Ad agency R/GA wants to 'disrupt management consultants'
- Creative agency R/GA is growing its consulting offering.
- The agency believes the diversity of its teams and a creative risk-taking mindset give it an edge over management consultants like McKinsey and Accenture.
- R/GA's business consulting practice is on track for 50% growth in 2017.
While consulting companies and IT firms are making inroads into the marketing sector,
Interpublic Group (IPG) is one of the advertising holding companies looking to shift to a consulting model. Its digital agency R/GA has been active in consulting for four years and now IPG CEO Michael Roth now wants the rest of his group to follow suit .Saneel Radia, the global head of the R/GA's consulting practice, told Business Insider the culture, flexibility, and risk-taking in creative agencies give his company an edge on consulting firms.
Radia credits R/GA's early jump into consulting to the agency's founder Bob Greenberg. Radia said he joined the agency in February 2016 after a conversation with Greenberg, where they agreed that consulting was broken and it needed to be fixed.
Consulting companies and IT firms made a lot of noise in 2016 by acquiring agencies and adding creative marketing services to their offering: Accenture Interactive acquired British creative shop Karmarama , Deloitte bought up creative agency Heat, IBM acquired two smaller creative agencies in Germany and another in the United States , and Capgemini bought the design agency Fahrenheit 212 .
As these large firms increasingly encroach on the traditional ad agency business, Radia explained R/GA is out to redefine consulting.
"Management consultants are too similar to their clients and too similar to each other," Radia said. "We're playing offense, we want to disrupt management consultants."
The approach has been successful so far. Radia said the consulting practice saw 50% growth in 2016 and is on pace to see the same performance in 2017. The practice works with clients already on R/GA's roster as well as going after its own clients.One of R/GA's early consulting projects was with Nike on retail innovation:
While R/GA has employees dedicated to business consulting, the practice also pools talent from across the agency to create teams on a project-by-project basis. At any one time, up to 150 people in the agency could be working on a consulting project.
R/GA's business model is a break from what clients have come to expect from traditional consultants, which charge clients for their time. Radia explained R/GA won't just advise on strategy, but it will also build products, campaigns, and infrastructure.
"[Management consultants] have MBAs and wear blazers to work," Radia said. "You wouldn't be able to spot the people working on consulting at R/GA."
"Our internal mantra is 'consultants that make'. You see real results," Radia said.
"Traditional consulting is a black box"
In the agency's new London office in Shoreditch, Lam-Po-Tang told Business Insider he met with R/GA chief creative officer Nick Law in 2015 before he joined that year, who explained to him what the agency was doing to go into consulting.
"I presented him over a couple lunches the main arguments as to why it was really hard. The main reason is culture clash. Traditional management consulting used to be very much about mitigating risk and doing lots and lots of analysis, to help managers be ever more certain the choices they were making about where to play and how to compete were the correct ones," he said.Lam-Po-Tang believes creative places, like his agency, stand a better chance of incorporating consulting-minded people than consultants bringing in creatives. He said creative agencies have a stronger culture and more diverse teams, which allows them to take more risks than management consultants.
"As a class, ad agencies are populated with people who know they have to make stuff up for a living. That's what creatives do. By definition that is taking a risk. That's taking a personal risk and a professional risk," he said.
"Large organizations are mostly structured around risk mitigation. They are not structured around taking risks. So they have a systems problem, a process problem, and fundamentally they have a cultural problem," he said.
Any consulting work begins with trying to understand the client's problem. Unlike usual agency work, there's no brief. Lam-Po-Tang admits R/GA's approach is a little more messy and chaotic than the consulting work clients will have come to experience. When Lam-Po-Tang explains to a client what R/GA will do, he makes it clear they can't expect to get the same quantity of analysis they would get from a management consultant.
"We intend to go to the two or three things you need to get moving on straight away because that's where the main goal is. And if that means I leave off 80% of the longtail analysis, that's smart," he said. "For us, we need to share with the client a high degree of confidence that this market, this segment, this proposition will be commercially successful and significant. A solution that affects 2% of revenue, that's not our ambition."
R/GA parent company IPG isn't the only advertising group focusing on business transformation. Publicis Groupe has highlighted its Sapient division and the digital transformation business as its foundation for the future. Dentsu's 360i has a 50-person consultancy practice, as Adweek reported. Meanwhile, WPP's CEO Sir Martin Sorrell recently brushed off concerns that consulting firms present a threat to its business, saying on the company's earnings call earlier this month: "I don't think it's that significant."