Consultancies may want to replace agencies at the head of the advertiser’s table, but industrywide fears of that happening anytime soon are overhyped.
The bosses of the big four holding groups all downplayed the threat of consulting firms as they tried to explain a tough quarter of revised sales forecasts, restructuring and client losses. WPP CEO Martin Sorrell went so far as to blame the trade press for spreading “wildly inaccurate estimates” of the revenue made by the likes of Accenture and Deloitte in advertising. As real as the threat of consultancies is to agencies, there are some factors hampering consulting firms’ much-vaunted rise.
Knowing their audience
Consultants and technology have exposed the dark arts of advertising-agency production, but now consultancies have to defend their own massive fees. Payments won’t come from the core branding or marketing pots, so that leaves the ones for media and digital. Yet accessing those budgets is easier said than done for consulting firms, which would usually work with CEOs and CFOs on much larger briefs rather than conduct a media audit.
When it comes to media, advertisers increasingly want planning expertise and are prepared to pay a premium for it. PHD does Unilever’s global planning, while Mindshare is tasked with execution and buying. Consulting firms have yet to fully tap into this opportunity. As Mark Butterfield, a marketing consultant and former consulting firm executive, puts it: “Unless the consulting firms are telling you [a marketer] something spectacular that you can actually get an ROI from, then that’s money not well-spent and is difficult to justify.”
The ad tech conundrum
It’s no secret that the management consultancies have chased more programmatic business this year. But it will take more than smart hires to bring in the briefs needed to make ad tech a worthwhile investment in the long term. Accenture, for example, talks about the importance of the service layer, envisioning itself as a partner guiding clients through the murky supply chain. However, details on how it would provide that clarity, whether it’s using third-party tools, developing a remuneration model based on transparency or buying ad tech companies, are scant.
The executives steering the consulting firms into programmatic are still undecided on how they build bespoke solutions for advertisers beyond the commoditized media trading model. There’s an opportunity, particularly amid the current of advertisers trying to understand ad tech, to be the partner that reveals how the black box of programmatic works and explains what to do with it. “It’s fair to say that one of the things that media agencies haven’t tended to do very well is explain their ad tech choices back to clients in a manner that makes sense,” said Paul Wright, CEO of Iotec Global and the former Omnicom UK chief digital officer.
A perceived talent deficit
Agency bosses have repeatedly stressed the talent advantage they have over consultancies. Consultancy firms have responded with their own recruitment drive this year, with Nikki Mendonça joining Accenture from OMD, while McCann Melbourne creatives Adrian Mills, David Phillips and Matt Lawson joined Deloitte Digital’s brand creative and media team. Despite the injection of expertise, there’s still a sense that the likes of Accenture Interactive and Deloitte Digital aren’t cut out for big digital briefs. Sorrell has highlighted the apparent talent gap to investors, claiming that when WPP has competed directly with consulting firms for digital briefs, the “win-loss records [for WPP] are consistently strong.”
Deloitte Digital’s CMO Alicia Hatch recently told Digiday that it faced a perception challenge, particularly in getting in front of new clients. It seems that, for the time being at least, many clients would rather have consultancies perform audits. It is estimated that between 15 and 25 percent of advertisers turn to a consulting firm periodically or annually to provide them with an unbiased view of their media-buying strategies, according to a recent study of 30 global media and marketing procurement directors who spend a minimum of $150 million a year by research firm Comvergence.
The consulting firms may have larger head counts than the holding groups, yet their ability to serve global clients has been called into question. Consulting firms have “practically nothing” in the Middle East, South America and Asia, claimed one industry insider who previously worked at a consultancy. Instead, the source said the tendency is to try to run regional accounts from one central hub. “It ends up with you wanting to talk to someone about the Chinese market and being put in touch with someone in Singapore,” said the source. “That’s trying to do it [move into advertising and media] on the cheap.”