Ten thousand words long article analysis: Why do advertising companies want to do consulting? (Part 1)

The consulting industry is not new to advertising companies. So why do advertising companies want to do consulting? Is it for strategy or tactics? What changes will consulting companies entering the advertising industry and the rise of digital advertising bring? Let's take a look at this article.

The boundary issue between consulting firms and advertising companies is nothing new. In fact, the boundary between the two seems to be slowly disappearing since the advent of the mobile Internet era.

In the past two years, the concept of " advertising consulting " has become popular in the advertising industry. Many people say that it is because the industry is tightening and advertising companies can't make money, so they can only explore new business upstream; others say that it is because compared with the 200,000 strategy fee , the 2 million strategic consulting fee is more promising.

Therefore, 4A companies took the lead in starting their own mergers and acquisitions and entering the consulting industry in 2017. As a result, with the help of mobile Internet and the transformation of 4A companies, a large number of hot shops began to usher in their own highlights in the advertising industry. However, in less than two years, the creative hot shops that were once so popular seemed to have begun to face various problems.

In this regard, Creative Hot Shop seems to have taken the old path of 4A companies that they don't like very much - entering the consulting industry. Just like in July 2020, WPP Group announced that it would merge its three agencies to form a new global strategic communications and public affairs consulting company Finsbury Glover Hering. Creative Hot Shop has basically begun to try to enter the consulting field.

On October 30, 2020, Aerobic YOYA held a strategic upgrade press conference in Hangzhou, proposing a new company development model driven by consulting + creativity.

On May 20, 2021, Okk. Creative Consulting was announced to be launched. The main creative team comes from the top domestic creative hot shops (former founder of Youmen, Wang Xiaosai), international first-line 4A and large integrated media agencies.

In August 2021, the international creative hot shop FF (FRED&FARID) announced the launch of the strategic consulting agency FLAWED , beginning its consulting experiment.

In 2021, Jiangjun Liang, chief strategy officer of Zanyi GGN, found his first consulting client through self-media and officially established "Jiangyi Consulting" .

On March 3, 2022, Ma Xiaobo, Yao Jun, Sun Tao, and Zhou Jun, advertising professionals with more than 20 years of experience each, jointly established a new brand marketing consulting company: Qun Yushan.

On February 14, 2023, Su Lao Shi , the former senior consultant of Xiaoma Song, founded Su Lao Shi Brand Marketing Consulting, with a team from Ogilvy, Hua & Hua, and Xiaoma Song.

On March 13, 2023, Tianyukong and Zhaoma Brand Management, subsidiaries of Insai Group, jointly invested to establish Shanghai Zhaoma Tianyukong Brand Marketing Consulting Co., Ltd., referred to as Zhaoma Tianyukong ...

But it is undeniable that the capabilities required by advertisers and consultants are also very different, although both parties are indeed in the upstream and downstream of the same industrial chain. So why has brand consulting become a hot word in advertising companies ? This may have to go back to an earlier timeline to start.

1. Consulting firms invade the advertising industry

Before 2016, the relationship between advertising companies and consulting companies was actually quite close, and they were good partners. To a certain extent, even in many fantasies about the two industries, it is not difficult to find that there is no overlap between the two sides.

People often imagine consulting firms like this: graduates from prestigious universities, wearing black suits, holding endless meetings and making endless plans all day long around the company's strategic direction, and finally finalizing a PPT with the strategy, telling the client what you can do next and why you should do it.

On the other hand, advertisers need to wait until all these plans are finalized, and the senior executives of the client will determine the products they want to promote according to the strategy given by the consulting company. Walk to Madison Avenue and enter a building with a shining sign on the exterior wall downstairs, which reads WPP, Publicis, Omnicom, IPG... or other companies.

Then, a brainstorming session like the one in the American TV series "MAD MEN" was started to formulate strategies and finalize the creative ideas. The advertisers opened the PPT, and the client excitedly said, "This is the creative idea we want."

Then from Manhattan to Brooklyn, then to Florida, and finally picked up the shining trophy at the Cannes Creative Festival. Finally, one day on Madison Avenue, the person who came up with this idea had an advertising company named after himself.

All of this is based on a simple division of labor: the advertising company is responsible for creativity and delivering the value that Party A wants to convey to consumers ; the consulting company is responsible for top-level construction and solves the company's strategic direction for Party A and jointly determines the next direction of the company.

However, this tacit understanding has gradually disappeared since 2016: consulting companies began to do advertising. Then, 4A companies started to criticize consulting companies, and the two sides officially started fighting. It probably started in 2017 when Accenture Interactive won Maserati's global brand experience marketing agency business - this was the first time that an advertising company under a consulting giant "grabbed" a brand's main advertising agency business.

In 2017, Accenture Interactive, IBM iX, and Deloitte Digital were listed in the list of the world's top ten digital marketing groups released by overseas media AdAge.

For a while, the war of words between the two sides escalated to a higher level, and many media outlets even wrote more shocking headlines: Accenture's acquisition of WPP is really not a fantasy.

2. Strategy, advertising, and media: The weapon of advertising companies is creativity

People's earliest fantasies about advertising companies are Ogilvy, WPP, Publicis, Omnicom and many other 4A companies. Even domestic advertising agencies that have grown up will be given a code name for a long time as their size grows: local 4A.

As mentioned above, whether it is international 4A or local 4A, although they have a series of subdivisions such as strategy, creativity, and media, the core that they value most is still creativity. For a long time in the past, advertisers who have been praised and even regarded as legends are best known for their creativity that has made a product go from being ignored to quickly opening up the market and becoming a hot-selling product.

At the same time, 4A companies also hope that what they output is not cheap content, but the ability to continuously raise their own business threshold, integration strategy and media department strength. Finally, tell customers: what we output is a creative idea that is worth a high premium .

Ultimately, advertising agencies can get more client budgets. Of course, it would be best if they could win a big prize at a creative festival.

Therefore, the pace of mergers and acquisitions of major 4A groups has almost never stopped. They recruit talents for the research, strategy and media departments, and constantly acquire new companies for their own groups, turning advertising companies into behemoths. But creativity is still the foundation of advertising companies. Just like the most important event in the advertising industry, from the past to the present, it is still the Cannes International Creativity Festival. From the name, you can see how important creativity is to advertisers.

In fact, if we take a closer look at those widely sung advertising legends, we can also further glimpse the importance of creativity in the advertising circle. For example, when summarizing the reasons why P&G was able to stand out in the early days, many people often focus on the fact that P&G was the first brand to put its logo on soap.

In addition, we can see that DDB Advertising Company only needs one "Think Small" advertisement to make Americans who prefer big cars pursue the small car Beetle.

If we look at the title page of Steve Jobs:

The people who are crazy enough
to think they can change
the world are the ones who do.
—Apple's “Think Different” commercial, 1997

This sentence is the advertising slogan that many people believe saved Apple in 1997.

As digital media becomes more and more powerful and media channels become more and more dispersed, data has become a recognized deep water area. Each company has its own walled garden and each company has its own logic for delivery. This media environment is constantly changing consumers: the circle is becoming more and more obvious. The so-called information cocoon and circle barriers have largely separated consumers.

This means that if you still want to rely on a "big idea" as in the past to make consumers in a region have a consistent understanding of the brand, this is already an impossible task. However, if you completely rely on precise delivery, it is not a good idea either. Adidas did this back then, and the final result was a negative case of "discovering comprehensive advertising after two years and ignoring long-term branding."

3. Strategy: Strategy or Tactics? The weapon of consulting companies is strategy

Of course, the essence of the above stories is to summarize those legendary results from the perspective of advertising people. In the eyes of many advertising people, creativity has its unshakable position.

If the pursuit of "Big ideas" was the most important part of the DNA of many advertisers at the time, then for consulting firms, another word was engraved in their DNA: strategy.

Therefore, if we switch our perspective to the consulting company, the conclusion of the above story may change slightly. The consulting company would think that P&G was able to become popular in the United States at that time because its product quality was good enough, and the biggest role of printing a logo on the soap was to allow consumers to quickly identify the style of the soap. Or to put it simply: the power of the product has made P&G what it is today.

In addition to the phrase "Think Small", the reason why Americans accepted the Volkswagen Beetle was the inflation in the 1960s. Americans in the era of great inflation would naturally be more willing to accept the Beetle, which consumed less fuel and was cheaper.

The same is true for Apple. The "fool-proof" closed system of Ios is more user-friendly, and the subsequent innovations at the product level have brought about a change of the era. It was not Think different that made Apple, but Apple's innovation and revolutionary products that made Think different.

Two completely different ways of thinking have created the difference between consulting firms and advertising firms, just like the English word: Strategy, which is a word used by both consulting and advertising firms, but in the Chinese context it is divided into two words: strategy becomes a part of advertising, and strategy becomes the most important weapon for consulting firms.

As Michael Farmer, a senior strategic consultant and former director of Bain Consulting, said when talking about the business of consulting companies: Consulting practitioners will devote 100% of their energy to helping clients figure out how to revitalize brand growth and how to achieve brand profitability. These tasks include a lot of analysis, forming strategic plans, and letting the acquired agency company to specifically implement the implementation of marketing communications .

Such roles naturally shaped the division of labor between early consulting firms and advertising companies, with consulting firms responsible for corporate strategic planning and advertisers responsible for agency execution.

If the industry continues to develop rapidly, both parties can live in peace. Consulting business will never be exhausted. Why take the risk of entering a completely unfamiliar field? Moreover, those 4A companies on Madison Avenue have already firmly controlled almost all traffic.

This means that if the world does not change, both advertising and consulting companies will be able to continue to operate steadily for the next 40 years according to their previous division of labor.

4. The digital era drives market change

But unfortunately, the world never stays the same.

When the time came to 2017, the time for change had come. Mobile digital advertising emerged in 2014, and after three years of development, it has gradually matured.

The decentralization of media has, to some extent, weakened the monopoly of 4A companies. In the past, media resources were basically controlled by a limited number of agencies, and giant agencies almost monopolized all media resources in the industry, and used this to form a strong moat in combination with creativity.

However, the extreme fragmentation of mobile Internet media has, to a certain extent, broken through this moat.

Thanks to the characteristics of digital media, the role of creativity has been greatly weakened. On the contrary, the mobile Internet can collect user preferences and usage habits from all angles. This also means that for companies at this time: the ability to accumulate, interpret and use data has become a new option to determine the competitiveness of enterprises.

At this time, people will discuss data reports more, use them to gain insights into consumers, develop marketing strategies, determine suppliers to implement marketing projects, and allocate budgets and channels to ensure that the marketing results expected by customers are achieved.

From this, people seem to have discovered a new possibility: the ability to use data is precisely the area where consulting companies excel.

Over the past many years, consulting firms have been very good at providing clients with professional market reports and insights through a series of research, so it is not difficult to go a step further and do marketing reports. In this case, why not directly hand over brand strategy and media allocation to consulting firms?

In the past, this would have been a bit of an obstacle.

When we take a closer look at the strategy-based Warc Awards, it is not difficult to find that the cases that won the grand prize are that almost all of these award-winning brands have cooperated with their agencies for more than five years. A former senior executive of a daily chemical fast-moving consumer goods brand told Morketing: Long-term cooperation allows the agency to have a good understanding of the brand owner’s demands, understand the value that the brand wants to convey to the outside world, and deeply understand the preferences of the brand’s target audience.

Now, with enough data, this process can be shortened infinitely, and there is no need to use various creative ideas to test the preferences of the brand's target audience. Instead, the creativity can be customized and planned according to the attributes of the audience. So we see that as companies such as Accenture Interactive begin to enter the pitch scene, they no longer wave the plan based on the brief and brainstorming, but instead use market and consumer surveys and data to impress advertisers.

So, we saw that after Accenture Interactive won its first pitch in 2016, consulting firms like Accenture and Deloitte, Internet companies that have algorithms like Snapchat and Google, IT technology companies like Salesforce and IBM, and even media companies that have always focused on content production like The New York Times and Vice, all began to frantically acquire companies in the marketing and communications sector.

Of course, in this transformation, in addition to consulting companies, the client is also changing.

The Internet technology revolution has given advertisers the means and possibility to directly and free contact and communicate with consumers. A large number of free content platforms, traffic portals, and online accounts have given advertisers the opportunity to bypass traditional institutional media and directly promote their brands. The internal advertising departments of traditional "IN Houses" have begun to evolve towards "self-operated content" in a big way.

The era of relying entirely on advertising companies to handle all matters of brand communication is gone, and advertisers are becoming more and more powerful. This power is different from the traditional power of advertisers relying on the status of the client. Today's power is based on the improvement of professional capabilities and the control of implementation methods.

Simply put, in the past, the biggest moat for service providers was creativity, and by extension, it was the talent that could produce excellent ideas. But today, in addition to people, which are always important assets, service providers may need to supplement their hard assets in data and technology.

We can see this more or less in various digital advertising and marketing service providers. Almost none of the digital advertising service providers that have emerged with the Internet era emphasize creativity. Instead, they bluntly and coldly call this romantic word: delivery materials.

Their propaganda focuses on two things:

1. Third-party data provides advertisers with multi-dimensional data insights that they do not have.
2. It is a powerful technical model capability that enables efficient and accurate advertising delivery.

Thus, in that new era of advertising that was turbulent due to the arrival of digital advertising platforms, digital advertising services emerged like mushrooms after a rain and became an important new force in the advertising industry.

Author: Innocent Roland

Source: WeChat public account: Morketing (ID: Morketing)