Welcome,the new adland superpower:Dentsu

13 Jul,2012

 

By A Correspondent

 

It’s no longer watercooler chatter or just a whisper in the corridors. By gobbling up Aegis, Dentsu has made its intentions very clear. Sir Martin Sorrell and Maurice Levy, the Japanese are a-comin!

 

Announcing the mega-deal: Tadashi Ishii, President and CEO, Dentsu Inc and Jerry Buhlmann, CEO, Aegis

Dentsu’s $4.9 billion acquisition is being counted as the biggest in the advertising business. It’s the second buy of a British ad entity within a month. But, of course, Aegis is a large network while BBH (which sold out to Publicis) is just a creative boutique.

 

There was nothing forthcoming from the Dentsu and Aegis offices in India, however, it’s set to be business as usual for the now. The nitty gritty will only be completed by the end of the current year, and the impact, if at all, will be more on shared services, sources tell us.

 

There is a marked difference between our respective styles of functioning, an insider at Dentsu told MxMIndia on conditions of anonymity. “But that too is a global issue”.

 

Another industry voice told MxMIndia that the scale which Dentsu attains will help it considerably. It’s not just the preserve of networks like WPP, Omnicom, Publicis and IPG any more. The rub-off will be very positive on both entities and pitches henceforth will see them as significant players.

 

First some background:

In July 2009, Dentsu announced its medium-term management plan titled “Dentsu Innovation 2013”, focusing on global business expansion and intensifying digital offerings, together with further strengthening its mass media business, to drive its business strategy as one unified group and to achieve strong growth. Looking to its clients’ and media agencies’ business landscape, Dentsu’s business exposure has been expanding globally, especially with strong focus on emerging markets including Asia.

 

On the other hand, Aegis, a global focused media and digital communications group with highly competitive digital service offerings, enjoys a strong presence across Europe and increasingly in the US (clearly the world’s largest advertising market), and is rapidly growing its footprint across Asia and the Pacific. The combination of Dentsu and Aegis will be highly complementary, bringing together a global media platform with capabilities to provide integrated solutions, and offer enhanced quality services to clients.

 

Both companies place “client centricity” at the core of their values and Dentsu’s corporate vision for “Good Innovation.” and Aegis’ to “Reinvent the Way Brands are Built” demonstrate the respective commitment to continuous improvement.

 

The Rationale:

Dentsu believes that a business combination between Dentsu and Aegis will deliver the following strategic and financial benefits:

 

1. Expansion of global presence

The geographical fit between Dentsu and Aegis is highly complementary. Dentsu has a leading market position in Japan’s advertising and marketing sector, an established presence across Asia, and an increasingly expanding business in the US, with mcgarrybowen as its core US subsidiary.

 

Additionally, Aegis enjoys a leading position showing strong presence across Europe and increasingly in the US. Moreover, Aegis is rapidly growing its footprint across emerging markets, and has established robust positioning in Asia excluding Japan.

 

Together, the enlarged group will be a stronger global competitor with the scope and scale to compete for and win international mandates across Japan, Europe, Asia Pacific and the Americas. The combined network with a full range of advertising, media and marketing services will enable Dentsu and Aegis to provide highly integrated services for local, regional and global clients across multiple international locations.

 

2. Enhanced service and integrated solution offerings

Dentsu and Aegis each rely, in order to be competitive, on distinct service offerings and expertise, together with their creativity and integrity, to exploit best solutions with a variety of service offerings.

 

Following the transaction, the combined group will have a strengthened ability to offer a wider spectrum of niche services and expertise as a full service agency. With both Dentsu and Aegis’s extensive experience and knowledge, the combined group will enhance its ability to offer integrated solutions to clients.

 

3. Intensified digital capabilities

The adoption of ‘scaled’ technologies by consumers has driven the proliferation of connected devices and advancements in communication technology, significantly affecting clients’ advertising and marketing activities. Dentsu faces strong client expectations to strengthen digital solutions.

 

With the rise of digital consumption and client demand for digital services, Dentsu has successfully enhanced its digital solutions over the years. By integrating Aegis, with Isobar and iProspect’s digital strengths in creative origination and performance marketing, the combined business will provide a powerful global platform for media, content and digital technology, and will increasingly support client activities.

 

The combination of Dentsu and Aegis, with its robust client portfolio, will count at least 71 out of the top 100 marketers as clients on a combined basis, and will provide global and local clients with a new, differentiated proposition to achieve their objectives, and also accelerate the drive to continuously create new innovations as one unified group.

 

CEO-speak:

Here are comments from the respective CEOs:

1. Dentsu: Tadashi Ishii, President and CEO:

I am pleased to announce this exciting and transformational combination between Dentsu and Aegis. Together, we will be able to deliver fully integrated and best-in-class services to our clients through a new global communication network born in the digital age offering a broadened service portfolio. Dentsu and Aegis will be the market leader in the Asia-Pacific region, enjoying a strong presence across Europe and the fastest growing agency network in the US.

 

In recent years, under the leadership of Jerry Buhlmann and his team, Aegis has been recognised as the most successful independent media and digital communications agency with strong performance momentum and talented, client-focused employees. We look forward to working with our new colleagues with whom we already share a common “client-centric” philosophy. Jerry and I have huge ambitions for a truly client-focused global communication network built in the digital age, and are looking forward to further innovating our business and continuing to contribute to our clients’ success.

 

2. Aegis: Jerry Buhlmann, CEO:

This is a compelling combination of two great businesses that will create one of the world’s most dynamic marketing services groups – and the first to be born in the digital age.

 

We at Aegis are delighted at the prospect of being able to play a full part in helping Dentsu create a platform for global growth and continued digital innovation. By forming the first communications group with true global reach, the growth strategies of both businesses will be enhanced as we provide more scale, geography, capability and investment to support clients.

 

“For the people of both these great businesses, the combination offers continuity and the promise of working for one of the most exciting, high-growth companies in our industry. We have complementary geographic fits and aligned visions and strategies. Together, we have strengthened investment capabilities as we work to help more clients than ever before navigate the complex and converging media ecosystem.”

 

The India angle:

Market observers in India credit the team led by Sandeep Goyal for the initial salience of Dentsu amongst advertisers. The Japanese ad network is no longer an alien name, even though it’s not as big as WPP, Publicis, Ommnicom or IPG.

 

In India, Dentsu has the following arms: Dentsu Marcom, Dentsu Communications, Dentsu Creative Impact, Dentsu Media and Dentsu Digital. And Aegis has: Carat, Vizeum, Isobar, iProspect, Posterscope, Brandscope, Hyperspace, Carat Fresh Integrated, PSI and Doosra.

 

But the presence of Mr Goyal earlier and now Rohit Ohri has ensured that business keeps coming in to Dentsu, a senior media agency executive told MxMIndia. As for Aegis, the leadership of Ashish Bhasin means that the group has stability at the helm.

 

For Mr Ohri: Ken Terasawa (Exec Vice Chairman), Soumitra Karnik (NCD) Narayan Devanathan (Dentsu Marcom), Titus Upputuru (NCD, Dentsu Marcom), Arijit Ray (Dentsu Communications), Glen Ireland (Dentsu Digital), Yutaka Kamoshita (Dentsu Digital) and Divya Gupta (Dentsu Media) and for Mr Bhasin: Kartik Iyer (Carat), Anand Bhadkamkar (CFO), S Yesudas (Vizeum), Haresh Nayak (Posterscope), Shamsuddin Jasani (Isobar), Zaheer Mirza (Doosra).

 

While Mr Ohri is travelling and not available for contact, the information that MxMIndia received the morning after the announcement that the overall global structure will be unveiled only by the year-end, and following that regional and India-specific restructuring may happen. However, in the same breath, a source in a Dentsu international office told us that given the slowdown managements will be sensitive to overspending, so don’t be surprised if the process towards rationalization happens quicker.

 

Suggested reading:

Ad Age report: Not the ‘Big Four’ Holding Firms in Adland Anymore — Now It’s the Big Five

http://adage.com/article/agency-news/big-holding-firms-adland-anymore-big/236001/

 

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