THE CONSULTANTS: CONSULTANTS: INTO THE BOARDROOM - They’ve got the ear of the MD and a fee from the finance director, but as consultants grow more influential, Ken Gofton asks who advises on what and are they worth it

Whether they’re setting up special consultancy arms, or simply asserting their strategic know-how, marketing services agencies are now stampeding to get their feet under the boardroom table. Far from locking the doors, many clients welcome the invasion.

Whether they’re setting up special consultancy arms, or simply

asserting their strategic know-how, marketing services agencies are now

stampeding to get their feet under the boardroom table. Far from locking

the doors, many clients welcome the invasion.



And of course it’s not just the marketing specialists who want to offer

top-level advice for a handsome fee. Channel 4’s recent series on

management consultants, Masters of the Universe, estimated that the

business was worth pounds 25 billion worldwide, and growing fast. Nearer

home, the London-based Management Consultants Association claims its

members’ revenues rose by 30 per cent last year to pounds 2.7 billion.

It puts the total UK market at nearly pounds 5.5 billion.



Much of this is far removed from marketing. Compared with IT consultancy

and systems management (nearly pounds 750 million), corporate strategy

(pounds 284 million) and financial systems (pounds 188 million),

marketing accounts for a lowly pounds 37 million of MCA members’

income.



Yet strategic marketing consultancy is in demand and it’s a development

that poses key questions. Is marketing now at the heart of the boardroom

agenda? And where it is, which sort of agencies and consultancies are

there with it?



Clients do want more top-level, external advice on marketing issues and

for a whole list of reasons. Short-term pressures, for example, leave

clients too little time for long-term planning. ’More senior marketers

don’t have the time to look outwards or forwards, and they need to do

both to drive their businesses,’ Fiona McAnena, managing director of the

Added Value Company, says.



The company, a leading marketing consultancy now boasting a turnover of

pounds 30 million, has just completed a survey into how marketing

directors spend their time. Half goes on dealing with current

issues,with 16 per cent on reviewing past performance and 25 per cent on

planning the year ahead. On average, only 14 per cent is devoted to

longer term thinking.



Marketing, meanwhile, is becoming much more complicated as media

fragments and new tools like the internet arrive. McAnena points out

that many markets are becoming less clearly defined, while brands are

moving into wider territory, with developments such as airlines and car

manufacturers setting up in financial services.



The point is summed up by Kevin Thomson, chairman of the Marketing &

Communication Agency, a specialist in internal communications. ’We’ve

gone from mass marketing to mess marketing,’ he says. ’You just don’t

know how you are going to reach your customer now - online, off-line,

globally or locally, conventional media or face to face.’



To all of that can be added pressure on resources, which means that many

tasks once done in house are now farmed out.



’Companies have realised that it may be better to keep central office

costs low, and buy services in,’ explains Anthony Wreford, European

president of Omnicom’s diversified agency services division. ’Putting it

crudely, you can fire an agency or consultancy with three months’

notice, whereas getting rid of individuals or departments can be both

expensive and tortuous.’



There’s no accurate measure of what marketers are spending on

consultancy, however, and one of the complicating factors is definition.

’Consultancy’ implies top-level, impartial advice; it may, or may not,

include implementation of any recommendations made. Many marketing

shops, though, use the terms ’consultancy’ and ’agency’ as if they were

interchangeable.



Wreford argues that agencies over the years have tended to be more

generalist, leaving a gap for consultants to establish themselves in

specialist areas.



These may be industry sectors such as information technology and

healthcare, or disciplines such as customer relations, internet

marketing and internal communications. ’The fact that they are

specialists means that the quality of the service or advice is actually

a lot better, and that’s one reason for their success,’ he adds.



But at the same time the complex web of specialists needs to be fitted

into an overall strategy and advertisers want to see how that web is

affecting the bottom line. Some specialists are better placed or better

resourced to take the strategic high ground with the client and to

charge for that ’total communications’ vision.



’Consultancy is just a posh word for good thinking,’ Iain Ferguson,

chief executive of KLP Euro RSCG, says. ’We have a section which is

about good thinking, financed by clients purely to think about where the

market is heading, how consumers attitudes are changing, and so on, with

no link to creative execution.’



Advertising and media agencies would argue that they are in pole

position, having been trusted with the lion’s share of spend and the

highest profile part of the communications strategy for clients over the

years. Informally, they have been consultants for a long time, although

they have rarely charged explicitly for their advice.



Rather than detract from that part of their current offering, many are

launching spin-off units which can offer strategic advice at a charge

and at arm’s length from the main agency. Leo Burnett has set up a

separate consultancy unit called Innovations; CIA Medianetwork is to

launch a division offering research and consultancy called the Knowledge

Bank; while others, such as Carat, also have research and consultancy

wings.



Naturally, direct marketing specialists are in there fighting, given the

rising importance of their discipline to clients’ businesses. When

companies are spending between pounds 10 million and pounds 20 million a

year on direct marketing, their directors are more interested in what it

will do for profits and customer relations than whether a triple-folded,

self-sealing mailer is a better solution than a conventional letter.



That’s the logic behind last month’s launch of Zalpha, the consultancy

arm of the UK’s biggest pure direct marketing agency, WWAV Rapp

Collins.



Stuffed with planners, database specialists, statisticians and internet

strategists,



Zalpha’s focus will be on business solutions that deliver a return on

clients’ investment.



It’s a timely move, and not unique to WWAV. Lowe’s integrated offshoot,

Interfocus Network, set up a management consultancy division 18 months

ago under Miles Murphy, formerly of Coopers & Lybrand. It’s been

advising the US clothing company, Eddie Bauer, on everything from retail

strategy to distribution in the UK - issues well outside the normal

brief of a communications agency.



Some of the marketing services specialisms are better positioned than

others to influence a client’s overall business strategy. With the

internet now affecting some corporations’ standing in the City, media

and marketing is shifting further up the boardroom agenda. Marketing

services companies are looking to supplant the traditional business

consultants, rather than the business consultants stretching to cover

traditional ad agency or media agency ground.



Martin Sorrell, WPP’s group chief executive, has warned persistently of

management consultants moving on to agency turf. He claims that some of

the world’s fastest growing industries, such as IT, telecoms and

pharmaceuticals, have a greater propensity to turn to management

consultancies - especially McKinsey, Bain, the Boston Consulting Group

and Monitor - for marketing advice.



’When I was at business school, they used to draw a distinction between

business strategy and marketing strategy,’ he adds. ’Today, it’s

increasingly recognised that they are one and the same, and this may be

what is driving the thinking in these new industries.’



It’s very difficult to pin down precisely what clients are spending on

strategic marketing consultancy but, Sorrell argues, it represents an

opportunity as much as a threat. ’What we are trying to do is build

specialised, strategic marketing businesses,’ he says. ’It is too strong

to call them consultancies, but they will advise clients in a number of

highly specialised areas where it may have been thought in the past that

our traditional businesses did not have the competencies to provide

strategic advice.



’I believe marketing issues are the critical issues that companies face,

because of over-capacity and the need to achieve branding and

differentiation in an increasingly undifferentiated world. What I would

like is for our companies to be the preferred supplier when clients have

a strategic marketing issue to deal with.’



Omnicom and the other major marketing communications groups take a

similar line. Wreford says: ’Our aim is both to support and invest in

consultancies that are at the top of their particular trees, and

therefore have the capability to develop good client relationships, and

deliver to client expectations.



’They have to be good in their field, but, given that, it is an

opportunity for us. Once Omnicom has backed a company, we work with it

to help it meet its clients’ needs and fulfil its own ambitions, which

might be domestic, and might be global.’



Reservations remain as to whether the big names in management

consultancy represent a threat to the marketing specialists. Eddie

Bowman says not, and he’s seen it from both sides. A career adman,

formerly with Dorland and Ogilvy & Mather, he now heads up KPMG’s

advertising consultancy practice - a unit specialising in advising

agencies how to run their businesses more efficiently.



Agencies tend to worry that they are not paid for the consultancy work

they do. Management consultants, on the other hand, are very good at fee

negotiation, and are quite prepared to say no and walk away if their

expectations are not met.



But in terms of the work each side does, agencies can stop being

paranoid.



’The consultants are brilliant at linear thinking, at sorting out

complex problems in a logical way,’ Bowman notes. ’Agencies are lateral

thinkers, great at communication and dreaming about the future of the

world. They’re just good at different things.’



This is a view that is increasingly heard. The Marketing & Communication

Agency’s Thomson equates management consultants with the left-hand,

logical side of the brain, and marketing specialists with the

right-hand, creative side. Sorrell speaks of international consultancy

firms being good at ’quant’ (data), and the marketers good at ’qual’

(insights into customer behaviour). ’There’s some scope for working

together,’ he adds, ’even though consultancies tend to think of

advertising as superficial, and advertising agencies regard consultants

as overpaid for what they do.’



As the Added Value Company’s McAnena sees it, the two sides are

complementary.



’Management consultants have a superb reputation for analytical skills,

but you can’t analyse your way to the future,’ she says. ’What’s

critical is that there must be room for leaps of faith, for creativity

and innovation.’



One reason for the rise of consultants is that companies are always

chasing the latest idea in the hope that it will be a panacea for

corporate ills.



At the very least, they can’t afford to be left behind.



Two of the big themes at the moment are corporate reputation and

customer relationship management. The first has got the PR industry in a

lather of excitement, with the Public Relations Consultants Association

forecasting that this could be the industry’s big growth engine for the

next few years.



The reasons include not only a probable link between reputation and

share price, but also a belief that reputation could be the big

differentiator in an age when products and services are so readily

copied.



Customer relationship management - ’a strategy that affects the whole

organisation, from marketing to IT’ - will be a major specialism of

WWAV’s Zalpha. ’The theory of customer relationship management is a very

good one, but the reality lags a long way behind,’ says the WWAV

chairman, John Watson. ’Zalpha’s role is to take a buzzword and make it

actionable.’



Key to both these developments, however, are a client company’s

staff.



If they don’t share the vision and culture, if the image doesn’t reflect

reality, relationships with customers and the company’s reputation will

be in danger. As a result, internal communications are moving up the

agenda.



’Three years ago, I could count my competitors on one hand,’ says

Thomson.



’Now it’s impossible.’



MARKETING AND COMMUNICATIONS: INNER-CIRCLE CONSULTANTS



Advertising Agencies have been trusted consultants for years, but may

need to formalise the arrangement for profit and profile.



Agency selection In at the beginning, those who help clients to choose

an agency can have input into the client’s strategic marketing

vision.



Brand positioning and management Though some are a substantial size,

these are usually small outfits and fleet of foot, often built around

individuals who are trusted advisors.



Corporate identity The new incarnation for big design groups who have

proved themselves able to see a company ID in terms of a masterplan.



Corporate reputation The PR masters of spin are increasingly influential

as manipulating the perception of a company goes up the marketing

foodchain.



Database design/telemarketing The power and influence of IT shows its

face in the marketing services world.



Direct marketing Those who master the relationship with the customer are

naturally in line to be trusted consultants.



Futurology Research companies and those ’prophets’ going the extra

mile.



Anyone who can predict will always be close to the kingpins.



Gurus Those irrepressible individuals who probably have a book under

their belt and the confidence to advise on the big picture.



Internal communications An unpredictable workforce needs expensive tlc -

often an issue close to the boss’s heart.



Internet/new media When it affects the share price, the internet vaults

into the boardroom. Will it be accompanied by marketing agency

consultants?



Media As media and distribution channels merge, media’s share of the

planning pie continues to rise.



New product development Advisors in at the beginning when there is a

need for strategic input.



Sales promotion Another consultant on the inside with the customer and

with increasing budgets.



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).