Will Cashed-Up Consultancy Firms Swoop On Aussie Agencies?

Will Cashed-Up Consultancy Firms Swoop On Aussie Agencies?
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As B&T reported yesterday, a new menace to agencies appears to be emerging – cashed-up business consultancy firms who want to add things like brand, data, analytics and marketing to snare a bigger slice of the customer pie. Or, more to the point, the very services offered by many agencies.

PwC’s recent recruitment of media heavies – including Russel Howcroft, the AANA’s Sunita Gloster and Foxtel’s Mark Buckman – is confirmation enough that the lines between a consulting firm and a media agency are becoming increasingly blurred.

And these consultancies – most global – aren’t short of cash if they wanted to acquire an agency or recruit the staff required to start a media division of their own.

Speaking in The Australian Financial Review yesterday, Howcroft said brands wanted to spend more on media and marketing, they just needed a guiding hand to show them how to do it more effectively.

Over in the US market, huge consultancy companies the likes of Accenture, Deloitte, IBM, KPMG, McKinsey and PricewaterhouseCoopers are eyeing, if not buying, agencies.

Accenture – a traditional business services company –  has made no secret of its plans to buy media for its clients. Rapid changes in technology are also allowing non-media businesses to transform themselves into aggressive media players.

US industry site Adweek cites Deloitte’s recent purchase of San Francisco independent agency Heat as a harbinger to the future.

As Adweek noted, Deloitte was typically good at things like financial and technology services, data analytics and customer segmentation; however, with the acquisition of Heat it could also offer its clients branding and content expertise, too.

Commenting on the acquisition of Heat, Deloitte Digital’s Andy Main said:  “Now, you basically have this little package under one roof to help deliver on clients’ ambition to ‘future-proof’ themselves” and take on all challenges in the marketplace.”

While Heat’s CEO, Andy Barrett, added: “Deloitte just engages across a broader set of client touch points than agency firms like WPP, Omnicom, Publicis and IPG.

“It’s bigger than any holding company by quite a bit. So, you wind up having these conversations with clients where the client is like, ‘Hey, what do you know about X industry in China?’ And it turns out you’ve got an entire practice in that industry, in that country, led by well-respected experts.”

However, it’s by no means the end for agencies. Many of the good ones have been transforming their own businesses to tread on the toes of the consultancies.

A prime example of that is Publicis Media’s purchase of Sapient in 2015 for a whopping $US3.7-billion. Sapient (now called Publicis.Sapient) is a marketing consultancy firm with a heavy tech focus. The purchase enabled the world’s third-largest agency group access to new geographical markets and the ability to create new revenue streams through digital consultancy, e-commerce and IT.

However, US industry commentator and blogger, Avi Dan, agrees that many agencies have made progress in the consultancy area but their input is possibly too nominal to frighten big multinationals like Accenture or Deloitte.

Dan recently told Adweek that most agencies’s efforts in transforming their business was little more than “putting a couple of people [staff] on to give the impression that they are ‘beyond advertising'”.

“I think the so-called trend will continue because agencies are hungry for added revenue. But these services are bottom feeders—they are not competing with McKinsey or Accenture and will disappear as soon as the agency goes through cuts,” Dan believed.

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