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
Beacon Communications

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 Weekly Update 16th Nov 2017: Dentsu matched WPP with its own set of disappointing results for Q3, though the figures were at least an improvement on the previous quarter. Gross profit - Dentsu's equivalent to revenues stated by other groups - slumped 2.1% on an organic basis, as strong growth of 5.9% in the EMEA region was offset by weakness elsewhere, especially Japan (down 5.0%) and the rest of the Asia Pacific region (down 5.5%, led by declines in China). The Americas too were disappointing, registering a 2.0% decline. The group blamed the Japan decline on weak comps against last year's Olympics as well as higher costs to implement new working procedures against excessive overtime. Revenues for the year to-date were up over 12% on a reported basis including currencies and multiple acquisitions, such as Merkle, but net profits slipped nearly 7% against last year. Vivendi is due to report results for its various divisions, including Havas this afternoon. Dentsu's results earned it bottom place so far in the organic performance ranking for 3Q. MDC 7.6%, OMC 2.8%, IPG net sales 1.5%, PUB 1.2%, IPG revenues 0.5%, WPP net sales (1.1%), WPP revs (2.0%), Dentsu (2.1%).

Adbrands Weekly Update 17th Aug 2017: Quarterly results from Dentsu confirmed fears of a dramatic slowdown across the industry for most big marketing groups. Exchange rates and the acquisition of Merkle and other companies helped to lift Dentsu's reported gross profit by over 8% to the equivalent of $1.9bn, but the organic performance excluding currencies and M&A was Dentsu's worst for quite some time. Combined gross profit fell by 4.8% (after a lift of 3.9% in Q1). Japan was the worst hit market, down by a shock 8.1%, but international markets also fell by a combined total of 2.7%. The EMEA region was the best performer, down by only 0.3%, compared to declines of 4.1% in the Americas and 3.8% in other Asia Pacific markets. For the half year to-date, net profit was down over 14% to around $273m. The group also cuts its forecasts of revenues and profits for the full year.

Adbrands Weekly Update 18th May 2017: Dentsu was the last of the major marketing groups to report results for 1Q, coming in towards the top of its peer group with overall organic gross profit growth of 3.9%. Unlike previous recent results from the Japanese giant, the respective performances of its core domestic business and the international Dentsu Aegis Network were reversed. Dentsu Japan enjoyed an organic lift of 4.7%, well above recent levels, as a result of the lift from the World Baseball Classic tournament to which it held exclusive domestic broadcast and sponsorship rights. However, DAN slipped back to 3.1%, its poorest performance for more than two years. The weakest contribution came from the Americas, up only 0.6% overall as a result of an especially poor performance in Latin markets. Total reported revenues rose 16% to the equivalent of around $1.91bn. With all the marketing groups' results now in, here's the final ranking for organic growth for 1Q 2017. MDC Partners leads with 5.6% followed by Omnicom (4.4%), Dentsu (3.9%), Interpublic (2.7%), WPP (net sales 0.8%, revenues 0.2%), Havas (0.1%) and Publicis (negative 1.2%).

Adbrands Weekly Update 16th Feb 2017: Not even strong results from Western rivals like Interpublic could take the shine off another dynamic performance for Dentsu, and especially the international Dentsu Aegis Network business. Full year gross profit (effectively revenues) of Y838bn (around $7.27bn) represented organic growth of 5.1% for the year, narrowly beating Interpublic. It would have been higher still were it not for a weaker final quarter of 3.9%. Dentsu's domestic business was up just 1.0% in 4Q and 4.5% for the year, compared to 5.8% for 4Q for Dentsu Aegis and 5.7% for the year. Group net profit was up only marginally year-on-year to the equivalent of $770m. Profits in both years were undercut by a raft of adjustments, impairments and special charges. The group warned that it expects current year profits to decline as a result of costs associated with reducing employee workloads in keeping with its new HR policies.

Adbrands Weekly Update 26th Jan 2017: Dentsu named Toshihiro Yamamoto as its new CEO, to replace current leader Tadashi Ishii with immediate effect. Ishii offered his resignation at the start of the year after prosecutors recommended charges be brought against the company for its gruelling work culture which prompted the suicide of a young recruit just over a year ago. Yamamoto has spent 36 years at Dentsu and has experience working in all three main areas of media, account management and business development.

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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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