In Interpublic Group’s (IPG) annual earnings call on Friday, CEO Michael Roth said the advertising group is “beefing up our areas on business transformation.”
The term, increasingly used by advertising agencies, refers to how agencies can help brands to face off digital disruption and continue to reach consumers.
On the call Roth highlighted the risk coming from consulting companies, which he explained already worked with many of IPG’s clients.
“And so, while they’re doing the system integration, they have added digital capabilities and some of them have bought creative agencies to try to encroach on our space, if you will,” he said. Roth added IPG hadn’t seen any face-to-face competition with consulting companies.
To compete with these new entrants, IPG wants to present clients with an “integrated offering” opening up the door to move into consulting on business transformation. Roth highlighted the partnership its creative agency R/GA has with Snapchat for a incubator program for marketing and technology startups as one example from which its clients can benefit.
Another part of the shift is to continue investing in its own media-buying arm Mediabrands to become the “data stack and platform that would serve all of our agencies and their clients.”
IPG isn’t the only advertising group focusing on business transformation. French advertising group Publicis highlighted its Sapient division and the digital transformation business as its foundation for the future in its earnings call last week.
A note in September from financial analysts Exane BNP Paribas titled “Can you hear the neighbours” said it expected IT services and consulting to generate half of the revenues coming from “convergent digital marketing,” which combines “CRM, commerce, customer experience and storytelling.” Advertising agencies would make up the other half of the revenues.
Consulting companies like Deloitte and Accenture have been prolific in acquiring creative agencies. Deloitte acquired American shop Heat in February last year and British creative agency Karmarama sold to Accenture in November.
Both companies have business transformation offerings, with Deloitte even being named a leader in business transformation consulting in a 2015 report.
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