IBM is scooping up digital marketing agencies like hotcakes.
The Armonk, N.Y.-based tech giant acquired its third digital agency in a week today. It bought ecx.io, a Dusseldorf, Germany agency that becomes the latest addition to IBM Interactive Experience digital agency (IBM iX).
Coincidental? Yes, if you ask IBM.
"These three were identified very independently and pursued very independently and honestly is a bit of a coincidence to come within such close proximity," John Armstrong, the North American leader for IBM Interactive Experience, told CMSWire in an interview today. "I wish there were some exciting plot that I could reveal to you but we're just going all out here, and we're really delighted with how it turned out."
Feeling Accenture Heat?
One part of the acquisitions may not be so coincidental. Aperto and ecx.io are German companies. Chicago-based Accenture Interactive — one of the major competitors for IBM in this space — has a presence in Germany.
Coincidence? Probably not, said Jill Finger Gibson, principal analyst at New York City-based Digital Clarity Group. In addition to Accenture, several of the largest established digital agencies have multiple offices in Germany (i.e. Sapient, DigitasLBi, Razorfish), she pointed out.
"To compete in Germany — Europe’s largest market — you really need a well-established local German presence," Finger Gibson told CMSWire.
IBM's Armstrong said there was no particular strategy to be in Germany other than it's a major economic European hub. The World Economic Forum has Germany as the No. 2 economy in Europe behind Switzerland.
Nonetheless, IBM has to have eyes on Accenture Interactive, which Finger Gibson said is the "only other company that has the comparable scale and capabilities." It spent, she said, more than $1 billion on acquisitions last year, many of which were agencies. It has plans for an additional $1 billion this year, she added.
"IBM may be feeling the pressure from some of its largest global clients to stay competitive through increasing its presence in specific regions," Finger Gibson said.
Anjali Yakkundi, senior analyst for Forrester Research, said she, too, sees Accenture Interactive as a key IBM competitor in the space along with other big guns like Deloitte Digital and PwC (which acquired BGT in 2013). Then there's the more typical smaller agencies like Razorfish and Sapient and "thousands of boutiques." In all, it's a "really crowded space."
She wasn't surprised by IBM's flurry of acquisitions in the past week.
"IBM Interactive has always been positioned more like an agency-offering," Yakkundi told CMSWire. "Like most or many of its competitors, it's challenging to get credibility without acquiring."
R Ray Wang, principal analyst and founder of Constellation Research, sees IBM's three acquisitions this way:
"The future is where design marries tech. You want digital artisans, those who can do STEM while talking design thinking, ethnography and user experience. The firm of the future must have both in order to make clients successful."
Where They Heading?
IBM has spent the last two years building up its experience design capabilities in its IBM iX division, including building innovation labs around the world. They have around 22 now, Finger Gibson said.
"The three recent acquisitions of Resource/Ammirati, Aperto and ecx.io are all design-focused agencies, so these acquisitions fit that strategy," Finger Gibson added. "IBM is poaching talent from the digital agency world to beef up its experience design chops. On a recent analyst call, they reported they had hired 15 people from other agencies in the last year."
IBM may be making a content and commerce play here, too, according to Finger Gibson. All three acquisitions are strong on digital marketing and content management, she said. Ecx.io is one of the few specialized in implementation services across three of major commerce and customer platform software providers: Adobe, Sitecore and SAP hybris, according to IBM officials.
"When we spoke to Aperto last year," Finger Gibson told CMSWire, "they reported that about half their business comes from WCM-related projects. Marry that content with IBM’s commerce and analytics capabilities and you’ve got a strong set of customer experience-related competencies."
'Committed to Growth'
IBM began its digital agency in 2014 and now has more than 10,000 consultants on board. Armstrong said the services span strategy, creative, design, mobile, digital and customer analytics and commerce and customer platform software providers.
"We're absolutely committed to growth and leadership in this whole space," Armstrong said. "A lot of that energy was funneled into organic growth and the expansion of our locations around the world. One of the challenges is finding space, but another is finding the talent to fill that space. It's all in the name of being present with the right capabilities to serve around digital."
This year, IBM began to consider inorganic growth through acquisitions as a companion to its organic growth to help increase scale and the "breadth of what we can bring to the market."
Asked to describe what IBM Interactive does, Armstrong described it as either short, sharp innovation projects and programs or long-term digital transformational efforts. He cited IBM's work with Citibank and its Citi App for Apple Watch efforts and IBM's digital experience work with the Atlanta Falcons football team, which is opening a new stadium in 2017.
"We had to reimagine what capability in the context of a financial services company would be compelling in customer experience," Armstrong said of IBM's work with Citibank. "We had to redesign and replatform their mobile app to native iOS and test, design and deliver their watch app in the span of four months."
As for the latest addition, ecx.io, IBM gains 200 employees specialized in designing and implementing commerce and digital marketing services and platforms to IBM iX.
Title image courtesy of IBM.