Consulting firms will ‘decimate’ ad agencies

As management consultancies move further into the digital advertising arena, they will make a play for media buying budgets even if they won’t openly admit it. That is the view of a marketing consultant, who spoke as part of Digiday’s Confessions series, in which we exchange exchange anonymity for candor. This person believes consulting firms are quietly building their own media buying services which could “decimate agencies.”

Agencies have guarded their budgets against other threats before. What makes consulting firms different?
Agencies are talking to clients about low CPMs when it comes to how to buy media. That happens despite everyone accepting that’s a bad way to buy online media. Consulting firms are telling clients, “Forget about CPM; let’s talk about the cost per sale,” and asking, “How much are you willing to pay for that?” The reason that the advertiser is in digital is because they’ve been convinced by their media agency that they’ll save money, and it will be cheaper to reach their audience using digital. You turn that around and make that performance-based media, like the consulting firms want to do, and suddenly you can make great money on it because the client is willing to pay $1 per view and $100 per acquisition, for example.

Conflicts of interest at consulting firms aren’t new, so why haven’t they been pressured more?
Marketers have a different set of ethical standards for management consultants than they do for agencies. The big consulting firms run pitches when they’ve got agencies themselves. It’s so easy for them now to audit a big advertiser, while also saying, “You guys are missing this skill set, but guess what? We have a new media strategy and analytics department that could give you what’s needed.” The management consultants don’t see conflicts of interest; they don’t want to be exclusive to a client. In 2018, marketers must reconsider how they define a conflict of interest.

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