Behind Accenture's Droga5 Groundbreaking Deal



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Accenture Interactive today announced it has reached a deal to acquire Droga5 in what it's calling a game-changer for the business.

Buying Droga5 could put to rest the notion that consultants pose little threat to ad agencies because they lack creativity. Still, skeptics have questioned the ability of large-scale retailers, who have been marketing their offerings in recent years via acquisitions.

Accenture Interactive did not disclose the financial terms of the deal. But a spokesman confirmed it was the largest agency, the acquisition of the group. That suggests a $ 283 million price tag for the 2013 Acquity Group, a large Chicago-based digital agency.

Droga5, which operates in New York and London, employs roughly 600 people. The agency reported 2018 revenue of $ 185 million, down 9.8 percent from 2017, marking its first annual revenue decline.

The acquisition effectively ends WME 's ties with Droga5, says Droga5 founder and Creative Chairman David Droga. The talent agency has acquired a 49 percent stake in the agency in 2013.

Droga5 will retain its agency name, and the management team will remain intact: Droga will remain creative chairman; Sarah Thompson remains on global CEO and Bill Scott will remain as U.K.

In a press release announcing the acquisition, Accenture called it "an evolution in Accenture Interactive's journey to a new agency model-one with the power to engineer transformative brand experiences and infuses those experiences with the emotional and inspirational power of branding thinking and creativity.

"Joining Forces with Droga5 will be a game-changer for the future," said Brian Whipple, Global CEO of Accenture Interactive, in the release.

Droga in a phone interview said, "Neither company wants to do this, but both companies want to do this because of the opportunities it affords … I can create the work that creates great awareness for customers, but if their e-commerce is not in sync, then what's the point? We built our agency by making all the things in the front of the decks for customers-but we're going to redefine our industry by making the moonshots in the back half, the most ambitious, transformational ideas that we did not have the infrastructure or the skill set for. "

He says this move is not out of the industry: "I'm not cashing out, I'm not kangaroo, but I do not want to go there. of the people that helps the industry on its front foot again. "

Jay Pattisall, a senior analyst at Forrester, said in a blog post on the deal that it has "renewed emphasis on creativity in marketing." He added: "Combined with Accenture Interactive's technology, data, experience design, commercial and programmatic capabilities, the addition of Droga and [other acquisitions] helps move them one step closer to providing CMOs and integrated marketers, scaled marketing solutions they require. "

How the relationship started

Droga says that the agency has been working with Accenture Interactive about three years ago, during a project on the United States. "We realize how well they work in the real world and make things in the world that we do not think about how-and-where-it's about accountability." "The most powerful ideas in the world."

Droga, an Australian native, founded Droga5 in 2006 in New York, after he stepped down from his agency as global creative director of Publicis. The agency first started out as an indie hotshop known for its creative daring ideas, including the UNICEF "Tap Project" that the agency conceived after Esquire magazine challenged Droga to change the world with a single magazine page, and the Marc Ecko "Still Free "stunt that saw a graffiti artist tagging Air Force One.

Over Armor, Prudential, Chase, Google, Sprint, Heineken USA's Dos Equis, and Pizza Hut, the latest edition of the magazine. Its U.K. office handles Barclaycard.

Last year, the shop is back to IHOP's decision to become IHOB, a new year, to promote its burgers. It also conceived the Cannes Titanium-awarded Lions "Dundee" Super Bowl campaign for Tourism Australia. At this year's Big Game, the agency conceived the idea to bring Bud Light into the world of "Game of Thrones" to the show's final season. Other notable efforts include The New York Times' "The Truth Is Hard" campaign, high-profile ads for Misty Copeland and Lindsay Vonn, and the Cannes Grand Prix-winning campaign for MailChimp.

The agency was embroiled in controversy at the beginning of 2018, when it fired its New York Chief Creative Officer Ted Royer after an internal investigation. The agency at the time said, "We are committed to maintaining a safe and inclusive environment for all our employees."

A small slice of the Accenture pie

Droga5 is a high-profile acquisition but will be a small income piece of the Accenture portfolio. Accenture Interactive reported 2018 worldwide revenue of $ 8.5 billion, according to Ad Age Datacenter. New York-based Accenture Interactive is a fast-growing branch of global consulting giant Accenture. Dublin-based Accenture reported worldwide net revenue of $ 39.6 billion in the fiscal 2018 ended August 2018, when it employed 459,000 people.

Ad Age Datacenter ranked Accenture Interactive as the world's sixth-largest agency based on 2017 revenue, backed by five big legacy agency firms (WPP, Omnicom Group, Publicis Group, Interpublic Group of Cos. And Dentsu Inc.). Ad Age Datacenter also ranked Accenture Interactive as the world's largest digital network. Accenture Interactive this year ad Fortune 500 companies.

Consultancies in recent years have sought a bigger foothold inside client marketing departments by wooing chief marketing officers with strategic and data analytics solutions to big business problems that traditional advertising can no longer solve. Accenture Accenture Interactive in 2009 after CMOs "has become more responsible for business goals, not just brand goals," Whipple told Ad Age in a 2017 interview. Competing Consultancies Follow the same path by creating dedicated marketing services units. They include PwC Digital Services, Deloitte Digital, Cognizant Interactive and IBM iX.

Acquisitions have played a key role in the consultancies move to grow their creative reputations. IBM Resources / Ammirati, based in Columbus, Ohio; Deloitte acquired Heat, based in San Francisco; and Accenture took on Karmarama, a large independent creative shop in the U.K. The 2013 acquisition of London-based design firm Fjord was a significant creative move for Accenture.

Last year, Accenture Interactive reported nine acquisitions (Adaptly, New York, New Content, Brazil, Kaplan, Stockholm, Kolle Rebbe, Germany, HO Communication, Shanghai, MXM, New York, Mackevision, Germany, Rothco, Ireland, and Altima, France). ). The company acquired digital agency MXM-Meredith Xcelerated Marketing-from Meredith Corp. last May.

But Droga5 is by far the biggest creative shop by a consultancy when judged by name recognition. "This is a truly historic deal that literally resets the dynamics of the entire industry," says Droga5, CEO and Vice Chairman Andrew Essex, who left the agency in 2015. "It's all about creative talent and business acumen, not incumbency."

Culture clash?

Still, critics of consultancies have long questioned the ability of the firms to integrate creative shops. The Droga5 deals with the test because it has long championed the importance of independence and the creative freedom that it affords. But Droga argues that even with the acquisition, that freedom will remain:

"We are independent of compromised, and we are in the business of being profitable, but they are not buying us in the world. enjoy more than our independence. "

Glen Hartman, Accenture Interactive's Senior Managing Director for North America and Global and Digital Marketing, in an interview said: "I'm always in the mood for the vibe versus the agency vibe. [But] We have been working on the topic of "Accenture Interactive." He added that "the culture at Accenture Interactive is far from a traditional stereotypical … consulting firm would look like. Our offices and studios look a lot like Droga5. "

Contributing: Ann-Christine Diaz, Bradley Johnson, E.J. Schultz, Alexandra Jardine

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