Large advertising firms likely prey for consulting and IT giants

One of the top six advertising groups is likely to be purchased by giants in management consultancy or IT, who are increasingly encroaching on the lucrative advertising market, according to a mergers and acquisitions adviser.

The prediction comes in the wake of the high-profile acquisition of Australian creative design agencies The Monkeys and Maud by consulting and technology firm Accenture, and is a sign of things to come in the words of Ben Tolley. Tolley, a partner at Clarity, the company which advised the sister design firms on the deal, recently stated that he expected bigger acquisitions to follow over the coming years, with global systems integrators and IT firms growth “compared to the relative size of the ‘big six’ minnows" who make up the world’s largest ad groups.

The largest of these, WPP, is half the staff-size of Accenture, whose stock market capitalisation is also more than double that of the ad-firm. The other ‘big six’ firms – Omnicom, Publicis Groupe, Interpublic, Dentsu and Havas – are significantly smaller companies, making further M&A activity an inevitability remarked Tolley. The push from the consultants follows changing client demands for integrated digital services, as well as dynamics in the professional services industry including globalisation and blending of service areas – Tolley added that the growing capacity of professional service groups to utilise technology to make the best use of market data means their role is becoming increasingly similar to ad agencies.

“There’s a certain amount of wishful thinking on the part of the marketing services firms about there being a culture clash between the consultancies and system integrators and software companies on the one hand and creative businesses on the other,” Tolley claimed. “The reality is what those firms [in management consulting and IT consulting] are doing in marketing services is very similar,” he said.

Golden Monkeys | Maud

Based in Sydney, The Monkeys agency has been praised for innovative design and campaigns over the past decade, most recently receiving an award for 2017 APAC Creative Agency of the Year by Mumbrella, Australia’s leading marketing publication. The group were also past recipients for Agency of the Year from AdNews, B&T, Campaign Asia, Campaign Brief, among others. Its team of 130 employees have been behind a slew of breakthrough brand campaigns in the region, including Telstra’s: Thrive On; Meat and Livestock Australia’s You Never Lamb Alone and, most recently, QANTAS’s Dreamliner launch. 

Their acquisition, along with sister company Maud, meanwhile builds towards Accenture fortifying the firm’s role in the ad market, through its campaign and design wing Accenture Interactive (AI). The new deal will bolster AI’s full suite of digital customer transformation services, which the company provides to chief marketing officers and chief digital officers, as the group hope to supply creative solutions in design, marketing, content and commerce.

“The Monkeys has created provocative ideas that have redefined the industry and delivered innovative customer experiences,” head of Accenture Interactive Australia and New Zealand, Michael Buckley, confirmed, “This acquisition further differentiates Accenture Interactive as a new breed of agency providing CMOs with innovative thinking and a new set of connected capabilities to win in today’s experience-led economy.”

Accenture’s move builds on several previous bolt-ons in the advertising field, including the purchase of Belgium-based design firm Kunstmaan, German creative agency SinnerSchrader, Dutch mobile agency MOBGEN, and UK creative agency Karmarama last year. With the ‘Big Four’ accountancy and consultancy firms PwC and Deloitte are also building large advertising presences, among others, reportedly worth over $750 million and $1.6 billion respectively, advertising groups will undoubtedly continue to be considered desirable assets as the firms seek to effectively exploit this new front.

Related: Space between consulting firms and creative agencies is converging.