Being just one rung in a long ladder of names linking branding, advertising, publishing, direct marketing and communications may not be every design consultancy’s idea of bliss, but that is exactly where Interbrand and Newell & Sorrell find themselves. Since the merger last year, they are jointly under B for Branding in the four pages of DAS companies, itself just one division of the Omnicom Group.
The match between Interbrand, known for naming and brand evaluation, and design consultancy Newell & Sorrell seems convincing in theory, but only time will tell what practical benefits it will bring. However, some in the industry are cautious about rushing into marriages of convenience. “Client perceptions are changing, but you always have to deliver,” says David Rivett, managing director of Design Bridge. “There are some projects that are global in scope, where the communications task is fundamental and it makes sense to collaborate with other companies. But this sort of project is still the exception rather than the rule.”
There was speculation recently about Design Bridge’s acquisition by APL, an advertising agency in the Interpublic Group, after they had worked on successful pitches together. But no one should hold their breath on this particular deal, says Rivett.
Where a creative team is working as part of a larger organisation, the need for effective internal communications increases exponentially. “Acquiring a company is the easiest part,” adds Rivett. “The hard task is meshing the different cultures and sharing out responsibility in an acceptable way.”
A takeover is not necessarily an easy way to boost a consultancy’s reputation, but this doesn’t mean the Interbrand/Newell & Sorrell merger will be a one-off. Many of the London consultancies think it likely that others will follow over the next few years.
“The most likely scenario is a series of mergers and acquisitions, resulting in a streamlined group of players dominating the industry,” says Satkar Gidda, marketing director at Siebert Head. Gidda foresees a “Top Ten” emerging in much the same way as in the advertising field.
Siebert Head links this predicted change in brand design to shifting client perceptions about success in the market. “Not all brands benefit from advertising, which may be only regional or only periodic. But if you get the brand development right to begin with, that is your advertising there on the shelf – day after day.”
The most ambitious consultancies will grow in size, says Gidda, by acquiring expertise from the client side and from other disciplines such as brand strategy and management consultancy.
Siebert Head believes that geo graphical reach is a crucial part of this growth, which is why, after several years work in Poland, the consultancy has established its own office in Warsaw. The next step, says Gidda, could well be some sort of joint venture with brand development or management consultants in Eastern Europe.
The relative strength and independence of design consultancies in brand development is very much a UK phenomenon. “Clients in this country have recognised the need for experts in branding and design,” says Bernard Gormley, chairman of design consultancy Ziggurat. “But the advertising agencies haven’t taken this lying down and are fighting back by buying into design consultancies.” This contrasts with a market like Germany, he adds, where agencies have kept the upper hand as brand custodians, largely because of client conservatism.
Like Gidda, Gormley sees a compact group of top international con sultancies emerging over the next few years. “Smaller groups are being squeezed by the ever-increasing number of rosters being put in place by the likes of Nestlé, SmithKline Beecham, Bass and Van den Bergh Foods,” he points out. “Ideally, small is beautiful for clients. But the reality is if you want to stay on those rosters, you have to provide a full service, strategically as well as in implementation.”
Ziggurat has worked out its own way to face the challenge of international brands. “How will the independents survive against the likes of Omnicom and WPP? Ziggurat believes it is about creating networks and joint ventures to prove that you can work on an international platform,” says Gormley. The company has worked in joint ventures in the Far East for Seagram and for SB in India. While consumer attitudes may be quite similar throughout Europe, local knowledge and experience is essential when there are big cultural differences, says Gormley.
There is also huge potential, says Ziggurat, for consultancies to collaborate more often. The gradual convergence of corporate and product branding has brought different disciplines closer together.
Henrion, Ludlow & Schmidt, which previously called itself a “corporate identity consultancy”, has pointedly dropped the “corporate” from its own identity. Like Design Bridge’s Rivett, director Chris Ludlow is wary about predicting a spate of mergers, especially the kind which would bring together a number of different disciplines. “In our case, people come to us for independent advice,” he says. “They don’t want to be sold a package. Consulting depends upon independence for its credibility, even though some growth is needed to satisfy clients.”
Dragon offers naming, strategy, new product development, graphics and structure while keeping its size to a minimum. Like many of its competitors, it sees itself as an “international branding specialist” rather than a design consultancy. In the US, Dragon has also presented joint pitches with Dragon Rouge in Paris, which is part of the same group. But the competition for business is not likely to end there.
“Consultancies will have to compete with management consultants and advertising agencies in the strategic nature of their work,” says Linda Mooney, senior consultant at Dragon.
“Size is an interesting issue,” adds Mooney. “Clients do want to work with people with international experience, but that doesn’t necessarily mean having people in every country. You can build up a group of individuals with a lot of international expertise and still keep the number under 30.”
This threshold for staff numbers seems to be significant. Dragon still employs fewer than 30 in its London office. Beyond this number, says the consultancy, the culture begins to change.
A client such as Mars is likely to want to work with somebody who can provide naming, graphics, structure and strategy, says Dragon. And in practical terms, size need not be a limitation. Even smaller companies can offer these skills in-house, with technology such as video-conferencing adding to the potential of consultancies to handle projects around the world. But the key has to be client perceptions. “The larger multinationals are going to look at the bigger boys to start off with and they will increasingly find their needs are satisfied there.”
Like Mooney, Wagstaff managing director Clare Anderson does not believe that increased size is a benefit in itself. The acquisition of another creative consultancy, the Green House, a year ago was more to do with raising the creative level in the company than anything else, she says. “A lot of our clients like working with a smaller group of people. We are wary of growth and are more interested in building the skills of the people we already have.”
Wagstaff partly owns Prescient, a research and planning company. This brings benefits not only for clients, says Anderson, but also for the creative team when it wants to refine its own perceptions or flesh out a hunch about consumer preferences.
There is certainly a possibility that, over the next few years, there will be a split among brands, brand identities and how they are handled at the design and strategy stage. It may be that the consultancies with the most clout will pull in most of the business from the international brands, leaving the smaller brands to the consultancies which do not make it into this elite group. But this outcome is by no means certain.
Some point out that the trend towards mergers in the industry is nothing new. “Mergers within the design industry have been happening with varying degrees of success for some time now and I’m sure there will be more,” says Clare Fuller, head of identity consultancy Bamber Forsyth. “In general the trend will continue towards being more strategically-led and more international.”
Will brand design follow the route of the brands they shape, becoming small cogs in ever-larger mechanisms? Or will they imitate the flexibility that many of those same brands are learning to value, and remain supple, small-scale operations?