IBM acquires digital shop: Agencies, what's your next move?

The competition for agencies is heating up with every passing day. The impending changes in the marketing/advertising agency landscape many have been talking about for years, is happening real-time.

In a bid to differentiate from its competitors and go straight after digital marketing dollars, IBM is set to acquire Resource/Ammirati – a US-based digital marketing and creative agency - combining the companies' strategic, creative and technology talents to address rising demand from businesses “seeking to reinvent themselves for the digital economy and provide differentiated experiences to their customers.”

While such a move by a large tech firm (and even professional services firms such as Accenture, McKinsey, Deloitte and others) is not unprecedented, it signals a red flag for pure play marketing agencies whether creative, media or digital.

A tell tale signs of what the industry is going through, the move is interesting given IBM's acquisition of a digital creative agency.

According to James Hawkins of Dentsu Mobius that's what makes the move interesting as acquisitions these days tend to gravitate more towards media than creative. "A big reality is that media and creative are increasingly coming under one roof, led by digital. This is what real integration will look like," he said.

The acquisition will also open roads for more pure technology companies to start looking at end to end delivery with a focus on UX/UI and front end innovation.

"Today digital is more than just campaigns or communication vehicle, its a business transformation tool and this opens space for a lot of players. The sheer fact that technology companies are acquiring agencies makes the agency space hotter than ever," Neeraj Gulati, managing director, Ingenuity said.

Read also: Competitor alert: Agencies, are you ready?

Are agencies irreplaceable?

Most recently, IBM acquired Silverpop to boost its personalised email marketing solution IBM Silverpop Engage.  Read more about Silverpop, now rebranded to IBM Marketing could, in our story: Is your email marketing strategy truly effective?

This is IBM's first acquisition of a digital marketing creative agency and adds to IBM's design and digital experience capabilities. The move also helps make a strong distinction from its competitors, the likes of Oracle, Adobe and others.

The deal is projected to close in the first quarter of 2016, subject to satisfaction of customary closing conditions and applicable regulatory reviews. Financial details were not disclosed.

Clients for IBM Interactive Experience (IBM iX), include the likes of Air Canada, Boston Children's Hospital, Citi and Staples across some 24 global IBM Studios. Resource/Ammirati will help IBM build on the success in North America and join over 10,000 IBM iX employees to support demand for its services in this fast-growing market.

Resource/Ammirati's 300+ associates across its offices in Columbus, Chicago and New York will continue to serve a diverse roster of clients spanning consumer goods, retail and financial services companies such as Birchbox, DSW, Nationwide, Nestlé, Newell Rubbermaid, North American Breweries, Shaw Industries, Sherwin Williams, Toys "R"Us and White Castle, among others.

"Resource/Ammirati has built its own stellar brand and reputation on a long, distinguished record of advancing leading brands in every industry," Paul Papas, Global Leader, IBM Interactive Experience.

"That portfolio of work and proven expertise is a perfect complement to the experience design capabilities of iX -- where we bring clients a distinct fusion of industry insight, design thinking and end-to-end digital transformation, from the experience of the individual to the core processes of the client's enterprise."

Founded in 1981 with Apple as its first client, Resource/Ammirati has been known for its work in the digital marketing space including the Victoria's Secret Webcast Fashion Show during the Super Bowl in 1999. It was one of the firsts to tackle Facebook eCommerce capability for The Limited, Home Depot and P&G, and create Sherwin-Williams' ColorSnap Studio - an Ad Age "App of the Decade" and the first-ever digital personalised circular, CVS's myWeekly Ads.

In 2014, Resource acquired advertising firm Ammirati, establishing its presence in New York and adding branding and design capabilities to round out the firm's creative, digital and ecommerce offering for a growing base of clients.