Storyboard18: Dentsu's transformation continues. But what's the big picture?

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The Indian unit of Dentsu Group Inc, a Japanese advertising-focused company, has been hit by a wave of high-profile exits in the past year amid attempts to transform into an integrated business while battling perception of upheaval.

The CEO of Dentsu India, and heads of several units left in an exodus that began in January.

The latest to leave was Ashish Bhasin, CEO APAC, and chairman India, Dentsu International. In September, when Storyboard18 asked Bhasin and Dentsu International about his exit, they vehemently denied, describing the report as rumour.

Over the past three months, around 50 employees across senior and mid-level have quit the company’s agencies, according to multiple people Storyboard18 spoke to.

Pre-pandemic, Dentsu Group in India had over 3,200 employees. Since then, there’s been a significant reduction in headcount because of organization-wide restructuring of businesses, which were also affected by the Covid-19 crisis.

In India, the group’s current client roster includes Mastercard, Intel, Microsoft, Toyota, Maruti, Uber, Flipkart, IKEA and Swiggy.

Globally, Dentsu is present in over 145 markets and employs over 64,000 people.

Dentsu International APAC (excluding Japan) reported 3.6% organic growth in H1 FY2021 and 10.2% in Q2 FY2021. The APAC region reported double digit growth in the second quarter driven by double digit growth from Australia, Indonesia, South Korea, Singapore and Thailand. India saw revenue decline for the quarter, impacted by the resurgence in COVID-19 cases, as per the company

A brand crisis?  

Few ad agencies have witnessed such drastic changes, in a short span at that, as Dentsu International India, triggered by a raft of reasons ranging from the pandemic slowdown to restructuring to internal audits at units over alleged malpractices.

To be sure, the company has also made several senior level hires. Dentsu recruited Mindshare’s Vinod Thadani as chief digital growth officer, Dentsu Media Group and CEO, iProspect. GroupM’s Rohit Suri was appointed Dentsu International’s chief HR officer (CHRO), South Asia. Ajay Gahlaut joined Dentsu Creative India as group CCO.

As it happens, the exits are bad PR, ironic for a company that is in the business of communication.

Dr Sandeep Goyal, managing director of Rediffusion, told Storyboard18, “Dentsu has been one of the foremost brands in the world of advertising. They were growing strength-to-strength. However, in the last few years, the growth was haphazard, and no one understood how to bring it together.”

Goyal, who is also the former founder-chairman and India JV partner of Dentsu, says the task of the next CEO at Dentsu International India, is to ensure there is a hymn sheet, and everyone sings along the same hymn sheet. As the person who built the foundation of Dentsu in India, Goyal’s advice to the company is to “re-group”. “As a company, Dentsu has been good in the areas of sports, digital, and data. They should use these services as their strength and mainstream it till they get their whole act together. It saddens me to see them in headlines for all the wrong reasons,” he adds.

While Dentsu International’s big ambition is also to simplify its structure, the effort is “confusing and complicated”, according to rival networks’ chief executives.

“Not all clients are aware of the restructure,” said an executive of a rival agency, asking not to be named.

A client of Dentsu India was recently taken aback when he saw a new agency (new because it was rebranded) taking credit for his brand’s campaign, a senior executive of Dentsu International India said on condition of anonymity.

An advertising executive at another ad holding company told Storyboard18, “Restructuring units as an exercise is not new in the ad business. However, they should have been careful about not diluting some of the businesses it acquired and made a noise about.”

The hot seat 

Given the scale of change, the spotlight’s currently on Dentsu and the question of Bhasin’s successor who will have a huge task ahead. He or she will inherit a lot of baggage but also a chance to truly transform an iconic advertising company.

Storyboard18 had earlier reported that Divya Karani, chief executive officer (CEO) of Dentsu Media South Asia, and CEO, Dentsu X India, would get additional responsibilities after Anand Bhadkamkar, CEO of Dentsu India, quit. She did get additional mandates. And many insiders have been telling us that Karani is most likely going to lead Dentsu’s India operations.

According to several top rival agency executives that Storyboard18 spoke to, Karani could be a good candidate to take charge of the network right now. “Divya ticks a lot of boxes for the role. She knows how the system works, worked, and will work,” says a top creative agency head. However, internal agency sources hint that the network is also speaking to experienced executives outside the system too.

On the other hand, Goyal says, getting a chief executive from Japan to lead could also be a good move. “Dentsu is a legacy brand. Their DNA is well defined, getting someone from the home country may streamline things here,” he adds.

Storyboard18 reached out to Dentsu International India with queries on the network’s new leadership plans and transformational-led changes to be expected in the coming months. We didn’t get a response from the company at the time of filing this report.

What’s the big picture?

Globally, the Japanese holding company Dentsu is gearing up to compete with the likes of Accenture Interactive, according to industry insiders.

This year, Dentsu International India fast-tracked its global HQ’s plans of “transforming into the most integrated group”. In 2020, Dentsu announced it would cut the number of global brands from 160 to six as part of a major transformation of the Tokyo-based group’s international operations. Consolidation of its over 20 agency brands in India accelerated earlier this year.

Executives at Dentsu India are not convinced about the new direction. “The ambition is great. However, it is not the Japanese way of doing this. The company is slowly trying to Americanize itself. It’s a bit odd,” said an executive of Dentsu India, asking not to be named.

Dentsu started its acquisition spree in India in 2012 by snapping up celebrated creative shop Taproot India and digital-first agency Webchutney. Taproot was founded by two of the country’s top creative leaders, Agnello Dias and Santosh Padhi.

From 2014 to 2017, Dentsu acquired several companies, including Communicate 2, Milestone Brandcom, WATConsult, Fountainhead Entertainment, Perfect Relations, Fractal Ink Design Studio, Happy Creative Services, Sokrati, and SVG Media, to deepen and expand its capabilities. The network shut Fountainhead Entertainment which was merged with Dentsu’s experiential marketing arm psLIVE to create Fountainhead MKTG.

“Right now, its reputation is at stake and a lot of mending needs to be done before the company rewires its vision,” concludes a top agency chief.

Client speak 

Dentsu in India handles the creative and media businesses of Maruti Suzuki’s Arena portfolio, which has affordable B-segment cars like Wagon-R, Swift, and Celerio. It also handles Maruti’s corporate branding activities. Arena contributes around 80% of sales for the company. Dentsu also handles the company’s premium and luxury car portfolio NEXA’s media duties.

Shashank Srivastava, executive director, sales and marketing, Maruti Suzuki, told Storyboard18, he and his team had queries on the effect of Dentsu’s “transformational” and “leadership changes” on their operations and advertising. The auto major checked the number and quality of resources dedicated to the account. Srivastava says, “From that perspective, there are no major changes from Dentsu on the way they are handling our business. That was a relief for us.”

The other area of concern was the impact of Dentsu merging its multiple agencies to simplify its structure as a part of its global strategy. “It was important to understand if Dentsu has firewalls in place to ensure there is no exchange of information between teams handling competing brands,” says Srivastava. Dentsu, as a network, also handles the businesses of Honda and Toyota. Srivastava says Dentsu has committed to dedicating completely different teams for each of its auto clients, like always. He further adds, Dentsu is mindful of these changes and has been proactively updating his team.

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