Goodbye, Ad Agencies. Hello, Consultancies

If creativity is King, it’s only because performance is Queen. The disconnect between jaw-dropping creativity and high-performance solutions continues to suck agencies dry all over the world. It’s for good reason: businesses don’t just need exposure or a viral YouTube clip. What market leaders want (and deserve) are metric-based solutions that can actually improve cash flow, create larger margins, and inspire greater market share.

Enter consultancies.

In 2017, four consultancies were listed among world’s top 10 largest agencies—compared to only the two that made it to the top in 2016. Accenture serves more than 75% of the Fortune 500 and IBM iX boasted revenue of $1.9 billion in 2015. Consultancies are well positioned and well equipped to trample over the top traditional “creative” agencies. It’s not surprising then that over 73% of marketers are open to hiring consultancies—not agencies—to solve their digital marketing needs.

In today’s world of machine learning and AI, everything can be measured.

Consultants have a rich history of offering their clients clear metrics and defined success. Agencies have a tendency to lay the creative director trump card and mistake an idea as a strategy. Agency executives talk about an Ad like it’s the silver ticket to market share—dreaming of smokey boardrooms on Madison Avenue.

Consultancies realize that the time when a good ad had the power to build a brand is long gone.

Customer journeys in 2018 are complex, with dozens of interactions (often disconnected) via multiple channels (often both online and offline). Consultancies help to identify, track, and analyze those interactions—and then develop solutions based on extracted data. As a result, products are getting sold faster, more frequently, and at greater margins. So, it’s no wonder brands like Uber, LG, and Airbnb hire consultancies for work that would have been previously assigned to advertising agencies.

In agency language, it’s the difference between an Art Director and a Creative Director. Individuals who provide art direction focus on tactics and alignment. These are pivotal items for a brand looking to operate with autonomy and unity. But Art Directors are not Creative Directors.

True Creative Directors think in terms of scale, strategy, execution, and analytics. Yes, these Creative Directors are rare—but they’re also the most valuable. To be truly creative you have to understand the marketplace, your audience, and relevant data. You have to steep yourself deeply into trends and you must emerge with a strategy that is scalable and aligned with the brand’s voice.

Here’s the problem for agencies and advantage for consultancies: true creative directors are more likely to be at a consultancy than at an agency. Why? Because they care about performance, not just press. Pixels and color are important but not as important as conversions.

The advertising industry is maturing and consultancies have a head start.

While this change is making typical ad agencies grimace, consultancies can barely suppress a grin. Agencies face three options: mature, downsize, or be acquired. The best agencies have brilliant people and talented minds. But that raw ability won’t help their suffering profit margin if they can’t offer holistic solutions—not just beautifully executed campaigns.

For the “Big Four”, the future is bright. Market leaders are buying expensive technology and honing the skills to translate it into profits. Consultants are in high demand. While the ad will never be dead, it will never be the holy grail it was once upon a time.

For advertisers, the grieving period is over. Move on, or become obsolete.

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