Accenture Interactive turned heads on Wednesday when it acquired creative juggernaut Droga5, a move that is being widely lauded by industry insiders.
The deal ends long-running speculations about which agency Accenture Interactive would buy next. Despite many rumors over the last few months, MDC Partners was never part of Accenture Interactive’s consideration set in terms of possible acquisitions, according to someone with direct knowledge of the matter.
If Accenture Interactive had bought MDC, the decision would have fallen outside of the company’s publicly facing strategy of never becoming a traditional holding company.
"We only make acquisitions for one of two reasons: 1) to add a new capability to realize our vision of creating compelling experiences; or 2) to scale an existing capability related to that vision in key geographies. In the former case, an acquisition like Mackevision gave us new capabilities in CGI, 3D imagery and visual effects; in the latter case, a digital marketing acquisition like PacificLink bolstered our presence in the strategically important Asian market," said Accenture Interactive CEO Brian Whipple.
He added that the company never makes "a deal simply to grow by adding revenue. As evidence of this, only 2.5 percent of Accenture’s growth in FY18 was inorganic."
See what industry experts think about the deal below.
Greg Paull, principal at R3 Worldwide
This is a seismic shift on Accenture’s profile and ability to fight globally. With well embedded acquired assets now in the US, Europe and Australia now, it will truly have the scope it has been talking about for five years.
Daniel Jefferies from Jeffries Consulting
They have been hunting for the right creative agency to add to the roster for a while -- Droga has had an interesting 18 months so this was probably a good "deal" for Accenture. If the holding groups weren't worrying about consulting companies eating their lunch they should be now!
Ben Wiener, CEO of Wongdoody (acquired last year by Infosys)
A big move in North America has been a long time coming for Accenture. There aren’t a lot of independents left in the market with the scale to make a meaningful contribution to their business, and the creative pedigree to burnish their agency offering. Droga wasn’t just the obvious choice, it was practically the only choice.
Accenture has made acquisitions in the creative agency space in other markets with the Karmarama (UK) and Monkeys (Australia) deals. Those transactions have had enough time to play out for Accenture to be seeing the value from them, and also to be smarter about the unique challenges of integrating a creative agency in to a global corporate culture. They practiced on smaller agencies in smaller markets before going all in with this deal.
The structure of the typical consultancy acquisition, with heavy incentives for retention as opposed to a traditional earn out, will likely prevent a flood of talent out of Droga, at least among those with good financial sense. I imagine that the major Droga clients are also Accenture clients, so they’ve de-risked client attrition.
Droga has a stellar creative reputation, and their work speaks for itself. But despite being the hottest agency of the past decade, they’ve been through their multiple rounds of layoffs recently and suffer from the same client volatility that plagues the industry as a whole. The Accenture sale gets them off that agency roller coaster.
I think the obvious question is how a creative maverick like David Droga fits in to a very structured and corporate environment, and how the broader Droga culture survives the swift and tight integration in to Accenture that will be needed to maximize value. A lot depends on how things are handled, and there are smart, experienced people on both sides of this deal. Some of the agency-consultancy deals have been less than successful. Ours has been great, with our attrition rate actually decreasing post-acquisition. So we’ll have to wait and see.
Jay Pattisall, Forrester principal analyst
Combined with Accenture Interactive’s technology, data, experience design, commerce, and programmatic capabilities, the addition of Droga5 and others helps move them one step closer to providing CMOs and marketers the integrated, scaled marketing solutions they require. Many may interpret this move as another omen for the agencies.
Headlines that obsess about the "consultancies versus agencies" narrative, however, are missing the point: Accenture Interactive’s acquisition of Droga5 cements a renewed emphasis on creativity in marketing.
Lindsey Slaby, founder of Sunday Dinner
Good on them! The complexion of what a marketer needs in a scaled agency has changed and deals like this merge performance and brand in a way that clients much desire.
What interests me most is how we think about the talent in deals like this. There is often a boxing in of skills -- if you are a creative you are perhaps just great at ideas but not generating ideas / work that is connected to the business. If you are a data scientist, you aren't one who can sit at the table and come up with creative ideas.
But the best ideas today are lauded for how they merge business and brand and creativity. So in deals like this, what I think about is the opportunity for talent! And redefining what the skillset is for those within the walls of an external or internal agency. Perhaps a deal like this can be looked at as laying a foundation to train a new breed of talent armed with modern skillsets.
There is also no doubt that getting communications strategy and creative minds upstream faster and closer to first-party data can provide a fertile playground for effective and creative advertising solutions.
David Gaspar, managing director, DDG
Overall, I think this acquisition is great, not only for Accenture’s clients but also the industry as a whole. When clients have more access to diverse skills and services they get a better, more innovative outcome and solution.
This announcement, however, is not surprising as it signals the continuation of the confluence between the consulting and creative industries that has been underway for quite some time. For example, our model at DDG is based on this convergence. We sit in the middle of both creativity and traditional consulting which allows us to bring a unique perspective to solving client’s problems. The danger in all of this is that the move doesn’t go far enough.
Droga will only sit under Accenture Interactive. The only way this convergence will work in the long run is by seamlessly integrating consultants and creatives. If Accenture wants the best results for their clients, it should be one Accenture and not silo creative and consultant.
Scott Harkey, co-founder and managing partner, OH Partners
This is a blockbuster deal. Accenture has been targeting numerous independent agencies with strong brand recognition, and Droga5 is the epitome of just that. Droga5 has been considered one of the top creative agencies for more than a decade, and Accenture is now tapping into Droga’s creative firepower and familiar name.
Consultancies, like Accenture, are targeting digital and creative agencies to extend its service offerings for its global clients. Good creative is hard to find and it’s what helps brands make money. The demand for innovative creative and strategy is high, and this acquisition continues to prove that. Consultancies want to be in the agency game, and agencies want to be in the consultancy game.
The model is shifting and at the end of the day it comes down to excellent creative, impactful strategy and insights, and business acumen. With this acquisition, all of that is made possible.
Steve Connelly, president and copywriter, Connelly Partners
What David Droga built was what this business needs now more than ever -- an independent counter agency that attracted not just great clients that crave counter marketing and thought, but also great people who wanted to serve those clients.
Some of the people at Droga are some of the industry’s best. They cashed out. I don’t blame them one bit, they built something truly amazing. But the independent fire is now out for them as well. People will leave. A different caliber of client will come.
And the responsibility is now on the rest of the independents to pick up the slack and the baton. I hope we are up to it. It’s an opportunity for clients that value agencies that are directed by gut and customer perspective, not bottom lines and algorithms.
Droga was built with a fire that can only burn outside of a holding company, talent with something to prove, and a middle finger up. I’ll miss the light of their North Star.