As technology enables more and more people to do stuff they couldn’t do before, and the lines between traditional business models blur, and in a move that may presage similar actions by other major consultancy firms, giant “professional services company” Accenture have announced that it has acquired major UK advertising agency Karmarama on Tuesday.
As Lara O’Reilly reports in Business Insider, David Whipple, who heads the Accenture Interactive unit – which was named by AdAge as the world’s biggest and fastest growing digital agency network in 2016 – said Karmarama will help set it apart from competitors like IBM, Deloitte, and the services offered by advertising holding companies. Now Accenture can help design customer experiences, build them, run them, and have an agency to lead on creative.
Karmarama works with clients including the BBC, Honda, and Unilever and is one of the UK’s biggest independent creative agencies.
Jon Wilkins, who is Karmarama’s executive chairman and will take on an additional leadership role within Accenture Interactive following the acquisition, told Business Insider he never wanted to sell the business to a classic advertising holding company where all the benefits of its independence could be stifled.
By contrast, he described Accenture Interactive as one of the most “entrepreneurially-minded businesses” he had come across.
Business Insider’s Lara O’Reilly: What was the appeal of Karmarama to Accenture?
Brian Whipple (Accenture): We are laser-focused on helping clients create the best customer experiences on the planet.
While we are in that today, having Jon’s team as part of the family vastly increase our ability to do that in the bleeding edge and I look forward to tapping the team across a network of opportunities.
[Karamarama is a] media agnostic, technology agnostic, experience-first philosophy agency concept. Technology, commerce, content management, and advertising are all about enabling the new customer experience not leading with [a specific media].
O’Reilly: Management consulting firms tend to be client focused, whereas creative agencies — arguably — have more of a focus on the consumer. Will this acquisition help you on that front too?
Whipple: Accenture Interactive is specifically focused on the interaction between the client and the end consumer, and not on clients per se. So that may be different from your consulting firm description. Accenture is in no part a consulting firm — our parent entity is, but that is not what the Accenture Interactive business model or culture is.
We are focused on bringing brand promise to life through the customer experience.
Jon Wilkins (Karmarama): An interesting find for us that we have detected from consumer point of view and the CMO point of view is the desire to create one connected experience. If you look at the way CMOs’ careers are evolving, the ones that have reached the pinnacle are those that have created a system to connect tech and digital experience with the brand and we think that is the battleground
From a consumer perspective, it’s the current weak link. A project Karmarama has been doing, Project Reconnect, which is championed WFA (World Federation of Advertisers), looks at the long term trends of brand awareness, engagement, and trust. All those metrics show a decline in brands’ ability to truly connect. The number one issue is a lack of connection in digital experience and brand
We see bleeding edge demands being placed on the CMO by consumers who are now voting with ad blockers and other avoidance techniques to demand more from brands and CMOs
O’Reilly: Independent creative agencies are usually favoured by clients for exactly that: their independence. When independent agencies get bought, they can sometimes lose some of the magic and some of the risk-taking they were afforded by being independents. Is that received wisdom true? How are you going to prevent that from happening?
Wilkins (Karmarama): I think it can be true – definitely if we had gone into a classic marketing services holding company, there are two things that tend to happen.
One: Management have selfish endeavours around their earn-out that forces them to become, maybe, greedy. And also they tend to work in silos and that can lead to a lack of entrepreneurialism.These are things we didn’t want to happen to our brand.
Within Accenture, we are very much agnostic, as Brian said. I think we can challenge ourselves to continually strive to bring new exciting ways to communicate with customers on behalf of CMOs.
I don’t think I’ve ever come across a more entrepreneurially-minded business than Accenture Interactive. When it comes to identifying business growth opportunities, they are different to the classic holding company.
Whipple (Accenture): Our bread and butter business is less about responding to client RFPs (requests for proposals) or AOR (agency of record) pitches. I’m not saying we don’t do that but the real play for us is bringing new business models entirely, new revenue streams entirely to our Fortune 2,000 clients.
It’s less about will they go with us versus agency X or Y and more about will they partner with us to create this new business.
Wilkins (Karmarama): Accenture Interactive is very entrepreneurial and we found this very exciting.
As an independent you can’t do, however ambitious you are, you don’t have logistics, scale, and breadth of business to go to these companies and help them grow their business.
We think we are going to be more entrepreneurial with Accenture Interactive. We are not just batting for ourselves: it’s a bigger market opportunity.
O’Reilly: Accenture Interactive acquired design agency Fjord in 2013, which seems like a similar deal in terms of bringing on board new creative expertise. How has the integration gone and how to you bring Fjord to the table when you are speaking to clients?
Whipple (Accenture): The Fjord deal has been amongst the most visible and most successful in Accenture Interactive’s history. We are fortunate to have a strong track record amongst most or all of our acquisitions and Fjord is at the top of that. Fjord is top of mind for our executives across the globe, and it has opened up major service design capabilities in Sao Paulo, Sydney Australia, and all major markets in Western Europe and North America.
Adding Karmarama from creative standpoint will only bolster that, and sit side by side from a service design perspective.
We have an Accenture Interactive team that has deep tentacles reaching into the technology capabilities of Accenture to shepherd creative talent and that’s critical.
We are not just another player in this ecosystem. We didn’t buy Karmarama to take their earnings and distribute them to shareholders — it’s about creating synergy for clients. Conceptually, this is the same play [as Fjord.]
O’Reilly: From the outside looking in, there now seems to be lots of entities offering a similar type of service. There’s Accenture Interactive, IBM’s huge iX digital agency, and Deloitte Digital and its acquisition of creative agency Heat. Then on the holding company side, you have Publicis Groupe acquiring Sapient and reorganising to offer clients “digital transformation” services and WPP reorganising its businesses around a concept called “horizontality,” where clients can take a mixture of digital, data and creative services. What makes you different?
Whipple (Accenture): It’s a fair question and I would propose to you that they are very dissimilar things. For starters, a number of the companies you mentioned, which are all well run, strong organisations are essentially a collection of different agencies. Yes, there are press releases about grouping them together, but they are a founder-based culture, so their go to market strategy is different.
I have one global management team and we go to market as Accenture Interactive. It may be that Fjord offers service design and Karmarama is in a similar brand space, but the Accenture Interactive team all has 100% aligned incentives, without separate founder incentives at all.
What’s also completely different is that while we are about designing customer experiences, we are also equal parts about running, enabling, and managing these customer experiences for clients. It’s not just about building it and turning it over to them, it’s often about running the assets and technology, where we would have a relationship with clients that would probably be 10-20x in size of what a traditional player would have. It’s a multi-year, retention-based relationship partner model.
O’Reilly: But isn’t that what iX and Deloitte offer?
Whipple (Accenture): I don’t comment on competitors usually.
iX is largely a piece of front-end design born through the web sphere of tech. Deloitte is also a strong firm but does not have nearly the global reach of Accenture Interactive, nor specifically the footprint that Accenture Interactive has in the share of mind with CEOs, and CIOs, and now CMOs.
I’ll give you an example. When you get in the client room and they say: We have to come up with a campaign and we have to do that in an innovative way that attracts new customers and creates profitable relationships in lasting way and a new revenue stream for us.
When that happens, a number of providers all raise their hand and say: “We can do that for you, here are five ideas.”
Then the client says: “We need that done and implemented in this particular commerce tech, across the Adobe marketing stack, and executing with our back-end campaign systems.”
Then 15 or so arms in air go down to three very quickly.
Then the client says: “And we need to version this in 20 languages, across 50 different countries.”
Most of the arms go down.
Then the client says: “We need you to manage it for us because it’s impossible for us to manage content and version content with software releases, government regulations, and privacy and permission restrictions.”
That, pretty much, is our business model.
We lead with definition of customer experience but by the time you have multi-national complex management pursuits it takes world class organisation like Accenture to pull that off for the client
O’Reilly: Jon, have you been shopping Karmarama around for a while and were there other suitors?
Wilkins (Karamara): Amazingly, we haven’t been shopping around for a while. But because we are quite big and independent, there has been a lot of independent interest.
There was never any desire amongst management to sell the business. We are a pretty soft company with some really good values. The term management used is to “steer the ship in the best waters for future.”
It’s another exciting journey for everyone involved. We told everyone today and people ar really excited and happy about the company.
We would have never sold to a classic marketing services group. That had zero appeal amongst management and leadership here. This was an opportunity to really challenge the model. The whole agency model needs shaking up and this is it.
O’Reilly: What do you mean by a “soft company”?
Wilkins (Karmarama): This business has never been about commercial pursuit. A lot of my former colleagues and peers set up agencies with sole aim of exiting and making money.
The thing that brought us together with Accenture Interactive was our cultural fit as over time we realised we share a lot of values: the way we treat staff, customers, the mark we want to leave on society. We have always had loftier maybe stranger pursuits.
What do we think at MOP? Yes, it’s a mega-trend. Money makes money, and the world’s gigantic professional services companies are hungry to expand their reach well beyond the days when they were glorified accountants.
What no one can do, though – besides a good ad agency – is bring together the fertile, creative minds that typify a typical agency’s staff, and yoke them together effectively into a team that produces ideas that are not only campaignable across a wide range of mediums – including events and the internet – but also make them universally compelling, entertaining and informative.
That is a unique skill set, and they require a special kind of organisation. Whether or not you can successfully meld that type of organisation into a “professional consultancy” is yet to be seen. The jury is still out. Today’s judgement would be “possibly, even probably, but not easily.”
As the old Chinese proverb says, “May you live in interesting times.”