Accenture: the cat and the pigeons

29 May 2018  |  Dominic Mills 
Accenture: the cat and the pigeons

There's no reason Accenture's move into media buying won't work, writes Dominic Mills - but there are enough hurdles to overcome to mean it doesn’t have a clear run at landing the big media accounts

Accenture Interactive’s announcement last week that it was moving into programmatic media buying has certainly put the cat among the pigeons, as represented by auditors and the traditional media agencies.

An American friend of mine from Virginia would say of this that “Accenture is now sitting in the catbird seat”; I have never totally understood the origin of the phrase - maybe it’s a southern thing - but it certainly conveys a sense of impending mayhem.

It’s also spooked major investors: on the day, WPP’s share price dropped 4%, and another 3+% the day after. Was this solely to do with Accenture? This was also the day Mindshare lost HSBC, but bear in mind that shares in both Publicis and Omnicom also fell last week, albeit by less.

You can read comment from Bob Wootton, Alex DeGroote of Cenkos and the IPA here.

Ironically, it came just a day or two after Dentsu Aegis boss Jerry Buhlmann dismissed Accenture’s threat to his business on the grounds that its offering had little to do with media. Nul points for timing - and a hit to the share price too.

Despite Accenture’s recent and repeated protestations that it had no interest in going into media, the move should not have come as a surprise. I’m told that, quietly and via the LinkedIn pages of at least one member of its staff, it had been running unbranded ads looking for programmatic traders for the last couple of months.

The apparent change of heart? Well, that’s all down to the fact that clients had been asking - no, demanding - that it move into media. Yeah, right. It looks like this was the plan all along: achieve profile and critical mass with its ‘experience’ offering based on the sweet spot between digital transformation and marketing, and then build out into adjacent areas of which programmatic is potentially a lucrative area.

So, looking at the move, there are two questions to answer. The first is this: what are the consequences for Accenture’s media auditing business?

Naturally, parts of the industry have been crying ‘foul’ on the grounds that the move into media buying raises a conflict of interest - a legacy business and not, it should be noted, part of Accenture Interactive - all the while chasing its clients as hard as they can.

So, are the likes of the IPA, Ebiquity and agencies right to protest? On the surface, unarguably. There is an obvious clash, despite Accenture Interactive playing the Chinese walls card for all it’s worth.

But in reality, no. I talked to a competitor and they tell me there’s two reasons, possibly three, why - although that won’t stop rivals making hay while they can

One, an organisation as large as Accenture is inevitably siloed, and they would find it hard to share information even if they wanted to - which I doubt since its corporate reputation is built on probity.

Two, its media auditing business is in reality tiny - with revenues in the low double-digits (which I think means less than $50m). In the context of a business as large as Accenture’s this is nothing. If it has to sacrifice the auditing business - which, I am told, has been leaking staff anyway - it can and not even notice the difference.

And the third possible reason it might be happy to let the auditing go is due to a structural change in the nature of auditing. Like most others, Accenture’s is built on cost pooling. This might have been fine a few years ago when you had a few TV channels and a restricted number of other media to measure. But now, especially in an era of 500 TV channels, almost infinite digital choice and increasing amounts of real-time bidding, less so.

So one side consequence may be a major shake-up of both the auditors and the way they work.

Back to the second big question, which is this: will Accenture’s jump into media buying work?

Well, why not? First, Accenture Interactive is new and shiny, and clients like that.

Second, it’s promising transparency, which is an obvious thing to do and while it is by no means the first to do so, it is still enough of a differentiator.

Third, unlike the holding companies, by culture and history, Accenture is good at running a single P&L, meaning it is less prone to sibling infighting amongst its operating companies.

Last, there is no doubt the Accenture brand plays well in the boardrooms and it is easy to see a client CEO/CFO/CMO saying “just buy the whole damn lot from them”, a point Bob Wootton makes well here.

Indeed, rather as they used to say that ‘no-one ever got fired for buying IT from IBM’, so the same may be said to apply to Accenture Interactive and marketing services.

That’s the upside. But there are enough hurdles to overcome to mean it doesn’t have a clear run at landing the big media accounts.

So far, while it looks as though they’ve hired the traders, where are the planners? I am unaware of any moves by Accenture in this area. And planners - really good ones, I mean - are the difference between adequate and great performance. But would they want to go and work there? Planners need to work in a sympathetic culture, and whatever the faults of the legacy media agencies, their planning abilities are a big plus.

Another issue is that really top-notch media buying depends, not just on digital, but a nuanced understanding of the different roles played by other media - TV, print, OOH and radio - and the ability to make them work in concert. If Accenture has no role in non-digital media, how efficient and how effective (not always the same thing) can the whole be?

Last - the money.

As a whole, Accenture operates off far higher margins than the ad industry. Why would it accept less from Accenture Interactive media? So the expectation is that it will charge and, as a declared transparent operator, without access to some of the tactics the established media buyers use to make up for downward pricing pressure - you know what I mean.

So, when push comes to shove on the margin - as it undoubtedly will - how will it manage? Bear in mind, of course, that those other auditors and pitch consultants - i.e. the rivals to Accenture’s auditing business - will be among those sitting in judgement on Accenture Interactive’s media efforts either in the pitch or in an auditing capacity.

Fun, eh?

The pigeons might just fight back.

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JohnGriffiths, Principal, Planning Above and Beyond on 29 May 2018
“my reservations come from that last point about margins. If a business is about aggregating revenue - or increasing margins then why go after a low margin business - what makes them think they can manage it and profit from it better than the existing players. And is the play the assumption that if you aggregate there will be a tipping point when managing it becomes viable - good luck with that! If Accenture run it like a high margin business they will fail. If they make themselves hostage to taking a big enough chunk of the pie they will fail not least because I believe governments are starting to take an interest in corporations which are not accountable. The regulators are coming - and to respond to that you need .. margin to match scale.”

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