In the second part of our series exploring the collision of martech and adtech, The Drum takes a look at how, in this ever-evolving advertising ecosystem, advertisers could be forgiven for having no idea where management consultants end and agencies start.
It’s a topsy turvy world where Accenture is ranked Ad Age’s number one agency and even advertising commentators are calling advertising a ‘dirty word’. Yet that’s the world we inhabit right now. The digital revolution has redefined and disrupted not only the products and services offered by advertisers, but the very foundations of the industry itself.
Management consultancies and advertising agencies, once embodying vastly different sets of skills, culture and services, have become unlikely foes, locked in a turf war and competing for the attention, budget and bandwidth of the C-suite.
The cause, says Bertil Snel, EMEA director partner of marketing at Adobe, is the threat to the core business of both parties. Cloud computing has made ERT and CRM integration much easier and quicker, threatening the margins of the traditional systems integrators, and while big ad budgets are in decline “more and more campaigns are being driven through digital”. Digital consultancy, it seems, is the common ground.
Anatoly Roytman, EALA managing director at Accenture Interactive, describes the challenge: “The whole world is becoming more complex. It’s changing quicker than brands and companies can deal with. Therefore consultancies must be much more strategic to meet their clients’ needs.”
It is both sides, therefore, that are evolving. And if agencies are Darwinian, continuously updating their expertise to stay relevant, so are the consultants.
Scott Brinker of Chief Martec paints a picture of a rapidly converging landscape: “10 years ago, these were very different types of organisations, but that’s no longer true,” he says. In fact, he adds, management consultants are successfully leveraging their C-suite influence and change management expertise to get a bigger bite of the cherry.
Danny Hopwood, EMEA vice-president of solutions and platform operations at Publicis Media, sums it up: “Their relationships with chief information officers and chief financial officers are their prized possessions. They’ve come in from a finance angle, helping their client set up IT products and services, which is why, when they make a slight pivot, it’s easy for them to go to the chief information officer and say ‘we can instigate a complete technology change in your marketing business’.”
Indeed, as businesses transform to embrace digital technologies, it is not only the marketing department that must change, but everyone from HR to finance and procurement. Management consultants, with their systems integration expertise, seem well placed to help clients not just execute brilliant digital marketing campaigns, but actually embed digital capabilities, make the right hires and strengthen their own expertise.
Brinker describes why the consultants are attractive partners to advertisers: “As part of the digital transformation, companies need to be able to iterate way quicker than before, meaning it makes less sense to outsource all the creative work to an agency. Developing creative capabilities in-house has become a priority and, for many, management consultants are helping make that happen.”
However, the agencies are not the victims here. Gustav Mellentin, chief executive officer of Adform, thinks it makes sense for consultancies to join the foray, citing agencies’ historic lack of focus on business strategy and “talking about clicks and not business.”
Joe Saumweber, chief executive and co-founder of RevUnit defines agencies’ failings as being about “thinking in campaigns instead of products”. For Roytman, it’s about a holistic approach: “We think about the entire value chain. With us, it’s not a hit and run. We look at conversion but also the lifetime value of brands and customer relationships with brands.”
Indeed, in a world where marketing and advertising has been replaced by customer experience across multiple touchpoints, a focus on campaigns seems short sighted.
“Marketing existed in the way it is now for many years, primarily focused on advertising and now it is undergoing significant change” says Roytman. “The name of the game is customer experience and it’s now about much more than advertising, it’s about how services are provided and marketing functions are having to think well beyond ads.”
But it’s not all doom and gloom for agencies. For many clients building internal capabilities, they are a natural partner, offering a creative outlook and a fresh perspective: “We don’t use management consultants and haven’t done for some time”, says Kerry Chilvers, brands director at Direct Line.
“We’ve really focused on building internal capabilities, which means we don’t turn to management consultants to move into new areas of the marketing mix. Instead, we’ve focused on building a strong agency network and roster who have permission to challenge us with relevant provocation.”
In fact, Chilvers says that employing consultants would have undermined their drive to build the strongest marketing team possible for a digital era:
“If we had supplemented this effort with management consultants, it would have been something they were driving, not us. We have to have credibility as a department to drive change internally. That means we need good people inside the team, not good people we buy in occasionally.
In the end, the strong client/agency relationship and ability to ask for (and measure) the results Direct Line needs means it trusts its agencies to deliver. It seems the industry may be undervaluing the deep personal relationships that have been formed over years of marketers and agencies working together when discussing ‘trust’ in a wider sense. Plus, agencies are fighting back by building their own strategic firepower, evidenced by moves such as Publicis’ acquisition of Sapient.
Another area of differentiation for agencies is that of creativity. Former consultant Mellentin is skeptical about the ability of consultants to exist in a creative space. “Maybe IBM can do it, but I don’t see how this a natural progression for the high-end guys like BCG or Bain.”
Although Brinker challenges the industry to redefine creativity as we know it: “The argument these companies would make is they’re bringing a more powerful form of creativity to the table than an agency with an ad campaign.”
Indeed, with inventions such as IBM’s responsive Watson ads, there is clearly scope for the definition of creativity to be challenged. Plus, as both parties continue to grow by acquisition, agencies must hold their ground.
What’s clear is that different types of consultancies and agencies and they compete in different ways and for some, these developments are welcome news. Hopwood paints a positive picture for creative agencies in particular:
“Now more than ever, there’s a place for creative agencies. We have reams of data available to us every second of every day that we can hand over to creative agencies to inform their strategies. They can monitor everything: from the way their site’s performing, or different sized units are working, which could lead to the creation of new creative formats that we’ve never seen before. There’s a sweet spot for everyone in this equation as long as everyone stays co-ordinated and works together.”
Indeed, a learning ecosystem has sprung up as marketers look to the most advanced digital businesses such as Unilever’s recent acquisition, Dollar Shave Club, to learn best digital practice. Technology companies, in turn, are looking to those using their software to give them insights into how best to develop it and of course, clients are talking to both their agencies and consultants for advice.
One of the striking relationships augmented by management consultants is that of technology companies and advertisers. Robin Ritenour, senior vice-president at Marketo, describes a symbiotic relationship, based on advice and insight sharing, that allows them to develop their products in ways which benefit their clients: “We want them to innovate across our platform. To tell us when they spot an opportunity to use the Marketo platform in a way we haven’t thought of.”
She adds: “They’re looking at what an organisation looks like across sales, service and marketing which enables us to design software that supports strategy across the enterprise. They amplify our value.”
Indeed, as technology develops, expedited as the war intensifies, the advertiser is the one who will benefit from the fierce competition to meet and anticipate their needs.
So, what will the ecosystem look like in five years time? While Hopwood’s picture of an emerging system of co-operation and specialisation is attractive, some aren’t so sure, with Roytman in particular defiant: “They are trying to get into our space but we are also trying to get into their space in a different way. The question is, who will get there first?”
Saumweber also paints a challenging picture: “What we’re seeing in this space right now is akin to what happened to house builders in 2008. Only the best will survive. Consultants aren’t combating problems with tag lines, they’re combating problems with products.”
Perhaps the most interesting prediction is that the distinction between consultants and agencies will cease to exist. Tatyana Ayrapetova, senior partner marketing manager at Adobe, describes a very brave new world: “Even the term agency is going to change, I don’t know what we will call them in the future. What I do see is that these new entities will have to be high performance orchestras, they will need to be flexible and agile, forming teams and creating flexible solutions that look very different for different clients.”
What seems clear from all predictions is that collaboration and flexibility will be key. Whether the holding companies of tomorrow will contain their own management consultancies or whether the way forward is a system of strategic power players with highly specialist, flexible and collaborative delivery partners, who knows. What we can be sure of is that the marketing and consulting ecosystem of tomorrow will look very different to that of today.