Adweek published an article noting the rise of “consulting services” within agencies. I think it misses the point.
I’ve worked at both “agencies” and “consulting shops” – and I’ve worked on several engagements where agencies and consultancies worked together. I’ve spoken to many friends in agencies and consulting firms, and the fundamental difference is not one of scale, or “competence”, or job title – it’s a fundamentally different view of what matters.
My friends who work for consulting firms believe that “the business” matters – how it’s organized, where the value is created, how the product range fits into the market place, pricing models, how it interacts with suppliers and regulators. They see “the market” as a primarily statistical entity, with “segments” and “channels” and believe that marketing and advertising uses a magical process called “creativity” to convince those market segments to buy the goods and services.
Some of my agency friends believe that it’s all about “the brand” – how consumers perceive it, how to tell stories about the brand, how to reach new people who might love the brand, how to measure the brand’s impact. Many of my agency friends go further, thinking about how “the brand” contributes to sales – how do we convert love for the brand into sales, how do we measure that contribution, where can we open up new opportunities for people to interact and buy? They see the rest of the business primarily as a black box which provides money for marketing, and products or services to sell to the consumer, with a magical process called “operations” which somehow delivers all this stuff.
Okay, okay, I’m exaggerating. But not much.
This dichotomy – separating customers from “the business” – has always been a bit problematic, but the Internet is breaking down those walls ever faster. Advertising – taking attention from consumers and using it to push your message – is ever more difficult as media is fragmenting, consumers have more choice in both the information they can access and the products and services they can buy. Today, “brand” is about how you treat your customers, not about your logo, or your strap line, or your colour palette.
But a business that focuses purely on operational efficiency is doomed – you have to innovate, and find new markets, or you will have to compete on price at best, or become irrelevant at best. While there is obvious value in improving operational capabilities, real innovation combines operational capabilities with customer needs.
And that brings me back to the Adweek article.
Where agencies can add new value is not in “marketing consulting” – we have been doing that for ages. Instead, agencies can bring that deep understanding of how to create a link with consumers – a story, a delightful user experience, a slick and natural-feeling technical implementation – to the operational improvements you can get from Accenture of McKinsey.