Will the new Omnicom fend off the consultancy threat?

Omnicom, after buying International Public Group (IPG), is the world's largest ad agency network. But does it mean the group or agencies will now have a seat at the boardroom table like the consultancies?

That's one of the questions this acquisition has posed.

Consultancy giants such as Accenture, JP Morgan, or Deloitte can sit next to the chairperson or CEO of an FMCG giant and recommend its board to increase the price of its best-selling biscuit, reduce the grammage of a hit flour brand SKU, or rebrand the company to move the bottom line, all while getting paid in crores for their recommendations.

"Will this consolidation create an Omnicom consultancy focus or group? I don’t think so." - Rohit Ohri

On the other hand, ad agencies that should be able to know their clients' consumers better than their own family and craft persuasive communication rarely make it past the reception desk on the top floor.

Seven to eight years ago, agency-holding networks considered consultancies as the biggest threat, rather than each other. Such was the worry that in 2018, Dentsu India launched its consulting practice called DAN Consult; if you can’t beat them, join them.

On the other hand, the consultants looked at ad agencies as the missing piece to their offering puzzle. Sure, the suits could crank open an Excel sheet, but can they tell a moving story with numbers and bring the client to tears, applause, or awe? No sir. The first sign of action from the consultants came in 2019 when Accenture acquired Droga5, one of advertising’s most famous creative agencies.

“Bringing in Droga5 was Accenture’s completing its full stack of services with consulting holding the high ground,” says Rohit Ohri, former FCB global partner and chairperson and CEO, FCB Group India, and suggests one cannot compare Accenture’s buy of Droga5 with Omnicom acquiring IPG. 

He does not believe the new Omnicom will offer anything in or around consultancy practices, and it’ll offer the same service the two networks offered before the acquisition. 

“It's just two networks doing the same thing and they may not likely get a seat at the table like an Accenture or a Deloitte. Will this consolidation create an Omnicom consultancy focus or group? I don’t think so.” 

"Clients are not really enamoured any longer just because you are from a large agency." - Virat Tandon

A whole new world

Saurabh Varma, founder and CEO of Wondrlab, a martech platform, sees a changing world where technology giants are acquiring content companies and content companies are acquiring data and technology brands. He believes agencies can get a seat at the table in this kind of world, provided they get six things right to compete with the likes of an Accenture:

•    Remove silos to optimise the business. Have as many partners as you want, but one person has to take the final call.

•    Use the money generated from the consolidation to take big steps, such as acquiring more large strategic companies.

•    Optimise your capex, especially your large costs like real estate and technology.

•    Combine your specialist operations; assume IPG has a fantastic cybersecurity offering and Omnicom is excellent in platform building; combine them and sell to clients.

•    The biggest thing you can immediately leverage is the combined media volume. You now have the power to negotiate a lot more.

•    You have to be decisive in the way you build the network with speed, and that will take some tough calls.

“At the end of the day, when you look at Accenture, there is only one brand and not 17 brands; create leadership that can be effective and can take calls on behalf of the entire organisation.”

There is a seat at the table 

On the other hand, Virat Tandon feels agencies do have a seat at the table. Not all, but design, strategy, and the ones that work on a brand’s communication. He is the founder of the marketing services platform Curativity and the former CEO of the MullenLowe Lintas Group. 

He nods to consultancies’ multi-offerings, be it in supply chain, finance, or even restricting the company. “Our expertise is in marketing, and as far as it is on the agenda, agencies do find a seat at the table.”

He adds a caveat: “Clients are not really enamoured any longer just because you are from a large agency. It's more about the specific talent/team's ability to impact the client's business, which earns one the respect and seat at the table.”