3. Consulting firms put the squeeze on ad agencies
Ad agency bosses are pushing back on the latest big move by a consulting firm, Accenture, to move into the automated ad-buying and placement space.
Why it matters: Some of the biggest advertising holding groups have been hit hard by a slew of changing market dynamics, including new competition from consultancies for digital ad buying and placement.
- Shares for WPP, Omnicom, IPG and Publicis Groupe fell significantly Wednesday after the news was announced.
Accenture announced last week that it's increasing its focus and investment in the programmatic in-housing and media planning and buying arena with Accenture Interactive Programmatic Services. Ad agencies and interest groups argue this creates a conflict of interest, as Accenture also conducts audits of advertising companies.
- MediaCom CEO Stephen Allan, for example, has called the Accenture plans troubling. "You can’t ask for money to pay the piper and then play the tune yourself. Clients should be very wary of this new dual role."
- Omnicom Media Group CEO Peter Horgan tells Australia's AdNews the move represents the “slightly insidious nature of consultancy cross-selling" and says "there is a fundamental conflict of interest."
- The Institute of Practitioners in Advertising (IPA), Britain's advertising agency trade body, also slammed the move, calling it a conflict of interests.
- Ebiquity, an advertising auditing competitor to Accenture, said via its Global Chairman of Media, Alan Rutherford that from the perspective of advertisers, "the news highlights serious conflicts of interest."
Yes, but: Some of this competitive reaction could be overblown. Of the six major factors contributing to ad agency decline, Brian Wieser, Senior Research Analyst for Advertising at Pivotal Research Group doesn't think consulting competition is as damaging as brands taking digital businesses in house, or the slow growth of major brands to direct-to-consumer upstarts.
- "Competition with IT services and consulting firms probably doesn’t have a huge impact, but it might be having one measured in tenths of percentage points," Weiser wrote in an investor note about agency growth last month.
- Case-in-point: Nearly two-thirds of brands purchasing ads through programmatic means have fully or partially moved the function in-house, according research from the Interactive Advertising Bureau.
In response to their critiques, Accenture says its Media Management business is run independently and is not part of its marketing services business.