Mat Baxter on consultancies: 'The industry shouldn't be scared'

Josh McDonnell
By Josh McDonnell | 10 July 2019
Mat Baxter

Initiative global CEO Mat Baxter "isn't scared" by the rise of the consultancies, saying it will force others to simply "up their game".

He told AdNews management consultants could be viewed as a good thing for the collective industry, with more competition raising the bar while also giving way to "price recalibration".

In the past, he says agencies have done a "terrible job" of pricing themselves and protecting their pricing position.

"When you have the likes of Accenture and PwC and others entering into the industry, what they do is they price recalibrate on our behalf," Baxter says.

"They actually start to change what clients perceive to be the price tag for certain things because management consultants will never operate on the margins that we're willing to operate. So, rising tide lifts or boats, everyone's pricing gets a bump."

According to Baxter, the other thing management consultants do is tell the long-term story of value creation that media agencies and agencies generally have not been able to do.

He says the industry get the benefit of learning from these new competitors on how to package, how to reprice and more importantly, how to develop product to be "truly competitive" with them.

"I'm not scared of consultants, competition breeds excellence. Are they going to force us to lift our game? Yes, absolutely. Are they going to knock some of us out? Yes, the crap ones will get knocked out", Baxter says.

"The great agencies will continue to thrive and survive as they always have but you're just going to have to be even better to survive and thrive. That's not a bad thing."

While Baxter says they have the ability to impact the industry on a larger scale, he believes the market gloablly is yet to feel any major changes come from the consultants.

He believes consultants are definitely in the marketplace "creating disruption" and forcing clients to re-evaluate the roster of partners that they use, however says for clients dealing with them, the "grass is not always greener on the other side".

"Management consultants to some extent have been a little naive in the way that they've entered the marketplace, only applying their lense of analysing market opportunities and then make strategic decisions about whether they're worth pursuing or not," he says.

"There is a lot more complexity and a lot more of a challenging work environment in the media agency and marketing communication space than the management consultancies first realised and I think you'll soon see them discover the business is not as simple as they maybe thought."

Earlier this week, Interbrand managing director Nicola Mansfield told AdNews the big four professional services firms weren’t designed for creative services, but the consultancy model does allow for “deep and strategic partnering” with clients.

She called out the agency model for being more passive and high risk with clients than in a consultancy where she says a “strategic partnership” is formed instead.

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