Managing expectations

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The march of the management consultancies has been observed throughout marketing industries in recent years, and research is no exception. With their scale and C-suite level client relationships, these relatively new entrants to the insight space are, undoubtedly, making their mark on the industry – and whether agencies see them as a threat is a matter of some debate.

Consultancies have been conducting various forms of research for a while – McKinsey, for instance, has been funding management research since the 1950s. Recently, however – as client marketing budgets become stretched and marketers need to justify every penny of spend, while simultaneously attempting to understand more about what customers want – consultancies such as Accenture, KPMG and Deloitte have gradually taken on more of the work traditionally done by agencies. 

The most tangible evidence of the trend is consulting firms acquiring agencies, mirroring their attempts to bolster their expertise in the advertising industry by buying creative agencies – Accenture’s 2016 acquisition of Karmarama is an obvious example of art and science colluding. In the research industry, KPMG notably acquired customer experience agency Nunwood in 2015, while Optimisa Research was bought by PwC last year to bolster its existing insight business. 

It’s not just about making strategic acquisitions, however. Consultants are increasingly competing with agencies for some of the more traditional briefs, as well as making their way on to the global roster frameworks, particularly for public sector work.

“The importance of insight and customer understanding has increased massively as organisations have identified it as a competitive advantage,” says Richie Jones, director of partnerships at Omnicom-owned C Space. “Management consultancies have sat at the top table for many years, helping organisations in a lot of the ways in which they traditionally made decisions – based on money, headcount and market analysis. Those organisations have realised, if they want to be truly competitive and make better products and services, they need to include the consumer.”

While consultancies have a background of leading clients through organisational change, market research has historically been a small slice of the marketing pie, and agencies haven’t always had the same level of access within the client organisation. As a result, consultants can include research as part of a wider offering, says Adele Gritten, managing director at Future Thinking, who says she is aware of one project the agency has lost to a consultancy in the past six months or so. 

She doesn’t think consultancies can offer much more than agencies, however. “Their luck, or their USP, is because of the consulting generally being at board level within organisations, it makes it easier for them to piggyback and put market research as a bit of a ‘me too’ to that overall offer.”

Barbara Harvey, who heads up Accenture Research, says it would be very unusual for the business to conduct stand-alone research for clients. “The work we do, 99 times out of 100, is part of something much bigger – it is a research component of something that we are doing elsewhere. We wouldn’t work as an agency, just doing a piece of research for a client – and that’s how it should be. Otherwise, we don’t really offer anything new or different from what an agency can offer.”

The division, comprised of 260 researchers in 23 countries, has three groups of people – those with sector/industry expertise, subject expertise, or deep skills in a technique, such as data science or economic value modelling. On any given project, it will pull in people from these three teams, plus secondary research with agencies. 

Consultancies’ familiarity with large-scale business challenges also stands them in good stead. Nick Bonney, who has held various client-side insight roles including at EE – and was most recently managing director at ABA Research – says consulting firms are adept at speaking the language of business. 

“The stakeholder interview is a key part of everything they do,” he says. “I don’t think I’ve ever seen a consultancy-led project where they haven’t gone around the business, spoken to all the senior people and understood the lay of the land before they start.” 

This aids relationship building and means they can position recommendations while fully understanding the challenges and landscape of the business they are selling in to. 

“Consultants talk in pounds, not in percentages. They are good at talking the language of the business, so have a sense of authority,” adds Bonney. “Agencies, particularly those that position themselves as championing the customer point of view, are very good at talking in consumer language, but maybe aren’t as good as talking the language of the business.”

With many clients becoming more source-agnostic when it comes to data, and more interested in tying different data sources together, the consulting business model also has an upper hand. Consulting firms were early adopters of ambivalence around data sources, and have the ability to turn large amounts of data into a strategic approach, rather than talking about methodologies. 

Evolution of the agency

Some agencies, of course, have already moved away from the siloed approaches of old and towards more consultancy-led services, in a bid to move further upstream. Many now even shun the term ‘research’, preferring ‘strategic consultancy’ or ‘insight consultancy’ as a better descriptor for work with wider implications for a business. 

Consultancies might be snapping at their heels, but there’s nothing to stop agencies biting back, suggests Ben Page, chief executive of Ipsos Mori. “I don’t think this is a life-and-death crisis for the market research industry – simply because it works both ways,” he says. “As consultancies are moving into research, there’s nothing to stop market researchers moving into consultancy if you’ve got the right skills.” 

This is what Ipsos did, Page says, by launching its evaluation business. “We noticed that consultancies were paying us to do data collection – so we decided to do some of that work ourselves, and we have. For market research, yes, there are threats – but, actually, the same things that are creating the threats in our market are also creating opportunities.”

While agencies, historically, might not have the top-level access boasted of by consultancies, Bonney says they should look to forge relationships within client organisations beyond just the research buyer. 

Part of the difficulty with this is that research, generally, forms a small proportion of overall marketing budgets, he says. 

“When consultancies sell in, they don’t talk about what it is – they talk about the benefit of the approach, and they sell to people who hold the purse strings. So they can open up access to budgets that, previously, may not have been there. If you’re talking to the chief executive and they think it’s important, they’ll find the money.”

Irrespective of the arrival of consultants, the industry is undergoing seismic change, driven by technology. On the one hand, client companies are using more of their own data to understand customers. However, the rise of software platforms – and the arrival of automation – are also threatening disintermediation between research buyers and agencies, as DIY research and automated online sample becomes more attractive to clients. 

“The big traditional market research companies – with exceptions – are relatively slow at embracing innovation,” says Accenture’s Harvey. 

“If I look at who’s coming to me with things that make me say ‘wow, I want to try that,’ they’re not the big research companies; they are small start-ups offering things that are really fast, with very big sample sizes and cool data visualisation.”

As a result, the skillsets needed to succeed in research are becoming more diverse. Complex data analytics are in high demand in agencies, but – according to research recruitment consultant Sinead Hasson, founder of Hasson Associates – graduates with these talents are more attracted to the perceived higher prestige of professional services. 

“At an entry level, it’s a lot to do with money,” she says. “Graduates are pretty confident they’re going to earn a lot more working as a management consultant. It’s also status; if you say ‘I’m a management consultant’, it has a lot more kudos.”

Adding strings to your bow

Future Thinking’s Gritten speaks of the need for agencies to have “polymath skills” – for instance, account managers being more abreast of technical aspects – if they are to sustain the industry. She also predicts there will be more consolidation as agencies look to bolster their existing offer in areas such as data science – an approach Future Thinking took in 2016 with the acquisition of Bulgarian data company GemSeek.

Perhaps the future lies not in a battle for influence, but in acceptance that the parameters for success are changing. Daniela Fernandez, managing partner at The Leading Edge, which recently retitled its leadership team to move away from methodology-specific job titles, believes the blurring of lines between agencies and consultancies is a positive thing for the industry, and will lead to greater competitiveness, reach and impact. 

“Both sides can and should learn from each other – research without a strategic mindset gets shelved, and strategy that has no consumer or client insight behind it can take you down a completely wrong path,” she says. 

For this to happen, Fernandez adds, both types of business need to evolve to have greater niche skills – such as ethnography or neuroscience – or the ability to merge strategy, advertising, quant and qual. “It’s all about creating teams with the right combination of skills.”  

This article was first published in Issue 22 of Impact.