Over the past decade, management consultancies have increasingly intruded onto agencies’ traditional turf, competing for media budgets and marketing operations engagements. No news there.
Today, this isn’t a trend to observe but the pervasive reality. In mid 2019, the conflict spilled into the open as WPP and Omnicom made it clear, if not quite public, that they were unwilling to participate in any pitch or media audit led by Accenture.
The question of what this competition means gets reopened whenever a significant acquisition takes place on either side. It’s also a notable theme in Econsultancy’s Top 100 Digital Agencies report 2019, sponsored by MiQ, which was topped by Accenture Interactive.
But is there anything new to learn?
The case for consultancies
Consultancies tend to bring wider business integration and measurement rigour to the table. The story told by CMOs who go this path (at least in public) is one of sophisticated attribution of spend and extensible technology.
Early in the game, the large consultancies invested in building upon both marketing theory and technology. They were first to market as digital transformation became a global multi-trillion dollar priority and that positioned them to work their way down from strategic realignment into the guts of the marketing budget.
Media came into the picture as programmatic rose to dominance. Open-source technology platforms pioneered by the consultancies for other business processes were reengineered to provide media management and visibility into results in ways that were, at least in theory, genetically integrated with the wider organisation.
Agency branding vs transformation challenges
For agencies, it’s still about leading with the brand and creativity, with media buying as the profit centre. Even today if one compares the “wins,” the results are weighted with agencies taking most of the straightforward brand jobs, in contrast to the consultancies’ dominance in business transformation.
An issue for agencies is that while transformation consulting can lead to broader engagements and media pounds, it’s difficult to go in the other direction. Agencies and their parents are quickly adding strategic business services and technology integration chops, but the climb is steep and the economics are challenging.
The acquisition race to change perceptions
With all the investment happening in both directions, however, the real differences for a brand marketer may be less about capability than business relationships.
The recent headliner acquisitions on both sides underscore the race to change perception and achieve parity in key capabilities.
On the consultancy side of the ledger, for example, Accenture’s purchase of renowned independent agency Droga5 strikes at the idea that consultancies can’t be a platform for real creativity. The message from leadership at both companies is careful to tout a cultural match as it is to make the business case.
Meanwhile, Publicis completed the purchase of third-party data giant Epsilon in 2019, supporting the agency network’s case that they can move beyond messaging into broad customer and audience management, with all of the strategic vision that requires.
Over time, with consolidation into the holding companies and acquisition into the consultancy-led networks, the practical difference to many engagements will lessen. In perspective, as one marketer remarked in an Econsultancy survey, “The success of an [agency/consultancy] relationship is 75% the team you get and 25% the company…and I’m being generous to the company.”
For brand advertisers, the problem is generally a good one to have. If consultancies put pressure on pure play media and brand agencies, they have to reply with a mix of pricing innovation and responsiveness.
CMO or CEO – who’s owning the relationship?
Of course, underneath any argument for a clear advantage on one side or the other is a murkier reality. Old complaints around payment models, transparency issues, and kickbacks as well as newer concerns with conflicts of interest cavort below the surface.
Perhaps the loudest unspoken truth is that political allegiances can help or hurt partners’ prospects of winning the hearts and minds of CMOs.
Consultancies often start at the top with a CEO or board-level relationship. A successful turn there leads to discussion of the broader business and marketing specifically. After all, that’s where the new money is being spent, and everyone wants to access, manage, measure and/or optimise it.
Leaders in any endeavour prefer control over their relationships. They like to choose key partners and to trust that the buck stops with them, figuratively and literally. For some CMOs, the consultancies don’t and can’t fit that view if they come referred from above, or worse, laterally from a sales optimisation engagement.
Meanwhile, traditional agencies enter the business through marketing. That’s both a structural barrier and a unique selling proposition. The tight relationship with marketing helps protect media and brand businesses, but it can prevent them from expanding into wider corporate strategy.
Effectiveness trumps agency vs consultancy debate
The complexity of today’s marketing and business landscape demands two kinds of partner.
The first is capable of understanding and enabling a business at a strategic level. They have to bring talent and capability in many disciplines simultaneously, with technology as a foundation for growth. Consultancies have an edge, but their advantage shrinks as technology gets continually cheaper and easier to implement.
The second is the specialist partner, good at a small set of complimentary disciplines, demanded by today’s marketing complexity. Agencies often have an angle here, but the challenge for the holding companies is to crack the code of integration without cannibalisation.
But what of the companies in between? Those who struggle to provide a range of services, are drawn too thin to do everything well and are too big to specialise. The future for those companies seems to be assimilation, voluntary or not.
Eventually, the multiple pressures on the marketing services sector will result in positive outcomes for brand marketers and in the end, the industry itself, in the form of more reliable client bonds. Those companies who are consistently effective will thrive, regardless of which bucket they’re from.
This essay was originally published in Econsultancy’s Top 100 Digital Agencies 2019 report, sponsored by MiQ.