The goalposts are moving. Agencies must become more consultative to win.
The management consulting industry is changing rapidly. Lower-cost, specialist, boutique firms are driving up competition and big corporations are building in-house strategy teams, but one of the biggest shake ups in recent years is the collision between the creative and business consulting worlds, largely driven through acquisitions of agencies from mainstream consultancies in a bid to deliver end-to-end customer experiences for clients.
Accenture has been the main player here. Its marketing off-shoot, Accenture Interactive, has made 30 acquisitions in the last six years, including Karmarama, The Monkeys and Droga5.[1] Three years ago, Accenture, Deloitte, IBM and KPMG collectively spent $1.2 billion on marcomms agencies, whilst M&A spend from the marketing powerhouses of Publicis, WPP, IPG, Omnicom and Dentsu halved.[2]
Last year, four of the top creative agency companies in the world were consultancies — Accenture Interactive, Deloitte Digital, IBM iX and PwC Digital — and consultancies are now winning client business that would have traditionally gone to creative agencies.[3] In a recent Forrester survey, 73% of marketers said that they are open to using consultancies for digital marketing work[4] and Leo Burnett CEO Andrew Swinand has claimed that his main competitors are now consultancies, rather than WPP and Omnicom.[5]
Agencies are fighting back
However, it is not just consultancies plundering talent from the marketing world. On the other side of the fence, agencies are clamouring to add commercial rigour and business acumen into their creative outputs. Iris made very early inroads into this new world; its first acquisition in 2008 was management consultancy Concise, in a bid to address clients’ broader business issues. Ogilvy has set up a strategy and innovation arm called Ogilvy Consulting, Leo Burnett provides data, analytics, research and CRM expertise in its offering called The Core, whilst WPP launched Kantar Consulting, a marketing and sales consultancy, in 2018.
This is understandable. CMOs want to work with firms that can use data and commercial nous to solve the big problems facing their business. This is because marketing is no longer just about shiny billboards, but customer interactions, experiences and journeys. Marketing is becoming a critical component of running a business and a way of solving complex commercial problems. As consultants pride themselves on doing exactly this, it is unsurprising that they believe they can play a role here.
Consultants are an important piece of the marketing jigsaw
At this stage, it may be helpful to consider why businesses use consultants in the first place. The demand here is largely driven by two factors: acting as an additional resource to fill talent gaps and providing access to expertise that does not currently exist within the client organisation, but the value they bring is more nuanced than that.
· Consultants enable businesses to ‘rent a brain’ for a short-term engagement, rather than hire permanent staff
· Consultants can provide objective cross-industry perspectives, enabling them to see the wood for the trees, in a way that internal people cannot
· Consultants can fill skills gaps (50 per cent of businesses consider themselves to lack the essential skills required to move their business forward)[6]
· Consultants often act as a catalyst for change
Paying third parties to understand your organisation, its ways of working, structures and processes, then devise strategies as to how to move your business forward, can often be seen as a superfluous investment; an assignment that is either not required or could be controlled internally. Yet despite such scrutiny on the cost of advisory services, SMEs are spending over £60 billion on external consultants annually[7] and the UK market continues to grow year on year.[8] Furthermore, 81% of clients had their expectations met or exceeded by consulting projects last year.[9] Such work is typically pitched at a C-suite level, so it is not a huge stretch to offer marketing services as an addition.
Integration between creativity and consulting is key
As consultancies continue to encroach on creative turf through acquisitions, and agencies add more consulting firepower to their offerings, something has to give. For the consultancies, buying ad agencies is the easy part. Valuing the role creativity plays, in all its guises, and integrating it fully within their organisations is much harder (and may still elude them). But the consultancies will still end up delivering strategic work, even if that does not include creative elements. The greater challenge is for agencies to learn to harness the virtues of business analytics and commercial acumen, so that the consultancies do not eat their lunch.
The good news is, it is arguably easier for agencies to become more ‘commercial’ than it is consultancies to be more ‘creative’, and whilst there is much that consultancies can learn from agencies, there are some important steps that can be taken by agencies to become more consultative.
· Have a structured, analytical approach to solving problems through the use of rich data sets that exist within marketing (and other) departments
· Take a step back at the outset of a project to understand the client business problem (in the context of its business model, levers and drivers) before jumping to a creative solution
· Develop into a ‘strategic’ partner of a client rather than an ‘agency’ partner
· Become ‘cost-savers’ rather than ‘cost-drivers’, through leaner teams and demonstrating value to the client at every interaction
Consulting work typically operates more in the shadows. A strategy project does not have as much marketable value as, say, a glossy TV campaign. Iris’ Chief Creative Officer, Shaun McIlraith, recently alluded to this in an article with Campaign, claiming that the “most genuinely creative work can be virtually invisible….some of the best ideas we produce will never be seen because, rather than creating a presence, they create an absence — of a queue, complaint or problem.”[10]
An acceptance is therefore required that creating truly impactful work can only be done through a combination of creativity and consulting, data and technology. This is requires a redefining of the agency business model. It occupies the sweet spot between rigorous commercial and business strategy, and creative thinking.
The challenge in implementing this new model is the legacy practices and mindsets that exist in both worlds. Traditional consultants are process-driven, analytical and scientific; the antithesis of a more-fluid creative organisation. On the face of it, agencies and consultancies are culturally different, but when everything is broken down, they are both in the same business of helping their clients grow. They just sell different products and services to do this. Finding common ground is key, and there should be more that unites agencies and consultancies, than there is which divides them. In order to win, firms need to create a culture where multi-disciplinary teams are the norm.
[1] Mulcahy, Emma (2019), Accenture Interactive acquisitions: all its agency deals so far. Available at https://www.thedrum.com/news/2019/08/12/accenture-interactive-acquisitions-all-its-agency-deals-so-far. [Accessed on 3 February 2020].
[2] Walford, Tony (2019), Expect more agency acquisitions as consultancies battle to keep up with each other. Available at https://www.thedrum.com/opinion/2019/05/10/expect-more-agency-acquisitions-consultancies-try-keep-up-with-each-other. [Accessed on 3 February 2020].
[3] Ad Age (2019), Ad Age Agency Family Trees 2019. Available at https://adage.com/datacenter/agencyfamilytrees2019. [Accessed on 31 January 2020].
[4] Schultz, E. J (2017), The Race is On: How IBM, Accenture, PwC and Deloitte Are Shaking Up the Marketing Industry. Available at https://adage.com/article/news/consultancies-rising/308845. [Accessed on 31 January 2020].
[5] Schultz, E. J. (2017), The Race is On: How IBM, Accenture, PwC and Deloitte Are Shaking Up the Marketing Industry. Available at https://adage.com/article/news/consultancies-rising/308845. [Accessed on 31 January 2020].
[6] Gough, Owen (2017), UK SMEs spend £60 billion per year accessing expert consultants. Available at https://smallbusiness.co.uk/uk-smes-expert-consultants-2538135/. [Accessed on 27 January 2020].
[7] Gough, Owen (2017), UK SMEs spend £60 billion per year accessing expert consultants. Available at https://smallbusiness.co.uk/uk-smes-expert-consultants-2538135/. [Accessed on 27 January 2020].
[8] Consultancy.uk (2020), UK business and management consulting sees sustained growth. Available at https://www.consultancy.uk/news/14397/uk-business-and-management-consulting-sees-sustained-growth [Accessed on 27 January 2020].
[9] Consultancy.co.uk (2019), 8 out of 10 UK companies hire consultants, and are satisfied. Available at https://www.consultancy.uk/news/19841/8-out-of-10-uk-companies-hire-consultants-and-are-satisfied. [Accessed on 28 January 2020].
[10] McIlraith, Shaun (2020), Agencies need to redefine creativity. Available at https://www.campaignlive.co.uk/article/agencies-need-redefine-creativity/1672067. [Accessed on 31 January 2020].
