Two Worlds Divided by a Common Client

Opinions differ on the nature, or in some cases, the existence, of the turf battle, or "polite incursions" as Steinmetz describes them. "[The notion of territorial skirmishes] is a provocative subject for news coverage by the consulting trade press and the PR trade press, but personally, I think it's an overblown issue," says Steve Silber, a PricewaterhouseCoopers' spokesman in the firm's Atlanta office and a PR professional by background. "For our part, we consider the marketing, the public relations, and even the broader strategic positioning needs of a company to be but just a component of its overall change management or operational efforts. We don't see any reason why it needs to be a turf battle."

The advertising and PR side favors the perspective that there is marketing and branding territory up for grabs "Everyone wants to grow," says Larry Weber, chairman and CEO of advanced marketing services for the Interpublic Group of Companies. Weber notes that law firms also compete with consulting firms and advertising and PR agencies for strategic communications services, particularly in situations where law firms are involved in crises that might affect reputation or brand. "If you're not growing," he adds, "you're dying if you're a service business. I think the battles are fought one at a time."

Regardless of how overblown or polite the turf incursion may be, the fact remains that a new, hybrid approach to the high-level marketing and communications platform has appeared. And management consultancies with marketing and branding practices borrow ideas from these new competitors.

Staking Claims

Historically, advertising and public relations agencies urged clients to take a more strategic approach to their disciplines. "Advertising agencies for years have been crying that no one is giving them respect at the CEO level," says Steinmetz. "And they brought on all kinds of strategic capability and bought up consulting skills, database management, and customer analytics. Doing so gave them more respectability, but those acquisitions were always designed to ultimately create a better ad."

The advertisements, particularly the television spots, improved greatly. The success of some of those campaigns (think Energizer Bunny or "Where's the Beef?") helped elevate the practice of branding to a more strategic position within the organization. But that success and the revenue it generated also concentrated agency attention and resources on television advertising rather than on developing expertise in broad-based marketing. "The smarter people I met in the advertising industry would say that they felt advertising had abandoned the opportunity it had to work on a strategic marketing level with its clients," says Scalea, "and that the reason consultants were able to infiltrate was that there wasn't a strong enough beachhead, if you will, from the agency side." He says that advertisers became frustrated that a creative part of the up-front process, the marketing leading into advertising programs, was placed in the hands of other professional services providers — mainly consultants. "The consulting side would likely say that either they saw the opportunity or that it wasn't being performed, and clients searched them out," Scalea adds. "The result in either case is that there is this area of overlap."

Not that advertising didn't try. Many advertisers acquired companies and expertise they hoped would strengthen their strategic offerings. "Agencies have gone out and looked for database companies, direct marketing firms, graphic design firms, and exhibition services to acquire," Scalea notes. "From our vantage point, aside from the database companies, those efforts represent integrated communications resources." Steinmetz agrees that most agency acquisitions were focused on customer analytics and database management rather than on strategic consulting. "To get to strategic consulting," he says, "they tried to hire senior strategy consultants from major firms. Two and a half to three years ago, I used to get a phone call a week from major advertising agency conglomerates asking me to come on board to set up a strategy practice."

The results of those efforts have been mixed to this point. Scalea says that many ad agencies were unprepared for the integration difficulties that followed the acquisitions. "Advertising as an agency set is less involved in broad-based market strategies," Weber adds. "They tried that and they didn't have the horsepower." On the other hand, the blended services approach espoused by Hill, Holliday and Inward Strategic Consulting seems to have won out over the ad world's attempts at adopting a one-stop-shopping model.

The Overlap Dance

The disputed territory between providers of high-level marketing, communications, and branding services is difficult to nail down. "While some professional services may overlap in theory and practice, it's a matter of how the client manages such situations," Silber notes. "A PR professional usually is not a lawyer, and a lawyer usually is not a PR professional. The same goes for management consultants and marketing executives. Here at PwC, for example, we don't have people whose job it is to publicize clients' products and services. That is the domain of a public relations agency."

Weber seconds the latter point, noting that senior PR strategists now take a much more proactive approach to equipping clients with crisis communications plans, for example, before a crisis strikes. "So, before the event happens, help me protect my brand, build brand equity, and create positions with different constituencies that will be effective in influencing their positions," Weber says. "If PR does it right, I don't think that can ever be the domain of legal or consulting firms, because they didn't grow up in content creation, in generating ideas to influence opinion."

But Weber and others on the PR and advertising side also assert that services firms often overlap, in practice, in the areas of customer relationship management, market research, and brand articulation. "I think the overlaps are in customer relationship and how you strategically approach building that customer relationship," Weber says. "Branding has shifted from a product or a company to a relationship with a customer or a potential customer. The stronger that relationship, the stronger the brand. The weaker that relationship, the weaker the brand. So, whatever party can bring strategic thinking and then execution to get that done is very important." Weber also notes that consulting firms, particularly the Big Five with their bounties of IT expertise, are best positioned to dominate the type of engagements that require front-end expertise associated with automating the marketing process through CRM, sales force automation, and relationship automation solutions.

Scalea points to fundamental market research as a highly contested area. "Consultants and advertising agencies both bring a unique set of capabilities to conducting the research," he says. "Agencies tend to have more perspective on the customer outlook and the target audience's mindset. Consulting firms tend to do a better job on research related to industry dynamics and market dynamics, and tend to have better access to industry experts."

For advertising agencies, branding traditionally translated to brand identity and associated graphic standards. "On the other side, management consultants are involved in process redesign, organizational structure, and the HR dimension of how you execute the brand," says Steinmetz. "How are we going to organize to facilitate it? How are we going to structure our business processes to support it in sales development? How are we going to package our products and procure our suppliers to support this brand essence?" But, increasingly, advertising and communications firms are getting involved earlier in the brand development process.

"We are working as the consulting arm with a number of our clients where we literally are in the thick of designing and developing new products for launch," says Scalea. "We are looking at functionality issues, we are looking at distribution issues, we are looking at usability and feasibility and sales forecasting. We are absolutely up-front-and-center working with them in the most fundamental way. When you're starting with that knowledge base and that in-depth of relationship with the client, who better to prepare to develop much more impactful and creative advertising than the people who have been giving you advice all along the way?"

Sharing the Sandbox

In most cases, consulting firms share clients with advertising and public relations agencies. "I remember working with Bain and thinking, 'Well, gee, I could have given that advice,'" says Weber. "I tried doing that a couple of times and it didn't work. I'm sure it's the same on their side. They thought, 'Well, gee, Larry gave that advice and they're getting paid a lot of money and I could have done that.' And then they tried it and it didn't work. So I think the more we try to work together, the better off we are. And I would advise the consulting community to partner with the boutiques in the communications industry that are really specialized, the ones that specialize in litigation communications or M&A communications. Those are the ones they should partner with, and not try to copy."

Silber says that change management specialists at PricewaterhouseCoopers regularly advise clients to communicate certain messages to various constituencies. "And the consultants might encourage the client to use a public relations agency to do so if the client doesn't possess the needed resources for a broad communications initiative," Silber notes.

But here again, theory and practice often differ. Both camps bristle when they sense that the other has crossed traditional territorial bounds — consulting into the execution of creative or communications processes, and advertising/PR into change management. "I would say to the consultant side, 'Don't be so arrogant just because you're viewed as the strategist,'" offers Weber, who stresses that objectives, roles, and processes must be clearly defined when services firms encounter overlap.

Steinmetz, Scalea, and Silber emphasize that the client often plays a pivotal role. "Let's say we have a client who is working with a consulting firm and they're working with us as an agency," Scalea notes. "We have agreed that we want to do a market segmentation study. We have encouraged the consulting firm to take the lead on that. So they spec it out, find the research suppliers, and write the fundamental objectives. But then we collaborate on the design of the research study. Well, now we all have a vested interest in the accuracy and the validity of the results coming out of that."

When clients hire both types of firms, Steinmetz says that they shouldn't try to mediate between the two, one interaction at a time. "They should create a comprehensive, integrated marketing/communications process, fitting in the hired guns where needed," says the consultant, his creative roots showing. "The client must act like a conductor, managing a large orchestra with different instruments, musical movements, and timing."

Sidebar: Hyping the Hybrid

Allan Steinmetz has played on both sides of the marketing/branding fence. The former worldwide director of marketing and communications at Arthur D. Little, Steinmetz also served as worldwide director of marketing for Andersen Consulting and on the advertising agency side as a senior vice president at Young & Rubicam. He founded Inward Strategic Consulting, Inc., a management consulting firm specializing in both change management and marketing/branding strategy, in part to provide a blended approach to clients seeking marketing/branding services.

CM: What is at the root of territorial conflicts between advertising agencies and consulting firms?

Steinmetz: Each believes they can do the other's task, but they can't. Advertising executives are jealous of the recent foray by consulting firms into their domain, and consulting firms really don't respect what advertising agencies do for their clients. Both parties have yet to learn to work together, forcing clients to become mediators and arbiters. That causes confusion, mistakes, and poorly executed plans that lack buy-in.

CM: What are management consultants' major strengths in the marketing/branding arena?

Steinmetz: They sell disciplined, methodical, and measurable processes, connecting proposals to their business impact. They idealize the best practice, repeatable methods of achieving desired results.

CM: How about their weaknesses in this area?

Steinmetz: When they do an assessment or an audit of a client, they'll interview lots of people and collect lots of facts, but they don't want clients to make recommendations for them. Just as there are consensus opportunities on the creative side, I think there are consensus opportunities on process issues as well.

CM: Where do advertising agencies often drop the ball?

Steinmetz: They focus on the sell, not on building consensus before launching a campaign. When creativity is the product, the focus won't be on methodology and repeatable results. That strong salesmanship becomes a weakness when not aligned with corporate goals.

CM: What can consultants learn from their counterparts at marketing/communications firms?

Steinmetz: When consultants go on sales calls, they communicate on an attributes level instead of a value level: Here's what we do and here is the price. They don't talk about how their offerings can help the client make a difference in society, which is the way advertising agencies work.