Dentsu Group Records Positive Growth as It Continues Transformation Strategy

Dentsu as a group saw a second-quarter rebound in organic revenue of 15% year over year, with sales at the Japan Network up by 12% and at Dentsu International by 17% for the period. The group continues towards its target of generating half of Group revenue from customer transformation and technology services. The company, which owns agencies including Carat, IProspect and Merkle and reports its figures in Japanese Yen, delivered revenue of $2.2 billion in its second quarter—growth of 18.2% on the previous year—while underlying operating profit was $240 million, an increase of 71.6% as it began its international restructuring process announced last year. For the first six months of the year, Dentsu’s total revenue was $4.5 billion—up by 7.3%—while underlying operating profit was $646.8 million, an increase of 35.8%. Regional growth across the board Regionally for the first half of the year, Japan experienced organic growth of 4.5%, the Americas of 5.1%, EMEA of 8.7% and APAC (excluding Japan) of 3.6%. With client advertising spend recovering internationally to around pre-pandemic levels earlier than predicted, the Japanese side of the business experienced a 40.3% increase in online sales as digital solutions remained critical for marketers in the short term as they pushed forward digital transformation needs. In North America, second-quarter organic growth was 15.1% due to “a strong media performance,” which the network said it expected to continue for the rest of the year. Meanwhile, demand for customer experience management (CXM) was also witnessed by clients aiming to improve their data and digital operations. Across EMEA, demand was also experienced for media, CXM and Creative services, with France, Spain and the U.K. all delivering over 20% in organic growth during the second quarter as economy recovery from the impact of Covid-19 continued. APAC, excluding Japan, experienced double digital growth across Australia, Indonesia, South Korea, Singapore and Thailand. However, India’s struggle to cope with the resurgence of the virus saw a decline in revenue there. The network's transformation continues Meanwhile, the network’s transformation initiative within Dentsu International saw it achieve over a third of its agency optimization with a reduction of brands from 160 to six. This included a reduction in property, which is a quarter on the way to its target. This included the integration of creative agency BJL into Dentsu McGarry Bowen and the acquisition of LiveArea by Merkle to strengthen its global experience and commerce capabilities. It was also announced that Fred Levron would be joining Dentsu International as global chief creative officer from FCB later this year as the business looks to strengthen its creative credentials. Jean Lin, the company's global chief executive of creative services, was also given the new role of executive officer as another move that would bridge creative and technological services. In a statement, Toshihiro Yamamoto, president and CEO of Dentsu Group Inc, described the performance for the second quarter as “strong” with growing confidence among consumers and clients across all regions. Of the acquisition of LiveArea and its part in the focus on digital transformation revenue growth, he added: “These structural growth areas drive deeper client relationships as we become embedded within our clients’ data and technology. The greatest opportunity for brands today, as they build strategies to re-emerge from the pandemic, is customer experience transformation."He continued: "Creating competitive differentiation through marketing strategies, supported by data, technology platforms, and analytics is where we see the greatest demand for our services. These services also transform our revenue profile, generating a higher level of recurring revenues through ongoing managed services whilst also transforming our ability to deliver services from lower-cost locations.” The group has forecasted a year-end revenue increase of 10.6% to $9.4 billion with an underlying operating profit increase of 23.8% to $1.4 billion. Dentsu Names FCB's Fred Levron as Global Creative Leader