Jon Wilkins, executive chairman of UK-based ad agency Karmarama, came to the region recently to talk about parent company Accenture Interactive (AI) offering Karmarama’s services from Dubai. Although in many ways, Karmarama has been here for a while already.
The agency was started in London in 2000 by the founders of independent St. Luke’s, and has won numerous awards since then. In 2016 it was acquired by AI, itself the creative arm of global management consultancy Accenture. Wilkins is also strategy lead for AI in Europe, the Middle East, Africa and Latin America.
AI has been offering its range of creative services in Dubai under the flag of Accenture Interactive Studios. This includes design agency Fjord, as well as the other creative and digital services AI offers, such as the content and strategy capabilities of Karmarama. With 25,000 employees worldwide, it is bigger than Havas, the world’s sixth biggest advertising holding group, which has about 19,000 staff. Ad Age ranks it as the world’s biggest digital agency network. In the year to August 2018 its revenues exceeded $7.8bn, about the same as Interpublic, the world’s fourth biggest advertising group.
David Fregonas, the MENA managing director of AI, says: “Our team has ... skills from creative technologists, designers, digital business marketers, brand specialists, content specialists. ... Because we design experience, build experience and run experience – Fjord is mainly in service design and innovation – we need brands such as Karmarama to kind of amplify the brand, to bring the brand to life in this vast ecosystem of customer experiences. That is not Fjord’s mandate; that is Karmarama’s mandate. We have known Jon for a while, we have worked together, we have exchanged a lot with the people from Karmarama and we decided that for this market it was hugely relevant to work within one P&L.”
That is one of Accenture Interactive’s selling points, that it can offer up all its services through one P&L that can span disciplines or geographies. “That means we have a lot more freedom of movement, a lot more skill-sharing, a lot more exchange across geographies,” says Wilkins. “What we’re trying to do
is take the best lessons we’ve learned from here to explore elsewhere and from other markets to bring here and are trying to build this consistent story.”
This is in contrast to the traditional holding group model, he says. “On a macro level, I think you’re seeing the holding companies no longer being a safe haven for creativity. Their business model isn’t holding up.”
He adds: “If you think about the margin suppression within holding companies at the moment, the media agencies have really been propping up the holding companies, at least from a margin point of view, for a while. The media agencies have been exposed through digital challenges in terms of transparency and clients putting more on them. So it’s very hard to see where the growth in
operating margins is going to come from in the holding company.
“For them to be able to say we will effectively cut our margin to do this with you feels quite inappropriate for some of their shareholders, and it’s hard to see how they are going to do that in the short term.”
He quotes Sir Martin Sorrell, founder and former CEO of the world’s biggest advertising group WPP, who said: “Transforming an existing business is akin to changing the engines on the plane while it is still flying.”
Once Sorrell was ousted from WPP last year, he promptly declared that the holding group model no longer works. On this, he and Wilkins are aligned. And Wilkins says other creatives feel the same.
He says: “A lot of independent
agencies that we speak to have already written off the holding companies as an opportunity for their career development and as a home for their agencies.” At the same time, smaller agencies are likely to hit a wall when it comes to growth if they don’t have a way to scale their offerings. That is one of the key drivers for joining a larger entity, whether that be Omnicom, Publicis or Accenture.
Wilkins became chairman of Karmarama in 2014, and the sale to Accenture Interactive went through before Sorrell was ousted from WPP. But Wilkins claims cracks were beginning to show even then in the holding group model.
“We had been working with a number of consultancy businesses, launching new products and
services, and we thought what was interesting was as the world continues to digitise, we could see more and more of our clients bringing consultancies and agencies together to try and get that balance between delivering data technology and creativity,” says Wilkins. “And we thought, well, that could be an interesting partnership for us. And it was at a time where the writing was on the wall a little bit for holding companies, though we hadn’t yet seen the WPP story or some of the more problematic issues that the holding companies were facing.”
He cites the statistic that while 80 per cent of chief marketing officers say their brand experiences are consistent, only 15 per cent of consumers agree. With a touch of understatement he calls that discrepancy “a growing disconnect”, adding: “We were quite keen on building a model that would allow us to create brands and stories but also deliver that through services and technology, and in order to do that you need quite a broad range of skills, so that was why we parked ourselves at the door of Accenture two years ago.”
There’s a chance the Karmarama name won’t be around forever,
WE COULD SEE MORE AND MORE OF OUR CLIENTS BRINGING CONSULTANCIES AND AGENCIES TOGETHER TO GET THAT BALANCE BETWEEN DELIVERING DATA TECHNOLOGY AND CREATIVITY.”
agencies that are bought by holding groups often have a four-year earn-out with half of the money paid to that shop’s owners based on hitting an individual target. “I cannot tell you how much that does not encourage collaboration,” he says.
The Karmarama deal, by contrast, was “full, final and settled”, with Wilkins and his colleagues rewarded for “loyalty, collaboration and keeping a great team together”.
“It’s entirely the opposite,” he says. “When you come in it’s like joining a band of brothers and sisters. Our competition are the marketing services companies. Versus our resource, they are still huge. Not versus Accenture, but versus our resource. We still have this Robin Hood mentality within the creative component that we see ourselves as an agitator, a start-up, and that mentality is actually very strong.”
So with the resource management of the behemoth that is Accenture, but the upstart mentality of agencies such as Karmarama, Accenture Interactive is hoping to provide an alternative to the holding group model. If the ambitions of Wilkins and Fregonas come to fruition, this could be a welcome alternative for clients and agencies alike.
though. Accenture has bought several agencies recently, including Irish agency Rothco and The Monkeys in Australia. It has also been hiring top talent and indulging in “aqui-hires”, buying the creative talent out of top agencies.
Fregonas says of Accenture’s expansion policy: “We don’t care too much about the brands actually; we care more about the people contributing to it. We keep on sunsetting some brands and acquiring new ones, but the destination is quite clear, and the way to reach this destination is a nice inch-by-inch progress towards bringing creativity and analytics to this goal of the best experience.”
Fregonas says Accenture Interactive is currently “actively” looking for agencies and talent in the MENA region. One reason for Wilkins’ visit is to encourage more people to send in their CVs as the agency hunts for people “across the board”. “If you get an unfair share of talent you will get an unfair share of business,” says Wilkins.
That talent immediately becomes part of a bigger picture. “Another thing that’s really interesting about our model is when agencies are rolled in there is no separatist desire to not collaborate from day one,” says Wilkins. “[AI] doesn’t use an earn-out structure.”
By comparison, independent
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