Whose lunches are the big management consultancies eating?

As management consultancies continue to make inroads into the media and marketing budgets of Australian brands, Bilyana Smith argues it's time for the industry to fight back.

It is no longer news that the big global management consultancies (Deloitte, Accenture, IBM, McKinsey, PwC, KPMG….) are buying digital agencies and design companies and competing with the advertising industry, but that is only the tip of the iceberg and they may not be after the adman’s lunch at all.


While the industry is watching in disbelief and arguing about the ability of management consultancies to attract and retain creative talent critical to success, the bigger issue is escaping attention.

In their pursuit of growth and a move to expand the frontier of their professional services, they are disrupting the marketing function in large companies, taking out the CMO’s seat at the business decision-making table and pushing it down the value chain into the territory of mere execution and, crucially, removed from the board level.deloitte-logo

And that is bad news for the ad industry because it means getting even further removed from decision making at a board level and downgraded to the level of supplier versus strategic partner, competing at commodity level and suffering downward spiralling fees.

The good news is that it may not be too late to gain new ground – before the game change is complete, new rules established and the musical chairs taken.

First, why did it actually happen? New technology, media fragmentation, big data and fragmented marketing budgets coupled with constant change, have created unprecedented challenges for CMOs, for which they had not been prepared.

Expected to define strategy for delivering on business objectives, drive and direct execution across ever increasing numbers of channels and customer touch-points, draw customer insights and respond in real time, all with decreasing budget and constant pressures to deliver more with less – they face an enormous task.

This requires strong, multi-faceted super teams wearing multiple hats and covering a seemingly endless range of talents, capabilities and experiences – well beyond their means and capability. And the agencies are missing the opportunity this opened up.pwc logo

The one-stop-shop model (creative agency as the lead) that worked in the past is no longer able to deliver the expected end-to-end service. The remaining alternative is to bring strategy in-house and manage the execution through a roster of specialist agencies to service variety of channels and functional needs.

It may sound like a logical solution, but instead of the expected collaboration, agencies fight amongst themselves for a larger share of the budget, making the job of coordination and creation of seamless customer experience very difficult and ineffective, with poor outcomes.

As a result, marketing function is left open and vulnerable, clients’ needs unmet, customer experience, business imperatives and objectives compromised. Ironically, at the same time, the CMOs are becoming more responsible for the overall customer experience. As an opportunity this was too important to go unnoticed.

Management consultancies have already been working with chief executive officers and chief information officers on tasks ranging from developing high-end business strategies to implementing new technology.

They have been in the right place to see the opportunity and quick to move in. They bring strategic thinking, holistic view and understanding of client’s business and established relationships with the C suite, and stronger influence at the decision making table. In addition, they have been acquiring capabilities to complement their consultancies with the ability to provide seamless, end-to-end digital marketing services – from high-level strategy needs via experience design to marketing, content and commerce to traditional creative and campaign analytics.

The game is changing and once the process is complete and the game rules established, it will be too late to catch up. One thing is certain – the ad industry must disrupt itself.

Reinventing is what this industry is good at. It is time now to take its own medicine and innovate its way out of obsolescence. The innovation that is required is not about technology; digital transformation is already taking place everywhere.Businessman Analyzing Graph

Instead, it is about reinvention of the agency business models. Less about navel-gazing and much more about looking deep into our clients’ world, living in their shoes, identifying their problems, their pains and gains, pain relievers and gain creators.

Asking ourselves: What can we do to help them succeed and deliver on their business objectives, grow revenue and market share, help them defend the territory they are about to lose, and redefine it? In short, answer the strategic questions: How do we create value for them and how do we capture some of that value?

What are the products and services that we can develop to deliver on these? And what do we need to do, what resources do we need to have, what changes to make, new skills to learn and new partners to find, in order to accomplish that?

We can only win by playing on our strengths. Trying to grow by patching up weaknesses is the equivalent of fighting on competitors’ terms.

As business theory tells us – marketing is a discipline on the crossover of art and science –qualitative and quantitative, emotional and rational, right and left side of the bran. It requires both sides to work its magic, to the industry’s advantage, perhaps.

As one single core capability that defines the ad industry and differentiates it from management consulting, is the creativity in many different forms: creative thinking and problem solving, creative mindset and a vast pool of creative talent? Bringing together emotional and rational. Can all this creativity be harnessed to deliver new value in new areas and in different ways?

It will be important to find the way to close the gap in business strategic advice – by moving up the value chain beyond creative execution. How? By reinventing the concept of strategy within the agencies, as fundamentally different from currently devalued planning service? Or by spinning off independent strategic outlets, to be run by people not usually hired by this industry – management consultants, MBA graduates…to advise clients and develop business strategies that underpin and drive marketing effort and implementation? Or creating a different approach altogether?

Who is most likely to lead the change? Large global ad agencies, as hotbeds and ultimate source of creative energy, reinventing the ecosystem?

Or smaller, fresh-faced and bootstrapped but innovative, hungrier, tenacious and nimbler independents?

Perhaps new entrants that are not ad agencies at all in the conventional sense, but perhaps collectives of start-ups, freeform teams, individuals, covering a broad and flexible spectrum from business, brand and creative strategy via range of execution capabilities, media, content…?

Or by the holding companies (WPP, Interpublic, Omnicom, Publicis, Dentsu..) striving to adapt and grow, which may be tempted into investing in start-ups and incubators for the future – in addition to acquisition of already proven and established businesses albeit behind the disruption curve.

In either case change doesn’t happen easily. It requires inspired leadership and courage to face inconvenient truths and the stomach for failure. To embrace speed and agility, test ideas and never lose the sight of the customer.

To rock the boat and change comfortable habits and mindsets, the way adland thinks of itself and about its clients.

Bilyana Smith is a business leader, advisor and Angel Investor. She has a special interest in creative leadership and business model innovation. She holds BA (Architecture) and MBA from University of Sydney Business School


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.