The future of global agency holding companies, like Accenture, Deloitte, IBM, KPMG, McKinsey and PricewaterhouseCoopers, lies in acquiring high performing marketing consultancy firms.
Global agencies are showing interests to buying up high performing marketing consultancy firms in an effort to build up their marketing-focused operation and “gain a larger slice of the client pie.” Recent acquisition by Deloitte include San Francisco 112-person agency Heat, Polish agency Doblin, and UX designer Flow. These acquisitions helped Deloitte Digital boost its global revenue 32 percent year over year to $3.1 billion.
“As digital ad spending continues to grow—eMarketer projects a rise to nearly $305 billion in 2019 from $230 billion this year—industry watchers predict the trend of consultancies buying up agencies will only accelerate.”- David Gianatasio, Adweek, Jan 2017
The benefits of joining a global agency holding company
For consultancy firm:
- Gives its consultants a chance to work at greater scale and address issues at the heart of the global business.
- Gives the firm the ability to leverage on experience and insights from holding company in foreign industries.
- Joint efforts allow consultants to offer solutions that cater to improving customer experience – that require a set of skills historically “owned by agencies offering disciplines such as UX, design, creativity, customer centric data analytics and customer engagement.”
For the holding agency:
- “Integrating branding and content expertise with core strategic offerings such as financial and technology services, data analytics and customer segmentation makes the company a more valuable partner to current and prospective clients.”
- Broadens the range of services offered. Customers want a “holistic approach.”
- Customers don’t care about the specific offerings from consultancy or agencies, but the ability of the provider to solve its specific problem, which is what having multiple expertise under one roof provides.
- Acquisitions are necessary for maintaining its core revenue since other global agencies are doing the same.
- Moreover, the acquisition of consultancy firms gives access to “deep, actionable consumer information collected through decades by the big consultancies.” Data allows agencies to deliver campaigns that perform better. “…The Accentures and Deloittes of the world want their data to work harder and generate new revenue streams. These goals intersect for brands seeking to produce campaigns, events and points of contact (digital, in-store and otherwise) that foster one-to-one relationships with customers, sell products quickly and efficiently, and keep buyers coming back for more.”
The trend for acquisition and digital transformation of global agencies continues to follow the escalating digital marketing budgets, as consultancies firms and agencies look to increase grounds.
“Last November, Accenture acquired 250-person London creative shop Karmarama in a deal some media outlets estimated north of $60 million. And just last month, the firm made one of its biggest buys yet, adding 500-person German digital shop SinnerSchrader to bolster its capabilities in customer experience design, ecommerce and mobile marketing.”
The transformation allows agencies to include an ability to design customer transaction platforms and “infuse creativity into everything” they do. Clients also want the benefit of having a holistic solution and agencies offer that, by helping consultancy firms to “ideate, design, architect and create the tools that will change the brand experience for… guests and associate alike.”
Delivering technological solutions to clients is one of the drivers for integration because customers want to “feel special and build brand loyalty.” Joint projects offer such space for “creative thinking and design thinking to solve business problems.”
“According to experts, as established marketers face increasing pressure from nimble newcomers such as Airbnb, Jet.com and Uber, they’ll continue to seek out that “wow factor” by leveraging consulting, technology and creative. “This is where the big-money projects are going to be over the next few years,” says industry adviser Langley, who believes that further disruption will surely follow.”
Global consulting and IT firms are expected to make “deeper incursions into territory traditionally held by agencies” so as to orientate their business models to cater to complex business problems that require integrated solutions.
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“Global Consultancies Are Buying Up Agencies and Reshaping the Brand Marketing World” originally published in March 12, 2017. By David Gianatasio