This is the first part in a two-part series about how management consultancies, publishers and technology firms are starting to offer digital marketing and advertising services to their clients in Asia Pacific. Part two will be on how agencies are responding to these developments.
The Drum reached out to EY, KPMG, Deloitte and Boston Consulting Group for this story, but they declined to participate after deliberating in-house, while Accenture failed to respond to our questions by press time. McKinsey, PwC, IBM, Bloomberg and The New York Times meanwhile, shared their thoughts with us.
As with many industries around the world, the traditional advertising agency business has experienced major disruption over the past couple of years, as management consultancies, technology firms and publishers are starting to provide digital marketing and advertising services to their clients, either by acquiring creative and digital shops or starting an advertising arm.
The first signs that the new kids on the block had arrived was when Accenture Interactive acquired design shop Fjord in 2013, before investing in digital agencies around the world like IMJ Corporation, AD.Dialeto, Pacific Link and Chaotic Moon. It then bought Kamarama, one of the UK’s largest independent agencies, which counts the likes of BBC, Just Eat and Unilever as clients.
The acquisitions opened the floodgates for other consultancies and tech firms to follow Accenture’s footsteps in as Deloitte bought out full service ad agency Heat, IBM acquired digital agencies Aperto, Resource/Ammirati, and ecx.io to build up its IBM Interactive Experience studio offerings, and Capgemini bought design agency Fahrenheit 212.
The likes of EY, McKinsey, KPMG and PricewaterhouseCoopers have also either built a digital marketing arm or added an agency division to their core product offering.
Publishers are also getting in on the act too, as Bloomberg Media Group and The New York Times have chosen to provide brands with strategic directions and marketing products with their custom content studios, instead of producing branded content like their competitors. The Times also acquired ad agency Fake Love and influencer marketing agency HelloSociety to boost its T Brand Studio’s capabilities.
These consultancies and publishers are also starting to make similar moves in Asia Pacific in 2017 as McKinsey bought Malaysia-based VLT Labs, a digital and design studio, while Accenture opened a digital hub in Singapore with a 200 headcount that provides services that it acquired from the likes of Fjord. It also bought Australian creative agency The Monkeys and said the acquisition would lead to further growth in Asia Pacific. Meanwhile, The Times opened its T Brand Studio’s APAC headquarters in Hong Kong.
In response to the moves made by Accenture and McKinsey, Nick Spooner, PwC’s Digital Experience Centre leader across Southeast Asia and Australia, reveals to The Drum that the London-based firm is planning to expand its global footprint further across APAC by opening an Experience Centre in SEA in addition to existing centres in Hong Kong, Australia and China.
“Our Experience Centres are spaces made up of three key components - talent (a community of experienced business, industry, creative and technology professionals people who co-create ideal future experiences), environment (digital and physical environments such as labs, alternative workspaces and Sandboxes) and methodology (collaborative engagement models and services that help move our clients beyond current trends and focus on the future of their business),” he adds.
Spooner explains that brands in APAC are turning to consultancies like PwC because they want to find new ways of solving problems, creating unique experiences and accelerating business growth. PwC is responding by helping brands, who have traditionally used ad and digital agencies for their business, understand the firm’s digital marketing approach through its methodology of Business, Experience and Technology (BXT).
“The BXT method is PwC's point of differentiation, and it helps organisations view their business challenges holistically from the three lenses of business strategy and operations, user experience and emerging technologies, concurrently,” he says.
“By bringing together PwC's capability in business strategy and operations consulting, user experience design, and expertise in current and emerging technology, we break down silos in organisations and embrace the power of design thinking. This leads to breakthrough solutions for our clients.”
Brands in APAC are also looking for a new kind of partner, one that has weathered the challenges of being in business and can help them navigate the enormous opportunities that lie ahead, according to Andrew Johnstone-Burt, managing partner, digital strategy and iX at IBM.
IBM, which recently launched Watson Advertising that leverages on Watson, its artificial intelligence service and includes IBM-owned The Weather Company’s data capabilities, feels that there has never been a better time to be a creator. But, continues Johnstone-Burt, as businesses now know more about customers, their desires and behaviors to make experiences more effective, product more relevant and relationships more loyal.
“Yet, there’s never been a tougher time to be in business. All businesses are open to disruption. Advances in technology, access to capital and the exponential power of networks means there are no boundaries when it comes to where competition can come from,” he adds.
Johnstone-Burt highlights the fact that as IBM iX is design-driven, and has a focus and emphasis on applying creativity, as well as using IBM Design Thinking for solving business problems, it differentiates IBM from the agencies and strategy consultancies who are trying to build their technology capabilities.
“IBM iX teams are multi-disciplinary. When our clients work with us, they work with different sets of practitioners that come from different background and have different skillsets and capabilities,” he says. “Our multi-disciplinary teams of business strategists, creatives and designers, data scientists, and technology specialists work to deliver new ideas and experiences. They all work together as one team in helping our clients solve the most complex business problems
Dilip Mistry, digital vice president at McKinsey, explains that the joining of VLT Labs into Digital McKinsey further boosts McKinsey’s digital capabilities in APAC where demand is fast growing and allows the firm to help local organisations become regional and global leaders in a digital age.
Mistry points out that the line between advisory and execution work has blurred, as the firm consistently hears two themes from its clients. The first is that the clients need McKinsey to bring new forms of expertise and insight to solve their most challenging issues, and the second theme is that clients want McKinsey to serve not just as consultants, but also as true impact partners in delivering value from its work.
He says: “We are constantly upgrading the capabilities that we bring to our clients – including acquiring leading firms such as QuantumBlack in advanced analytics, Veriday in product design and more recently the acquire of VLT Labs in product engineering and digital design. We are also hiring more professionals who bring expertise in areas such as digital transformation, machine learning, and corporate restructuring to augment our traditional client service staff. All told, colleagues with new capabilities in these areas account for nearly one third of our total professional staff today.”
As McKinsey’s mission is to help its clients make distinctive, lasting, and substantial improvements in their performance, and to build a great firm that attracts, develops, excites, and retains exceptional people, Mistry says the firm believes digital marketing is a critical capability for many of its clients. As such, it is focused on helping them with a broad range of challenges; from digital marketing strategy development, building operational capability to helping measure and problem solve how they can be more effective in achieving their marketing performance aspirations.
“We have recently helped an Asian telecommunication company build a new digital marketing team by hiring, driving and executing agile marketing campaigns to accelerate the effectiveness of their digital marketing spend,” he adds.
Transparency has increasingly become a major issue for brands because of how some traditional media and advertising agencies spend their ad and media dollars, as well as not doing enough to remove fraudulent inventory.
Asked if any of their clients have raised this issue and what are their consultancies’ strategy for dealing with this, PwC’s Spooner and IBM’s Johnstone-Burt declined to comment. However, McKinsey’s Mistry reveals that in the firm’s conversations with c-suite executives and chief marketing officers, common questions include what is the right operating model for digital marketing, how to deliver on the promise of personalization at scale and how they can optimise their marketing spend so that they can track the business performance that can be attributed to marketing excellence.
To this end, Mistry explains that conversations often revolve around product, people and process, adding that more often than not, the discussion starts with the latest digital marketing technology innovation and evolves into discussing the new types of talent that are required to build effective digital muscle.
“Ultimately, there is recognition that effective digital marketing today requires a deep look at the marketing process,” he says. “In fact, the reality is that marketing is no longer the preserve of marketers. Today effective digital marketing requires bringing together designers, engineers, data scientists, agencies and marketers to work together as a ‘marketing scrum’ to listen, create, test, execute, iterate to effective acquire, engage and retain customers.“
Now that the consultancies and publishers are well and truly on the agencies’ turf, should they be viewed as a threat? While Mistry and Spooner were ambiguous in their responses, Andrew Benett, global chief commercial officer at Bloomberg Media Group believes that there is space for everyone in the ecosystem.
The former chief executive of Havas Creative Group adds that Bloomberg chose the path of providing brands with strategic direction for its Media Studios, instead of just producing branded content as it realised that marketers are in need a strategic partner that can provide more actionable data, true insight, relevant creativity, and access to the audience they need to reach.
“Given what’s happening in the industry with the complete blurring of the lines across agencies and consultancies, we have a tremendous opportunity to help our clients solve their business challenges,” says Benett. “What makes our offering unique are the assets of the Bloomberg ecosystem. Our new business is aimed to leverage the best of Bloomberg – such as Bloomberg Intelligence and BNEF – to provide clients strategic and creative thinking that goes beyond simply media. Our clients will certainly overlap, but there is space for everyone.”
Raquel Bubar, director, T Brand Studio International at The Times, echoed a similar viewpoint, stressing that while they are competing with some creative agencies, The Times is also maintaining excellent relationships with agencies that see the value of associating their client's brand with the publisher.
“Our digital and print publications offer a secure and trustworthy environment to advertise in, and many agencies want to work with us to develop never-been-done-before ways of delivering their brand message, which we've become so well known for,” she adds.
Even as The Times is maintaining its relationships with agencies, it is confident that it can compete against them for clients, says Bubar, as The Times’ unique proposition over traditional ad and digital agencies is that it has T Brand Studio journalists who lead all of its storytelling campaigns. Rather than looking at each creative project through only an advertising or marketing lens, she argues The Times also offer a journalistic perspective that identifies a unique and newsworthy story that it knows will resonate well with audiences both on and off The Times.
“To this end, we have a product called Storymining in which we embed a journalist and a content strategist inside the brand to meet with people at various different levels and departments at the company, to uncover a story that they may not otherwise know they should be telling,” she says. She adds that this is a great tool for brands who may not know which stories they should be telling to the public, and The Times can help them identify stories that will work on its site, in other advertising or media campaigns they may be running, or on their owned or social media channels.
The hiring of talent with digital marketing and creative experience by these new players has also been a major talking point, with brands like Airbnb expressing doubts that consultancies can attract and retain creative talent.
PwC’s Spooner disagrees, pointing out that as the firm works on large, innovative and transformational projects from strategy and creative to execution and operation, it attracts diverse talent from creative and design types to technologists and strategists. McKinsey’s Mistry underlines the fact that fewer than 50% of its new hires join directly from graduate school, and the company is hiring more experienced managers, scientists, designers, big data experts, mathematicians, implementation experts, and start-up entrepreneurs.
IBM’s Johnstone-Burt says the tech company has attracted talent from the world's top agencies, and claims it constantly hears the same feedback that they love that they are not working on one-off campaigns, but are using progressive strategy, creative vision and transformational technology to solve real business problems. “While other consultancies are layering on creativity, it's embedded in our culture and fundamental to how we work,” he adds.
Bloomberg meanwhile, is in the process of staffing up to build out its new model and it is hiring about 30 people by year-end to map to category practice areas based on the responses it is receiving and the conversations it is having in the marketplace, according to Benett.
“The talent we are speaking to are very excited about the prospect of working at Bloomberg under this new media model. We're helping clients tackle their main business challenges through the lens of Bloomberg, a leader in delivering data, news and analytics,” he says. “Bloomberg Media Group, as a publisher, has a competitive advantage to attract and retain talent for this reason, as we are a part of a broader organization that is driving the global business conversation.”
Over at The Times, Bubar says working inside a brand like The Times gives it an advantage when it comes to attracting new creative talent because journalists, videographers, technologists and strategists are familiar with The Times’ world-class journalism and innovative storytelling techniques. “But T Brand has also built its own reputation in the creative industry in its own right, as being a leader in brand content. Between our studios in New York, London, Paris and Hong Kong, we attract some of the most highly-sought after talent in the world,” she adds.
Part two, detailing how agencies are responding to diversified competition in Asia Pacific, will follow later in the week.