PERFECT MATCH: WHY CONSULTING FIRMS ARE BUYING ADVERTISING AGENCIES
17 APRIL 2019
On the heels of the recent announcement of Accenture Interactive’s acquisition of Droga5, it begs the question: Why are consultancies so eager to snap up ad agencies?
According to ADWEEK, M&A agency acquisitions by consulting firms were up 125 percent in Q1 of 2018 alone, gaining $4.6 billion in sales from agency deals. In the last few years, we’ve seen a significant shift in the global gig economy which is broadly altering the landscape of the agency scene and brands are seeking higher levels of collaboration among their agency and consulting partners. As creative production and programmatic media is being commoditized, it is easier than ever to start an agency, attract top talent with promises of freedom and independence and add a sprinkle of courage and conviction to the work.
But in the age of dying retainers and more project-to-project shops than you can count, consulting firms are seeking to attract talent that can deliver conceptually big ideas that break convention and deliver fully integrated digital, social and experiential customer experiences. Equally, consultancies are looking for ways to diversify revenue models and capture more market share of services, moving away from time and materials based labor and shifting to value-based pricing models that deliver wins, both in terms of margins and creative results.
Consultancies have long been known for being able to penetrate deep within the walls of brands by imbedding consultants, often at the highest levels of their clients. Consultants are naturally wired to mine for new opportunities within their clients and have the strategic relationships to effect these work streams. Additionally, consultancies are also often tasked with complex change management initiatives which require both internal and external cultural shifts within the brand. Although consultancies are often leading the strategy work, they have yet to be as nimble as digitally-native agencies that have learned how to quickly maneuver in an ever-changing cultural landscape.
AI, big data and predictive analytics may be changing digital advertising dramatically, but so far, big data and AI haven’t been able to crack the code on creating the next culturally disruptive campaigns.
Agencies like Droga5 have long hung their hat on not only the ability to think strategically about brand challenges, but also deliver the creative to make ideas sticky, memorable and actionable.
Consultancies are built for problem solving, while agencies are focused on non-conventional creative ideation. While consulting firms often weigh out risk mitigation, agencies offer a divergent calculated risk with ideas that break convention and cut through the clutter of corporate messaging.
Through our internal culture change and brand strategy work with clients like Starbucks, Intel, Nike, Cisco and GE Healthcare, we’ve learned that the next generation of brand warfare will be fought over talent, not just consumers. Employer Brands are on the rise and become a significant, if not equally weighted part, of the brand ecosystem equation. We’ve learned that crafting a brand’s ONLYNESS, the one thing a brand can authentically lay claim to, is the foundation for internal culture change and rallying employees around the “why” behind the brand.
Consultancies may be built to sell ideas, but agencies are built to create cultural movements. Together, they create a combination that can create an end-to-end brand ecosystem that balances risk mitigation and corporate culture with disruptive, breakthrough ideas.
The biggest challenge facing these new global consultancy superpowers is how to ensure that top-notch talent doesn’t slip through their fingers. After all, it’s hard to convince cutting edge creatives to dawn a tie for the boardroom.
Manifesto is a new kind of agency—one that blends cause with commerce and raises the social consciousness of the brands we work with. Our desire is to work with the most talented and courageous people and partner with the most ambitious brands in the world. Brands that are bold and optimistic, that have an appetite for disruption and want to challenge the status quo. Manifesto was born out of the belief that every brand can be a catalyst for good. Because of this, we can say Manifesto is a brand declaration agency.
Our work spans the spectrum of brand and marketing, from strategy to advertising campaigns in traditional and non-traditional media.
Manifesto has offices in Portland, Oregon and Milwaukee, Wisconsin.