A new type of fish swims in the agency pond
Agencies have enjoyed a generally stable decade when it comes to revenue, mostly thanks to digital-related services (except for 2009 in the U.S., but we shall not speak of that again).
But back in 2008, the top nine agency big fish saw a new gilled hybrid enter the waters: consultancies.
Since IBM interactive made its mark on the list of top 10 agencies eight years ago, increasing numbers of consultancies are acquiring agencies to broaden their expertise and grab a share of marketers' budgets.
The AdAge Agency Report 2017 shows the rapid growth and success of consultancies-turned-agency-big-fish, with four consultancies now ranking among the world’s biggest agency companies, reeling in $13.2 billion of the $48.3 billion total revenue in the U.S.
Four consultancies threatening agency-land
Accenture Interactive (#6)
PwC Digital Services (#7)
IBM iX (#8)
Deloitte Digital (#9)
Catering to the post-marketer's challenge
Marketers in the digital and post-digital age face significant challenges. Rapid changes in technology, a better-informed customer with high expectations in an interconnected world means marketing priorities have also shifted.
Business outcomes are focused on customer experiences; there is increased investment in technology and demand for skills around these technologies; ensuring internal barriers are removed in order to better cater to each stage of the customer lifecycle.
Consultancies are responding to this increased focus on value-driven, technology-based experiences, by expanding their capabilities to cater to the post-digital marketer’s challenges.
Marketers don’t seem to mind this new market convergence, with “73 percent somewhat open, open, or very open to using consultancies for digital marketing work” according to a recent Forrester survey.
And it’s no wonder.
Consultancies are charming the dollars out of marketers’ pockets with fully integrated services, strong strategic focus, tech expertise and data analytics solutions – something that more traditional advertisers just can’t compete with.
Will consultancies eat the agency?
As consultancies are stepping in to solve new marketing challenges, agencies are starting to worry.
Andrew Swinand, Leo Burnett North America CEO told AdAge that the time is now to discover “how do we as a creative entity better and faster integrate consumer insight and data, versus how quickly can the consultancies continue to acquire creative agencies to try to reposition their offering."
While the race is on, the future is not all doom-and-gloom for agencies.
Marketers will still consider agencies for specialised campaigns focused on creativity and execution according to Forrester.
For big creative ideas, agencies will remain the first port of call. Most global agencies have invested largely in adjusting their creative processes to cater to the post-digital age and its marketing challenges. Consultancies typically don’t have creative ideation and content production capabilities.
Running specific channel strategies, creating and delivering campaign and content creation also remain the agency’s domain.
So while consultancies will solve a wide array of marketers’ challenges, they won’t entirely replace agencies, as creativity and execution will remain high on marketers’ priorities.