Dentsu (Japan)

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No advertising agency dominates its home market as comprehensively as Dentsu, which controls around 30% of all mass media advertising in Japan and has a staggering portfolio of more than 6,000 clients. Despite the best efforts of its competitors to erode its dominance, it remains almost twice as big as its closest domestic rival. Until recently, Dentsu's influence outside Japan was limited to say the least. In 2000, though, the giant began to spread its wings, backing the merger of Leo Burnett and D'Arcy, and then swapping that stake for a sizeable minority stake in the newly expanded Publicis Groupe in a concerted bid to increase its share of Western advertising budgets. The benefits of that partnership were limited, and it was terminated amicably in 2012. In the mean time, Dentsu had begun to bolster its resources in the US with selective acquisitions. Until recently its biggest success was the purchase of the New York shop McGarryBowen, one of the most admired agencies in the US, which has now expanded its footprint internationally. In a bold new move, Dentsu announced plans in 2012 to acquire Aegis Group, parent to the Carat and Vizeum global media networks. That deal finally completed in March 2013, giving Dentsu a fully global profile for the first time. It has continued to build its profile with additional acquisitions.

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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. See also:

Dentsu Aegis Network
Dentsu Y&R
Dentsu America

The Adbrands Company Profile of Dentsu summarises the agency's history and current operations. Subscribers may access the following website links:

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Dentsu Public Relations Ad Dentsu Osaka
Dentsu Research Creative Associates


Phoenix Comms (Korea) &c China

Recent stories from Adbrands Weekly Update:

 Adbrands Daily Update 15th May 2019: Dentsu was the last of the big marketing groups to report 1Q numbers, and they were far from the group's best. The group as a whole reported an organic decline of -1.6% with the main Dentsu in Japan suffering a -2.7% fall while the wider DAN network could manage only -0.7%. All three metrics were the worst for more than a year. The group blamed declines in traditional media in Japan, and a generally weak performance across the Asia Pacific market, especially Australia. DAN's best region was North America, just narrowly in the black at 0.1%, but EMEA was down -0.4% (the worst result for more than two years) and the wider APAC market down -3.0%. Reported revenues were approx $2.1bn but Dentsu reported a net loss of around $24m as a result of financial expenses and accounting items. With all results now in, Interpublic was clear champion of 1Q with 6.4% organic growth, followed by Omnicom at 2.5% and Havas at 0.1%. MDC was negative -0.9%, ahead of Dentsu at -1.6%, Publicis at -1.8% and WPP at -2.8%.

 Adbrands Daily Update 1st Mar 2019: With all 4Q results except MDC Partners now in, Interpublic leads with organic growth of 7.1%, while Havas jumps into second place with a dramatic turnaround of 4.8%. They are followed by Omnicom 3.2%, Dentsu 0.9%, Publicis -0.3% and finally WPP with -0.7%.

Adbrands Daily Update 14th Feb 2019: Dentsu's results for 4Q were a completely mixed bag of spectacular and disappointing. Most impressive of all was exceptional organic growth of 12.0% in EMEA. However that was offset by a 3% decline in Japan and a drop of almost 10% across the rest of Asia. That evened out to a lacklustre 0.9% lift overall. For the year as a whole, growth was 3.4%. Full year net revenues came in at around $8.5bn. However net income slumped by 14% to the equivalent of $818m as a result of much-publicised employment reforms in Japan and investment in "global platforms and systems" internationally.

Adbrands Weekly Update 15th Nov 2018: It was a big week for personnel changes in adland. Perhaps the most notable was the resignation of Dentsu Aegis Network CEO Jerry Buhlmann. He will continue to serve as a special advisor for the remainder of his contract into 2019, but his executive duties will be assumed by DAN chairman and Dentsu EVP Tim Andree. Buhlmann's future plans were not disclosed, but he departs on a high. Dentsu reported excellent results for 3Q, underpinned by the DAN division. Overall organic growth was 5.4% (matching Interpublic for best of class among the marketing groups). That included an exceptional 7.0% at Dentsu Aegis - its best quarterly performance this year - and 2.7% at Dentsu Japan. In both EMEA and APAC ex Japan, DAN scored 8.2% organic growth, and 5.3% in North America. Group revenues less cost of sales came in at approx $2.0bn. Net profit more than tripled to approx $418m.

Adbrands Weekly Update 9th Aug 2018: Dentsu jumped to the top of the class with a stellar performance for the latest quarter. Revenues equivalent to around $2.0bn represented impressive organic growth of 5.9% for 2Q. Japan was the key contributor with an exceptional 8.4% lift. The international Dentsu Aegis Network contributed 4.5% overall, including 6.5% in the Americas and 4.8% in EMEA, but only 0.8% in other APAC markets. The group said seven of its top 20 markets delivered double digit organic growth, including India, Russia, Spain and Italy. The US, Brazil and Australia were "strong", the UK "positive", but France, Germany and China all negative. Despite the good topline performance, net profits plunged to a marginal loss as a result of further workplace reforms in Japan and investment in global infrastructure and IT systems.

With only WPP left to report 2Q figures (not until September), here's the current ranking for organic growth (or decline) in 2Q. Dentsu 5.9%, Interpublic 5.6%, Omnicom 2.0%, MDC -1.7%, Publicis -2.1%, Havas approx -4.1%.

Adbrands Weekly Update 24th May 2018: Ads of the Week "Everyone Is A Key". Identical-looking crowds are a long-established pop-cultural meme in Japan. (The span dates back at least as far as techno group YMO's 1980 album Multiplies, all the way up to the Glico ad we featured here earlier this year). It's not too surprising perhaps; many Western visitors to Tokyo may have felt they experienced something similar in real life. This startling spot from Dentsu is for tech giant NEC's Bio-IDiom digital identification system, and has some fun choreographing a troupe of 40 girls all with the same face, thanks to 39 identical prosthetic masks. 

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Dentsu was founded in 1901 by journalist Hoshiro Mitsunaga as a news wire service to cover Japan's war with China. Denpo Tsushin (or Telegraphic Service) filed war reports to newspapers, who paid by donating free advertising space which a separate company, Nippon Koukoku (Japan Advertising) sold on to clients. In 1907 the two businesses were merged as Nippon Denpo-Tsushin, shortened to DenTsu, and Mitsunaga was able to secure exclusive rights to syndicated material from US news service UPI. This power allowed him to negotiate even more favourable advertising rates from newspaper clients. In 1925, to instil a fighting spirit, Mitsunaga initiated a tradition, leading his entire team of employees on a hike up Mount Fuji to Japan's highest peak, some 12,400 feet above sea level. That same climb is still re-enacted with near-sacred devotion every year, although nowadays only selected employees join the expedition. Only for four years during World War II have Dentsu employees not made the climb.

In 1936, Dentsu was forcibly annexed by a Japanese government keen to control the flow of news reporting in and out of the country, and it was merged with state-owned rival Domei. After intense negotiation, Mitsunaga was granted permission to spin out both companies' advertising divisions as a separate unit, although Domei remained the controlling shareholder. However the advertising business was overshadowed over the next eight years by war, first with China and then with the United States and other Allies. At the end of the Second World War, Domei was broken up to form two new news bureaux, Kyodo News and Jiji Press, who between them shared control of Dentsu. Sadly, Mitsunaga did not live to see the post-war resurrection of the business. He died in 1945. 

A new president, Hideo Yoshida, was appointed in 1947. He had served in the company's advertising department before the war, and had been greatly influenced by American marketing techniques. A brilliant organiser, he recruited former government officials and military officers as well as members of Japan's best-connected families to oversee a massive expansion of Dentsu's operations. Most significantly of all, he almost singlehandedly led the introduction of commercial broadcasting in the country, investing in several of the start-up networks and establishing extensive production facilities within Dentsu to churn out first radio and then television programming, and forcing clients to transfer their budgets from traditional forms of newspaper and poster advertising into these new media. As a result, the company came virtually to control the domestic networks. At one point during the late 1950s, Dentsu handled as much as 60% of all television advertising, and Yoshida himself sat on the board of directors of no less than 20 broadcasting companies. Crucially, he was able to persuade clients to overlook the fact that Dentsu worked for their rivals as well, splitting the accounts of Honda and Nissan, for example, or Toshiba and Matsushita between different floors or buildings. 

This immense power earned Yoshida the nickname of "Oh Oni" or "big demon". (It was a reputation he enjoyed. In 1960, he told Time magazine, "If I am the big demon, then my men will have to work like little demons.") Another key skill was to persuade rival companies The huge increase in earnings allowed Dentsu to establish its first overseas office in New York in 1960. Other outposts followed in Bangkok, Chicago, Los Angeles, Paris, Melbourne and Taiwan. Two years later the agency established a joint venture with Young & Rubicam. Although this initially foundered, it was resurrected in 1981 as Dentsu Young & Rubicam. In 1975, Dentsu joined forces with General Electric to create Information Services International Dentsu, a global IT services consultancy. (GE subsequently sold its shares when the business issued an IPO in 2000).

Further joint ventures with Y&R followed in 1985 with the formation of healthcare agency Dentsu Sudler & Hennessey and direct marketer Dentsu Wunderman Direct in Japan. There was a brief liaison with France's Eurocom in the late 1980s, subsequently dissolved when Eurocom became part of Euro RSCG, and also a partnership with PR agency Burson Marsteller. In 1990, Dentsu bought UK agency Collett Dickenson Pearce.

Dentsu finally woke up to the competitive threat posed by its international rivals in 1999. Although the company had worked hard to expand its overseas operations in the 1980s and 1990s, virtually all of its revenues still came from Japan. With admirable foresight, Dentsu announced plans to renounce its private status in 2001, its 100th anniversary, with an IPO. The agency promised to use the resulting funds to mount a global expansion drive, in particular to boost its US profile. More significantly still, in 1999 the group took the plunge into the global mainstream, backing Leo Burnett's takeover of MacManus Group with $400m for a 20% stake in what was briefly marketing services group BCom3. In 2000 Dentsu announced several new partnership deals. In the first, the agency formed a joint venture with telecom group NTT to develop and sell advertising for the hugely successful i-mode service operated by NTT's DoCoMo mobile operator. The following year the group increased its presence in the US, taking a 10% stake in Harmonic Communications, a San Francisco-based internet ad effectiveness firm chaired by former USWeb/CKS founder Mark Kvamme, and also acquired small ad agency Oasis International. It also bought a 40% stake in Sony's inhouse agency in Japan, Intervision, with plans to help build the business into a broadband communications and marketing agency. (It was later renamed Frontage).

In early 2001, Dentsu confirmed that it would proceed with its IPO before the end of the year. As promised two years earlier, Dentsu's IPO went ahead in November 2001. The group offered around 20% of its equity for free-float, raising around $325m in cash and valuing itself at $4.7bn. A few months later, the group gave its blessing to the acquisition of BCom3 by Publicis. The Japanese company paid a further $500m to end up with a 15% stake in the combined business. See full profile for current activities

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