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Accenture Is Buying Droga5, an Ad Agency, Making a Bet on Creativity

The consulting giant Accenture expects its deal for Droga5, the independent advertising firm, to close by the end of May.Credit...Albert Gea/Reuters

Accenture is trying to add the kind of creative muscle not normally associated with giant consulting firms with its plans to buy Droga5, an independent ad agency. Now it needs to make sure the two cultures merge without squelching the energy that made the agency such a standout.

Accenture’s deeper push into advertising reflects the ad industry’s rapidly changing competitive landscape. The company’s marketing arm has grown significantly in recent years as broader shifts in consumer behavior have reordered what advertising truly encompasses. In the past, it was about coming up with attention-grabbing ads. Now, it is also about providing broader consumer experiences.

That has made the fight for marketing dollars that much more fierce, with traditional ad agencies jostling with Silicon Valley firms, consultants and upstarts for business.

“We’re working with clients to reinvent how consumers buy their particular products and services,” Brian Whipple, the chief executive of Accenture Interactive, the company’s digital agency, said. He pointed to the development of wearable devices for Carnival Cruise Lines and new fitting-room technology at clothing stores.

“We expect to have an Uber-like, Amazon-like experience when we go to a restaurant or go to a retail store or when we order products online,” he said.

As the firm takes on more ambitious consumer experience projects for brands, it must incorporate “media and advertising and brand strategy and the like, and that’s where Droga and team come into play,” Mr. Whipple, 53, said.

[Read more about the uncertain future of advertising as we know it.]

Terms of the deal, which was announced on Wednesday, were not disclosed. The acquisition was roughly a year in the making and is expected to close by the end of May.

Droga5, which employs more than 500 people, will become part of Accenture Interactive.

Absorbing an independent agency into a larger entity can pose its own issues, however, said Greg Paull, a principal at R3, a consulting firm that works with agencies and marketers.

“It will be a challenge to mix the two cultures together because they are quite different,” he said. Still, he added, “it’s shifting the paradigm from a purely creative-led business to more of a strategic and consulting-led business.”

Droga5, which was founded in 2006 by David Droga, has become one of the best-known independent ad agencies in the United States. (The “5” was appended because Mr. Droga, 50, grew up as the youngest of five brothers.) Droga5 last reported annual revenue for 2017, when it exceeded $200 million.

Some of its notable campaigns include Under Armour’s with the dancer Misty Copeland; Anna Kendrick’s almost-Super Bowl commercial for Newcastle Brown Ale, a digital campaign in which the beer company imagined the “mega-huge football” spot it would have made if it could have afforded one; and this year’s “Game of Thrones” surprise Super Bowl ad with Bud Light. Droga5 is also responsible for The New York Times’s ad campaign featuring the motto “The Truth Is Hard.”

Being subsumed into a larger consulting firm represents a sharp turn. Other prominent independent agencies have steadfastly maintained their autonomy. In 2017, Wieden & Kennedy in Portland, Ore., which is best known for its work with Nike, backed a new agency in Austin, Tex., on the condition that it would remain independent. Colleen DeCourcy, Wieden & Kennedy’s co-president, said at the time, “Our whole abhorrence of controlling interest in anything is that you lose the independence to put the work first.”

Mr. Whipple pushed back at the notion that consultants did not understand creativity the way that traditional agencies did, saying that the cultures of Accenture Interactive and Droga5 were more similar than people might expect.

“Accenture Interactive has its own culture that is really in no way consulting-like, but I will say if it were to have elements of that, I think that’s a good thing,” he said. Its offices aren’t full of people in suits and ties talking about financials, he added.

Accenture Interactive’s revenue rose 30 percent, to $8.5 billion, for the year that ended Aug. 31, accounting for about a fifth of Accenture’s overall revenue. The unit, established in 2009, has acquired dozens of firms in recent years, but Droga5 is its biggest purchase and is expected to give Accenture Interactive new clout in North America.

Mr. Droga, who will remain the agency’s creative chairman, said that while he had fielded acquisition offers before, he felt Accenture and his agency complemented each other.

“You can have the best advertising out there, but if the e-commerce is not good or the relationship with the customer and the experience isn’t great, then that’s irrelevant,” Mr. Droga said.

Mr. Paull said the deal represented a “seismic shift for the industry.”

“I really think it’s going to change the mind-set of how consultants are perceived,” he said. While Accenture Interactive has bought several creative agencies overseas, they were “nothing of this scale, and nothing as U.S.-centric as this.”

Mr. Droga and Mr. Whipple said they had started acquisition talks about a year ago, using the code name “Stellwagen” for the deal, a reference to a marine sanctuary. (Mr. Whipple is an avid fisherman.) Accenture said it would share more about the internal structure involving Mr. Droga, his executives and Mr. Whipple by the end of May.

Analysts and investors have increasingly posed questions to big advertising holding companies about the threat posed by consulting firms. In recent months, executives from the holding companies WPP and IPG have acknowledged their presence in public comments but noted that the firms were not yet big competitors in the creative realm.

“They have not made the investment in creativity that we believe is necessary to compete,” Frank Mergenthaler, IPG’s chief financial officer, said of consulting firms at a conference last month.

Mr. Whipple said that he viewed Accenture Interactive’s work in customer experience as a new category, and that the firm was more likely to team up with the holding companies than compete with them. Those partnerships may happen less frequently with the acquisition of Droga5, though, he said.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: Accenture Makes Bet On Creative With Droga5. Order Reprints | Today’s Paper | Subscribe

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