Big Q Consultancies: Difficult to shake campaign-dominant logic

by MarkLives (@marklives) What may the broader agency and marketing community learn from the rise of non-traditional firms now operating in the advertising agency space? What processes and practices are giving these firms an edge, and to what would the rise of these players be attributed, in spite of the best integration efforts by the traditional agency networks? We asked a panel of key industry executives for their take. Next up is Joshin Raghubar of iKineo.

Large consulting and technology firms such as IBM, Deloitte and Accenture have moved definitively into the digital-marketing-and-communications space ad agencies once hoped to dominate themselves. In the UK, IBM iX, Accenture Interactive, BAE Systems and Deloitte Digital UK already rank in the top five interactive agencies based on revenue; Accenture Interactive, part of Accenture Digital, was named the world’s largest digital agency network by AdAge last year.

Joshin Raghubar (@Joshin) is an entrepreneur in the media, marketing, and technology sectors. He is engaged in the evolving role of entrepreneurship, trust and innovation in the ‘good society’: he is the founder of iKineo, a Pan-African customer engagement agency; Sprout, digital media performance firm; and Explore Sideways, an online purveyor of wine tourism experiences. Joshin is chairperson of the Bandwidth Barn and non-executive director of Cape Innovation & Technology Initiative (CITi), Enke, Africa Leadership Initiative (Southern Africa) and African Leadership Network. He is a fellow of 2016 Yale World, ALI, Aspen Institute’s Global Leaders Network, US-Southern African Centre for Leadership and Public Values, and a Bertelsmann Foundation’s global Transformation Thinkers programme member.

Traditional ad agencies certainly have had a head-start on the management consulting industry to dominate the digital customer engagement and experience services portfolio for clients. However, by not being able to step out and above the ‘creative communication and advertising’ mindset, and firmly into the problem-solving business and leadership territory, agencies have once again ceded the high ground to consultancies.

Accelerated digitalisation of business

All industries are experiencing the accelerated digitalisation of business. This is not just about digital communication but the digitalisation of everything. The internet of things (IoT), big data, on-demand fulfilment models, dynamic pricing, and an avalanche of other forces are reshaping the competency and opportunity set required for marketing service providers.

In a Contagious Magazine article, journalist Dan Southern noted that, even as far back as 2004, the Journal of Marketing published a paper that is now one of its most frequently cited, which asserted that “the objective of marketing is shifting from efficiently delivering tangible goods to market towards creating value through the exchange of intangibles such as knowledge, information, and skills, to the benefit of customers.”

In other words, marketing was already evolving then from a campaign-dominant activity to a service-design-led activity. In this new world, where the power has shifted from companies to customers, marketers and their agencies needed to become service and product designers, strategy consultants, data scientists, user-experience (UX) specialists, intangible product owners, and customer community managers. The space between a brand experience in the media and an actual user experience has shrunk to one click, and it was only a matter of time before service providers would have to have credible capabilities throughout this value chain.

Able to respond and move

Consulting firms and other non-traditional agencies with established business leadership brands, which already have had some of these competencies, have been able to respond to these new opportunities more quickly, and have been able to move into the adjacent communications market by adding the necessary creative and innovation skills.

Even though they’ve had at least 13 years since the writing has been on the wall, for many traditional agencies, it has been difficult to shake this campaign-dominant logic. However, it may not be too late. In this age of disruption, creativity and innovation are required more than ever. In the quest to regain some of the territory lost, there are a number of valuable lessons to be learned from the growing consulting practices.

1) Management consulting firms have direct access to the C-suite.

They continue to invest in maintaining this access and have invested heavily in thought-leadership along the digital transformation value chain. In sharp contrast, many chief executives today only vaguely know the name of their ad agency or digital agency. If digital is fundamentally changing the chief executive’s business, she or he will only naturally turn to people who speak the language of the C-suite.

2) Consulting firms haven’t been shy to acquire agencies with capabilities in UX, digital, design, branding, video and other creative domains.

Over an 18-month period in 2015 and 2016, Accenture acquired 40 marketing firms. Whereas consulting firms have been buying capabilities, perhaps traditional agencies should consider buying firms for their C-suite brand share. Alternatively, along with attracting the right leadership talent, agencies may have even created new leadership brands free of the traditional advertising legacy.

3) Consulting firms have maintained their high-value pricing model.

Agencies are victims of their resource-plus pricing model which, combined with margin squeezes, have resulted in clients being serviced by the lowest-cost staff who aren’t equipped to deal with complex client needs. This also means that consultancies simply can afford to hire the better talent.
4) Consultancies have been quicker to demonstrate actual capability and intent by walking the talk.

For instance, many have established innovation centres and actual incubators, where clients may work with them to build up new businesses and digital products. These initiatives are valuable sources of client stickiness and collaboration.

The legacy of the CMO/agency relationship has been challenged and even been disrupted by the technology and consulting firms. This disruption holds many lessons for agencies still in the fight to reclaim their territory.

Launched in 2016, “The Big Q” is a regular column on MarkLives in which we ask key industry execs for their thoughts on relevant issues facing the ad industry. If you’d like to be part of our pool of potential panellists, please contact editor Herman Manson via email (2mark at marklives dot com) or Twitter (@marklives). Suggestions for questions are also welcomed.

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