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#mavericksindigital: Is IBM a new threat for digital agencies?

To most of us when we think of IBM we tend to associate themes like mainframes, storage, security and infrastructure among others. Not really the most sexist of images right? But it appears that they are looking to change this perception and this week’s move has clearly underscored their shift.

Earlier this week, IBM’s internal digital agency called Interactive Experience (iX) went on a shopping spree and acquired three separate digital agencies – two based in Germany and one from the US, in an attempt to bolster its global digital agency capabilities.

One doesn’t normally associate IBM as having a digital agency competency. But this move is an attempt on their part to get clients and businesses to start thinking of IBM as a marketing and creative services provider. With this deal, they get over 800 digitally savvy staffers and top-notch clients the likes of Adobe, Coke and Volkswagen. This will bring iX’s digital head count to almost 11,000 globally, supporting their 2015 reported revenues of around USD 1.9 billion.

According to IBM, their intention is to really own the design, data and experience areas of digital. These are the areas the can best help brands through digital transformation, an area they feel they are in the best position to drive forward.

IBM’s move is something of a trend we have seen of late. A trend for consultancy’s to start getting more into the digital space, moving beyond thetraditionalconsulting functions of Finance, Information Technology and Strategy.

In October 2015, McKinsey launched a digital campus in Singapore with the aim to help companies and participants at various stages of their digital journey, to eventually transform and execute their digital initiatives at scale. This is already off the back of McKinsey’s existing aggressive push of driving their Digital practice globally since it launched a few years earlier.

Similarily, back in 2013 Accenture launched Accenture Digital, a new practice that immediately brought together 23,000 of its people to help consult with new and existing clients around all facets of digital from media, analytics, data, creative and retail.

Deloitte did something similar with their 2014 launch of Deloitee Digital followed by PwC Digital the same year which currently drives around USD 750 million in revenue.

Clearly these consultancies are seeing digital as the next big thing and are doing everything in their power to mobilize themselves around it. This will definitely require the ‘native’ digital agencies to be more on their toes actively defending their business and coming out with new and innovative products in the marketplace. The advantage the existing digital players have is the equity they have already built in their clients mind around being a true digital agency. This is something the new entrants will have to overcome.

However, the advantages of these consultancies is their prevailing strength in technology, an area clients are continually seeking guidance on. Whether it’s around setting up a DMP, digitizing the retail environment or consulting on digital automation, these are the areas where they traditionally excel.

Right now is there is probably enough room for both traditional digital agencies and newer consultancy agencies to thrive. Clearly there is still enough demand out there to satisfy all players, particularly with more and more businesses still trying to go online and as we see the next one billion consumers start using the Internet over the next year.

But as we look three to five years ahead, I suspect we will start to see more of a competitive scene, more cluttered pitched and probably more agency consolidation out in the marketplace.

Andy Radovic

Andy Radovic is the APAC Client Partner at Essence Digital, a GroupM company. He is a strategic digital marketer with 13+ years experience working in the digital media space across a variety of agencies, spanning stints in the U.S., Japan, Korea, and now Singapore. Before Essence, he was working for Maxus Asia Pacific, part of the GroupM network, the world’s largest media investment management organisation, and media communications and planning arm of parent company WPP. At Maxus, Andy led regional digital duties for Asia Pacific with a focus on building out the Maxus digital product offering across Asia Pacific focusing on search, social, mobile, digital analytics and e-commerce.
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