New Accenture CEO eyes M&A as Interactive revenues hit $10bn

Consulting giant's digital marketing services arm is now as big as Interpublic.

Sweet: Accenture has 'capability if that ever made sense' to do larger deal than that of Droga5
Sweet: Accenture has 'capability if that ever made sense' to do larger deal than that of Droga5

Accenture’s digital marketing services arm, Accenture Interactive, has passed $10bn in annual revenues, making it as large as Interpublic, the world’s fourth-biggest ad agency group.

Accenture Interactive, which marked its 10th anniversary this month, added at least $1.5bn in sales compared with a year earlier.

Julie Sweet, the newly promoted chief executive of Accenture, told investors that Accenture Interactive’s revenues of "over $10bn" in the year to August were "a significant milestone".

Accenture does not disclose Accenture Interactive’s exact financial numbers in its accounts, but said in June that it was growing at more than 20% and the "vast, vast, vast majority of that growth" is organic.

It had annual revenue of $8.5bn last year and a 20% increase would likely mean revenues jumped to $10.2bn or more this year.

Sweet said Accenture Interactive’s role in "creating better customer experiences" was one of three main areas of client growth for Accenture. "Building out their digital core" and "optimising their operations" are the other areas.

"Our clients are focusing on enterprise-wide transformation," she said, explaining why clients are asking for a broad range of capabilities.

Sweet, who has a background in M&A, told investors that expanding Accenture Interactive remained "an important focus point" for the parent company "going forward".

Another focus of M&A is future technology such as artificial intelligence and robotics, which Accenture dubs Industry X.0.

Accenture Interactive made its biggest acquisition, Droga5, in April for an estimated $475m to add to a portfolio that includes Fjord, Karmarama, Rothco, Sinner Schrader and The Monkeys.

Asked if Accenture, which is worth $130bn, could consider a larger deal, Sweet said: "There’s certainly no plan to do that but, obviously, we have the capability if that ever made sense."

Interpublic had annual revenues of $9.7bn last year. Revenues would have been $10.2bn if its acquisition of Acxiom had completed by the start of 2018, rather than in October 2018, accounts show.

Accenture Interactive is larger than Dentsu and Havas, two of the established "big six" agency groups, but it is still behind WPP, Omnicom and Publicis Groupe.

Mark Read, chief executive of WPP, said in August that he had not seen "a material increase" in competition from management consultants such as Accenture in agency pitches this year.