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The world’s largest agency group, WPP, has dismissed the apparent threat from consultancies such as Accenture and Deloitte which have begun to acquire creative shops to grow into the advertising and design sectors to service their clients.

While releasing its latest financial results, the WPP statement addressed the changing nature of the advertising market, highlighting three ways in which the industry is changing. On the rise of tech and search platforms such as Google (understood to now be WPP’s largest partner), Facebook and Amazon, it said that the former two companies had, in recent times, become “friendlier” as they have become key media partners for the network that is an important client to each entity. Another change the report spotlighted was client consolidation by major companies such as Unilever and P&G, probably the most important change taking place at the moment, forcing consolidation within the networks and cost cutting to match the lower budget spend from each FMCG conglomerate.

The third change was with the consultancies moving into the space by acquiring “small agencies” and talent. The report stated that only “two or three” such businesses were currently capable of competing.

It continued: “Most agencies report, including ourselves, that even when they do compete directly with the consultancies on digital projects, the win/loss records are consistently strong, particularly given the continuing importance of the creative dimension for success.”

It then continued to question whether such companies were capable of buying a culture of creativity and claimed that the press had “wildly” overestimated their digital marketing revenue in comparison to the holding companies and agencies.

“Where the consultancies may have made some inroads is their focus not so much on the digital area, but more importantly on client concerns about cost. Very few CEOs will resist the suggestion that they may be overspending and the promise of an audit or review that will only cost a proportion of any cost savings generated or a contingency fee,” the report said. “So, it may well be, that consultant activity is having some impact, not so much in the digital area, but more because of an emphasis on cost containment.”

WPP reported an increase in revenue of 1.1% at £3.649bn for its third quarter and reported revenue up 8.9% at £11.053bn for the nine month period overall.

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Sourced from THEDRUM

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