The Cannes Lions festival is the ad industry's biggest annual gathering, a place where the best campaigns are honoured at glitzy ceremonies and clients are courted over chilled bottles of the local rosé. But this year you would be forgiven for thinking you were attending a 1980s accounting conference.
Yachts from Accenture and PwC flanked the beach, and the biggest billboard-plastered on the side of the Palais des Festivals des Congres de Cannes-featured IBM, the company behind mainframe computers. Deloitte hosted a full week of events on the future of marketing at the five-star Barriere Le Majestic hotel. Accenture won its first Grand Prix award, for an ad it did for the Times of London. McKinsey hosted a rooftop cocktail party.
Their outsize presence reflects the seismic shift confronting Madison Avenue. Traditional agencies are already under pressure as the likes of Facebook and Google pull in marketing dollars and cut out agency middlemen. But the consultants pose an even greater threat by persuading clients to re-allocate their advertising money.
Accenture, Deloitte, IBM, McKinsey, and PwC argue that they can save money by helping a company's employees take over much of the work once done by agencies. And they urge clients to divert a big chunk of their marketing budgets from TV spots and billboards, the traditional domain of agencies, and instead fund digital initiatives such as mobile apps.
These projects, the consultants say, better engage customers-and happen to be where the consultants excel. "This industry has to re-organize," says Alicia Hatch, chief marketing officer of Deloitte Digital, where revenue jumped by almost a third to US$4.1 billion ($6b) last year. "It's really about responding to what brands need today versus trying to carry past models into the future."
Accenture has taken it one step further in recent weeks, starting to purchase online ad space for clients. Traditional agencies have long bought TV time, newspaper pages, and website slots in bulk, selling it to clients at a profit. That work typically accounts for as much as 20 per cent of revenue at major ad groups and tends to be their most profitable business, according to Bloomberg Intelligence. Accenture says its consultants have developed an expertise in the complex world of buying digital space that will help clients save money.
The ad people say Accenture has an unfair advantage because it audits ad campaigns and knows how much agencies pay for space, though Accenture says it will strictly separate that part of the operation. "The agencies feel threatened," says Ben Bilboul, chief executive of Karmarama, a leading UK creative agency acquired by Accenture Interactive in 2016. "Their reaction is indicative of how significant it is to their business models."
While global advertising groups like WPP, Publicis, and Omnicom are bulking up digital divisions that provide similar services, the IT consultants have a strong lead. Half of the world's top 10 ad-industry businesses are now consulting firms, according to trade publication Ad Age. Accenture Interactive is the world's biggest stand-alone digital agency, with revenue of US$6.5 billion last year. Though that's a third of WPP's sales, it grew 35 per cent last year, versus 1.7 per cent for WPP.
The consultants, after decades of helping companies streamline computer systems, are using their tech expertise to help marketers navigate a complex ad world, says Antonio Lucio, who oversees the marketing of computers and other gadgets sold by HP. Advertisers today must analyze reams of customer data to craft persuasive campaigns, show them to the right people at the right time, then measure the effect on sales. "Who can add greater value to the totality of that system today? The consultant," says Lucio, who has hired consultants to help his company better understand the impact of its promotions. "They know data, they know analytics, they have everything."
The Mad Men talk down the threat from the Math Men. Managing campaigns across Facebook, Google, Twitter, Snapchat, Amazon, plus traditional channels like TV, radio, and newspapers, requires a depth of experience that only agencies provide, says Jonathan Nelson, head of digital for Omnicom. "We bring it all together," he says.
And marketers still prize the kind of creative ideas that make an ad go viral and resonate with customers, an area where the IT firms have their doubters. "They're good at tech logic but I haven't yet seen real creative impact in the way you see from the agencies," says Keith Weed, chief marketing officer at Unilever, which spends 7b euros ($12.1b) annually promoting brands such as Dove soap but hasn't hired any of the consultants to design a big campaign. "The biggest return on investment you get is from great creative."
The consultants are aiming to bridge that gap as they buy up traditional agencies and integrate their creative chops with digital knowhow. With a market capitalization roughly five times that of WPP and Publicis, Accenture is a credible suitor for either, according to brokerage Natixis. Accenture rules out the prospect for now, but says it's planning more smaller-scale acquisitions. "We want to help brands build deep relationships with consumers," says Joy Bhattacharya, UK & Ireland managing director of Accenture Interactive.
The consultants' financial clout, expertise in technology, and strong relationships with senior executives all pose a risk for traditional ad shops, says David Wheldon, president of the World Federation of Advertisers, a lobbying group. "If I was sitting in an agency, I'd be frightened," he says. "It's a kind of existential threat to the industry."