The advertising industry is 'selling short the value of what we do' according to the CEO of British creative shop Karmarama
A large part of the shift is being driven by consulting firms and systems integrators, which have bought up a number of advertising agencies.
Last year, IBM bought two German agencies, ecx.io and Aperto, to help build out its growing digital agency business iX. Also in 2016, Deloitte acquired creative agency Heat.
Business Insider spoke to Ben Bilboul, the CEO of British creative agency Karmarama which was acquired by Accenture Interactive in 2016. Bilboul thinks the industry is a lot more valuable than it's given credit for.
Since its sale, Karmarama has continued to bring in new clients. In January 2017 it was named creative agency for Philadelphia, the Mondelez-owned cream cheese, and more recently was named the agency for car part retailer Halfords.
In an interview with Business Insider, Bilboul said new client wins come from Karmarama's own culture but also recognition from its new parent company in the value of creative agencies: "It's taken Accenture to recognize the value of what we do and place it at the highest level."
Bilboul explained being part of Accenture Interactive has given Karmarama the opportunity to brings its creative capabilities to more strategic conversations rather than focusing on singular projects, which is how many creative agencies are brought in by brands.
"The business model of agencies hasn't really changed," he said. "They're getting less income because more of that budget is being diverted elsewhere," Bilboul said. "Therefore they're finding it harder to pay for the great talent they have because their model is still based on 'let's try and get a juicer retainer for doing everything' and increasingly they're being brought in just for a project to kick off the process that is then fulfilled elsewhere."
The quality of talent in advertising is something Bilboul often brings up in conversation as an example of the assets the industry has but isn't using the way it should.
"I think that we [the advertising industry] are slightly selling short the amount of value we can offer to clients," he said of the creative capabilities of advertising agencies.
Reshaping itself into creators of customer-centric experiences is something he thinks would allow it to compete with in-house agencies and cheaper creative production, such as that coming from online crowdsourcing platforms.
"There's a huge oversupply in the industry. A client can procure some creative at a very low price, that probably isn't priced fairly enough in terms of what's being delivered," he said.