutes to watch how sight/sound/motion through a jazz soundtrack to match headlines, creating a melodious and lyrical ad. 

Let’s turn to a hypothetical for a second. Say this wasn’t the New York Times, and instead Brand X. So Droga, as part of Accenture, creates the ad. But how did we get here? Did Brand X ask Accenture to do an audit of its ad partners, to look under the hood of their agencies, and then come back with this intel -- how these companies work, who’s producing the spot (i.e., talent), and what are the pricing models -- and say, “You know what, we can do this for you as part of a bundle for our consultative services.”

This is the root “conflict of interest” challenge for all parties involved. As the agency world struggles, the consultancies keep gathering steam.

And as we looked at a couple weeks ago, ad agencies are in a free fall. As an example:

Omnicom, which has laid off 6,100 staffers amid the coronavirus (as well as hiring freeze and pay cuts) said revenue dropped 25 percent and expects it to continue heading south for the rest of the year. 

In June, Forrester predicted the industry will lose 52,000 jobs over the next two years, according to Marketing Dive.

Accenture, on the flip side, took in $10.99 billion in revenue last quarter, outpacing a forecasted $10.72 billion, making it the third quarter in a row that it outperformed analysts. 

Beyond creativity, consultancies offer clients the ability to take programmatic in-house. As I wrote two years ago, after Accenture decided it wanted in on the ad tech game:

In general, clients are looking to “in-house” their programmatic because they’re looking to take back control of their media capabilities, said Scott Tieman, the global lead for the new Accenture Interactive unit, in an interview with Adweek.

Because brands are bringing capabilities in-house, it means they’re operating some or all of the activities related to running programmatic media campaigns. Which means instead of managing an agency, the company is now on the hook for media planning and activation and measurement and optimization. It means they’re working with different parts of the organization they haven’t worked with before. 

So as the consultancies have built powerhouse creative and programmatic capabilities through acquisitions, they’re also beginning to recruit executives. 

Yesterday, Brad Jakeman, the former president of Pepsi, was hired by Boston Consulting Group to woo CMOs. Former Gizmodo Media Group’s CEO Raju Narisetti was hired in February by McKinsey as global publishing director. And former WPP chief customer officer Sunita Gloster (who previously was at PwC) joined Accenture yesterday. 

So as the world navigates the effects of the pandemic, watch for the consultancies to make more moves. Having direct lines to executives and major companies, it will be interesting to see how much influence the consultancies have in getting businesses up and running. And that will mean everything from internal process to external marketing. 

Thank you for allowing me in your inbox. If you have tips, or thoughts on the newsletter, drop me a line. Or you can follow me on Twitter. If you enjoyed this edition, please consider sharing across your social networks. 

Jimmy Reed, “Big Boss Man”

Some interesting links:

• Steve Bannon Is Charged With Fraud in ‘Build the Wall Campaign’ (NYT)

• Gannett news president: Diversity and inclusion are choices, not just words. Today we reaffirm our mission. (USA Today)

• Trump tacitly endorses baseless QAnon conspiracy theory linked to violence (The Guardian)

• Verizon makes statement with new Disney deal: The pay-TV bundle is dying and isn’t coming back(CNBC)

• Apps Serve Professionals Distanced Networking With Novel Twists (WSJ)

• Newsweek and the Rise of the Zombie Magazine (The New Republic)

• A TikTok ban is overdue (NYT)