For management consultancies trying to be agencies, 2018 is the year they’ll have to prove they can do it.
“Next year is the year we’re focusing strongly on organic growth that is in part seeded by some of the acquisitions we’ve made around the globe,” said Brian Whipple, CEO of Accenture Interactive, which snapped up 14 agencies globally in the past five years.
Management consultants have been creeping in on agency turf for a while now, spending a lot on acquisitions. The biggest player is Accenture Interactive, but others aren’t far behind. Deloitte Digital acquired creative agency Heat in 2016, while IBM’s acquisition of Resource/Ammirati has now resulted in a 36-studio holding agency called IBM iX.
In 2017, consulting firms started a sometimes painful process of integrating those agencies into their existing operations. Next year, the pressure will be on to prove the integrations panned out.
“When we buy a company, their destination is [Accenture Interactive],” Whipple said. “They might keep a brand identity for a transition, but the management team is emotionally and work-wise strategically signed up. If they wanted a founders’ culture, they can go to a holding company. Our mission is never to grow that business as standalone.”
Meanwhile, for agencies like Hill Holliday and Ogilvy, which have moved in on consulting companies’ turf, next year is the time to prove they can fight back.
Now, consultants are adding design, user experience and customer experience projects to their existing offerings. Traditionally, UX or creative projects were the domain of agencies, while consultancies used to do supply-chain management, information technology or tech-related work.
There have been indications that the pitch is working. Deloitte connected its win of LG’s work to its purchase of Heat; Accenture has won duties for Maserati. Deloitte also won pizza brand Papa Murphy’s, which needed to figure out back-end development that Deloitte Digital could handle, while Heat could take care of creative.
The one area consultancies still haven’t cracked is media planning and buying. There have been some moves in this direction. Deloitte does media-mix modeling, planning and budgeting with a group of media-buying agencies that set aside inventory for that company’s use. Accenture and PwC help clients with business-related changes, including bringing programmatic in-house. There is room, especially as traditional media buying companies wrestle with transparency issues.
The big change will come once consulting companies move in on the bread-and-butter of media buying. There are some indications that will happen next year. Joy Bhattacharya, Accenture Interactive’s U.K. and Ireland managing director, said at a breakfast briefing earlier this year that he’s had lots of discussions with clients to help them set up in-house digital media-buying operations. Some of that is fallout from this year’s transparency and fraud issues with media that have clients asking if they can do this buying themselves. At PwC, there is a marked move to try and increase auditing capabilities as a response to the rash of questions being asked about rebates.
However, Whipple said he doesn’t see Accenture moving aggressively into media buying because it’s highly competitive and relatively low margin. More likely, Accenture will get more involved with retail media or commerce that combines experience and advertising. “In that context, if media is going to be part of something, we might be in that,” he said.
At IBM iX, global leader for strategy and design Robert Schwartz said programmatic will be a big driver for 2018. While he doesn’t want to get into traditional media buying, IBM iX has clients asking about help with media — and he wants to put in tech like blockchain next year to help them, especially with problems like fraud and transparency.
“How do you connect media buying with technology?” is the question Louise Clements, who heads ICF Olson, a consultancy-agency hybrid with more than eight acquisitions under its belt in 2017, is trying to answer. “I don’t see that happening yet,” she said. “That is a big opportunity to connect opportunities for the market so you can do that and do it cost-effectively.”
Image courtesy of Accenture Interactive