Inside Accenture Song’s deal to acquire Work & Co

Accenture Song CEO David Droga had been a fan of Work & Co long before his company agreed to acquire the design and tech agency earlier this week. “Long before I did my deal with Accenture” in 2019, Droga said. The acquisition signifies what giant consultants like Accenture value when it comes to agencies. Work & Co was founded in 2013 and has grown to nearly 400 employees working with clients including Pfizer, UnitedHealthcare, Apple, Gatorade, Google and the PGA Tour. In 2022 the agency grew revenue by 33% to $146 million. “The acquisition brings a new arrow to the quiver for Accenture with a more strategic brand and design capability,” said Greg Paull, principal of consultancy R3. “Work & Co also enjoys a lot of C-suite discussions beyond the CMO which will have strong synergy with the rest of Accenture’s business.” Mohan Ramaswamy, Work & Co’s co-founder and strategy partner, said that the agency had been approached numerous times about being acquired in the past, but it was never the right time or partner. “The beauty of Accenture and Song in particular is that they are that blend of creativity and technology, but just at a different scale fundamentally,” Ramaswamy said. “So having their backing, the network of clients they collaborate with [allows Work] the ability to build out our own capabilities and do things at a global scale we weren’t able to do on our own, or it would’ve taken many, many years to get there. It feels like we just leapfrogged our growth process.” Work & Co will fit within Accenture Song’s Design and digital products practice. Its other practices include commerce, marketing and service. Terms of the deal were not disclosed. Read more: Accenture Song to buy Work & Co Generative AI A key reason for the acquisition was Work & Co’s generative artificial intelligence capabilities that it has built over the years, according to Droga. “I admired their leadership for how they pivoted much more into AI and generative AI before a lot of the other companies out there,” Droga said. “We are fortunate that Accenture was in there long before it became topical. When it made the headlines, Accenture already had been in there for a long time, but I admired the fact they were as well.” Also read: Accenture leans into AI with $3 billion investment Specifically, Droga said he liked that Work & Co was using AI as part of its offerings rather than looking at generative AI as a “widget.” “A lot of people talk about generative AI like it’s just a new whizbang feature and they’re going to just change someone’s title and that's not what it is,” Droga said. “[AI] is not meant to replace ideas or creativity of the user, it’s just to enhance and allow us to do things we couldn’t do before in a more human way.” Ramaswamy said he believes most agencies are focused on “marketing automation” when it comes to the use of AI. He said his agency is more focused on building the next generation of customer experiences. Currently, around 30%-40% of Work & Co’s revenue comes from AI-enabled work, according to Ramaswamy. Check out the latest Ad Age events and award programs The agency also continues to look at how AI can help streamline its workflow when it comes to product development. In December, Work & Co launched CodeSail, an AI tool meant to help automate backend coding and other areas of the agency’s work. Ramaswamy said Codesail, which melds data points to enable personalization, is “unfortunately not something [companies] want to spend a ton of money around,” even though it is a huge value add that employs technology to enable what he called “a lot of meaningful work.” The beta is only being used on two client projects, including a financial services product that Work & Co is building for an automotive company, Ramaswamy said. Codesail was able to “orchestrate” all of the product’s discrete data points and “create them in a much more automated fashion,” said Ramaswamy. “Something that was an eight-week process becomes a one or two-week process ... and that means that we can spend more time on the stuff that’s more end-user consumer-facing.” Meanwhile Accenture invested $3 billion into its AI practices in June 2023. In September, Accenture invested in an AI platform called Writer, which is meant to help enterprises create content using generative AI. Work & Co’s model Droga said he was attracted by the way Work & Co combines creativity and technology within its agency model. “Their model is very [similar to] how we talk about Song being technology and creative coming together ... The engineers and tech people and designers are hand-in-glove,” Droga said. The digital agency market took a hit in 2023, with some agencies affected more than others. Work & Co laid off 8% of its staff, or around 45-50 employees, in January of last year. “Things really picked up in the back half of the year where we were operating at almost the normal speed and normal growth that we've come to expect historically,” Ramaswamy said. “A lot of that is AI-enabled. A lot of that is how we're focused on going to market.” Work & Co has 30 partners who are expected to remain part of the agency moving forward, according to Ramaswamy. Beyond AI, Ramaswamy said the agency is already working with a few clients on the use cases of spatial technology, specifically referencing Apple’s upcoming mixed-reality headset, the Apple Vision Pro. Read more: A marketing guide to Apple Vision Pro Future acquisitions The acquisition comes amid a lot of movement in the agency space. Last week, Interpublic Group of Cos. sold two of its legacy agencies, Deutsch New York and Hill Holliday, to global marketing services company Attivo Group. Also last week, Stagwell acquired culture-first agency Team Epiphany. Gut, L&C NYC, Majority, Movers+Shakers and Uncommon all sold various stakes of their agencies late last year as well. Also read: Inside IPG’s sale of two of its agencies “There’s no point being the best in a shrinking model,” Droga said regarding the recent mergers and acquisitions. “You either align where the world is going and you’re part of the future, and then you can help architect and contribute to the future, or you shrink into the past no matter how glorious that past was. I think a lot of places are playing catch-up. Obviously, some people are shedding assets because they need to take the weight off of a sinking boat.” Droga commended Gut’s decision to sell a majority stake to global tech and digital consultancy Globant in November of last year. “They realized that being a bright shiny star for a moment in time is not enough,” Droga added. “It has to be tethered to real influence and real opportunity and real accountability. And everyone said that when we sold Droga5 it was the death of creativity. No, I think it's the validation of creativity.” Accenture Song has seen growth since its rebrand and reorganization in April 2022. Its revenue increased 14% to $18 billion in the 2023 fiscal year, Accenture reported in December. Droga emphasized that Accenture makes it a point to not rush into acquisitions. Accenture bought healthcare marketing agency ConcentricLife in October and commerce agency The Stable in July. Its other recently acquired companies include Bangkok-based creative and digital agency Rabbit’s Tale and Sydney-based customer insights business Fiftyfive5. “We’ve been very deliberate in regards to Song to things that really add value for our clients, but also broaden the aperture of what we offer, or double down to another level of expertise,” Droga said. “So that’s why we’ve been deliberate less in the brand space and much more in commerce, data, and digital products. “I don’t think I need to buy creative agencies. I think that we’ve got our fair share of great creative agencies … we always have room for a lot of the best creative people and creative leaders,” he added. When asked whether Song might be interested in digital agencies such as R/GA or Huge, which have been underperforming as of late according to recent IPG earnings reports, Droga said, “I hired the best of R/GA. Why buy them when you can hire the best of them.” (Neither agency is believed to be for sale. An IPG spokesperson said: “For over 47 years, R/GA has been a launchpad for many careers. The agency is proud to incubate and develop such stellar talent—many of whom boomerang back after experiencing organizations that are less creative and talent-driven.”) In February of last year, Song brought on R/GA’s former global CEO Sean Lyons to head its global practices. Former R/GA exec Nick Law joined Song in January 2022 and now serves as creative chairman. The Work & Co deal is set to close by the end of January, according to a spokeswoman for Accenture Song. Currently, there isn’t a definitive answer on whether Work & Co’s name will change as part of the move, said Droga. In 2022, Droga rebranded Accenture Interactive into Accenture Song, enacting a name change for many of its entities, not including Droga5. “We try and treat each acquisition in a natural way where there isn’t just a definitive answer,” Droga said. “Obviously the ambition is for us to sort of all come together as one and we just try and find an elegant and appropriate path to get there ... whatever’s right for our clients and our people, we stand behind.”

Inside Accenture Song’s deal to acquire Work & Co

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