Western and European markets are a battleground for consultancies and agencies that are stepping over themselves for a marketer's attention, with the lines between their offerings blurring somewhat. Are Indian agencies prepared for the onslaught?
In 2013, Maruti Suzuki brought to the fore one of the core questions any consumer has before deciding on a purchase — kitna deti hai? (how much mileage does it give?).
Western and European markets are a battleground for consultancies and agencies that are stepping over themselves for a marketer’s attention, with the lines between their offerings blurring somewhat. Are Indian agencies prepared for the onslaught?
In 2013, Maruti Suzuki brought to the fore one of the core questions any consumer has before deciding on a purchase — kitna deti hai? (how much mileage does it give?). Clearly, a buyer always wants to know what the maximum worth of her investment is and how this can be measured.
However, ‘measurement is a tricky subject’ is what would probably be emblazoned across the gates of communication. Ascribing an upward business trend to an agency’s efforts was a simplistic way of doing things, until companies came along that said they could do it better. Cut to the Accentures, Deloittes, PWCs and IBMs of the world. These consultancy firms (for some years now) have been bringing together data and technological expertise, and redefining the RoI conversation by making deliverables more tangible than before. This is blurring the lines between what traditional ad agency networks offer to clients, and what these consultancies bring to the table.
Left brain versus right brain
Accenture Interactive (part of Accenture Digital) made noise in 2016 when it clinched the top spot in an agency report for the first time. Furthermore, IBM Interactive Experience’s (IBM ix) website sums up the value addition it brings as ‘Nothing we do is hypothetical. Everything we do makes a measurable impact’. This is the promise most consultancies are making in the face of the agency space that is re-thinking how it wishes to conduct the business of the future to survive. However, it is not a case of consultancies putting agencies out of business, Ashish Bhasin, chairman and CEO — South Asia, Denstu Aegis Network quickly assures. “Consultancies have a broader overview and good brand equity in talking about projects and business transformation cases,” he says, “But they lack implementation ability.”
However, agencies have been consistently dealing with shrinking margins and clients demanding more for less. Players from the same pool of clients are now finding themselves working with consultancies at prices agencies would have to fight for. McDonald’s Corporation recently entered into a multi-year agreement with Capgemini and Publicis.Sapient to bring about digital transformation of its restaurants, among other services. The speciality of agencies itself has potential to work against them which has given consultancies an opening to play as they come with capabilities atypical to an agency structure.
Accenture Interactive (AI) offers CMOs a combination of strategy, technology and analytics apart from the core idea. Currently in talks to acquire digital commerce firm Altima, it has previously acquired various creative advertising agencies — The Monkeys (Australia) and Karmarama (the UK), digital agency SinnerSchrader (Germany) and MATTER, a design and innovation firm, among others. Altima would be AI’s 17th acquisition in the past five years. Brands, according to AI, need an agency to manage the whole customer experience and every touchpoint along the way — from the inception of an idea to developing and designing a product, building awareness, and then selling and distributing it.
Sudhir Singh Dungarpur, partner and leader, digital services, PwC India notes that what has changed is that companies are now open to taking a more human-centric approach to problem solving.
“We are well positioned to deal with this shift because of our firm’s deep industry expertise, technological capabilities and creative bent,” Dungarpur says. “The fact that we are also experts in audit and tax is an added advantage.” PwC’s Digital Services enters into annual or multi-year contracts and a sizeable part of the fee is therefore linked to the successful outcomes of the solutions offered.
On the agency side, McCann Melbourne just lost its MD Adrian Mills, strategy director David Phillips and ECD Matt Lawson to Deloitte Digital. Earlier in October, Accenture appointed Nikki Mendonca (former president, OMD EMEA) as president of its Intelligent Marketing Operations (under Accenture Operations). Clearly, agencies cannot be caught napping. The quickest way to fight back is to bring in consulting capabilities in-house. Zenith added consulting to its offerings earlier this year. In 2016, O&M added a consulting layer with the launch of OgilvyRed. WPP’s Possible acquired Marketplace Ignition LLC earlier this year, to focus on tech, data and content.
The best business solutions go up against each other on the awards platforms too. Cannes Lions, being the biggest of them all, has been seeing an underlined presence of consultancies and tech companies; the hunger for being seen as solutions providers on creative, marketing and effectiveness is pretty strong.
The future: hybrid?
Going by the kind of ad dollars being spent on digital, it is a no brainer that both consultancies and agencies are putting themselves out there to get the marketer’s attention. eMarketer’s Worldwide Ad Spending 2017 report finds that worldwide digital ad spends will reach $223.74 billion in 2017 which represents 38.3% of total paid media outlays. Mobile advertising, in particular, will drive digital ad spends over the forecast period, says the report. In 2017, mobile will account for 63.3% of digital and 24.3% of total media ad spends. By 2021, it will grow to a 77.1% share of digital and 37.1% of total media ad investments, it adds.
Roland Folger, MD and CEO, Mercedes-Benz India maintains that both — consultancies and agency partners — are equally important. In terms of execution, he says, agency partners with their broad market experience and on-ground competencies are better placed to fulfil the brand’s demands and requirements. However, for areas related to analytics, KPI monitoring, data management and deployment, consultancies play an equally important role in the fast paced digital world. The trust factor built over the years for core competencies of consultancies and agencies will be hard to shake off. For the C-suite, does the creative capability of a consultancy seem different from an ad agency? In the same vein, will a marketer see the same value in the consultancy service being provided by an agency?
Experts believe there will be some sort of a convergence that will happen in the next 5-10 years. The Indian market has the benefit of learning from other markets and bolstering its efforts. Bhasin says that two things will happen. One, agencies will start building consulting capabilities as part of their offerings. Second, there will be some agencies that will have a consultancy-only offering; with the second model promising a better potential.
– IBB Consulting, strategy consulting firm
– Clearhead, digital optimisation company
– The Monkeys, creative agency
– Maud, design firm
– Karmarama, creative agency
– Acne, creative agency
– Heat, creative agency
– Mobiento, digital agency
– Market Gravity, design
– Web Decisions LLC, data management and marketing services
– Pond, design agency
– BGT, digital marketing agency
– Thinkerbell, creative agency (minority stake)
– Resource/Ammirati, digital agency
– Aperto, digital agency
– ecx.io, digital agency
– Vivant Digital, digital agency
– Zone, digital agency
– Cadient Group, digital marketing firm
– Mirabeau BV, digital marketing and customer experience agency