Advertisers with Performance Problems Turn to Management Consultants

Accenture sees it another wayamp160quotCMOs are seeking our talents not the other way aroundquotIs consulting going to the mountain or is the mountain coming to consultingManagement consulting firms are not a recent invention McKinsey was established in 1926 a year that marked quotthe invention of management consultingquot the company saysThe management consulting firms began to flourish in the 196039s and 197039s when corporations first experienced serious performance problems due to the complexity of global operations the excessive use of energy during the oil shock decades competition from higherquality lowercost Japanese manufacturers problems integrating acquired new businesses during the MampampA boom problems developing and integrating management information systems and so forth The Boston Consulting Group was founded in 1963 Bain ampamp Company in 1973 Accenture in 1989amp160and Deloitte Consulting in 1995 although the original Deloitte dates from 1845Each consulting firm had a clear specialty during the formative years McKinsey specialized in reorganizing companies into decentralized profit centers BCG and Bain focused on corporate strategy Accenture and Deloitte were expert in developing and integrating management information systemsSince then though the consulting firms are converging as their practice areas overlap and their clients39 performance problems intensifyWhat links the consulting firms into a coherent competitive threat is their focus and experience in solving highlevel corporate performance problems for CEOs CFOs CIOs profitcenter presidents and heads of procurement The typical consulting firm charges out its people at a multiple of 50x their salaries higher than the ad agency multiple which ranges from 22x to 25x The high consulting fees can only be justified if improved results are the outcome It takes highlevel consulting relationships to solve highlevel performance problemsMost ad agencies work at a lower level with their clients and focus on creativity as their valueadded creativity that builds brands and engages consumersamp160The problem is it isn39t working all that well todayIf management consulting firms flourish when corporations suffer ad agencies have the opposite experience The Golden Age of advertising took place during the exceptional postWorld War II consumer and advertising boom from 1945 to 1975 and during the media price inflation era from 1975 to 1990 Since then times have been tough for their clients and especially for ad agenciesThe nostalgia that agencies feel for the Mad Man period goes beyond fantasizing about threemartini lunches and the exceptional ease of media commissions The nostalgia is for a time when everything was growing in the global economyamp160and ads created by Bill Bernbach Leo Burnett David Ogilvy and George Lois were the talk of the town The Creative Revolution made the cover of Newsweek in August 1969 Those were heady days Ad agencies were pushing on an open doorAd agencies flourish when times are good but not when their clients are having performance problems Agencies can solve creative problems but not corporate performance problems They don39t have the skills or expertiseAdvertisers today have two serious performance problems and to solve them they are turning increasingly to the management consulting firms not to their ad agenciesDigital and social confusion CMOs do not really understand how to use or how much to spend on digital and social media True more dollars are pouring into digital and social media and spend on TV is slowing down but this reflects CMO experimentation rather than CMO insights There is a serious lack of confidence about the quality and efficacy of digital and social spend It will take a lot of analytical horsepower to come up with answers about what works and what does not The management consulting firms are better equipped to handle this than the advertising agenciesLack of brand growth Legacy brands are languishing Increased shareholder value in marketing has been driven more by media and agency cost reductions than by brand growth CMOs have a short tenure in their jobs they are blamed and sacked when growth is not achieved This is a corporate performance problem not an advertising problem Agencies are throwing their best creativity at their clients but the outcome is not satisfactory Consulting firms armed as they are with analytical expertise and more recently creative capabilities may do a better jobCritics of consulting like IPG39s Michael Roth fall back on quotconsulting firms are not creativequot as their main argument ignoring that creativity amp224 la ad agency is not succeeding at solving client performance problemsAd agencies should take a closer look at the marketplaceamp160The mountain is coming to the consultants and the consultants are growing in strength and capabilitiesCartoon credit Robert Weber The New Yorker The Cartoon Bank With permissionClick the social buttons above or below to share this story with your friends and colleaguesThe opinions and points of view expressed in this article are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated bloggers

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Advertisers with Performance Problems Turn to Management Consultants

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