Exclusive: Accenture's Droga5 acquisition reinforces WPP's new strategic direction is the right one, says Mark Read

WPP boss Mark Read, who is leading the renewed strategy for the world’s largest advertising company, feels that Accenture's Droga5 acquisition reinforces that his new strategic direction is the right one.

Mark Read

Speaking exclusively to BestMediaInfo.com, Read said, “This acquisition demonstrates the power and value of creativity to our clients and reinforces my view that WPP’s new strategic direction is the right one.”

Reacting to the development, Read’s predecessor and now S4 Capital’s founder, Martin Sorrell, was very brief to tell BestMediaInfo.com that Accenture and Droga5 are a perfect fit.

Martin Sorrell

Not long ago, when Martin Sorrell launched S4 Capital, he revealed that he wanted it to resemble the likes of Accenture because all six holding companies are moving in the exact same direction. “The Accentures don’t compete for $5 million projects, they compete for change projects as high as $200 mn,” Sorrell, the Executive Chairman of S4 Capital, had said at that time.

Sorrell probably said this as he might have had a hint of the likes of Accenture looking at stepping into the creative area. For quite some time, word has been around in the industry that technology and consultancy companies such as Accenture and Capgemini were considering acquiring Publicis and WPP, as well.

But with Accenture Interactive acquiring Droga5, rather an independent creative agency, the million dollar question is that has the tech giant changed its strategy to build the creative business brick by brick with independent agencies instead of trying to catch the big fishes? Or, is the acquisition of holding companies still on cards?

At the Spikes Asia 2017, Kate Stanners, Global Chief Creative Officer at Saatchi & Saatchi, mentioned to BestMediaInfo.com that if technology companies such as Capgemini and Accenture were to acquire giants like Publicis and WPP, it would be a big move.

Ashish Bhasin

Talking about similar acquisitions taking place in the future, Ashish Bhasin, CEO, Dentsu Aegis Network of Greater South and Chairman and CEO of India said that in today’s day and age, nothing can be ruled out. “There are some weak holding companies, so there could be some potential targets. But it’s not very likely in the immediate future,” he pointed out.

Acquiring six major agency holding companies, what’s it like?

Discussing the rise of consulting companies getting into the advertising space, Sorrell had said earlier, “If you even add the market cap of all the holding companies together, Accenture is one-and-a-half times bigger.”

"One can only benefit from the deal by partnering with each other to deliver better rather than trying to be better than each other," mentioned Stanners earlier.

“I find it very interesting. It’s not unusual and a lot of people have been doing it in the past and it has failed because some forces reject other forces and sometimes it works quite well together,” she added.

Bhasin clarified, “One thing that has to be remembered is that the smallest of the big four consultancies has a market cap of the big five of advertising put together. So they definitely have the more financial wherewithal. So it’s not something that can ever be ruled out.”

“The weaker, old world traditional type of holding companies will definitely be under threat,” he added.

What benefit does such an acquisition serve to both – the acquirer, and the acquired?

The future of advertising clearly lies in the meeting of creativity with technology and data. “The assumption being that both of them coming together would be able to deliver that. And that will be the single biggest benefit, I guess,” explained Bhasin.

Stanners has worked closely with DigitasLBi and Sapient. “You need to spend time together as you speak different languages. One needs to respect each other and not think you are better than the other. If you really understand what the other does, then it is powerful,” she had said.

Buying boutique, independent or large agencies?

Bhasin thinks that the technology and consultant companies would prefer to go with as scaled up operations as possible, particularly if they need a global footprint.

Droga5 might be an independent agency, but it’s not a boutique agency, it’s a fairly scaled up agency, it’s big in New York and London.

What is the strategy behind such acquisitions?

The consultancies are with good theoretical and strategic concepts, but they are not good at creativity and last-mile implementation. “So what they are seeking by an acquisition like this would be able to get the creative ability and the ability to do the last-mile implementation,” emphasised Bhasin.

What was interesting was when Publicis bought Sapient. “The way that works, the creative agencies are able to access the knowledge and experience and understanding and use it and vice versa. That is at the end going to make creativity more powerful. Technology will bring to us the way in which we can make the work more powerful like never before,” Stanners had said.

“Whether you buy each other, I don’t know, but they will have to coexist,” she had appended.

How does this impact agencies?

Everybody has a different point of view. “But speaking from an Indian perspective, it is a great opportunity for agencies because rather than us worrying about the consultancies coming down into the agency world, I think we should take the upper hand. We have the implementation and creative ability which they will never be able to do at a cost and scale the way agencies can, the last mile bit,” said Bhasin.

In India, nobody pays for PPTs, they pay for delivered implementation. “We actually have a huge edge in that. They are definitely better in the areas of strategic thought and strategic areas, but I see it is an opportunity for agencies, as agencies can very easily go up the ladder than they can come down the ladder. They will never be able to do this implementation at the scale that we can, because their cost structures are very different,” he added.

DAN Consult was launched in India, keeping such situations in mind. “You have the implementation ability and the creative ability, you have the potential to build better strategic capability, so it’s easier for agencies to eat their lunch than worry about them coming into our business. And I think DAN Consult is the first example of that in India,” said Bhasin.

“I’d rather take the battle into their field, than wait for them to come into ours. That’s why other people may see it differently, but I see it as an opportunity,” he concluded.

Info@BestMediaInfo.com