McKinsey steps on advertising toes

The advertising industry, already reeling under a downturn in business, got yet another jolt recently. Global strategic management consulting firm, McKinsey, made an unusual acquisition that has the advertising industry in jitters. McKinsey recently acquired, for an undisclosed amount, Chicago-based Envision, a brand-consulting firm with four partners and 10 employees with backgrounds in advertising, marketing and psychology.

Hitherto advertising firms, which have traditionally seen themselves as custodians of their clients' brands, have generally handled brand consultancy. But with advertising firms neglecting the areas of brand valuation and enhancement of corporate identity, specialised brand consultants, most of who are established management consultants, have risen. This acquisition marks a departure for McKinsey, which has chosen to generally expand through organic growth and rarely acquires other businesses.

But the global consulting giant has made the acquisition to speed up the expansion of its branding practice, which was formed three years ago. For some time now, there have been turf wars between the consulting fraternity and the advertising industry on who is best equipped to advise companies on branding strategies. The recent McKinsey move threatens to accelerate the war, which may increasingly see management consultants replacing advertising firms as the most trusted brand-related strategic advisors to companies.

Global advertising giants have tried to rectify the situation by setting up their own focussed brand consulting units or buying brand consulting practices to work with them. Thus, Omnicom of the US owns Interbrand and WPP of the UK owns Enterprise IG and Landor Associates. McKinsey however denied it was engaging in a turf war over branding and stated that it believed advertising agencies focused on communicating the strategy through advertising, while consultants, like them, focused on brand delivery, which is helping companies deliver on their brand promises.

Advertising executives have been trying to question the management consultants' ability to understand brand strategy. The consultants, ad execs believe, are consumed by numbers and have no ability whatsoever to understand emotional, psychological or intuitive phenomena. McKinsey's acquisition of Envision may just change that perception!