If any themes emerged out of our better stories of the past week is was this: “Anything you can do, I can do better.” Agencies are being nipped at by aggressive, resource-rich consulting firms on one side. And on the other, publishers desperate for more revenue streams have gone the content creation route. Increasingly, though, they’re finding that their precious content studios, while often successful, are more of a margin game.
Enjoy your weekend, though we’re pretty sure there’s someone out there who thinks they can do that better, too.
Consulting firms are gunning for agency dominance
We had a pair of consultancies-as-agency stories this week. The first was this cautionary tale from an anonymous digital agency executive. Speaking under the cloak of anonymity, the exec tells us agencies no longer have the liberty of turning a blind eye to consulting firms.
It’s only a matter of time before they not only complete their acquisitions and fill out the gaps they have, but also begin to figure out how to integrate those companies into the DNA of their brands. We may have been doing what they’re trying to do for years, but that doesn’t mean that we don’t try to aggressively stay ahead of the pack. They’re coming right on our heels, and they have C-level relationships and money and resources to procure what they don’t have … If we look at the list of companies that play in the space, it’ll look very different in two years.
Our managing editor, Shareen Pathak, takes a close look this week at Accenture Interactive, the agency inside consulting giant Accenture. It is on a growth tear, snapping up agencies and opening offices. AI has grown double digits in the last year — it has over 13,000 employees globally and has increased both capabilities and where it has offices. The agency claims upwards of $3 billion in global revenue and to be the fastest-growing sector inside Accenture. The majority of its clients are also clients of parent Accenture.
“We’re not like consulting firms. We’re agency-esque, with baristas and coffee and studios,” said Accenture Interactive CEO Brian Whipple. “We have an agency culture that has the luxury of Accenture’s footprint to get a warm introduction [to CMOs].
Publishers, meanwhile, face content studio growing pains
The consulting firms are apparently having better luck — and seem to be better built for advertising — than publishers. Many media companies have looked to so-called native advertising as the silver bullet for publishers as display ads lost effectiveness, so they fired up content studios to create campaigns that mimic editorial. For some publishers, native is now the biggest source of their ad revenue, reports Lucia Moses.
But the growth obscures just how hard the content studio business is, due to high content creation, overhead and distribution costs as well as rising competition. If running a display ad on your own site is nearly all profit, the margin on a branded content campaign could easily be half that, said Paul Rossi, president of The Economist Group.
“If you look at the real challenge of native advertising, it’s really more about the margin than the revenue,” Rossi said.
The way many publisher studios are set up is part of the problem.
And they grapple with e-commerce, too
At least media companies appear to be having better luck with their branded content than with e-commerce. Moses constructed this fascinating post-mortem of the Thrillist-Jack Threads marriage of content and commerce. E-commerce business is a low-margin grind, and content and commerce were hard to mix organizationally.
One reason it’s hard to mix commerce and editorial is that the cultures don’t mesh, reports Max Willens. Some publishers have found that the solution is to keep commerce and editorial independent of each other. Giving them license to stand on their own results in collaborations with editorial that are more thoughtful, and more mutually beneficial. “Instead of just trying to forward an e-commerce agenda,” said Katherine Martinez, the director of e-commerce at Nylon, which went from selling T-shirts in 2013 to much pricier items like these $310 sunglasses, “it’s, ‘what else can we do to add value [to editorial]?’”
Mint: Further proof being a first mover doesn’t failure-proof you
Mint was an instant hit when it launched 10 years ago. It came out of nowhere, making something boring but important like budgeting kind of fun. It was easy to use, and best of all, it was free.
It was so full of promise it exceeded its new user acquisition goal of 100,000 in the first six months — by 10 times that. Two years in, it hit 1.5 million and was sold to the data aggregator Intuit for $170 million. It hasn’t had much in the way of competition — until now.
Mint today is a mobile app working to stay relevant in a sea of similar personal financial management (PFM) apps, such as Moven, Clarity and Penny. “For a while, Mint was the best on the market because it was the only one on the market,” said Stephen Greer, an analyst in consulting firm Celent’s banking practice. First movers need to keep moving too, it turns out.