The new advertising era.- Agencies willing to become consulting cos and vice-versa. Some thoughts beyond the Droga5 acquisition by Accenture

The acquisition of Droga5, previously announced last April 3rd has been completed today by Accenture.

The Droga5 leadership team consisting of creative chairman David Droga, global CEO Sarah Thompson and UK CEO Bill Scott remain in their current roles and will guide the integration, along with the rest of the agency management team. Financial terms of the transaction were not disclosed.

Accenture underscores that this movement adds more than 500 employees to Accenture Interactive, bringing unparalleled brand expertise, creativity and strategic rigor to help clients reinvent their brand experiences and meaningfully connect people with brands.

“Today’s news represents an exciting new chapter in Accenture Interactive’s journey to build a new agency model,” said Brian Whipple, global CEO, Accenture Interactive. “Together, we have the power to engineer transformative brand experiences, and infuse those experiences with the emotional and inspirational power of brand thinking and creativity. We’re excited about the possibilities of what we can achieve together.”

Philip Thomas (CEO de Ascential Events y Chairman Cannes Lions presenta el León de San Marcos 2018 a david Droga -Fundador de Droga5-).© Eastwind.

Founded in 2006, Droga5 is a highly regarded advertising agency with offices in New York and London. The agency is known for its influential and industry-challenging campaigns for clients including Amazon, The New York Times, IHOP and HBO’s Game of Thrones. Last month, Droga5 was named Agency Innovator of the Year in the 2019 Ad Age A-List, lauded for turning out “smart, attention-getting ideas as strategically sound as they were ambitious,” while Campaign handed Droga5 London its top prize for Independent Agency of the Year.

Milestone for Accenture, but just glamurous acquisition among other sound purchases for an already disrupted market

As Accenture Interactive celebrates its 10-year anniversary, the acquisition of Droga5 represents a significant milestone in an already momentous year. Earlier this week, Accenture Interactive was recognized by Ad Age in its Agency Report 2019 as the largest and one of the fastest-growing digital agencies in the world, citing the Droga5 acquisition as a disruptive moment for the industry.

But in Eastwind’s view, this sound purchase is just one among many other operations, which are all of them framed into the run to expand business revenues both by the companies initially born in the consultancy side and and those operating the agency side of the business.

The digital revolution and the content revolution have both much to do with the purchases and alliances established in latest years. That’s why Eastwind can’t consider the movement agreed by Droga5 and Accenture as “the” disruptive purcase, but as the confirmation of an evolution in the market that started off some years ago and our magazine has been closely following.

In fact the purchase closed by Accenture Interactive today is the latest in a series of operations that the company has been carrying out since 2013, such as the acquisitions of the design firm Fjord and the e-commerce specialist Acquity Group, or the most recent operations, including the purchase of the creative agency Karmarama and that of The Monkeys.

Left to right: Pablo Alzugaray CEO and co-founder of Shackleton), Juan Pedro Moreno (President, Accenture Spain, Portugal and Israel) and Juan Nonzioli (Director Creativo General y co-fundador de Shackleton). © Accenture Interactive/Shackleton.

Just few days later than the acquisition of Dorga5 was announced in early April, Accenture Interactive purchased another top creative agency called Shackleton, this one operating in Spain and Latin America.

The growth of Accenture Interactive as a provider of advertising services has been quick and not only through acquisitions. The company already offers content creation services in the field of augmented reality as well as programmatic purchase services.

Accenture has achieved a swelling increase in its turnover, today at about $ 8. Bn, through being first at servicing the changing needs of Marketing Directors. The company has started from its direct contact with the top management of the companies and from its know-how applying them to the development of services of all kinds, including marketing and advertising. It remains to be seen if the advertising agencies are able to do the contrary, or what is the same, it remains to be seen if they are able to compete with the consultancy cos. in their craddle market.

As of today large agency groups are doing the same as the big consultancies. There are few advertising groups that do not own one or several consulting companies as well as digital specialists. Many of them offer programmatic purchase services and both virtual reality and augmented reality content creation services.

That’s why Eastwind considers it is worth spending some few minutes, not just commenting the purchase of Droga5 by Accenture but thinking a bit on what this and other strategical movements in the same direction mean for the advertising and marketing sector.

Consulting cos. “eating” creative share, agencies grabbing consultancy skills, and some creatives doing the consultancy “turncoat”

In some cases acquisitions and other sound agreementsare aimed to provide agencies with the digital or consultancy know how they lack. In others they are consultancy firms who evolve to the pan-services model including advertising and marketing.

Eastwind followed the transformation of Arthur Andersen into Accenture and the birth of Accenture Digital. A company that has not stopped buying others, among them creative agencies, like Droga5.
The consultancy firm usually preserves the independence of the creative agency keeping their leading teams at the time they are purchased. This is the case in Droga5 purchase.

David Droga will continue in his role as Creative President of the agency, Sarah Thompson will remain as global CEO and Bill Scott will continue as CEO in the UK, working together with the rest of the management team of this creative agency, considered as “indie” that employs around 600 people.

Deloitte Digital has taken a different path, hiring world reputed creatives who then get integrated into Accenture’s own structure.

Carlos Holemans (ECD, Accenture Digital Spain) at the cdec 2019. © Eastwind.

Few months ago, Carlos Holemans (former founder and CCO of El Laboratorio and now CCO of Deloitte Digital) left El Laboratorio to become the CCD of Deloitte Digital in Spain. Holemans said in a round table during the day C at the cdec 2019 recently celebrated in San Sebastian: “It seems that my colleagues in Deloitte are determined to dissect the creative process in order to define a creative a method, it seems that they wnat to systematize the creative process”.

In the agencies side of the market, WPP Group itself seems immersed in a mergers, sales and acquisitions whirlwind, committed as he is the new CEO, Mark Read, to integrate tech in the creative DNA of all the brands owned by the Group.
Large consulting firms and the advertising mega groups have decided to become multifaceted companies able to meet all the needs and demands of the clienst they have already “hooked”.

Those consultancy firms seem decided to make their clients profitable meeting themselves every need the clients might have instead of looking outside the consulting firm for an specialist able to provide the service.
Among the groups of agencies that operate successfully in the consultancy field for services not only related to marketing and advertising, one good example is the Japanese Dentsu, a pioneer in this kind of strategical movements.

In February 19th 2016 Dentsu changed its corporate purpose introducing the following change in its articles of incorporation: “Research, studies and consulting business regarding medical care.”

Dentsu Aegis Consult is focused on growth consulting and digital transformation for business since 2017 and in 2018 the group acquired the claud consulting called Amicus.
After years diversifying their business activities, last 10th April Dentsu announced the launch of Sellwin consulting in New York under the lead of Travis Johnson.

Tadashi Ishii (exiting President and CEO Dentsu) -right- and Toshihiro Yamamoto current President and CEO Dentsu Inc.). © Dentsu Inc.

There are also creative professionals who move from the agency side to the independent consulting arena. The latest in Spain has been the world reputed creative Toni Segarra, former co-founder of * S, C, P, F … Segarra collected last month the recognition to his whole career as an ad creative (the Honor cdec prize). Now providing strategic consultancy services at Alegre Roca, the new company that he has established along with his partner Luis Cuesta. We had the opportunity to congratulate and talk with him at the end of the awards gala. Segarra told Eastwind a bit on his new business.

Toni Segarra (co-founder of Alegre Roca) shows the el CdeC of Honor 2019 last 30 th de March at the end of the Award Gala. © Eastwind

Despite all these movements: consultancy firms diving into the creative advertising side and vice versa, there are still some companies who remain faithful to what they consider their main strength, their communication expertise. This is the case, at least in Spain, of Havas Group.

Not long ago Alfonso Rodés (CEO of Havas Media Group) explained: “Starting off a consultancy business when the revenues margin in this sector is narrowing, does not make much sense”.

Alfonso Rodés (CEO Havas Media Group Spain) -on the right- and Ester García Cosín (General Director, Havas Media Group) during a press conference at the Havas Village in Madrid. © Eastwind.

Ester García Cosín (Managing Director of Havas Media Group) added: “As far as we are experts in communication, we can in some way offer consultancy services, but just in this field, to our clients. In this we work within this space but not in that of the general consulting field as McKinsey does, for example. ”

Rodés added: “Cases like that of Toni Segarra are exceptional. There are at most four or five people within the advertising sector that, like him, are able to doing it”.

Size matters but not so much

In short, the examples analyzed above illustrate the main strategical approaches to the clients’ demand for consulting and ad/marketing services related to digital and new techs. These new needs have driven to the entry of new players in the market and the transformation of those who already were operating in it.

On one hand, the big players, tend to cover all business lines needed to meet the clients’ needs. On the other hand, they find those companies who specialize in understanding the changes and both establish alliances or hire an specialist to do the work, even outside the group, big company or SME. Finally, there remains the cluster of specialists, mostly small or medium-sized, who are either hired by the big ones, or even bought by them. All the movements described tell that the key to get a slice of the cake keeps on being talent, rather than size.

Image over the headline.- Brian Whipple (left), global CEO of Accenture Interactive and David Droga (right), founder and Creative President of Droga5. © Accenture Interactive.

Related Eastwind Marketing links:

David Droga, Lion of St. Mark at Cannes Lions 2017

Droga5 -William Morris Endeavor, an strategic partnership reshaping the ad business through creative, tech and glamour

Accenture Interactive acquires award winning communications group Shackleton in Spain

Dentsu, to change corporate purposes

Dentsu Y&R and Dentsu Wunderman get merged

Dentsu launches new agency Dentsu Digital in Japan

Dentsu Aegis Network grows programatic media planning in Brazil through Navegg purchase

Dentsu Aegis Network acquires Fountainhead Entertainment, India’s leading event & activation agency

Dentsu Ventures invests in Survios, a VR entertainment content developer from the USA

Dentsu launches new concept of creative-tech-media agency in Singapore

Dentsu Aegis purchases Alesport Group in Spain

DAN aligns all its lifestile, entertainment and sports marketing offers under MKTG brand

Dentsu Aegis network grows Mobile and Digital in Brazil through Pontomobi acquisition

Dentsu Aegis Network acquires e-commerce solutions shop Bluecom in Asia

Dentsu Aegis purchases e-commerce digital agency VeryStar in China

Cannes Lions 2017.- Havas and Vivendi bless their merger, still pending, with music

IBM iX completes its first digital agency full purchase

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