So, where are we going with all this?
16 March 2017
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So, where are we going with all this?

The capability gap between consulting firms and marketing agencies is narrowing. Whilst the number of consultancies acquiring advertising, digital and marketing agencies is increasing, are we really seeing a trend – and when is a perceived trend really a trend, and not just a fad? For those not in the know, a fad is defined as ‘’an intense and widely shared enthusiasm for something, especially one that is short-lived; a craze’’

Safe to say that consultancies usually don’t enter a specific part of the business world to entertain or create a craze – and certainly not one that is going to be short lived. There is too much at stake, too much to risk. No, the consultancies are seeing and seeking a real opportunity – ‘’with widely shared enthusiasm’’ – to further support their existing clients’ businesses and in addition creating new leverage to gain additional business from potential new clients.

The Ciesco 2016 Global M&A Review highlighted major acquisition activity from Accenture, IBM, Deloitte and Capgemini – having joined the likes of McKinsey, EY and KPMG who acquired in 2015 – all purchasing tech enabled media and marketing companies, digital and advertising agencies.

However, it was the transaction where Accenture Interactive acquired Karmarama, the UK’s third largest independent creative agency, that really got the attention of the media and as they put it “sent shivers down the spines of old-school denizens of adland”. Whilst Accenture’s previous acquisitions and developments in the sector enabled it to provide ‘behind-the-scenes’ digital experience offerings, this major deal is expected to bolster its strategic and creative capabilities to provide its clients with customer-facing content via multi-channel opportunities. Kind of like starting at the top and working your way through by joining up the dots in a potential complete service offering. Something that Accenture and other consultancies, if they follow that path can do – but the agencies really can’t.

Not surprisingly, the recent Campaign Breakfast Briefing in London hosted by Gideon Spanier, Head of Media at Campaign sold out fast. A packed house at the eloquent Regent Street Cinema came to listen and learn from sessions titled ‘’When the consultants met the creatives” – the feature being the fireside chat between Ben Bilboul, CEO of Karmarama, and Joy Bhattacharya, Managing Director and UK and Ireland Lead, Accenture Interactive – with Gideon ably providing questions and prompts.

Whilst the interaction between Ben and Joy was relaxed yet dynamic, and although the beans were not exactly spilled about the details of the deal itself – what came across was a cooperation and a desire to take clients to a new and different level – and here we are talking about existing Accenture clients clearly believing and trusting that the Karmarama skills and experiences in strategy and creative development and execution – and importantly understanding the customer journey and the key touchpoints – will help them accelerate and further exploit market opportunities. Exploiting these new potential synergies and opportunities certainly threatens existing relationships for those agencies who have clients already aligned to Accenture in some form or fashion.

Apart from the Karmarama deal in 2016, Accenture also acquired a majority stake in a 600-employee-strong full service digital agency in Japan – IMJ Corporation. They also acquired Netherlands-based CRMWaypoint and Italy-based New Energy Group, both Salesforce solutions providers.
The company further expanded Accenture Digital’s open source digital capabilities in Europe through the acquisition of Tecnilógica in Spain, of a Germany-based leading consultancy, dgroup, and of a France-based IT consulting, design and implementation company, OCTO Technology.
These acquisitions were aimed at helping Accenture’s clients deliver an ‘end-to-end’ customer experience from new product development and execution to marketing and delivery.

Previously, major consulting firms, such as Accenture, concentrated on developing their digital and technology expertise. In 2016 their focus expanded to building strong creative capabilities as well, aimed at competing with the large global advertising networks to move towards becoming ‘the provider of choice’ for boardroom executives.

Also, just over a year ago, IBM iX made a huge statement of intent by announcing three acquisitions in one week – creative and digital agencies Resource/Ammirati, Aperto and exc.io. Deloitte Digital made a strong push into the creative sector with the acquisition of Heat, a 110-person US based creative agency hailed as ‘breakthrough agency of the year’. The acquisition resulted in what they refer to as ‘the world’s first creative digital consultancy’.

A trend has developed – and will continue

A Ciesco 2017 Outlook point: ‘’The consultancies will continue to make inroads into the marketing services sector with an emphasis on strategy/creative and digital services. This will continue to threaten the big agency networks who will struggle to compete with the combination of the traditional and new services now being delivered by the consultancy firms. Accenture acquiring Karmarama shocked, yet did not surprise.
(Ciesco, 2016 Global M&A Review, Outlook)

Ciesco tracks global M&A activity within the media, marketing, and related technology sectors throughout the year and publishes the key findings in an annual report in partnership with Experian. The report showcases Ciesco’s analysis of deals by volume and disclosed value, geography, and sector, together with an overview of the buyer landscape and private equity activity, revealing the key insights and trends, as well as an outlook for these sectors.

For a copy of the full 46-page report, including detailed analysis on:

  • Deal statistics, volumes, values
  • Notable deals
  • Buyer landscape
  • Emerging buyers
  • Private equity activity
  • Geographic overview
  • Cross-border activity
  • Sectors
  • Ciesco’s outlook

Please contact james.whyms@ciescogroup.com.