Sectors: Creative, Media & Technology

In all, Accenture Interactive has acquired more than 30 agencies over the past four years. Interestingly, these have been in every conceivable discipline – full-creative, design, web build, search, SEO, branded content, CRM, production, data, media…on every continent apart from Africa. It looks, then, that Accenture is extremely serious about being a big player in marcomms as well as professional services and consulting. But what of its own rivals? Well, most of them have been busy too, if not in the same high-profile way as Accenture Interactive. As yet, they’re not spending anything like as much. Last year marketing consultancy R3 found that Accenture, Deloitte, IBM, KPMG and McKinsey had between them spent more than $1.2bn hoovering up marcomms agencies in 2017. By contrast, the big five marcomms holding groups (Publicis, WPP, IPG, Ominicom and Dentsu) spent $1.8bn on M&A over the same period – just half what they’d spent in 2016. It’s fair to say that as the holding companies have struggled with the disruption wreaked on the marcomms industry over the past five years, it’s been the consultants who’ve kept M&A activity buoyant since 2015. But while KMPG spent $14m in 2017, IBM, $28m and Deloitte $144m, Accenture Interactive eclipsed all of them by spending just over $1bn on M&A throughout 2017 (that’s twice as much as either WPP or Dentsu). In fact, that same year, the firm announced a $1.8bn war chest for M&A in the marcomms space, signalling an aggressive intent to steal a march on its competitors. The others will need to act quickly, and spend heavily, if they are to catch up. There is, however, a structural reason why Accenture can be far more prolific than its peers. That is due to the fact it is listed and can therefore issue shares to raise cash. Many of its contemporaries are partnerships, which means partners of the firm effectively pay for the acquisition between them. So, if a target agency has multiple geographic locations – eg London, New York, Singapore – then the partners in each of those jurisdictions will have to stump up their share of the acquisition cost. This gets particularly tricky if it’s the UK consultancy that wants to make the purchase as it fulfils a specific need for the UK arm and not for the others. Deloitte Digital’s acquisition this week of online marketing agency Pervorm offers us the ideal opportunity to re-examine the state of play with the other consulting giants. Pervorm, founded in 2010, is an online agency with offices in Amsterdam and Vietnam, whose specialisms include digital marketing, in-house consultancy and analytics. This latest acquisition gives Deloitte a foothold in the media space and strengthens its search, social and programmatic advertising offer. Although the sum that changed hands has not thus far been disclosed, it’s reasonable to assume that the founders would have been happy with the money they received, since the consulting giants see the value of digitally and creatively-focussed marketing shops (one of the reasons for this we’ll examine later). After Accenture, Deloitte has been the most acquisitive, buying up agencies like San Francisco’s Heat, the Swedish creative shop Acne (whose clients include Ikea), Market Gravity (a ‘proposition design’ business based in south London), the cloud services firm CloudinIT (clients include Amazon and Salesforce) and design agency Brandfirst. But in the last year or so, Deloitte has been quiet, and the Pervorm acquisition may signal a renewed interest in catching up with Accenture. We’re also seeing lesser known, but seriously sizable consultancies move into the space, such as ICF. This is a 5,500 staff, $1.4bn market cap consultancy that own the marcomms outfit formerly known as Olson. We at Green Square advised We Are Vista on its sale to ICF last year and the whole ICF marketing services side has subsequently been rebranded ICF Next, boasting specific capabilities in creative engagement, insight and analytics, loyalty, communications and technology. This gives it fleet of foot to face clients in the way that suits the clients best. So, why are the consultants – big and small – moving into marcomms? The answer is simple – all businesses need to grow, and extending the range of services they can offer clients (including advertising, marketing, strategy and ancilliaries) gives them access to new service lines into which they can utilise their expertise and footprint. They have a great deal in their favour, such as existing client relationships in many cases; experience of operating at both global and local levels; understanding of both strategic disciplines and their importance; big budgets, currently much larger than the under-pressure holding groups can provide and large headcounts. Accenture has over 400,000 employees globally which, supplemented by creative talent from the agencies they acquire, means it can offer clients quick and effective end-to-end service. Consultancies also have a reputation as cost-savers and problem solvers, whereas traditional marketing agencies are seen as cost drivers, which is a huge structural problem they need to solve (although agency chiefs quite rightly like to point out that they charge clients a lot less for their services than the consultancies do). This is where it can get tricky for the consultancies: their traditional business relies on known and proven methods and models into which they can plug staff to collect data, provide reports, implement systems etc, which can be highly profitable as it is replicable. While some marcomms services such as digital transformation, programmatic, performance marketing can also be mechanised to a degree, creative services by their very nature rely on people to come up with new ideas for campaigns. They need a lot more human interaction and the charge out rates for marcomms staff are likely to be a lot lower than those of the consultancies. That said, consultancies usually have direct access to “C-suite” personnel client-side, which agencies often don’t. And since the turn of the century, CMOs have increasingly moved into the boardroom as marketing becomes a business-critical component of most large businesses or brands. Marketing is no longer just about TV ads; it’s about interacting with customers and their journeys, protecting brand reputations and values. When you are selling consultancy services at C-suite, it’s not such a stretch to provide marketing and creative strategy as well, and the opportunity could be there to do this at a premium. It’s often said that the success of disruptive, fast-growing businesses like Uber or Airbnb is down to sound strategic thinking and brilliantly user-friendly customer interfaces, rather than high-impact advertising. Rather than pushing messages at people, marketing has increasingly become a way of solving complex business problems and realising a brand’s strategic thinking. Quite reasonably, the consultants who’ve always prided themselves on helping clients to solve complex business-critical problems believe they can play a role in shaping these kinds of brands. Does this mean that the traditional creative ad agency will be a thing of the past? Unlikely, but there will, as Adrian Mills, partner of creative, brand and media at Deloitte Digital told The Drum last year, be a shift in power. As Mills pointed out, consultancies can’t operate on the low margins that many agencies do these days, but what they are good at is bringing in or outsourcing the stuff they are unable, for whatever reason, to do themselves. How do the traditional agencies react to this shifting landscape? The big problem that Deloitte, Accenture and the others face is reputational. They have few creative credentials. Which is why the consultancies have shifted from buying agencies purely with expertise in web, mobile development and UX design to full-service creative shops like Heat, Karmarama and Resource/Ammirati (bought by IBM in 2017). Also, Karmarama aside, the consultancies have been snaffling up young businesses or startups – consultancies tend not to be famed for their entrepreneurial spirit, and hotshops possess these qualities by the bucketload. The challenges for the consulting firms is to keep these acquisitions separate, to nurture that entrepreneurial spirit, rather than subsuming them into the wider acquirer culture. One thing the ad agencies can do is focus on their creative heritage. Most aspects of marcomms – production, execution, web build, account management, etc – can be commodified to a greater or lesser degree. But creative thinking cannot. And creative talent will always be drawn to an agency environment rather than a management consultancy, even if the latter pays better. If the established agencies can continue to attract the most talented creatives, and trumpet these credentials to existing and prospective clients, they’ll have a future in this newly-competitive environment. And of course the other thing the WPPs, IPGs and Dentsus of this world can do is set up their own consultancies. This has been tried before (back in 2006, OgilvyOne in the UK set up a short-lived consulting unit called Ogilvy Engage) but it’s more difficult than it sounds – and probably requires bringing in outside talent. But this, perhaps, is a story for another day…

Arrizabalaga stayed on the pitch, while Sarri blew his top, and was held back from confronting him. Later, they both said that the situation was a misunderstanding. Whether this was true, or a face-saving exercise is not really the point. But it got me thinking …. how could it have ever come to this? Would this farcical situation have ever happened at Chelsea’s opponents that afternoon, Manchester City? As soon as full-time came I watched the City players, coaches, manager, other support staff all get into a tight huddle near the centre spot. They were tight. Chelsea meanwhile seemed to be in a dispersed daze. As anyone who’s seen Amazon’s documentary on Man City, All Or Nothing, will tell you, their manager Pep Guardiola is a man with a plan, and an eye for detail to match. He would have ensured that every player knew exactly where they had to be and what they had to do – including in the event of extra time or a penalty shootout. Pep, you see, is a fellow who has his house well in order, and that’s part of the secret of his success. The same applies to any business that’s looking to leap from the lower leagues into the big time, or perhaps seeking a partner or acquirer to take them there. When we begin our journey with a new client it normally begins with an Ascension Day – this covers the whole spectrum from the very basic house-keeping to the grand plan and road map to get there. So the first rule is, know what it is you’re supposed to be doing, who you’re doing it for, how you’re going to do it and why – what’s your proposition and why will someone want to buy that just from you. This is way more important than the Shoreditch offices, the flat whites, beanbags, pool table and shiny new Macs – all things too many businesses concentrate on too much, often to cover up the un-exciting offer that sits behind it all. Then you have to make sure everyone you’re working with – creative, suits, strategists, data bods, CRM experts, production people – knows and understands this too. And that they buy into it, are genuinely excited about it and will do whatever it takes. This is what Pep has done so successfully with his team. Everyone has bought into his vision, method and strategy, from the boot boys to the groundsmen and the catering team to the players and fans and crucially those above him. They have bought into it and understand where they fit in and what is expected of them to achieve success. This is why City – and I’m not a supporter as you know – are so good, and why defeats or dips in form do not faze them. They’re prepared. If you are, losing an account, a pitch, a key member of staff, a particularly tricky brief won’t faze you either. So plan ahead, be ready for any eventuality that you can think of and make sure everyone understands what they’re supposed to be doing, when they’re supposed to be doing it, how and why; a winning mentality. Another crucial part of putting your house in order is understanding your place in the world. Smaller or startup businesses have traditionally – notions of nimbleness and hipness aside – been at a disadvantage to their bigger matured cousins, because they’re seen to lack the scale that big global brands demand; they certainly lack the resources, human or otherwise, to compete on a level playing field. If your analysis of your competitive landscape reveals that you won’t for the moment be competing with the giants, then all well and good. So, who do you compete with? And can you co-exist, or will it be a competitive fight to the death? And what can you do with the resources you have? Over-promising, not meeting deadlines and the like can be fatal. Will you have to hire in extra talent? The so-called “Hollywood model” – having a small core team and drawing on a wider pool of outside or freelance talent – is becoming increasingly popular. It’s interesting to note that one of the smartest and most successful agencies of recent times, R/GA, came out of the film industry before being snapped up by IPG. Despite having 2,000 employees on its books, it still draws on outside help, whether that’s collaborating with other experts or ‘hiring in’ individual talent. Next, and a related point, decide whether you’re a generalist or a specialist. Five hundred years ago, a very good scientist might, over a lifetime, be able to understand the entire sum of human scientific knowledge up to that point. Nowadays, it’s impossible for a theoretical physicist, geneticist or cosmologist to know everything in their own chosen discipline – so they have to specialise. Similarly, nowadays, it is very hard for all but the biggest businesses to do everything for a client. Far better to do one or a few things, even if it’s looking quite niche, extraordinarily well rather than overstretch yourself. And if you want to do more, you will have to invest. You can’t do this on the fly, put up a facade and hope no one looks behind it. Guardiola will have a transfer budget, and will work out how he wants to spend it long before the contract is signed. His bosses will be aware of what he wants to do, and he’ll have convinced them of his targets’ merits, how they will improve the team. You’ll need to do something similar, perhaps just within your own existing resources as opposed to investors or banks, but it needs to be done well. You’ll also need to constantly evaluate your methods and processes, and be hard on yourself. In an industry being ripped apart by disruption, you’ll need to be a disruptor of yourself in order to survive and thrive. What intellectual property do you hold – this could be software and systems based, it could be processes, methodologies, data, freelance resource databases. Even when his team have won, Pep looks constantly at the performance: what could have been better executed? Where are our weak spots? What dangers and opportunities await us in the next match? Just as Pep and co continually evaluate players’ fitness, performances and attitudes, and endlessly re-watch past matches, you’ll need to do the same – constantly review your creds (with outside help if need be), carry out pitch post-mortems or reviews and revisit your positioning in the competitive set. This last point is incredibly important – a positioning within a disrupted market or industry is never static as the environment is itself in a state of flux. And again, this involves being aware of one’s surroundings at all times. After all, if you can’t create your positioning for yourself, how can you expect clients to trust you to be able to do it for them? To return again to the football analogy, every player in a good team knows where they must be at any given time. This has all manner of implications, particularly when you’re after new business. I remember back in the late noughties, there was an agency that kept winning new business pitch after new business pitch. Their sister agency, which was housed in the same building, kept losing the pitches it went after. Why was this, I wondered? The boss of the successful shop told me: pitches were rigorously researched, practised, rewritten and rehearsed again – as were presentations. She made sure her team knew more about the client than the client did. And other agencies in the process (if known) were studied for strengths and weaknesses. Furthermore, every single person in the room with the client on the big day knew what they had to do and say, and when. Crucially, she also always ensured that there was talent in reserve to keep the rest of the agency running smoothly and to ensure that existing clients enjoyed high levels of service and creative. The other agency’s pitches and presentations were by all accounts sometimes chaotic and unfocused, even though the creative ideas may often have been spot on – it was excused as being ‘dynamic’, ‘free-willed’, ‘highly innovative’, ‘not prescriptive’. All things that the successful shop’s chief executive almost certainly created the environment for. The successful agency had a continual run of success… because they had their house in order. Finally, it’s worth remembering that for all the glories of their 2017/18 season, Manchester City didn’t appear out of nowhere. Despite his stellar record at other clubs, Guardiola was forced to learn lessons from a transitional first season (2016/17) that many felt was a relative disappointment given the expectations that accompanied his arrival. But learn from that first season he did, and it has been pretty much all upward from there. City won’t always have everything their own way of course, but for the time being they look like a team that has its house well in order – and as a result they look like champions – this season and moving forward. That was a hard thing to say from a Chelsea fan, but credit where it’s due… Read More