Robert Sawatzky
Jun 7, 2018

Behind Accenture Interactive’s Chinese growth ambitions

A string of acquisitions may soon enable Accenture Interactive to connect the dots on marketing services for Chinese clients.

Accenture Interactive's Hong Kong studios in Quarry Bay
Accenture Interactive's Hong Kong studios in Quarry Bay

I’m standing in a windowless workshop on the second floor of a Hong Kong office tower. It’s not exactly the place most people want to be on a Friday afternoon, and hence the room looks hastily abandoned.  Computer parts lay all about in mounds—motherboards, drives, circuitry and bits of wire with tools strewn everywhere and prototypes half completed. What captivates me is it looks like a quintessential inventor’s workshop. 

I really want to take a photo but I’m told I can’t. This stuff is top secret. In one corner is product shelving of the future for a major pharmacy chain, which displays product specifications the moment the product is handled. In future, I’m told it may be able to light up products by colour coding throughout stores based on each visiting consumer’s preferences. In another corner, a monitor appears to be spitting out a stock ticker’s worth of information about my face to a major Asian cosmetics company so they can best target (or let’s say cater to) me the moment I choose to walk into their store.

A photo provided by Accenture Interactive of its workshop room in Hong Kong

We’re in the bowels of Accenture Interactive Studio, where Greater China managing director Jason Chau is showing me around. One way to describe Accenture Interactive (AI) is a customer experience shop that rolls up design, content, commerce and marketing services into one.

The workshop is the ugliest room by far, but it’s emblematic of what this place is. “The reason why they’re called studios is, like a movie or art studio, the intention is you come here and make something,” Chau explains. While there’s a recording and photography studio down the hall, that’s not the main focus. The Hong Kong studio builds at least a product—digital or physical—a day for clients on average, if not more. 

“Clients don’t come to us and go ‘I need a new experience,’” says Chau. “The client comes to us with a business problem, usually ‘I need to increase revenue or save cost’…. What we do here is to say, you have the potential to create a service or product or redefine that experience that will help you increase market share, drive additional revenues, save costs. Let us show you what that looks like.”

Making that new product or business model attractive to customers is where AI’s marketing services come in, joining forces with members of global design agency Fjord (bought in 2013) and local digital marketing agency Pacific Link (bought in 2015) all housed under the same roof. Those agencies can also be brought in earlier to help with product development, but in effect, the marketing part of AI tends to be the finishing touches for a client, rather than the starting point, as in most traditional agencies.  

“We spent a tremendous amount of time and focus to build up that proposition here,” says Chau. “The outcomes that we have been delivering to the client have given us a sense that this concept and this model works. Now what we want to be able to do is take this and translate that into what we need to do in the mainland.”

Accenture Interactive Studios Hong Kong

“Aggressive” Chinese growth plans

Accenture’s footprint in China includes offices in Beijing, Dalian, Chengdu, Shanghai and Shenzhen, but AI, which does not divulge Chinese employee numbers, hasn’t yet been much of a force in the mainland. That's changing very quickly, however, with a string of acquisitions that is giving Chau new building blocks to work with.

Earlier this year Accenture acquired two European companies. The first, Paris-based digital commerce agency Altima, bought in January, has a Shanghai office to produce commerce content and web analytics. A month later, Accenture took control of Stuttgart-based visual-effects shop Mackevision, with a branch in Beijing. In addition to making CGI effects for film and television, the shop creates digital twin models of physical products that can be easily reconfigured—tools that are highly appreciated in China’s digital-savvy market.  

Then, just last month, Accenture announced it was buying full-service independent agency HO Communications based in Shanghai, with offices in Beijing, Chengdu and Nanjing. HO’S 200+ employees provide marketing services ranging from content creation and creative design to branding and media services.

“So the plan in the mainland is to look at a full suite of capabilities as we’ve had in Hong Kong and connect them,” Chau explains. “We have all the ingredients. We haven’t put it all under one roof just yet.” While Accenture has a ‘digital centre of excellence’ in Shanghai to showcase new technologies, it’s being considered for a new full capability AI studio.

Chau, the former managing director of SapientNitro China, says most of his time and effort in fiscal-year 2019 will be spent in the mainland, working with a new leadership team put in place as part of Accenture’s ramp up there. JK Shen, AI’s new managing director for China, was brought over from Sapient Razorfish last November. In January, consulting veteran Wei Zhu took charge of Accenture’s overall business in China and has been vocal about raising Accenture’s digital capabilities there.

Jason Chau, Accenture Interactive Greater China

The needs of Chinese clientspartners

Accenture does a brisk business selling digital transformation around the globe, but it's a vastly different sell in China, where brand-customer transactions already happen on mobile first and big media firms don’t need to be told how to build new technologies. 

“There’s no doubt that those players that we work with have fairly advanced business models in mind in terms of what they can bring to market," notes Chau. "They understand the business model and they understand what they want to create.“

Where Accenture sees its role, however, is the ability to turn those advanced technologies into a consumer-friendly set of experiences. While clients may think about meticulous user experience details such as how users will push button interfaces, they still need help translating that technology into a service experience and figuring out how to bring it to market in a compelling way, even in a such a mobile-friendly ecosystem.

“Companies are coming to us because they don’t have access to the clients that we do," says Chau. "Not to say that we’re in the business of being middlemen, but we understand the ambitions these guys want to create and the experiences they want to create.”

A simple example is work AI now does for a cosmetics firm. The company connected the firm with a major internet player to leverage its messaging platform to identify customers in need of products and direct them in a user-friendly way to a nearby store. On the surface, it doesn’t sound much different from what any agency with data-sharing agreements with Tencent, for instance, might be able to do, or even for the retailer to work out with BAT on its own.

Accenture, however, has that track record of fitting all the core elements into seamless customer experiences. Plus, if you’re a brand that has developed the initial technology yourself, there’s a good chance AI can partner with you to commercialise it. 

“We’re seeing that trend where because of the access we have to clients and all the things we’re doing that [clients say] it probably makes more sense to not pay you as a vendor and [instead to] work with you as a partner," Chau says.

Accenture Interactive Studios Hong Kong

Agency of record

One could argue that AI has more flexibility to connect its various clients, since unlike agencies it holds fewer agency-of-record agreements to prevent it from reworking marketing or CX solutions built for others.

It’s not that AI wouldn’t want the marketing and advertising business, though. It does bid for some pitches, moreso in other parts of the world, but holds relatively few accounts. Accenture simply has less experience in selling to clients through the front door than the back door.

“We don’t necessarily see the creative bit as important because it generates X amount of revenue," says Chau. "We see the creative bit to be important because it allows us to be the partner of choice for our clients, because they know we can deliver upon all these things across the spectrum. Through that process, if we do become agency of record or experience agency of record, then great. But it rarely starts with ‘hey, do you want to be our agency of record.’”

But agencies don’t need to be in a pitch battle to have their guards up. Already the media agencies are defending their turf, calling Accenture out on its media auditing business as an inherent conflict of interest.

Source: LinkedIn

Chau's response is that media audits are done by a dedicated practice within Accenture Operations, a separate unit from the programmatic services housed within AI.  Non-disclosure policies, firewalls and industry standards, he says, ensure client information is kept confidential.

"Our clients have been asking us to help them gain greater transparency, control and value in their media buying," says Chau. "We’ve recognized an unmet opportunity in the marketplace to reimagine the way they are currently planning, buying and managing media.”

Clearly the game is on. As AI continues to buy more agencies like The Monkeys and HO Communications, and as it ramps up its plan to grow in China, one can only expect it to bump into the big holding companies more often. 

This article has been updated from an original version to include AI's response to conflict of interest allegations around media audits and programmatic services.

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