Dentsu (Japan)

Profile subscribers click here for full profile

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.

Selected Dentsu advertising

Who are the competitors of Dentsu? See Leading Agency Brands Worldwide and Japan

Latest news about Dentsu? Click here for recent headlines from Adbrands Weekly Update

Subscribers only: Adbrands profile

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
McGarryBowen
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:

Dentsu website

Brands

Dentsu Public Relations Ad Dentsu Osaka
ISID Dentsu TEC
Dentsu Research Creative Associates

Worldwide

Phoenix Comms (Korea) &c China

Recent stories from Adbrands Update:

Adbrands Daily Update 7th Aug 2019: Dentsu's results for 2Q were a slight improvement on the previous quarter, but still showed negative organic growth both in Japan and in international markets. The combined slide was -1.3%, comprising -1.4% in Japan and -1.3% from the Dentsu Aegis Network. The latter was DAN's worst performance for two years. The real problem area is the Asia Pacific market excluding Japan, where the organic fall was a shock -12.3%, exacerbated by negative sentiment against Japanese companies in China and account losses in Australia. That slump undercut modest 0.7% growth in EMEA and stronger 2.8% lift in the Americas. Reported net revenues for the quarter came in at around $2.0bn with net earnings of around $11.8m.

Adbrands Daily Update 22nd Jul 2019: Dentsu is planning to unite its Japanese and international structures from the beginning of 2020 under the main corporate brand. That will result in the elimination of the Dentsu Aegis Network name in favour of a single unified Dentsu brand. The merger of the two businesses is also expected to result in redundancies. Dentsu has yet to confirm that it will phase out the Aegis name, but told Campaign "The focus today is not on the name, but on the action of bringing the Dentsu Aegis Network and Dentsu businesses closer together. This is a natural evolution in order to deliver long-term sustainable growth, built around our shared passion for client-centricity, innovation and creativity."

 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.

More about Dentsu from Adbrands Weekly Update


Subscribe to Adbrands.net to access the full profile and account assignments


Account Gains & Losses

see full profile

Brands & Activities

see full profile

Management

see full profile

Global Links

see full profile

Background

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


All rights reserved © Mind Advertising Ltd 1998-2019