Have you formed an opinion yet on the battle between traditional advertising agencies and management consulting firms for marketing and advertising supremacy?
Many have, citing profound differences between these two types of professional services providers. The basis for the beliefs are centered on a range of characteristics attributed to each type of firm, including; company culture, strategic focus, business processes, talent pools, breadth of capabilities and ability to provide integrated solutions.
The question to be asked, as management consultants continue to push into ad agency territory (largely through acquisition) is; “Are the differences between these entities meaningful?” Or will the blending of these two types of firms ultimately result in a level playing field among the large agency holding companies and international consultancies?
Most pundits suggest that the differences are very real, with consultants largely grounded in a strategic focus on how to boost a company’s performance, and agency services centered on building brands by leveraging traditional media channels and touchpoints. Clearly both perspectives are valuable in their own right. Along with these differences, other complicating factors are at play that will determine the ultimate outcome.
- Marketers seem to be increasingly focused on improving in-market performance, which is becoming the principal means of validating the efficacy of their advertising programs. Metrics such as awareness, consideration and brand purchase intent are all well-and-good, but at the end of the day organizations are more interested in topline growth, market share expansion and bottom-line profits.
- There have been profound shifts in consumer purchase behavior and questions raised about the validity of the traditional purchase funnel used by marketers to map a consumer’s progression from awareness to action. In today’s digital-centric world of transacting business the path to purchase is not as linear as it once was.
- Research among younger shoppers suggests that marketers can no longer pre-suppose that brands matter. Certainly not to the extent that they once did. In an industry where it is projected that companies will spend in excess of $1.0 trillion on marketing services in 2017 (source: GroupM, 2016 “Global Ad Expenditures Forecast”) this is quite alarming. According to Havas Worldwide’s 2015 annual index of “Meaningful Brands” it was determined that “only 5% of brands would truly be missed by consumers U.S. consumers.” Driving this trend has been the emergence of the 75 million plus U.S. millennial target segment, whose trust in brands has been eroded as have their perceptions of genuineness and brand authenticity.
These trends may point to a larger shift, where consumer purchase behavior is more readily shaped by relationships, peer input and social influences rather than by branding. Thus the ad industry’s model of pushing brand messaging through a variety of media channels as a way of creating awareness and consideration in the hope of driving purchase intent may not yield the results it once did. It is likely that this traditional approach will be supplanted by social engagement and social selling as consumers take control of the pre-purchase learning and competitive evaluation portion of the purchase decision making process.
This could allow management consultancies to curry favor among marketers under pressure to drive performance in the short-term. The consultancies ability to offer integrated end-to-end solutions including; organizational design, transformational strategy development, user experience design, data analytics, technology support and increasingly branding and marketing expertise is considered to be quite compelling to many Chief Marketing Officers.
With so much at stake, it is certain that the agency holding companies and global consulting organizations will continue to invest in transforming their businesses to better serve marketers seeking to evolve their approach to achieving in-market success. In the words of Jeff Bezos, Founder of Amazon:
“We expect all our businesses to have a positive impact on our top and bottom lines, Profitability is very important to us or we wouldn’t be in this business.”