Advertising agencies have nothing to fear from consultancies and should be trying to work with them, not against them, according to senior executives at Accenture, KPMG and PwC.
The comments come as Australia’s management consultancies have stepped up their marketing services divisions, hiring new talent from brand and agency backgrounds and acquiring marketing businesses.
In the last twelve months, the likes of Accenture, Deloitte, KPMG and PwC, have all ramped up their CMO and Marketing services in Australia, as they seek to help clients to transform their organisations into customer-centric digital businesses.
From Accenture Interactive’s high-profile acquisition of The Monkeys, regarded as Australia’s best creative agency and the company’s subsequent appointment of executive creative director Ant Keogh to lead creative in the agency’s Melbourne office, to KPMG’s cavalcade of big-name hires including former Publicis Australia chief executive officer Andrew Baxter and ex-Droga5 chief Sudeep Gohil, plus its recent acquisition of customer experience agency UDKU, and then there’s PwC which has also snared a number of high-profile hires including ex-Y&R chief Russel Howcroft and former AANA CEO Sunita Gloster, to run its CMO Advisory business and invested in ad agency Thinkerbell.
The flurry of activity has ruffled feathers within the advertising industry with the consultancies facing scrutiny and criticism by agencies and holding companies. While Martin Sorrell famously dismissed the threat claiming "consultancies have had no impact on our business", overall the response has been mixed. Australia is widely regarded as one of the most oversupplied markets for advertising agencies, so is there room and work for everyone with the arrival of the consultancies?
The Drum spoke with the senior executives leading the marketing services divisions at three of the key consultancies about their offerings and the threat they pose to agencies.
“We were in Cannes this year, “says Justin Papps, partner and head of CMO Advisory at PwC. “A speaker from one of the agency groups said the consulting companies can’t be creatives so creative people will continue to go to agencies, as they don’t want to work for accountants. That’s a problem for agencies if they think that way because saying that consultancies are a bunch of accountants is like saying WPP only make wire baskets - that might be where they started but they are much broader than that. I think that thinking will hold agencies back.”
Papps continues, “We have found there are generally two types of agency responses; one is gnashing their teeth and getting quite concerned, but, there is another group of agencies that have come to us and said ‘great, you're really good at what you do, we're really good at what we do, how can we work together?’ They are the sort of agencies that I think will come out better for this. They are the ones that understand that there are things that we do better. I don't know many agencies that have a chief economist who can be part of a conversation, so I think while they might be concerned I actually believe there is room for everybody and it's about just concentrating on what you do best.”
Much of the concern from agencies comes from the fact that consultancies are having high-level conversations with the C-suite, but Papps maintains consultancies are not trying to get agencies out of the picture.
“I have an enormous amount of time for the creative industry and I believe that we need a really strong creative industry in Australia because we've got to keep creating those breaks and ideas. That’s where agencies have their strength creating those unexpected but exciting ideas that drives a response for clients. If [agencies] double down on what they are really good at that would do them well, rather than looking over the fence and worrying about what's going on there. Yes, we are having conversations with other members of the c-suite but they are different sorts of conversations.”
KPMG’s Paul Howes, the partner in charge of its Customer, Brand and Marketing Advisory Business, believes agencies need to stop worrying about the emergence of marketing services within the consultancies and focus on doing their jobs.
“For an industry that talks about disruption a lot, it really seems to struggle with being disrupted itself,” says Howes.
“What interests me is just how much time this industry spends speaking about itself rather than speaking about their clients. I think it is remarkable the amount of trade publications that exist, the number of conferences that exist and the amount of debate that occurs on these questions and how much different agencies and consultancies spend speaking about themselves rather than the work that they do for their clients.”
“I know some people have the view that any form of competition is bad,” continues Howes. “I think there are lots of different organisations doing lots of interesting things and we believe we are different and unique, to be honest. We are also not that fussed about watching what our competitors are doing. It’s not how we measure our success.
“We measure our success on whether we are being commercially successful, and whether we are getting positive feedback from our clients and ensuring we are the clear choice for our clients in all of the fields that we work in. That's our philosophy,” says Howes.
With all the consultancies The Drum spoke to reporting strong growth within the marketing divisions, will we see more agencies expanding their services to offer consulting to businesses?
WPP AUNZ has recently launched its own strategy consulting division to help advise clients, and Accenture Interactive’s managing director Micheal Buckley believes there will be more to come.
“Brand and experience has become everything within organisations and we are seeing that with almost every client. That means it's not just about a campaign anymore, it's about delivering at an enterprise level and truly transforming the business at every possible level. That we can bring scale to the problem and deliver end-to-end on those solutions end to end is a massive differentiator and you will probably see agencies adopt our model now.”
“But, I don't know if agencies can,” he continues. “I do know that delivering what we are delivering at scale at the enterprise level is complex and you do need to have the background and history that we have from our history to do it. You are affecting call centres, the frontline staff, you are affecting retail, commerce, you are affecting everything,” says Buckley.
The focus of these divisions remains clear, consultancies are working with businesses to help them to transform their services, structures and communications, however, each of the organisation’s have adopted different approaches to solving the same problems.
KPMG launched its Customer, Brand and Marketing Advisory Business (CBMA) after acquiring Acuity Research and Insights in June 2017. The consultancy then set about hiring key talent including former Google industry leader for mobile and new business development Lisa Bora, ex-Virgin Australia chief customer officer Mark Hassell, former Telstra GM of Business to Business IT Melanie Evans and former JWT London management partner Carmen Bekker, among a string of others.
“We were looking at trends in the market and picking up strong messaging from clients that they were wanting assistance with transformation, not just on the customer element but also brand and marketing component of their business,” says Howes.
“We formed a view you can't successfully help businesses transform without helping them to transform their customer experience, and you can’t transform their customer experience without transforming their brand, and you can't transform your brand without transforming your marketing, and I suppose that is why we are following through in the supply chain.”
“Our customer advisory has been a part of our work for four years but the nature of our work in brand and marketing and social is radically different for KPMG and that's why we've brought in a range of different types of talent in our practice and we've grown this practice.”
The CBMA started the year with just 20 staff and has since grown to more than 100 people, and recently acquired customer experience consultancy UDKU (U Don’t Know Us). The division includes a customer advisory business, brand advisory business, marketing advisory and a media value advisory business, led by former Zenith managing director Karen Halligan, as well as its core research and insight business, however, it does not include creative implementation.
“We are not doing creative implementation and that's one of our points of difference. We are working with a range of different independent contractors and some agencies of that implementation work and we are certainly providing elements of implementation around customer but not in terms of creative implementation. We think that's important because we think that independence and objectivity is a crucial part of our point of difference.
“One element we have had success with is our media value advisory business. We think we are one of the few firms in Australia that can provide genuinely independent objective analysis and opinion on media value without any form of conflict and a range of our competitors can't make those claims.
“The core of our practice is still customer advisory and brand advisory work. Our research and insight work through KPMG Acquity, has been the single fastest-growing part of our business this financial year and continue to be a strategic priority for us in 2019,” says Howes.
PwC’s approach has been similar to KPMG with the powerhouse consultancy hiring a number of high-profile names including ex-Network Ten executive general manager and former Y&R CEO Russel Howcroft who joined as chief creative officer in 2016 and former AANA CEO and M&C Saatchi Europe COO Sunita Gloster, as well as Papps, who is ex Ogilvy and TBWA.
Papps says, “We have three key parts to our offering that is around strategy, structure and spend.
“The strategy piece is everything from brand and marketing strategy, right through to data analytic strategy to segmentation strategy, so anything to do with their strategic end of what they do. We then look at the structure, are they structured to deliver on that strategy and obviously PwC has a strong organisational function who we work with and start to design those marketing structures and operating system and teams for the future.
“A lot of the c-suite actually don't understand what marketing is doing so sometimes it’s not just about helping marketers but also helping the CEO or CFO to help them understand where the value comes from
“The last part of the offer is around spend, how can clients get the most for their investment and how can they ensure a return on investment with their marketing spend. Marketing is often one of the top three or four line numbers for expenditure but probably has escaped a lot of the rigour of other things, we help business understand what marketing drives and what additional investment might drive as much it would be where there is some efficiency and optimisation so we don't look at a cost outlay but also as a return on investment.”
Much like KPMG, PwC is not offering creative execution although it has invested a small stake in creative agency Thinkerbell, which it can offer up to clients if they wish.
“We don't do the execution side, but we will work with clients to help write a really good creative brief to go to a creative agency and allow them to do what they do best. Where we do have some clients that don't have an existing relationship we can talk to them about Thinkerbell, but it’s got to be right for them. We make it clear we have a relationship with Thinkerbell and they can decide if it’s necessary or not, but sometimes seeing that last piece through is good particularly with clients that don't have sophisticated marketing teams or are used to working with creative agencies,” says Papps.
Unlike the other consultancies, Accenture Interactive has built a network of agencies globally as a core element of its marketing offering along with its legacy in technology and insights. Its acquisition of The Monkeys, Australia’s most highly regarded creative agency, was a major coup for the business and along with its others highly regarded agencies, such as design and innovation agency Fjord, it is this model that has caused the most concern among agencies.
Buckley says, "When we make acquisitions, like The Monkeys, we share clients together and they also have their own clients, as does Accenture. Obviously, the synergies between the existing clients we both share are great and more often than not we know the same clients within the organisation. We also think about ways that Accenture can deliver experiences to The Monkeys clients that they may not already have and vice versa for Accenture clients."
"We see two choices, to grow organically or inorganically and obviously with The Monkeys currently the best creative agency in the market, it was a lot easier for us to grow that skillset inorganically."
Buckley continues, “While The Monkeys and Accenture Interactive have a focus on the CMO we deliver the focus end-to-end. Accenture's background is consulting and delivering technology, would traditionally have had a client in the business who was a CIO, and the beauty of what we see in our vision of brand promise is that the technology that is driven within the CIO's organisation is the brand promise delivered within the CMO so we are talking to both clients within the same organisation and so we are intrinsically linked across the Accenture business.
“The customer now has hundreds of interactions with a brand and you need to be able to deliver on every single part of that customer journey to be able to fulfil the promise. We have design, technology, marketing, and throughout that journey we can actually help clients use every one of those hundred interactions.
“That is also what The Monkeys love about being part of Accenture, they see the outcome of their promise comes to life. It’s not just a TVC, you are part of the overall experience and seeing the fruition of their ideas and the end product coming to life is pretty exciting,” says Buckley.
Perhaps the most worrying element for agencies is the speed with which these new divisions have grown, with the consultancies reporting new clients, new projects and new hires - as well as flagging more acquisitions on the horizon - to manage the demand. However, they all maintain the need for companies to constantly evolve and transform ensures there is plenty of work – and room – for everyone who wants it.
“I believe there is room for everybody and everybody will find their niche because all clients are looking for growth,” says Papps. “I think there will continue to be room for everyone as long as we are all doing two things - which is one; looking for growth, and two; acting in the best interests for clients.”
Howes adds, “We will always want to grow and evolve and the only way you remain relevant to clients is by continuing to transform yourself as well. The reality is when I joined KPMG four years ago it was not on plan to create a business like a Customer, Brand and Marketing Advisory, so I can't predict what we will be doing in four years time.”