The agency/consultancy paradox
In the future, this revolution won’t be televised or hosted in the cloud.
It has been in the air for years now, agencies (Advertising, PR, DM, Social, etc.) are living below the circling vultures of imminent failure. Acquisition, consolidation, in-housing, and head-hunting of talent is an everyday occurrence while tech innovations hammer media rates every time a contract comes up for review.
Today, consultancies are owners of a multitude of these agencies, to many that is a death nell, and for the acquired… a time of alienation. Consultancies are not made of the stuff agencies are, but from outside appearances there is enough to graft the two together and make some money, so it happened in a big way. In 2017 alone the consultancy industry spent over 1.2 billion on M&A and since 2015 Accenture Interactive has acquired 32 agencies.
Yet there is a notable dissonance between these kinds of businesses. Though some pundits think it’s the end of an advertising industry that wouldn’t evolve, its clear agencies won’t completely die. It’s also true that consultancies are very big and won’t adapt to become agencies in the end.
The unnaturalness of all this is an archetype of paradox and will likely plague the communications and technology industries for decades …and clients.
Is an agency, overseen by a consultancy, still an agency?
Is a consultancy, staffed with agency people, less of a consultancy?
Let’s take a look at the differences and similarities for a start.
Agencies, on the whole, are a regular shot of good news for clients. Their operating mode is CREATIVITY which is manifest in an ability to tell a great story and communicate the value of their offering to the clients’ customers. And every day or week that comes, agencies are looking for a new assignment to produce great work that does just that.
When it comes to technology, with agencies, it’s relatively the same model. Their ‘can-do’ approach is what makes them invent and push for ideas that may not have a long shelf life, but can communicate powerful relevant ideas to the consumer or target audience.
The foundation of this successful agency model is built on the media spend. Exploited in the 1950’s the percentage of fee for managing it fueled fantastic, iconic advertising and protected some agencies from folding in creative failure. Every day hundreds of millions of dollars are managed quietly behind the flash and celebrity of the creative work.
Consultancies are in the business of bringing good news to clients too, but they weren’t brought in to brighten a day or create new ways of being compelling to their client's customers. They bring COMPETENCIES that are in place to fix, remove, replace, reinvent or move something forward that the client cannot do themselves. Confidence in the consultancy is manifested as strategy and competency.
Creativity? Well for one, consultancies are engrained in a corporate enterprise mentality …some were originally accounting firms. It’s hard to see beyond the constraints of the systems they are implementing and stop at their own constraints. This, supported by business acumen and long history of corporate strategy fulfills the consultancy’s surrogate role. To some, ‘rent-a-corp’.
It’s a capitalist's fantasy. With a goal of total account and revenue dominance, and tentacles stretching into other departments and affiliated opportunities. The multi-headed beast of consultancies are there to devour as much client budget as possible. To them, agency work is an add-on service that will have to go without the buffer that a media planning and buying revenue can support.
What this illustrates is that the primary dynamic between the two is how people are incentivized.
Agencies deliver ideas, confidence, and communication. They service their client and collaborate internally or with partners to create the best work. If successful, they win cool awards, leading to more work from more clients. And the award parties are epic!
An agency understands that a good user experience is a fantastic opportunity for a brand. In contrast, consultancies see user experience as a billable role and a level of guarantee that the largest of technology projects won’t fail.
Consultancies deliver strategies and mostly ‘out-of-the-box’ executions. They advise their client on how to spend their money, do a lot of complex work clients can’t or wouldn’t do themselves and compete to find more ways to keep billing them. In the consultancy world there are no shiny awards, or fancy conferences in exotic locations.
Agencies, through ideas, collaborate to meet exceptional goals as a team. Consultancies fix exceptionally complex problems and compete to stay billable.
The unspoken truths in these observations are illustrated in how companies collaborate and compete with each other. Agencies are collegiate, looking, as a team, to beat other agencies with better ideas and execution. From great work, awards and more revenue will come. For consultancies, they fight to win a client on their competency, certifications, and brand. They collaborate to win paid hours of work. This is where the cage match begins and there are no awards in the end, no shared goal. Just deliver and find more billable hours where you can.
This answers, in part, what the paradox asks. Each player loses a bit of their identity when they combine, but the one with the right incentives and culture creates a firmament for positive changes and exceptional outcomes. Agency people get that, consultancies don’t agree with that in practice, and with the flurry of acquisitions, they call the shots.
Telling the stories of clients, talent, technology and new operating models is a long journey, which I endeavor to do. First, we need to acknowledge the primary paradox; that a massive integration of services may not be a remedy unless we get the fundamentals of culture, creativity and competency right.
