What It Means for Advertisers as Accenture Ventures Further Into Agency Turf

WPP is the first to respond saying it won’t participate in the consultancy’s pitches anymore

In the famous story, the smaller, weaker David defeats the giant Goliath armed with just a slingshot and a few stones. But what happens when we freeze-frame on that scene and pan out to realize that Goliath himself is being stalked by a much bigger foe many times his size?

That’s certainly the case for WPP, which can feel the looming shadow of consulting giant Accenture, an organization more than double its size in revenues, falling across its future path.

Accenture’s business numbers are impressive and certainly something for WPP CEO Mark Read to covet. In 2018, they posted an 8% organic growth rate (versus WPP’s 0.4% decline) and seem to be an unstoppable force as they muscle into the advertising industry.

The Accenture Interactive unit (the bit that most resembles an agency) now boasts revenues of $8.5 billion, and recent acquisitions of leading agency businesses like Droga5, which is thought to have been purchased for around $400 million, highlight the company’s desire to compete head-to-head with WPP, Omnicom, Publicis and the rest.

 

For years, WPP was able to squash or acquire smaller agency businesses that threatened its dominance. But times have changed. WPP’s share price has almost halved since the highs of 2016, and it now finds itself under pressure to carve out a bright future for its twitchy shareholders.

Goliath has now become David.

WPP’s response appears to be that it will no longer participate in Accenture-run pitches. Leaked internal emails show that WPP now refuses to participate in any pitch or media audit run by Accenture.

While Accenture Interactive gets all the attention, the consulting giant has been running audits for major global advertisers since 2005 when it bought a company called Media Audits. Not only that, but they also run the occasional media pitch.

WPP has a problem with this because, during the course of running an agency pitch or an audit, Accenture would be asked by the client to “look under the hood” of the competing agencies. This would give Accenture as the intermediary consultant highly valuable intel about the processes, talent and pricing models of the world’s leading agencies.

Now that Accenture has become a giant advertising agency itself, it could present a serious conflict of interest, and WPP has said it will no longer allow Accenture the access required to do this work.

This sense of competition has been made worse by the launch of Accenture’s programmatic media buying business, again in direct competition with WPP’s GroupM and the media buying arms of the other major advertising holding companies.

The move by WPP is the clearest sign to date that Accenture should now be regarded as an agency. WPP clearly regards it as a direct competitor and will continue to call it out on any actions that could be deemed a conflict of interest and on anything that WPP sees as giving Accenture any competitive advantage.

https://www.adweek.com/agencies/what-it-means-for-advertisers-as-accenture-ventures-further-into-agency-turf/

Advertisers, as usual, will be the final arbiter, having to decide whether to continue to hire Accenture for media auditing services in light of WPP’s refusal to work with it. After all, they might have to move their audit business elsewhere if they have any intention to ever work with (and audit) a WPP agency.

I doubt that Accenture will be in a rush to concede to WPP and resolve this conflict of interest. Revenues from media auditing and pitches are small enough to be considered a rounding error in the group’s total numbers (I estimate it is less than 0.1%). But right now, it acts as a useful, but ultimately disposable distraction, keeping WPP executives busy even as business is stolen away by Accenture.

Until, of course, this becomes untenable under pressure from major advertisers, which are collectively, in turn, the true giants in this equation.

https://www.adweek.com/agencies/what-it-means-for-advertisers-as-accenture-ventures-further-into-agency-turf/