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Impact of the Management Consultancy Firms on the Agency Landscape

2017 has just drawn to a close, with no let-up in the global spending spree on agencies by Management Consultants.  The latest acquisition (by Accenture) is Irish creative agency – Rothco.  What can we expect to see in 2018?  And what are the implications for Client:Agency relationships for Consultancy owned Agencies?

The purchase of Rothco by Accenture is its 18th agency acquisition in 3 years – making good use of a reported $1.8bn ‘war chest’ with a stated objective to evolve into “a major experience agency”.  Apart from the scale and scope of the acquisitions another characteristic is the geographical diversity.  In the 12 months since the purchase of Karmarama Accenture’s acquisitions include:

  • SinnerSchrader – digital agency in Germany
  • Altima – full service digital commerce agency in France
  • Intrepid – mobile design and development – Boston (US)
  • The Monkeys – creative agency – Sydney (Australia)
  • Maud – design agency in Australia
  • IMJ Corporate – full service digital agency in Japan
  • Wire Stone – creative marketing agency – New York
  • Matter – design and innovation agency – San Francisco
  • Kunstmaan – integrated communications agency – Belgium

These add to a network of existing agencies in the Accenture portfolio on every continent.  There’s even been speculation in the press that WPP or Publicis Groupe could be a target for acquisition based on the size of Accenture’s war chest.

Although Accenture may have been very prolific in its acquisitions it is not alone.  Cognizant, for example, recently acquired the independent digital agency – Zone and also Netcentric in Zurich.  IBM and Deloitte have also got ‘deep pockets’ making a number of strategic agency purchases.

The move on agencies has also been supplemented by attracting key talent – Deloitte Digital poached DigitasLBI’s mobile advertising figurehead – Illico Elias, and Accenture hired Amir Malik, Programmatic Director of Trinity Mirror Group.

Whilst the focus of acquisitions has until recently been on digital agencies there is no doubt now that the large consultancy firms are moving into the advertising and creative business – enabling the integration of creative excellence with digital customer experience delivery.

Given the credentials of the Consultants you can expect that full financial due diligence has been undertaken before these acquisitions took place.  But this is creative territory, a largely unfamiliar area to the consultancy firms.

A key challenge is to retain and build on the Agencies’ business and capabilities.  Clients often choose the Independent agencies for that very reason – their independence – they offer the agility, innovation and free thinking not always enjoyed in larger agency groups.

Perhaps more importantly, how do they ensure they get the best from their Agency portfolio?  It’s common knowledge that Holding Company conglomerations of agencies in a network don’t always work in the integrated way they promise.

In 2018, we anticipate that more emphasis will be placed on understanding the quality of the Client:Agency relationships before acquisition takes place, as well as  measures to maintain those relationships post acquisition.

Whilst integration is likely to be more vertical into the Consultants other services – we suspect that there is still some way to go before the Consultants look and operate like a joined up agency network.

 

Christine Downton

Senior Consultant

The Observatory International, London

 

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