Accenture's push into media is less about the existing media industry than we all think (at least, I think)
This week, with Accenture essentially hiring Intiative's (excellent) management team looked like an entry purely into media. However, it there may be more to the global media push by Accenture.
What a stunning development in the Australian ad industry this week. Accenture Song, the management consultancy turned marketing services division, poached Initiative’s management team. I personally thought it was exactly the type of bold move we have not seen many in the ad industry make in a while. The global ad industry has gotten beige, full of benign people moves rather than stunning, value creating raids. It feels like we have lost the desire to disrupt by chasing excellence. Accenture certainly rocked my perception of that this week.
Some background to management consulting
If you haven’t, I highly recommend the ‘Lords of Strategy’ book to get a history on management consulting more broadly. It’s an intellectual history of consultants, and to understand the psychology, one must understand that consultants are essentially trying to sell theoretical ideas at scale into organisations. Even NPS, a fabled measure, was essentially an academic idea of Bain’s that they thought they could sell.
The consultancy industry is far more nuanced than most think. It largely revolves around three quite distinct business types competing for ground. I’m oversimplifying, but a good explainer is:
Executives. These are really known as the ‘Big Three’. McKinsey, BCG and Bain. In effect they are powered by future CEO-types who are super smart and deploy on highly analytic, strategic programs of work. These don’t always succeed. In some ways, these places are training grounds for future senior executives.
Accounting firms. These are known as the ‘Big Four’. In essence, these are businesses that deeply understand financial drivers. They include KPMG, EY, Deloitte and PWC.
Technology firms. These are groups like Accenture, CapGemini and Cognizant. Increasingly they encroach on traditional business consulting, primarily because business, customer experience, technology are converging to create new business strategies.
Marketing services are relatively new and adjacent areas for these companies to enter. Each is primarily approaching it from their ‘domain’ and seeing marketing as a logical extension of what they do. If you’re advising top-level businesses about how to grow, after all, marketing is the logical external driver you can control. You can see why if you propose a new growth model securing the marketing services contract (which distributes products) may be wise.
Consulting and audit divisions
Most of the ‘consulting’ businesses are actually businesses expanding beyond their traditional remits. In a sense, they’re brand extensions. And this is an important leading indicator as to the ‘why’. Each has a slightly different strategic imperative in my mind for doing so:
For the executive consultancies, it’s to influence product direction and marketing spend more. But it’s worth noting that McKinsey, BCG and Bain seem to be the least vocal about actually entering the executional areas of marketing and media.
For the accounting firms, they’ve built up large business services divisions. I think a key part of this is to de-risk an audit business that is starting to see automation bite. I don’t know for sure, but it feels logical to me that businesses like Xero, MYOB and Intuit will eventually impact the value of accounting as a service and pressure these smart financial people to find new revenue lines.
For the technology firms, they have built up large tech platforms that they need to activate. I think for these groups, it tends to be about realising the value of technology builds with massive investment. If you can’t translate those to customer impact, in all likelihood you will lose business and revenue.
With audit divisions impacting the accounting firms, you’d have to wonder if it’s appropriate for them to properly enter the world of buying ads on behalf of clients. I suspect that’s a problem and the why on Accenture’s move.
Wedge moves build competitive advantage
A key aspect I was once taught in politics by Sir Lynton Crosby was ‘wedge politics’. Wedge politics is where you take a position to split a constituent group. It’s a highly effective political method, but I often think it’s valuable as a method of doing business. In essence, you want to do business in areas where large incumbents can’t. Disruptive innovation is another variant of wedge politics: entering the market in a place where the incumbent can’t.
https://en.wikipedia.org/wiki/Disruptive_innovation
Here: https://en.wikipedia.org/wiki/Wedge_issue
So how is this relevant to Accenture’s move into media?
I think it has something to do with how they want to wedge the marketing services model. As a large consultancy, both the executive offerings historically, and the accounting offerings, don’t play into execution. There are myriad reasons tactically, but the strategic reasons feel like:
Executive decision making should be divorced from sunk-cost bias in execution.
Auditors should be divorced from executional actions.
Auditing is actually strictly controlled by regulators. A lot of services can’t be provided if you are auditing, essentially, which blocks true audit companies from also having the same client take up most business advisory. This is the key strategic blocker that stops PwC, EY and so on from directly entering the media buying game. They can consult and provide ideas, but can’t act in certain executional aspects. It’s also a key constraint on why these companies won’t replace full service holding companies.
Except for the technology companies. Their background is mostly in executing large programs. So it makes a lot of sense for them to be sucking up more executional work.
Hang on… doesn’t Accenture audit media?
Kind of. They ‘audit’ media but not businesses. In a sense, the word audit in agencies and consulting groups has been blurred. But auditing a business comes with specific, regulatory constraints. In a sense the credibility of being able to audit a business comes because you certify how the business works. ‘Auditing’, at least in the business sense, does not actually exist in the technology consulting firms. It’s instead used as a word to sell more business consulting services and make them feel more credible.
Accenture’s media wedge
I see the wider strategic issue of Accenture entering media as a wedge against the larger consultancy firms. It will come at the cost of their perceived independence, and I do wonder if the wedge will work. Only time will tell. I don’t doubt, however, that this move builds contrast in the market and is a move based on the historical strengths and origins of each group. Accenture’s move is steeped in the history of the consulting firms, instead of the media market. Time will tell if this is right.