It may be the biggest bombshell on Madison Avenue since Publicis and Omnicom announced their merger in 2013, or at least since they called it off a year later: David Droga, Creative Chairman of ad agency Droga5, was elevated to CEO of parent company, Accenture Interactive.
The scale of his responsibilities is positively breathtaking: Droga5 revenues are estimated at about $200 million in 2 offices with 625 employees, while Accenture Interactive is a $10.6 billion firm, the largest ad agency in the world, with 18,000 employees in 40 offices. Accenture Interactive is bigger than Ogilvy, BBDO and McCann – combined. Accenture Interactive a subsidiary of management consultancy Accenture, with revenues of $44 billion and 600,000 employees.
It’s an undertaking that would scare off a lesser man, but Droga has forever bested improbable challenges his entire career. He went from the mailroom at Grey in Sidney to become a partner and Executive Creative Director of OMON, one of Australia’s hottest shops, and at the ripe old age of 22. Six years later he moved to Singapore to become Executive Creative Director of Saatchi & Saatchi Singapore and Regional Creative Director of Saatchi Asia. Saatchi Asia was named Regional Network of the Year and Advertising Age named the Singapore office as their International Agency of the Year.
Droga was promoted to Executive Creative Director of one of the most famed agencies in the world, Saatchi & Saatchi London at age 31 in 1999. In 2002, Advertising Age selected Droga as “The World’s Top Creative Director.” Saatchi & Saatchi London won Global Agency of the Year at the Cannes Advertising Festival as well as Advertising Age and Adweek.
In 2003, Droga became Worldwide Chief Creative Officer of the entire Publicis Groupe, the world’s 3rd biggest ad holding company. He left three years later to start his own agency, Droga5 (The youngest of five boys, his mother stitched name labels in the boy’s clothing. Droga told me once that, at the time, his mother found it quite amusing that he named his agency after her label).
The agency soon was celebrated for its creativity and for the commercials that it created for the likes of Under Armour and The New York Times. A slew of Agency of the Year awards followed, and in 2020 Droga5 was named by both Adweek and Ad Age as Agency of the Decade.
David Droga is more than just a talented creative director. He is also one of the best dealmakers I know. In 2013 he sold 49% of his agency to Hollywood talent agency William Morris Endeavor, in a deal that valued the ad agency at $230 million. This was a ridiculously rich valuation, given that Droga5’s estimated revenues at the time were $59 million. When WME decided to dissolve the partnerships in 2019 and then started looking for a buyer, they found one – the acquisitive Accenture Interactive. The price tag for Droga5, $475 million, defies logic. Accenture Interactive agreed to a deal with such a steep valuation-to-revenue ratio of almost 4-to-1, while the ad holding companies were trading at less than 1-to-1 ratio at the time.
Accenture was initially attracted to Droga5 because of its creative reputation. It helped level the playing field. Agencies that once brushed off the consulting model as an indirect competitor, had to acknowledge their newly gained creative expertise. Bringing Droga5 into the fold was intended to show marketers that the consulting firm has the creative chops needed to compete for their business.
Like any other disruptive deals, it generated some controversy. People wondered what would happen to Droga5’s culture, an agency that had proudly waved the independent flag for so long.
The reality is that Droga5’s culture was imperiled anyway in recent years. Key top leaders like creative director Neil Heymann, head of strategy Jonny Bauer, ECD Casey Rand and CMO Chris Wollen left. The agency had gone through three rounds of layoffs in 2018 and had laid off 7% of its staff last year. It’s a grim reflection of how big creative ideas, no matter how smart, no matter how savvy, are falling lower on the marketing ladder as data and tech climb the rungs.
The Droga5 deal was intended to convergence the once siloed approaches to marketing services, where buttoned-up consultancies are going bigger on creativity, while agencies dip into the consulting side and areas like data and analytics.
The marketing landscape is changing. Demand for digital services at the consumer level, the media level and at the enterprise level is accelerating. Traditional platforms such as linear TV or magazines are losing ground.
David Droga’s move to the digital side of the $1.7 trillion global advertising industry is foretelling the path of the best talent in advertising. Of the advertising pie, more than 50% are in digital advertising, and it was already growing at a rate of about 20% annually, even before the pandemic. It is now estimated that digital will be two-thirds of the advertising pie by 2024. Analog media is cratering, and, along with it, the traditional agencies, whose business model is based on TV commercials and creating image advertising.
For a long time, marketing was largely about buying mass reach at the best rates and hoping to convert consumers to your brand. Digital marketing is all about targeting and narrowcasting through data and algorithms. There is a shift from reach and branding to performance marketing. There’s emphasis on CX, V-UX, martech, cloud services, AI, bid-based media, digital automation, marketing agility, cyber security, managed services, optimal tech stack, content management and commerce.
Some believe that, as the next phase of digital transformation evolves, Accenture Interactive will need to build off its tech heritage to provide differentiated experiences that distinguish brands from digital sameness. Droga might just the sort of creative leader to help inspire creativity throughout Accenture Interactive.
However, despite his creative prominence, Droga will face some challenges in his new role. It is easier to add technology to a creative agency than creativity to a consultancy. Consultants are better at solving business problems and then drive digital transformation.
Another challenge will operational. Accenture Interactive is not really an “agency” – it is more akin to a holding company. Droga will oversee a “hodge podge” of over 40 companies, acquired in the last decade in content, data science, design, media, experiential marketing, and app and web development in addition to traditional advertising. It would be a daunting task to converge disparate units into a cohesive, single solution and unified multi-platform offering, currently mandated by marketers.
Droga’s appointment at Accenture Interactive is very much a signal of the importance of creativity in both marketing and business. It is certainly a bold statement as he is the only major global agency CEO to rise from the creative ranks. It will send a powerful message to clients and the the industry.
Whether creativity would be enough to overcome his lack of technological savvy, time would tell. And as Droga immerses himself in Accenture Interactive and refocuses his energies, another question will arise about the future of Droga5. It would be hard to run both organizations simultaneously, even for a talented guy like David Droga.