Rivals call a halt to competition

Rivalry between advertising agency groups and management consultancies appears to be moving towards a truce as agencies identify new opportunities to expand and improve their own brand management service.

The encroachment of consultancies into agency territory has been well documented. In an attempt to generate additional revenues from outside their core competencies, many consultants sought to reposition themselves as experts in strategic brand management. With agencies initially slow to respond, this new wave of “brand management consultants” enjoyed some success in persuading clients that they were ideal brand evaluation and development facilitators, especially within the context of overall corporate aims and objectives.

Two factors are now beginning to ease the pressure on agencies. The first is that some have begun to develop their own specialist consultancy operations which focus on branding and brand management. Companies like the Brand Futures Consultancy – one of the first to launch in the UK or, more recently, Black Pencil in Germany, have grown from an untapped pool of brand expertise within agencies which has developed over many years. The viability of specialist operations like these suggest that consultancies have actually done agencies a favour by helping them to find these new sources of revenue.

The second factor is that management consultancies and agencies are starting to recognise that there is room for both of them. Each has a distinctive role to play in the process of building and sustaining brands over time, and can benefit from the strengths of the other.

In an article examining the situation in Germany, Reuters quotes Malte Wilkes, who was until recently Germany’s president of the Association of Management Consulting Firms. He admitted that it would be hard for management consultancies to compete with agencies in some areas and argued that both agencies and consultants would benefit if they worked together.

“It would be much better if we worked side by side,” he said. “I am not going to start writing a commercial script or composing slogans. There is no competition on the creative side.”

Representing the agency view, Grey Germany’s chief executive, Bernd Michael, told Reuters: “Consultancies think like companies and agencies think like consumers. With them logic is king and with us it is creativity. Recognising this could lead to a new and better division of labour.”

Increasingly, agencies are overcoming the threat from consultancies by doing just that. The most forward-looking recognise that by introducing the expertise of management consultancy people into their own brand management consultancies, they will offer a service to clients that goes beyond anything that either side could have provided independently.

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