The Inevitable Intersection of Agencies and Consultancies

Added on by Arturo Gutierrez.

A lot has been written about the changing competitive landscape of advertising and the need for the model to change. Way back in 2010 when I first joined JWT, which turned out to be an opportunity of incredible professional and personal growth for me, I began to see those areas where ad agencies could benefit from investing in, namely, technology consulting, marketing automation, and more specifically analytics. This recent article in Ad Age has led to a number of healthy discussions as of late and I want to briefly share some thoughts on where agencies still have an advantage and provide context on just why consultancies are very well positioned to compete. In many ways, competition here is dependent on who it is that clients will trust as technology and marketing increasingly intersect.

"Growth Practices" has become a common term on both the agency and consultancy side as I've personally experienced building and trying to compete with new offerings in market in both industries. On the agency side, it's more common than not to see an agency try and build an offering around analytics, CX and consulting capabilities. The traditional consulting firms, have done a great job on the acquisition side in bringing in capabilities they otherwise may have had a difficult time building out right from within, like branding, channel strategy, design...the softer side of marketing. And therein lies one factor that is key to the race to the middle; do we build or acquire? 

M&A in this context gets complicated quickly. If one industry leader (hypothetically, Trader Joes) merges with another (Sprouts) that shares similar capabilities and offerings, integration has a better chance of occurring. The profile of employees, processes, capabilities, and functional expertise among it's leaders, etc are disparate at best when you compare a traditional ad agency to a consultancy. Both, if they want to build from within, need to look for completely different profile of employees, make culture decisions, get buy in from existing department heads, and find a way to bring to market a new offering with existing revenue streams. But it does look like consultancies have a done a decent job integrating acquired agencies as both Deloitte (Banyan Branch, Heat ) and Accenture (Fjord, Karmarama) have brought in capabilities they took to market rather quickly with existing digital services.

These agencies don't just have capabilities consultancies can fill gaps with, they have positioned themselves to be trusted advisors to CMOs. They also supplement existing consultancy offerings that enable marketing execution (AB testing, big data, CRM). Agencies on the other hand still have the ear of the CMO, and if they build complimentary value services from within, or acquire and integrate efficiently, can lead CMOs as they take on work that intersects more and more with the office of the CIO/CTO. 

How much work consultancies are winning from agencies is a little unknown, but it's happening. And one reason is that traditional agency work, owned by the CMO, has been slowly converging with that which is managed by the CTO as technology has become instrumental in channel planning and execution. This is where, IMO, the race is. As the CTO and CMO work closer together, which will be the trusted advisor, the agency or the consultancy?