“It is ironic that people think our industry is terrible when WPP are in it and a fantastic industry when Accenture are in it” WPP boss Mark Read (below) told a Morgan Stanley conference last month. The quote comes from an interesting piece in the FT, contrasting the diverging approaches of Read and his counterpart Arthur Sadoun at Publicis Groupe.
Whatever his other issues, and the jury is still out on Read’s attempt to create a tech cum creative company along the lines of, um, Accenture he seems to have nailed it here.
But the underlying issue is that advertising and marketing is only a small part of what Accenture does although Accenture Interactive is a big beast in a medium-sized agency world.
New contenders are invading the holding companies’ territory on almost a daily basis. French holding company Fimalac recently struck a deal with indie digital agency Jellyfish (one that snuck in under the radar although it’s been in business for over a decade) to create what is claimed to be a £500m business. This isn’t anywhere as big as WPP or Publicis (or Accenture Interactive) but it’s arguably big enough to win big projects from big clients.
Competition is good for buyers, of course, but not necessarily for sellers. Read and Sadoun are both grappling with the problem of differentiation. Read thinks he can do it by combining creativity and tech, Sadoun by owning first party data which he thinks will give clients an alternative to the notorious walled gardens of Facebook and Google. To that end he spent $4bn or so on data firm Epsilon, a huge bet given that the Epsilon price tag is roughly half Publicis’ market capitalisation.
Sadoun may be right but trying to persuade a client that his data is bigger and better than anyone else’s is a tough call. Read, by selling 60 per cent of Kantar to Bain, seems to take the opposing view.
They can’t both be right surely. In six months or so (two quarterly earnings statements down the line) shareholders will presumably decide.