Following Wendy Clark's Departure, What's Next for Dentsu?

When Wendy Clark took Dentsu International’s top position, her remit included turning a holding company bloated with hundreds of individual agencies into one streamlined powerhouse. She also joined cognizant of Dentsu’s eventual plans to consolidate Dentsu International and Dentsu Japan Network, creating the need for just one CEO across the company. According to a Dentsu spokesperson, “It was Wendy’s decision to step down. She leaves Dentsu amicably and with our best wishes.” Throughout the consolidation, Dentsu has excelled at retaining its biggest clients, with 95% remaining on the roster in the U.S., but has struggled with winning new business. The agency attributes 75% of its top-line revenue growth to organic growth. Excluding Russia, Dentsu’s reported growth in Q2 stood at 8.2%, with its latest forecast for the full year pointing to nearly 5% organic growth, which slightly trails its competitors. “A lot of our clients are nervous,” said Greg Paull, co-founder and principal at pitch consultancy R3. And while Paull’s clients aren’t necessarily calling reviews, they’re keeping a close eye on the holding company. One Dentsu client, who requested anonymity to speak freely about his relationship with the holding company, told Adweek, “I don't know what the vision is, I don't know who the new CEO is, and what their point of view is … on building a brand.” Adweek spoke with more than a dozen sources, including eight current and former high-ranking members in the Dentsu organization, about the current direction of the company, and more specifically its U.S. operations. Dentsu did not make any executives available to talk on the record for this story. What’s behind the curtain Despite its 2013 Aegis acquisition, Dentsu remained a Japan-centric organization. With a stronghold on at least a quarter of the Japanese market, according to Paull, the Asian market is where Dentsu is strongest. Now, the group must expand its talent and the integrated mindset that has made it successful in Japan to other regions. To do this, Paull suggests Dentsu find a few clients it can execute well for in the U.K. or the U.S., then use the work as a test case to build credibility in the market. One Dentsu Creative client who wished to speak anonymously said they aren’t sure what the plan is now that the holding company and its global CEO are going separate ways. Dentsu Is Blending All of Its Global Creative Shops Together to Form Dentsu Creative “It was—point blank—a loss,” said the client of Dentsu’s choice to eliminate the DI CEO position, praising the outgoing leader’s firm grip on industry trends and her ability to craft a marketable brand for Dentsu. Aside from notifying them of the changes, Dentsu hasn’t told the client what Dentsu Group Inc. CEO Hiroshi Igarashi plans to do when he fills Clark's role. “If I was a much bigger client, I would be deeply concerned,” they said. From the client’s perspective, Dentsu’s leadership changes are murky. Other holding companies have been more transparent and reassuring when communicating any changes to their strategic vision following previous executive turnover. The challenge that Wendy's had is it's kind of teaching the elephant to dance.Greg Paull, co-founder and principal, R3 A Dentsu spokesperson addressed those concerns: “Igarashi is and always will be extremely client-focused,” adding that he built his career through account management and is closely involved with Dentsu’s clients in Japan. “Igarashi’s deeply held conviction, which he has followed throughout his career, is that engaging with folks directly involved with product development and customer sales is a key element of the client engagement process,” the spokesperson said. Tom Denford, co-founder and CEO of pitch consultancy ID Comms, was shocked when he learned of Clark’s departure. Clark reminds Denford of other industry leaders such as GroupM global CEO Christian Juhl, IPG Mediabrands global CEO Daryl Lee and Initiative global CEO Amy Armstrong, who he characterized as entrepreneurial and progressive. They represent the next generation of industry leaders, he said. “If you remove someone of Wendy's influence and visibility and good strong voice publicly, you’re going to suffer a little bit because the leadership of Dentsu behind Wendy is not particularly well known,” Denford said. Direction of the Americas With the creation of One Dentsu, the organization will have four regional hubs—Japan, APAC, EMEA and the Americas, which spans North and Latin America. In the Americas, one source within Dentsu told Adweek that the organization “was flipped on its head” in March as the company steamrolled toward its announcement of Dentsu Creative at Cannes in June. Dentsu had been working on consolidating its creative services for more than a year, but that plan was retooled under new global chief creative Fred Levron. Levron joined in 2021, and Paull describes him as a strong creative leader who might be under pressure to perform. “Now that he doesn't have [Clark], I'm not sure how the creative product is going to play out,” he added. Dentsu declined to comment about how the trajectory of Dentsu Creative changed under Levron. Jon Dupuis represented one of the biggest changes among its internal leadership team. He previously held the roles of global president of DentsuMB and CEO of Dentsu Creative Americas, but he’s now leading the Global Clients organization within Dentsu. “[Levron] has a strong desire to change the organization. He wants to do things in a way that will benefit our business and our clients,” a source within Dentsu told Adweek, but “a lot of the plan is still in his head and not necessarily on paper.” The right acquisition could help bolster their creative capabilities.Jay Pattisall, Forrester Research Because of that, the source told Adweek, the organization as a whole isn’t as clued in yet as it ideally should be. However, the source added, “what I know feels good to me.” Another source within Dentsu told Adweek that the remaining confusion “is more around how the organization is structured and how people within the organization communicate or don't communicate critical information.” Leadership sources within Dentsu expressed optimism around the Americas, citing new business wins in entertainment, CPG and QSR spaces that haven’t been announced yet. A Dentsu source also pointed to Cannes as a “great moment” where the messaging felt unified for the first time. That source also expressed that more work needs to be done to give each region within Dentsu the ability to reflect that global story in a way that best fits their market. “I just don't think that there's been that connectivity. I do believe it's coming.” Challenges on the creative side Dentsu Creative agencies have had an unremarkable new business year, with Herbalife representing its best win in the first half of 2022. The creative group netted a number of accounts in Asia and EMEA, but boasts no notable large wins in the North American market. It’s not losing business in North America, either. "What's very evident in my research and evaluation of the organization is that they're very strong in media and technology and data," said Jay Pattisall, principal analyst at Forrester Research. Compared to its holding company peers, Dentsu's creative offering lacks scale, he added. Before the agency consolidated its creative agencies, pitch consultants had trouble aligning the right creative agency with clients. R3 often presented DentsuMB as an option to its clients in some markets, and its sister creative agencies like Isobar in others, leading to what Paull described as a “disjointed” experience for clients. In a global pitch, Dentsu’s next step to show it’s competitive against other holding companies and to bring Dentsu Creative to the same level as the other arms of the company—Merkle and Dentsu Media. From a talent standpoint, Dentsu Creative has already made several significant creative hires, including former Energy BBDO creative Pedro Pérez in Chicago and former BBH creative Rafael Rizuto for the U.S. and Latin America. Levron has also instituted a global creative scale by which to judge work in an attempt to raise the bar across the network. Dentsu is implementing a program to allow its top 50 creatives more freedom to work on key projects around the world. "The right acquisition could help bolster their creative capabilities. Not that what exists isn't good... It is good," said Pattisall. Bearing the brunt of consolidation After Clark implemented changes at the holding group, ID Comms saw Dentsu showing up at pitches with a simplified, cohesive brand story. It was a breath of fresh air for the consultant, although from his perspective, the organizational structure still lagged behind competitors like GroupM. “It makes sense for Dentsu to want to be one company. For too long they've been this kind of mythical enigmatic Japanese operation with all the puppet masters—this kind of faceless corporation,” said Denford. The holding company’s acquisition spree underscores this, with about 159 individual acquisitions in the last eight years adding to the group’s brand sprawl. That’s more than any other holding company in the industry, according to R3 data. “It's just difficult to bring those disparate parts together in a culture that doesn't take on risk very well. And I think Wendy has [borne] the brunt of that through the process,” Paull said. Consolidating Dentsu’s agency brands was a critical choice, according to Paull. “The challenge that Wendy's had is it's kind of teaching the elephant to dance,” he said. Irn-Bru Parent to Grow Across UK With Media Consolidation After COP26 Success

The Future of Agencies

Following Wendy Clark's Departure, What's Next for Dentsu?

A new global leadership team coupled with frequent changes has clients on the edge of their seats

Jameson Fleming

Olivia Morley

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Jameson Fleming

Olivia Morley