Accenture Interactive has announced it has reached a deal to purchase the London-based independent agency Karmarama.

It's the latest acquisition from the consultancy, which has also bought independents in Brazil, APAC, the US and Sweden.

What does this mean for marketing?

Consultancies are swiftly targeting a demand

Just look at the top five agencies based on UK billings, taken from Econsultancy's Top 100 Digital Agencies report published in June 2016.

Three big IT and management consultancies, IBM, Accenture and Deloitte have successfully targeted the demand for digital and media, particularly within larger companies that are still getting to grips with their own digital transformation

  1. IBM iX - £191,673,395

  2. Accenture Interactive - £176,527,487

  3. SapientNitro - £165,433349

  4. BAE Systems - £77,741,561 

  5. Deloitte Digital UK - £75,000,000

How have they done it?

'The customer journey' is the new mantra

Ashley Friedlein, Econsultancy founder, puts it best in his introduction to that Top 100 Digital Agencies report.

"Historically separate parts of the customer funnel, managed by agencies, tech vendors, system integrators and consultancies, are coming together," Ashley says.

He adds, "The merge is forming a single view of the customer journey where there is data visibility, tracking and tech inter-operation throughout the funnel."

Consultancies, with their experience of strategy and technology implementation, were well placed to complete the loop and have been doing so through acquisitions.

Accenture was already handling strategy, technology and infrastructure, so it began adding digital marketing, notably with design business Fjord in 2013, and now with Karmarama.

Karmarama sees itself as an agency that unites brand with experiences, and Accenture in its press release refers to the Accenture Interactive division as 'experience architects'.

So, whether implementing a CRM system or designing a mobile website, the mantra is the same - it's all about the customer journey/experience.

customer joruney

Scale and specialism are imperative for big wins

A certain scale of agency is required to think big about customer experience. If an agency is to develop new revenue streams for a client, it must have wide and deep expertise.

If you go back to that top five list above, you may notice that since June, SapientNitro has reformed, merging with Razorfish (also part of Publicis.Sapient).

Scale was the rationale here, as well. In a statement, Publicis.Sapient CEO Alan Herrick said: "By creating SapientRazorfish, and by implementing a more integrated management structure, we are combining the very best digital and technology assets in one combined unit."

The biggest agency win of the year is also relevant here. 2016 saw Omnicom Group placed in charged of both McDonald's media and creative (the entire account).

Omnicom agencies will be selected based on their expertise, and Mark Ritson writing for Marketing Week states that this may represent an advantageous middle ground.

He puts it thus:

"Does the surfeit of communication options require a single integrated agency? Or should a client hand-pick the best dedicated agency to handle each specific medium or channel?"

"...The former suggests a ‘jack of all trades, master of none’ mentality. The latter alternative requires the client to essentially become the integrator of non-aligned, openly hostile competitive firms."

"...It would appear that McDonald’s prefers a middle position – a large holding company that can offer a range of specialist agencies but all within the single operating group."

How is this relevant to Accenture? Well, its acquisitions give it a greater degree of specialism and scale.

However, as Accenture concentrates on creating experiences and revenue (rather than perhaps traditional advertising), it is understandable that in a recent interview with Business Insider, executives involved in the Karmarama deal are talking about entrepreneurialism and new revenue streams, rather than a 'holding company' ethos.

Being big and small is no easy task, but acquisition is one way to achieve it, especially when these agencies have good existing knowledge of their clients.

t-shape

Campaigns are out (and skills are moving in-house)

As Accenture Interactive's MD Donna Tuths told Contently earlier this year, when talking about digital, “I see many of these things as no longer being the domain of agencies.”

“[Clients are] starting to see the folly in trusting their brands to short-term, campaign-driven partners.”

This is back to the customer experience mantra. It doesn't make sense for agencies to concentrate on short-term success in a particular channel, when they can be crafting channel-neutral, always-on campaigns.

Clients are bringing more skills in house and are altogether more comfortable managing campaigns in maturing digital channels, which previously might have been unique to agencies.

What these clients need is help with the blend of tech integration, strategy and creative on larger projects.

As consumers raise their expectations of personalised experiences, agencies must be better able to combine creative with machine learning and data.

Creativity has to be applied broadly, not turned on and off.

Consolidation is just a fact of life in a growing industry

Independent agency owners are taking the money as they realise the difficulty in trying to offer 'full service' in a market in which tools and services are proliferating.

Research from Luma Partners showed 72 merger and acquisition events in Q1 2016 (in adtech, martech and creative).

At this year's Festival of Marketing, Sir Martin Sorrell said he expects consolidation to continue apace.

In summary...

Slowly but surely, the word digital is becoming redundant. Digital is increasingly just an aspect of marketing now; an aspect of business.

Acquisitions and the greater influence of business consultancies are therefore not surprising.

Tech is being bundled into strategy, and the broader question is whether this necessitates different business strategies, with greater focus on long-term revenue and diversification, design leadership and customer need.

I'll leave the last words to one agency, commenting for our Top 100 Digital Agencies report, which said: “We need to find the right balance of structure and process versus the need for fluidity and dynamism to service our ever-evolving client needs."

"The agency landscape is facing a rethink and having told our clients that technology is changing their communications relationships, we must continue to turn the spotlight on ourselves by trialling different models to support an increasingly diverse range of outputs that stem from a cohesive narrative.” 

For further reading on this trend, download Econsultancy’s Future of Digital Agencies Report.

Ben Davis

Published 29 November, 2016 by Ben Davis @ Econsultancy

Ben Davis is Deputy Editor at Econsultancy. He lives in Manchester, England. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

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Comments (2)

Gary Trotman

Gary Trotman, DoM at Steelasophical Steel Band

Its a recent trend that was gong almost unnoticed .. this will be one way of ever increasing influencers of future trends in the market place .. is this a good thing? time will tell as good intentions and the reluctance to adversely influence the entire market have a lot to do with it. The reason is obviously guided by wanting to provide a one stop shop!!

11 months ago

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Alex Beal, Head of Marketing at Wipro Digital

Good analysis. However, as time passes and Accenture acquires more agencies and keeps them separate (to a degree), is Accenture looking more and more like an agency holding company?

11 months ago

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