Another Agency Gets Gobbled Up: Accenture Announces The Acquisition Of Karmarama
Over the past few years, we’ve seen a flurry of consultancies acquiring agencies. Acquity, BGT Partners, Lunar, and Cynergy are just some of the agencies that have been scooped up. The agencies and consultancy convergence has radically altered the conversation for marketers looking to purchase marketing services. They now have a new category of provider to consider and new capabilities to assess across the board. And marketers are paying attention: 73% of marketers told us in a recent survey that they were somewhat open, open, or very open to using consultancies for digital marketing work.
For the most part, consultancies have stuck to acquiring interactive agencies who have skills in web and mobile development and user experience design. But in 2016, the game has changed: IBM acquired creative agency Resource/Ammirati in January and Deloitte acquired creative agency Heat in February. Yesterday, Accenture upped the ante and announced its own acquisition of one of the largest, UK-based independent creative agencies, Karmarama, within the Accenture Interactive division.
Forrester believes this acquisition will create new market opportunities for Accenture Interactive:
Brings Accenture Interactive into creative-led marketing conversations. Karmarama brings formalized brand, creative, content development, and content production capabilities to the Accenture Interactive portfolio. Additionally, this acquisition will give Accenture a seat at the table for brand-level conversations where they will be uniquely positioned to link brand considerations to technical and process considerations.
Positions Accenture Interactive to add to their digital transformation repertoire. With the addition of new brand, creative, and content capabilities, Accenture Interactive is better positioned than ever to add the CMO into their influencer list, along with existing C-level execs like the CIO, CTO, and CSO. This positions Accenture Interactive well for broader digital experience transformation initiatives, which Forrester believes encompasses not just marketing, but rather also sales, service, operations, and technology.
Positions Accenture Interactive to compete against agencies… At first glance, Accenture Interactive’s acquisitions is a clear shot at the agency opportunity at a time when many agencies are struggling with low margins and customer attrition. Forrester certainly believes this acquisition will help Accenture Interactive compete against agencies and agency holding companies, like Publicis and WPP. Accenture Interactive has an advantage over these firms in that they don’t need to prove they are strategic by doing lots of upfront, free strategic work and they typically don’t have to abide by the competitive non-competes that agencies are usually forced to abide by.
…But better positions Accenture Interactive against other consultancies. The big media hype of the Karmarama acquisition has been about Accenture Interactive competing more and more against agencies. But Forrester believes the bigger story will be how acquisitions of creative shops like these actually better positions Accenture to compete against other consultancies. Consultancies as a whole are targeting cross-business, digital experience transformation dollars, and while they may have traction with lines-of-business, sales, technology, and finance (among others), few have marketing credibility. This acquisition puts Accenture Interactive squarely in a CMO conversation, a conversation that has been challenging for other consultancies to get involved in.
Like other agency acquisitions, we expect that there may be some bumps in the road ahead. We expect some of the biggest challenges for Accenture Interactive will be retention and culture. Culture is always a challenge, but in this case it will be particularly challenging since creative agencies typically live or die by their creative-driven culture. Plus, this creative-led culture is is starkly different (and substantial more free-wheeling) than a technical or consulting culture. We also expect that scaling Karmarama capabilities to other regions will be a slow and painful process, given the massive challenges in scaling a creative shop: we wouldn’t be surprised if Accenture Interactive ends up purchasing another creative shop in a different region at some point in 2017.
In the upcoming months, Forrester will continue to examine the evolving agency landscape. Stay tuned for more research, and in the meantime check out our latest research where we examined the broader trend of consultancies purchasing agencies.