New co-workers Brian Whipple and David Droga (photo: Accenture Interactive)
In practical terms, Droga5 has had very little impact on the day-to-day activities or issues in Canadian marketing. It’s a New York agency working on global brands.
But today’s news that Droga5 has been acquired by Accenture Interactive says a great deal about where the entire industry—Canada included—is going.
The shocking acquisition was confirmed Wednesday morning. Droga5’s 500 employees across its New York and London offices will become part of Accenture Interactive. David Droga remains creative chairman and Sarah Thompson remains global CEO.
“Accenture Interactive is one of the most disruptive forces in the industry, and we have always been a safe space for audacious ideas,” said Droga in a release. “I’m confident they are the best partner to grow our business and provide greater opportunities for our clients and our people. Why live off past glories when you can get busy trying to create new ones?”
As for the cost, terms were not disclosed. Droga5’s 2017 revenue was $200 million and Fast Company estimates 2018 revenue of about $245 million. Two senior advertising executives who have been involved with agency sales told The Message that Droga5 likely would have sold for 1x revenue, which would put the sale price somewhere near $250 million.
Much has been made of consulting firms’ growing incursion onto traditional ad agency turf, and Accenture has been particularly aggressive.
Since launching in 2009, Accenture Interactive has grown into a $8.5 billion business and made a number of high-profile creative acquisitions, including Fjord, Karmarama and The Monkeys.
But this deal is undeniably the most significant, and acquiring Droga5—one of the most successful creative shops globally the past decade-plus—feels like a watershed moment that provides a clear vision of just how far this trend could extend.
As big as the advertising holding companies are, the consulting houses are much, much bigger; if/when they decide that enhanced creative power can improve their product and generate revenues, it’s hard to see a reason they won’t simply acquire it, even if the holding companies don’t believe consultancies are big threats in the space.
The New York Times echoed this point today, recalling comments from Frank Mergenthaler, IPG’s chief financial officer, at a conference last month: “They have not made the investment in creativity that we believe is necessary to compete… They’re buying small agencies in some markets, so they can put in a deck they’ve got a capability, but we’re not seeing them much and we’re not seeing them at scale.”
A more optimistic interpretation holds that deals like this serve as confirmation of the growing appreciation of the power of creativity in business. Leaving aside concerns about culture clashes from merging two very different organizations, Accenture buying Droga5 reflects the growing belief that creativity can do much more for a business (and a brand) than just produce advertising. It’s about enhancing all consumer touch-points and creating entirely new consumer experiences that go far beyond advertising.
“Headlines that obsess about the “consultancies versus agencies” narrative, however, are missing the point: Accenture Interactive’s acquisition of Droga5 cements a renewed emphasis on creativity in marketing,” wrote Forrester’s Jay Pattisall this morning.
“[N]ew growth will come from creativity guiding brands, experiences, and communication… tap into partners who bring creative courage that can be executed at every touchpoint.”
Future brand building will be reliant not just on great ideas, but great experiences, a skillset that Droga5 has in abundance, said Brian Whipple, global CEO of Accenture Interactive. “We’re excited to work with David Droga and his team of brand strategists and creative minds to further our ambition to improve the full human experience with brands,” he said.
The Droga5 acquisition gives Accenture a distinct position in the market, and represents a signpost in its quest to build what Whipple called a “new agency model” possessing the ability to develop “transformative brand experiences, and infuse those experiences with the emotion and inspirational power of brand thinking and creativity.”
