Finance, Business and Management consultants have been servicing FTSE 500 companies for 100-plus years (for example Deloitte was founded in 1845). However they don’t appear to be making significant waves into the digital media industry, why? But one of the big questions is: 'Do they want to?'

Although traditional consultancies are yet to significantly disrupt the established media landscape in an significant way, one member of the ExchangeWire community offers his views on how within as little as two years, media agencies will be facing increased competition from the likes of KPMG and McKinsey using data as their main stock in trade.

Digital marketing is still very much in its infancy. The most experienced marketer/agency employee with significant digital experience will at the most have 20 years’ worth of experience. Twenty years isn’t a lot from an industry which started from very little (essentially inherited some offline ways of planning/buying/messaging which are no longer relevant to digital).

In that time we have seen marketing move from textlinks to banners, banners to video,  then to social media, from here to mobile, and more recently into wearable tech. This makes it a pretty tough space to stay on top of from a holistic consultancy point of view.

Whilst the author of this article isn’t an expert on the other industries, but there is a broad assumption that finance, business and management have established ways of working and therefore belong in the latter half of the Moore’s law theory (where the rate of change is consistent but the number of change influencers increases over time). Whereas digital is very much at the beginning, a key point to remember for this article.

Business opportunity cost and talent

How much could a consultancy make by operating in the digital marketing world? Starcom Mediavest predicted that global digital ad spend will top ~$100bn this year, so that is a large amount of money being directed into the space which would be sure to light up the eyes of senior execs at these consultancy firms.

When we look at what is happening currently, it’s pretty well known that the media agencies are continuing to undercut themselves time and time again (to gain new business) by operating at low human hour margins and using other revenue streams such as analytics, social

Listening and trading desks to really make the bulk of their money. Advertisers recognise they can get good client service and good strategy for next to nothing. It’s interesting that the creative agency side of the industry still charge through the roof, yet advertisers are happy to pay for it – a side point.

Let’s say a consultancy such as KPMG want to make a huge splash next year and consult on the top 10 digital spending global advertisers, what type of employee would they need to do this? Because these consultancies are so used to working in established industries they demand good university degrees from good universities.

They wouldn’t be interested in someone with a 2.1 in Psychology from the University of Essex, but actually this is where media is an anomaly. Because the industry is so new, you don’t need to have a degree which certifies you understand what it takes to operate in a certain industry/profession, there are significantly greater skills which are required (curiosity, work ethic, creativity, data application, etc.).

So KPMG has recruited 50 people to run their marketing consultancy arm for these top 10 global organisations (estimated annual salaries of £2m) how do they charge? Well, they need to be ‘pure play’ and by that I mean hours = cost. We’ve already established that agencies are devaluing the hourly rates and offsetting this with other revenue streams, so it’s a large challenge for a consultant to validate the pure man hour cost when it’ll be significantly greater than current competitors. That £2m human hour cost is difficult to make much margin on top of right now.

Barriers

There are likely more, but the three key barriers (of which I have touched on) I see for the consultancies making huge waves in digital marketing are:

- Existing relationships being difficult to disrupt, particularly on a global level. Global advertisers can have relationships in place with agency holding groups for 10-plus years, so disrupting this is difficult.
- Validation of the human cost. How do you provide a tangible value for that hourly rate?
- The industry is still relatively new which offers huge opportunities but also significant challenges for these consultancies. Attracting the right talent would be the number one challenge from having such a nascent industry.

What are they doing now?

In the above opportunity outlined for KPMG this would be considered ‘pure play’ but already some consultancies (not naming names) are going down the routes of ‘ad quality’, i.e. brokering a deal with a viewability/verification provider and marking up the cost. Come on consultancies, if you can’t operate in a ‘pure play’ way, then what hope does anyone else have?

Consultancies such as McKinsey have gone down the data route, having a team of 50 data engineers based in London who work with large organisations to manage their data and ensure what is delivered back is useful. How this is fed back into any marketing decisions is another thing, but data is certainly an area where consultancies are starting to flex their muscles and this should impact on the marketing departments.

Prediction

It wouldn’t be an ExchangeWire post without a prediction but once the industry matures and the rate of how people/business consume media slows will likely see the consultancies start to make big plays to marketing teams of global organisations. Will this be two, five, or 10 years away? Who knows, but the opportunity will be even more significant by then.

Can media agencies counter this? I think they’ve probably backed themselves into a corner with clients already and there are significant doubts over whether their decision making is neutral and best for their business needs. Lots of clients who utilise digital marketing to gain results (i.e. online sign-ups) won’t care, but to attract the large global brands of this world an extra layer of transparency is required and that isn’t how many media agencies currently operate.