Professional services firms take digital fight to marketers

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Instead of grey suits and sober ties, think tattoos, oversized glasses and gingham shirts.

Deloitte last week bought Seattle-based social media marketing agency Banyan Branch for an undisclosed sum. The world’s biggest professional services firm by revenues also acquired Brisbane web developer Digicon in September.

These may seem strange acquisitions for a company that made its name in the 19th century as a solid auditor of railway companies. But they are part of a larger gamble by consultants that their clients’ needs for marketing and technology expertise are coming together in the era of big data, social media and mobile devices.

Marketers and advertising agencies have already made digital a core part of their business, but recent acquisitions by Deloitte and its rivals show professional services firms are also diversifying into this fast-growing area.

“You’re seeing the role of chief marketing officer and chief information officer converging, and the emergence of a chief digital officer,” says Mike Brinker, US head of Deloitte Digital, the 18-month-old unit that will absorb Banyan.

Banyan uses algorithms and anthropologists to sift through Twitter and other social networks, and helps companies create promotional campaigns.

“Social media is actually spreading through every aspect of business – not just marketing and communications, but the whole enterprise,” says co-founder David Hanley. He notes the software behind the rewards programme for flights and hotels can be tweaked to nudge regular customers into promoting those brands online.

Deloitte Digital is “one of the fastest growing services within Deloitte” in revenue terms, according to Mr Brinker. It employs about 2,500 people and accounted for about 1 per cent of Deloitte’s $32.4bn revenue in 2012, according to estimates from technology analysts Gartner.

Deloitte’s competitors are taking similar steps. Booz & Company launched a dedicated digital unit in December, while Accenture acquired London-based design consultancy Fjord in May.

Having design capabilities helped Accenture win a contract this year from Nespresso, which makes a line of coffee machines and capsules. The Nestlé-owned brand wanted new services, such as allowing customers to order capsules online and pick them up from local vendors.

The ordering system required design work an agency would normally have done, but also a real-time inventory function and supply-chain management that is the traditional preserve of professional services firms like Accenture.

“Digital is about customer experience – it’s not just about creative, but about technology and process,” says Anatoly Roytman, managing director of Accenture’s interactive unit in Europe, the Middle East and Africa. Mr. Roytman says his firm will continue to use work with agencies for more complex design work, advertising and branding.

Even so, “we seem to have entered a phase in which consultancies are getting into the agency business”, says Rebecca Lieb, an analyst with the Altimeter Group.

This encroachment has not gone unnoticed. “Deloitte has to be quite careful,” says Sir Martin Sorrell, chief executive of advertising and media group WPP. He describes the firm as a “frenemy” in the area of data and digital, noting that it also audits WPP’s accounts. “It does raise the question from our point of view of who we’re dealing with,” he says.

Others have pointed to the risks of a cultural clash in trying to run a one-stop shop. Alwin Magimay, head of digital and analytics at KPMG UK, recently joined the firm after working at Accenture and then Deloitte Digital. “If you mix the DNA of a small creative company and the DNA of a big company, what you find is the creatives get frustrated and leave,” he says.

Peter Stein, the global chief executive of Razorfish, an interactive agency that is part of the Publicis advertising group, adds: “Their legacy processes, methodologies and culture are diametrically opposed to this way of working.”

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