Accenture Interactive buying its way to well over 20% growth
Since its launch in 2009, Accenture Interactive has executed a campaign of rapid expansion which has lately been sustained by a huge acquisition drive in the creative sector. According to Accenture’s Interim Chief Executive, the firm is now growing largely organically, at a rate in excess of 20%, even amid sustained hostility from the advertising industry.
In its continued push into the creative sector, Accenture Interactive most recently acquired New York and London-based ad agency Droga5, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. Since commencing its billion-dollar drive into the lucrative industry, Accenture Interactive has consistently demonstrated its ambition to be the globe’s most trusted advisor to chief marketing officers, with a holistic offering that combines its newly added creative capacity with the clout of its established advisory and analytics capabilities. Accenture’s arrival in the sector has not been without controversy, however.
Not surprisingly, creative sector incumbents remain hostile to its Interactive brand. Despite a mounting pile of evidence heralding Accenture’s growing role in the advertising industry, sector giant WPP has maintained that the marketing revenues of consultancies entering the sector have been “wildly overestimated” by analysts and the press. The spat between WPP and Accenture in particular has become increasingly ugly, with the agency group now refusing to share media data with Accenture for a media audit, suggesting it could use that intelligence to undercut WPP’s prices on pitches for lucrative advertising budgets.
Elsewhere, Ben Langdon, Chair of management consultancy Class35 recently suggested Accenture’s strategy might be heading in the wrong direction. In an article published on Consultancy.uk, Langdon argued that if Accenture’s purpose is digital transformation, then “going after creative agencies is barking up the wrong tree”, citing the Droga5 purchase in particular. He argued that Droga5 was “one of the few agencies” still doing brand work the old-fashioned way, making it attractive to Accenture, but added ironically that “by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.”
Despite the criticism it has faced on both sides of the consulting-marketing divide, however, Accenture Interactive would no doubt now argue that its results speak for themselves. According to its parent company, the creative wing has experienced meteoric growth of more than 20% over the course of this year. Accenture Interactive previously reported revenue of £6.7 billion in the year to August 2018, meaning it is on course to pass the £8 billion mark this year.
Organic growth
Commenting on the earnings call, David Rowland, Interim Chief Executive of Accenture, recently insisted that the growth was not just due to Accenture Interactive’s acquisition campaign. He argued “the vast, vast, vast majority" of Accenture Interactive’s growth is now organic, thanks to previous acquisitions such as Fjord, Karmarama, The Monkeys and SinnerSchrader having kept expanding, adding sustainability to the project as a whole.
With regards to the future, meanwhile, Rowland marked out Droga5 as a cause for confidence this trend will continue. Stating he was "particularly pleased" with the estimated $475 million purchase of the US-based creative shop, "by far our biggest" acquisition of the year, Rowland argued that it strengthened Accenture Interactive’s credentials as an “organic-driven business” which will continue to use strategic acquisitions as “an igniter of the organic growth… [meaning the firm] still has a big growth proposition in front of it."
Elsewhere, the founder of Droga5 has spoken on the main stage at the famous Cannes Lions festival to explain why he chose to sell his agency to the consulting giant rather than a traditional agency group. During a discussion at the advertising industry event, David Droga said that “the industry has changed”, with heightened advertising spending meaning clients are keen for analytical proof their expenditure is really helping. This, as well as a number of other matters, means brands need a more joined-up approach that goes far beyond advertising and communications.
Droga added, "I want to do more, with more levers, and I want to make it consistent… It’s humiliating because I’ve felt I’ve built this great agency over 12 years [and yet] in 10 years, they’ve built something bigger [conceptually] than any holding company by offering [a broader range of] services that we need, that clients need.”
