Management Consultants Push Further Into Ad Business

IBM Joins Marketing Industry Fray With Accenture and McKinsey

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NEW YORK (AdAge.com) -- Accenture. IBM. McKinsey. These consulting giants are casting a lengthening shadow on Madison Avenue, a thoroughfare long avoided by these left-brain-dominated organizations. The day ad execs have long feared -- when
As a symbol of its expanding management-consulting services, IBM uses the image of a brightly colored fish swimming upward toward the light and against a dull gray school of fish.
management consultancies' bean-counting, process-wielding barbarians will storm the marketing world's gates -- may well be nigh, as each of these titans is finding its own way to make money in the ad business.

Latest in the fray
IBM is the latest to get in the fray. It is advising Coty on what essentially amounts to a $65-million-plus ad review, as part of a wide-ranging procurement contract the fragrance-maker inked last year with the consultancy company. A Coty spokeswoman was quick, however, to deny that IBM would actually select the agency or agencies in question. "I'm in the process of hiring a new communications agency and will have to run it by IBM, who has a process in place from a procurement standpoint," she said, but added: "The marketing department is much better suited to making a judgment call on who we select as an agency."

Advising Wal-Mart
Meanwhile, McKinsey & Co. is said to be trying to nudge its way into having a role on Wal-Mart's massive creative and media review and, according to executives familiar with the situation, has already been advising the marketer on shapes its agency roster could take.

These are the latest examples, but it's Accenture that has probably made the biggest splash so far in the marketing seas. Following its purchase last year of Media Audits, its marketing-sciences division now audits about 15% of the U.S. TV market, including the budgets of major marketers such as Ford and Wal-Mart.
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The division's CEO, Jeffrey Merrihue, describes the effect in no less dramatic terms than "a tidal wave, and one that's already had some concrete effect." Mr. Merrihue said the firm's analysis is serving as "the foundation" for the media portion of Wal-Mart's ongoing review.

While procurement, media audits and strategy consultations are nothing new, there is now a confluence of interest in marketing that's had "outsiders" flooding in. Some are excited by what one executive called the "elasticity" of the contemporary business scene. That is, the same world-is-flat realities that have Accenture examining media budgets allow Starbucks to play in the movie business and Unilever to create TV programming.

'Commoditization of our business'
Others don't quite see the silver lining. "This is just another sign of the commoditization of our business," said a senior agency executive.

Either way, pretty much everyone agrees: These players are here to stay. After all, they're backed by increased vigilance over spending in all business functions, including marketing, and by the availability of two-way media channels. It's a zeitgeist in which C-suite execs and corporate boards want to move toward accountability and return-on-spending and, in an increasingly digital environment, the media channels and tools exist to get them there.

"They've always had marketing strategies that addressed organizational issues," said Arthur Anderson, principal and co-founder at Morgan Anderson Consulting. "Now they're starting to nibble around the area of marketing communications. What's truly surprising is they haven't gotten in the space sooner. For many companies, marketing is the single biggest annual investment."

Doom-and-gloom scenarios
The most nightmarish of ad agencies' doom-and-gloom scenarios -- the one in which, say, a McKinsey starts to direct individual marketing programs -- seem far off. Traditional management consultants seem more interested in managing marketing expense, understanding return-on-investment and keeping costs down than in shaping strategy.

Accenture's Mr. Merrihue said the firm has no plans to expand its marketing-related offerings, now limited to market-mix modeling and media auditing "in the medium or long term."

IBM declined to comment on its client work and its plans for the marketing function, and a McKinsey rep didn't return calls.
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