Creative agency Gut has been a breakout success, attracting big brand clients and winning multiple Cannes Lions awards, including an Agency of the Year recognition in 2023. That strong track record is one reason why it got here as a surprise to some industry watchers when technology consultancy Globant recently took a majority stake within the shop, raising questions on the viability of creatively driven independent agencies in today’s marketplace.
The deal reflects the growing interconnection between creativity and technology, a trend that is probably going to be further amplified within the months ahead by the rise of artificial intelligence (AI). Globant earlier this yr revealed that it’s investing $1 billion in Latin America, a plan that features the creation of an AI hub. Gut is predicted to aid in Globant’s efforts to construct out a broader AI-enhanced agency network.
“Technology and creativity have never been more closely linked than they’re today,” said Martin Migoya, co-founder and CEO of Globant, in a press release across the deal. “With this acquisition, we’ll find a way to offer a novel mix of top-notch technology and daring ideas to brands from the very starting of the creative ideation process.”
Founded just five years ago, Gut has quickly grow to be an industry darling. The agency employs greater than 500 people, with offices in South America, North America and Europe. Its client roster includes blue-chip brands resembling AB InBev, Mercado Libre, Google, Kraft Heinz and Coca-Cola. For Globant, the acquisition adds additional appeal to its growing digital marketing and sales practice. Over the past few years, the corporate has snapped up shops including Spanish agency Habitant, Danish agency Vertic, Ad_Bid and KTBO.
“[The Gut deal] shows the importance of digital transformation as the middle of selling communications,” said Greg Paull, co-founder and principal at agency consulting firm R3. “An agency can’t survive purely on great creative alone, nor can they survive on pure digital efficiency alone. It’s really bringing those two parties together that’s going to make a difference.”
Potential payoff
In some ways, Globant’s move for Gut is a well-recognized story. Accenture in 2019 acquired creative darling Droga5, the crown jewel in the corporate’s extensive run of agency M&A, while rival Deloitte Digital has also rapidly expanded its marketing services. However, these management consultants haven’t necessarily taken the industry by storm within the expected ways, indicating that acquisitions alone don’t unlock immediate wins or the intended synergies between tech and creativity.
“We’ve seen this movie before with Accenture and Deloitte acquiring creative agencies,” said Jay Pattisall, vp and principal analyst at Forrester Research. “These varieties of acquisitions haven’t been as successful as when agencies or holding corporations acquire the technology corporations.”
A shrinking field for smaller and mid-sized agencies has been apparent this yr in ways that stretch beyond the encroachment of consultancies. Majority and L&C have sold minority stakes to holding corporations, while Stagwell has been on a buying spree of late, acquiring creatively driven agencies including Left Field Labs, Tinsel and Movers + Shakers.
“It doesn’t bode well for small- to medium-sized agencies,” Pattisall said of the broader industry trends underpinning one of these dealmaking. “It used to be that once we checked out the difficulty of the dimensions of holding company agencies versus the culture of small independents, there was a debate as to which one was more useful because they each include pros and cons.”
Steep demands
One problem independents face is that digital technology continues to grow to be an even bigger and increasingly crucial a part of the marketing toolbox. Yet, these are areas that require a refined level of experience and hefty time and financial resources to get right. That may very well be one reason why corporations like Gut are looking to larger partners.
Digital tools also bring with them a level of accountability and measurement demands that indies can struggle to meet. Clients can and do seek more efficiency of their campaigns, at the same time as those campaigns have greater reach and scale. Ultimately, which means many creatively driven agencies can have to forge some sort of alliance with technology corporations, according to R3’s Paull.
“It’s a challenge,” Paull said. “But I believe ultimately the marketplace has said, ‘Look creativity is great, but we’ve to have a [measureable] aspect as well.’”
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