How Four Agency Holding Companies Are Upping Their Consulting Skills

One of the many pressures facing holding companies is increased competition from management and IT consultancies like Accenture, Deloitte, IBM and PricewaterhouseCoopers. While consulting firms may not be their biggest threat today, tomorrow could be another story.

Holding companies tend to work from the bottom up, focusing on marketing initiatives like creative or media strategy and execution. But management consultancies work from the top down, offering services around total business transformation, which inevitably touches marketing and advertising strategy.

To help their clients navigate technology disruption, consulting firms have been acquiring digital and design shops to offer marketing services while holding companies reorganize to accommodate client needs that go beyond marketing.

Accenture has been the most aggressive consulting firm in its pursuit of marketing services. Its digital agency, Accenture Interactive, is an amalgamation of more than 17 agency acquisitions that did $6 billion in revenue last year.

PricewaterhouseCoopers isn’t far behind: Its $3 billion Experience Center was built on seven agency acquisitions. Deloitte’s and IBM’s digital agencies, Deloitte Digital and IBM iX, respectively, each did over a billion dollars in revenue in 2016.

But agency groups aren't sitting idly by. Many have been making their own incursions on the "business transformation" territory that is consultants' home turf. Here’s how four holding companies who have been explicit about their need to transform are doing so.

Publicis Groupe

When it acquired Sapient in 2014, Publicis Groupe made a $3.7 billion bet on business transformation as a core service offering. During the company’s second-quarter earnings this past July, new CEO Arthur Sadoun declared his ambition to make Publicis “the leader in marketing and business transformation.”

But figuring out Sapient’s role in Publicis has been a signs of success. Consulting hub Publicis.Sapient won a big account for McDonald’s in August, in which it will create technology such as mobile ordering systems.

“We’re connecting the strategy and technology to something that a consumer is actually going to experience,” said Nigel Vaz, CEO of Publicis.Sapient in EMEA and APAC. “There’s a huge opportunity ahead of us to go from talking about building a brand through designing an experience and transforming systems to underpin that.”

To get to this opportunity, Publicis Groupe has spent the past three years restructuring its $14 billion business to break down silos between its agencies and integrate them with Sapient’s consulting offer. It’s betting that if it can help clients launch new digital services like the mobile and digital kiosk ordering systems it’s creating for McDonald’s, it can then market those services through its creative and media agencies.

“So many clients think of us as their communications partner, but their challenge is driving growth,” Vaz said. “If you’re going to drive growth, you have to do a lot more than be efficient in communications.”

But Publicis still lacks some important skill gaps to make that vision a reality.

McDonald’s, for example, teamed Publicis with IT consulting firm Capgemini, which will lead systems integration and change management on the retail transformation account, a hint that Publicis’ skills in that area either aren’t developed or aren’t well-known. (The relationship will be a litmus test for whether partnering is sustainable for agencies and consultancies, as Capgemini has been vocal about its own potential foray into marketing.)

Publicis also still faces internal and external confusion about its business transformation offering. For its employees, the past three years have been a blur of restructures, management changes and mergers. It's a lot to handle, acknowledged Richard Hartell, head of Publicis Media’s business transformation practice.

“Parts of our talent have grown up in an advertising or media agency world, and they like that,” he said. “You’ve got to help them feel concerned about and motivated by what that future looks like.”

WPP

WPP's pursuit of consulting has been less tumultuous than Publicis Groupe’s as the holding company builds pockets of consulting at some of its legacy agencies.

This year, WPP moved ecommerce consultancies Salmon and Marketplace Ignition under Wunderman to launch digital commerce consultancy Wunderman Commerce. Staffed mostly by consultants from Salmon, the group helps clients set strategy, think through logistics, integrate systems and market new ecommerce businesses, said Wunderman CEO Mark Read.

“We help clients define their ecommerce strategies and then we build that offer from a creative, technology and organizational perspective, so they end up with a functioning capability,” he said.

Wunderman plans to cultivate similar consulting skills among the rest of its employees through a big training push next year, Read said.

“There’s a big demand from our clients for more consulting services,” he said. “We’re training a new client leader able to have a conversation about business, marketing, sales and the application of technology.”

WPP has developed similar consulting units at AKQA, VML, Ogilvy and Mirum to help clients facing technological disruption. It also launched a consulting group called Gain Theory in 2015 that helps marketers find organizational efficiencies.

And at the holding company level, WPP is consolidating agencies to operate more nimbly around its central mPlatform stack (which, so far, has been deployed across the GroupM agencies). CEO Sir Martin Sorrell said for WPP to succeed in an environment of changing client needs and new competition, it should operate as one firm under a model where clients can cherry-pick the talent they want across disciplines.

“We’re trying to make sure our best people are available to our clients, not by brand, but as a company as a whole,” he said. “Clients look at WPP and increasingly say, ‘I may get access through some entry point, but I want access to the whole thing.’”

There are, of course, cultural barriers to making that a reality.

“We get up in the morning because of the company we work with within the structure, not the brand,” Sorrell said. “That has to change. The only question in my mind is how fast we get to that one-firm model.”

Omnicom

Omnicom made its former DigitasLBi CEO Luke Taylor to run Omnicom Precision Marketing Group. The group consists of CRM and digital agencies across Omnicom that will focus on business transformation and systems integration for clients.

On the company’s Q3 earnings call on Monday, CEO John Wren lauded Taylor as “one of the best and brightest in our industry when it comes to CRM strategies and digital business transformation.”

Omnicom declined to go into further detail about the services Precision Marketing will offer clients.

At the holding company level, Omnicom continues to embrace a “matrix and practice structure” that allowed it to put into place client-centric agencies for flagship accounts like AT&T, P&G and McDonald’s, Wren said.

“We’re adding depth through consumer intelligence and breadth by allowing our agencies to both win and grow on their own, as they always have, but also to deliver connected consumer experiences with other Omnicom disciplines,” said Peter Sherman, executive vice president at Omnicom.

IPG

At IPG, digital agencies like R/GA and Huge have become hubs for business transformation.

R/GA launched its consulting practice in 2012 as an extension of its digital agency. The agency was already building digital products and services for clients like Nike, but needed a consulting arm to bring a deeper level of strategy to its work, said Chief Strategy Officer Barry Wacksman.

“When we started consulting, the trend we were picking up on was most of our clients are in business categories that are pretty mature,” he said. “We saw the rise of innovative, young companies and we believed a lot of the challenges of our clients transcend advertising.”

Now, consulting is one of R/GA’s fastest-growing units. And as the practice has grown, it has expanded into new services like change management and organizational redesigns.

“We want to advise companies on how to organize themselves internally to embrace these new business models,” Wacksman said.

IPG is keen to grow and hire more of the strategic talent R/GA attracts, said Chief Strategy Officer Philippe Krakowsky.

“We’re going to make the investments in talent and find people who bring that expertise,” he said, “They’re going to run big client engagements or operating units.”

But IPG has been floated as a potential acquisition target, were a big consulting firm to move more aggressively into the space. On earnings calls, IPG’s CEO, Michael Roth, has suggested partnering with consulting firms.

“We’re still in the adjacency period rather than other overlap period, which is likely a few years out,” Krakowsky said.

Sarah Sluis contributed.

 

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