For all the disruption technology and Big Data have wrought on Hollywood, they've cause perhaps even more transformation in the industry that pays for much of what Hollywood does, advertising.
Big brands are dumping long-term relationships with their traditional agencies of record. Big consultants are buying up marketing, creative and digital agencies, most notably recently with Accenture's acquisition of Droga5 in what Ad Age reported was the consulting firm's biggest agency acquisition yet.
Accenture said in a release that the deal would be seen as "a game-changing milestone," part of its evolving strategy "to build a new agency model... with the power to engineer transformative brand experiences and infuse those experiences with the emotional and inspirational power of brand thinking and creativity."
David Droga, the founder of Droga5, said the deal is part of a broader industry trend to push into culture across many distribution platforms and methods beyond splashy traditional ads. Merging the two companies "isn’t a nice-to-have… This is future-proofing."
Notably, big Hollywood talent agency WME had owned a 49-percent stake in the 600-employee Droga5 since 2013, but no longer has an interest in the company.
“Time will tell if Accenture Interactive's decision to acquire Droga5 was the right move, but it certainly is in-trend with what we’ve been seeing with the traditional agency model being challenged, encouraging an opening for a new, more transparent, consulting-based model to steal market share," said Ryan McConville, President and COO at Kargo, which specializes in data and creative for mobile screens.
The growing capabilities of the big consultants are forcing traditional agencies to develop their own similar consulting models.
But, McConville said, just as Hollywood studios are hobbled in competing with newcomers because they still depend financially on older business models, "the agencies have come to rely on the profit-making properties of the non-transparent trading desks. The consulting firms are coming in clean, which may give them a reputational advantage. By adding creative chops to their consulting business, Accenture Interactive is one step closer to a full-stack consulting model that can challenge the legacy agency business.”
Some traditional companies are reacting with their own acquisitions. The Financial Times just reported that French holding company Publicis is near a $4 billion deal to acquire digital marketing agency Epsilon.
And some brands are taking a different approach altogether, relying on new kinds of consulting companies that provide "in-housed" data, analytics and related services directly. That approach gives a brand more control over its entire stack of marketing and advertising across digital and older platforms. That business, too, is rapidly evolving and consolidating.
Former long-time WPP head Sir Martin Sorrell now heads his own insurgent shop, S4, bent on breaking the traditional agency model that made Sorrell's name. S4 recently bought in-housing agency MightyHive as part of Sorrell's roll-up strategy. And last summer, two complimentary agencies that have long operated in different quadrants of the Google ad ecosystem, Analytics Pros and Adswerve, merged to provide a more complete package of search, analytics, data and other services.
McConville said MightyHive, the merged Adswerve and Jellyfish were all examples of in-housing specialists helping disrupt the industry's long-time centralization under the roofs of traditional ad agencies.
Adswerve just announced that it had picked up a key certification from Google Cloud for setting up data-analytics packages with more than 200 brands and agencies. The packages bring together "user behavior data from Google Analytics, as well as data from ads, social, CRM, email and other touchpoints," the company said.
“AdSwerve's value proposition coincides with the tech-consolidation theme and one of the vital aspects it helps solve is consistency around metrics and analytics," said Craig Rosenberg, co-founder & Chief Analyst of Topo, which advises companies such as Twilio, LinkedIn, and Google on ad trends. "The broader story of getting more from one agency or vendor applies too, such as the reasoning for marketing clouds."
AdSwerve also received a Partner Platform Award at a recent Google developer conference for its work with the World Surf League, a digital-first operation that streams surfing competitions around the world. The league has been notable for its innovative use of data and new distribution platforms to build audiences and revenue.
Because of the vagaries of waves, the league schedules competitions in two-week windows, and can stream both live and on-demand video of the resulting runs by surfers to whatever device viewers might be using.
The new system allowed the league to focus its ad spend and other marketing on higher-revenue customers, increasing live viewership by 30 percent and reducing by more than half the cost per conversion of those customers, a key metric.
Getting to that point took a lot of time and effort, a common occurrence in getting brands wired into all the different sources of data they already can access, in a way that can be more powerful, said Alan Rosen, AdSwerve's Chief of Cloud. That's because the data comes from a range of sources, may be structured in many different ways, and may not always be reliable.
"The first challenge that’s always hard is getting people to realize it takes time to get good data," said Rosen. "With the WSL, we spent a lot of time making sure that they trusted it. We did all sorts of deep analysis to prove the numbers were accurate. Once they were able to trust it, they could really go."
At the most sophisticated level, a brand can use the data to do propensity analysis, basically to make predictions on the behavior of market segments, so it can better anticipate where best to spend money and resources, Rosen said. "You can take all this data, know who they are, and activate that in lots of different ways."
As an example of what's possible Adswerve recently oversaw a major project with the YMCA of San Francisco that now is saving the non-profit organization $2 million a year in operational costs. It relies on a Google Cloud-based data warehouse that brings together information from its fitness centers, daycare and after-school programs, seasonal and weekend camps, swim lessons, and other activities.
The data warehouse technology sifts through various sources, automatically builds potential market segments, and allows the YMCA to A-B test how best to reach those segments in personalized ways that are more likely to resonate, and convert to paying customers.
