INTERNATIONAL: SPONSORED BY MOTHER TONGUE WRITERS - ISSUE/Dentsu plans to expand global networks with flotation cash/The Japanese agency will invest in a second-string agency, Karen Yates says
By KAREN YATES, campaignlive.co.uk, Friday, 30 January 1998 12:00AM
What would you do if billions of dollars suddenly came your way?
What would you do if billions of dollars suddenly came your
It’s a question that Dentsu, the world’s largest advertising brand, is
happily contemplating after board members voted to take it public for
the first time. The Japanese giant will release enough cash to fund its
new headquarters in Tokyo and an expansion into digital technology,
officials say. What they are less happy to talk about is Dentsu’s third
and most important aim - the biggest agency buying spree the world has
Unlike its rivals, such as McCann-Erickson and DDB Needham, Dentsu
cannot call itself a truly global agency network. Although it bills
dollars 14 billion a year, only 15 per cent of this comes from outside
its home market.
’Our aim is to make that 30 per cent,’ Kazuo Miyakawa, the chairman of
Dentsu in Europe and the Americas, says. ’We haven’t talked about when
that time should be, but from now on it will go up to 30 per cent.’
He is careful to balance this with a polite but definite insistence that
there will be no drastic change to Dentsu’s rather stately and piecemeal
approach to expanding overseas.
But Dentsu-watchers agree that the company’s move to list is a tacit
admission that its 40-year history of desultory acquisitions hasn’t put
it on the map. So a significant share of the money will be ploughed into
an expansion drive.
One admission Dentsu does make is that it is in dire need of a second -
or a third - network.
In Japan, intense relations between client and agency, built up over
decades, are strong enough to withstand the fact that agencies often run
two or more conflicting accounts. Dentsu handles both Toyota and Honda
in Japan, a phenomenon that does not work elsewhere in the world.
’We need two networks, if not more,’ Miyakawa says. Quality of service
to existing clients is Dentsu’s top priority, he explains, and it can’t
deliver this globally through just one agency brand.
So it is tempting to think that the cash heading Dentsu’s way may be
used to snap up an unsuspecting network, despite officials protesting to
the contrary. A Bates, say, or a GGT or a Young & Rubicam.
But Miyakawa is characteristically reticent. The most important thing is
sharing the same values in individual markets, he says. It takes
And it cannot be bought.
Nevertheless, pundits agree Dentsu has a lot of ground to make up if it
is determined to take on the big boys. The indisputable market leader at
home, Dentsu first put its toe in overseas waters in 1956 when it sent a
permanent representative to Honolulu.
Since then, it has tried a number of different routes to expansion: a
successful joint venture with Young & Rubicam, Dentsu Y&R, which has
delivered very well for Asia, and the liaison with the French group,
Eurocom, which fell apart after three years. In addition, Dentsu has
been quietly acquiring a variety of agencies in different countries,
such as Dentsu’s purchase of CDP in the UK.
In Europe, where Dentsu has interests in only eight or nine companies,
Miyakawa readily admits he could do with some extra muscle. Not in
London - which, he says, is more than adequately served by CDP and
Travis Sennett Sully Ross - but in France (where the network has a
regional head office but no agency), Scandinavia and Eastern Europe.
He sketches Dentsu’s dream network as a collection of successful local
agencies united into a global whole by strong core values and mutual
The suggestion is that such a chain might develop organically around,
say, CDP, while a second might include Travis Sennett.
The Americas are likely to receive the most attention. Dentsu’s approach
to them has been erratic in the past, resulting in a melange of joint
ventures and agencies that have been bought outright. Dentsu recently
bought out Y&R’s share of a Dentsu Y&R agency in Los Angeles in order to
stem losses. The renamed Rogge Effler is now on a firmer footing, says
Miyakawa, and US operations are in profit, but he admits the need to
’improve’ Dentsu’s service in the US and Latin America.
Whatever the final policy, it is likely to be at least three years
before the West witnesses any dramatic buying action from Dentsu.
Government approval for stock exchange listing in Japan takes up to
Until then, the way in which Dentsu decides to jump should give any
vulnerable networks plenty to talk about.
And Dentsu sources admit that acquiring a network is definitely one of
Edited by Karen Yates
Tel: 0171-413 4271.
This article was first published on campaignlive.co.uk
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