‘Joining the dots’ — The biggest challenge for Marketing Services firms

Marketing Services (MS) firms find themselves in an interesting space. They have seen revenues flatline or worse decline and margins shrink as traditional work has been taken in-house and management consulting firms are increasingly encroaching on their space. As AdAge reported, for the first time ever, four consultancies have cracked Ad Age’s ranking of the 10 largest agency companies. With combined revenue of $13.2 billion, the marketing services units of Accenture, PwC, IBM and Deloitte now firmly sit on the list. Acquisitions continue strengthening consultancies hold on the space with Accenture’s recent acquisition of droga5 taking them firmly into the creative space. This has been a wakeup call for the MS industry.

For MS firms there is a radical change of business and operating model needed fast to meet the shifts in client expectations driven by technology and data and stronger competition with many MS firms now looking to simplify their structures and go-to-market models. What makes this perhaps more complex is many MS firms have grown through acquisition. The race is on now to discover how MS firms can better and faster integrate consumer insight and data, versus how quickly consultancies continue to acquire creative agencies to reposition their offering even further.

Consulting firms though have other advantages as shown in the table below — namely their relationships with strategic buyers. They are not going through the traditional marketing channels, the heartland of MS firms. They are either going top-down through CEOs, or they are even going through the Board. MS firm’s typical relationship is with the CMO or other roles in the Marketing function. The challenge with this is the role of marketing has slipped down the value chain in many organisations and over the last few years marketing has become automated, commoditised, short-term and often a ‘sales support function’ or ‘cost centre’.

If we start with the end in mind, the challenge for MS firms is in integrating their disparate firms offering to bring integrated client value propositions to deliver more seamless and cohesive client experiences. MS firms are not currently integrated — at the extreme they are holding companies, with agencies inside that compete rather than collaborate with each other.

So, what do MS firms need to do to compete and ensure Management Consultancies don’t continue to eat their lunch?

• A radical review and redesign of their operating model around integration principles that bring together creativity, data and commercial into an integrated proposition for clients
• Drive operational excellence from front to back by implementing structures and process excellence that ladder up to an integrated and seamless client experience
• Strengthen governance, resourcing, tools and systems aimed at integrating systems across the business, to lead and respond to client needs and deliver a faster, smarter service
• Reduce cost of complexity and operate in a sustainable manner, leveraging capabilities across regions, brands and functions, underpinned by a scalable infrastructure
• Build go-to-market discipline and account management models to build more systematic interactions with clients and ensure ongoing nurture
• Industrialise methods and tools to create more sustainability and reduce inefficiency in client engagements
• Develop a talent model that brings data and analytics, behavioural science, process, structure, project management and change management to complement creative disciplines
• Find ways to elevate and differentiate the creative currency through effective use of data positioning, traditionally creative work has been at a much lower price point than traditional management consulting work

This would enable MS firms to innovate at pace, drive collaboration, realise synergies and improve customer experience by ‘joining the dots’.

Karen Thomas-Bland