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Consultancy businesses tried to promise they’d upstage agencies

Why consulting firms won’t win at advertising until they solve these points.
Written by publishing team

Remember when Accenture bragged about replacing agencies back in 2017 with a marketing services business? Have you ever wondered what happened to that plan?

In the years since, the market has shown that these consulting firms have not proven to be an alternative to agencies, and can instead be relied upon on projects specific to particular regions.

So far this year, advertisers have committed about $15 billion in media bills to marketing-services firms—none of which has gone to consulting firms. Instead, these companies were outwitted by the agencies that set out to usurp them. Unilever and Ribena both picked more agencies than Accenture Interactive earlier this year, for example.

Four years ago, the current climate was ideal for those companies — at least in the way they were told. Think about it: Companies are rapidly reorienting around sharp shifts in the way people consume media and purchase products; Marketers grapple with existential questions about the way they reach people as a result of those transformations; Agencies facing deep-rooted problems caused by all these moments. Consulting firms presented themselves as a panacea for this type of disorder in 2017.

However, marketers still have reservations about these credentials — a strain that has become more visible during the pandemic, a moment of crisis that has provided some reticence to walk away from tried and tested partners.

Even when consulting firms have successes, they often come with caveats. Accenture Interactive’s Rothko lost the marketing account of its solid White Claw earlier this year, but won a separate digital transformation project with the same advertiser. Often, consulting firms are contracted to provide a particular service in particular markets rather than acting as the leader of all professions as agencies are often required to do.

“Big consulting firms invest in agency business where someone speaks at the wheel of an airplane, whereas agencies are just one speaking from a client’s perspective,” said Tom Trescari, an economist at consultancy Lemonade Projects.

In other words, consulting firms sell the next big business idea to the CEO or CFO because everyone knows that’s the biggest driver of growth. Meanwhile, agencies are selling the next big advertising idea to the marketing managers who run the ads.

It’s a completely different business model,” Triscari said. “One depends on the profits from buying the media while the other doesn’t care about the media because there is much bigger fish to fry.”

Here is the gist of it.

The notable difference between large advisory firms and large holding firms, Trescari said, is a broad view versus a narrow one. He added that the difference between selling in an entire system to generate profit versus selling in a commodity component of the system has a cost. Somewhere during this transition to good alternatives to agencies, things got more complicated than consulting firms had anticipated.

But first, a history lesson: in 2017, the presence of advertising consulting firms was at its best. Not only were marketers suspected that agencies were secretly profiting from their media dollars, many of them felt they had given up a lot of responsibility for how ads were purchased by those same companies and found themselves scrambling to find ways to reestablish this balance of power. It seemed only a matter of time before consulting firms usurped agencies to become the advisors to some of the biggest advertisers. But that point never came – at least not in any meaningful way.

Yes, there have been notable wins like when Kimberly Clark replaced WPP with Accenture Interactive to create ads for their own baby products in 2019 but they weren’t enough to indicate that these companies are becoming a force to be reckoned with. In fact, the forays they made into marketing budgets appear to be due to their relationships with top executives and the opportunities these relationships offer, rather than by beating the agencies at their own game.

“They’ve been good, but I don’t think they’re any more advanced than any good agency,” said the media executive, who recently sat through presentations from Accenture Interactive and Deloitte Digital as well as from other agencies to get his media dollars. “Commercially, they pay their own consulting rates, which are above average agency rates,” continued the CEO, who requested anonymity because the presentation’s outcome was, “commercially. “However, they somehow allocate less time to projects than regular agencies do.”

To maintain their competitive edge, agencies in this position have imitated the consulting firms they have set out to replace. It is now standard practice for agency heads to talk about positioning themselves with top marketers as sources of efficiency delivery, not as cost centers. On the flip side, consulting firms have not been able to imitate media and creative services agencies in the same way.

Purchasing power is a good example of this. This type of scale is essential for any organization looking to stand out as a viable alternative to agencies, not just online media. However, consulting firms don’t really have it. They have eschewed offline media, which is essential for media agency competition. It is the difference between whether these companies are trapped in either evil or virtuous circles. “You have a scale, it works in your favour, if you don’t have a scale you end up getting rejected which means you can’t get the scale to get big enough and so on,” said Ian Whitaker, founder of Liberty Sky Advisors.

There is also the issue of trust. These are companies that openly align with certain publishers and technology partners, often receiving compensation for bringing in new business as part of partner programs. This can be a concern for marketers, especially those who question whether the loyalty of consulting firms is with them or the owners of the technology they’re selling.

“Vision [consulting firms] One marketer at CPG, who agreed to speak to Digiday on the condition of anonymity due to concerns it would jeopardize the business relationship between his employer and Accenture, said. “But getting into the mindset of top marketers has always been a problem. It will take a long time to sort out; not least because marketers are remarkably reticent to embrace ideas that deviate from the status quo.”

Coca-Cola’s latest mega show is a case in point. Accenture Interactive was phased out early on in a lengthy process that lasted about a year. But it might have been filmed had it been logistically equipped to cater to the advertiser’s creations, media and data – and various geographic needs – in some 200 countries. The advertiser said the same thing in an interview with Ad Age last month. Manuel Arroyo, Coca-Cola’s chief global marketing officer, explained that “the challenge we faced was more than geographic expanse.” “Their ability level is very different depending on geography around the world.”

This isn’t the first time executives at Accenture Interactive have heard that excuse, and it probably won’t be the last. Sure, the consulting firm has strong assets in important markets such as the US, UK, Japan, Germany and Australia, but for a number of global marketers, this is not enough. They want an outfit that has a strong presence everywhere.

“Unlike a holding company that has strong entities in every market, Accenture Interactive lacks the global glue — both in terms of joint clients and the talent to make a truly global footprint,” said Greg Paul, co-founder and director of consultancy R3. “They are working on it.”

This becomes clear a lot due to the recent changes at the top of Accenture Interactive. David Droga, best known as the founder of creative agency Droga5 — home to some of the most iconic ads in recent memory — was named CEO and Chief Creative Officer of Accenture Interactive over the summer. For a company that isn’t necessarily known for its creative chops, it’s clear what Droga is meant to be promoting – set it on the path to becoming a creative-led consultancy where innovative ideas are as much the focus as effectiveness and efficiency.

However, Accenture Interactive’s problems run much deeper than that. What marketers are discovering is that even if the strategy from a company is often sound, it is not always possible to translate the next steps into real life that can lead to tangible change for its business.

Accenture Interactive declined to comment for this story.

Granted, the same can be said for PwC Digital Services, IBM iX, Deloitte Digital, and all the other consulting firms that have tried to match marketers over the years. PricewaterhouseCoopers declined to comment and Deloitte Digital did not respond to a request for comment. It’s just that Accenture had a bigger role in the transformation than most given how vocal they are about their own plans to replace agencies. However, other consulting firms continue to have ambitions to influence marketers’ decisions – albeit in more focused ways. Deloitte Digital launched Ethos last month to help businesses with quality social marketing initiatives, while PwC continues to assist larger advertisers with the risks and warranties associated with purchasing online media.

“You only get this knowledge by immersing yourself in an industry like advertising and then growing as a business in it,” said Nick Waters, CEO of media business group Ebiquity. “It is difficult to import that expertise through appointments and acquisitions because you need to be able to spread that knowledge across the business. Integration on this scale is difficult.”

The question arises as to how seriously any of the consulting firms are about replacing agencies. After all, most of their spaceflights to date have been about dismantling existing competitors, not adding significantly to the competitive landscape. We expect this to continue. Advertising is a small part of a broader business model rooted in senior leadership and a strategic advisor at the higher levels of the corporate hierarchy. It is a marketing opportunity for their transformation services in the cloud, customer experience, data collection, outsourcing, analytics and IT security. Being an agency is basically a means to an end.

Until priorities change, consulting firms are set to continue being the marketing services provider that routinely wins accounts they don’t promote – but often misses when they do.

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