Dentsu Aegis boss Jerry Buhlmann is media's iron man

The chief executive of Dentsu Aegis Network talks to Gideon Spanier about acquisitions, the supposed return to full service, cultural differences and his love of triathlons.

Dentsu Aegis boss Jerry Buhlmann is media's iron man

No one gets to the top without being tough but Jerry Buhlmann is something else. Last summer, the keen triathlete came off his bike in Italy and broke both his arms, suffering a compound fracture on one side.

He insisted on going back to the UK for treatment so got the doctor to put his arms in plaster and write a letter giving him permission to fly. He returned the same day, without taking painkillers, and walked out of Heathrow – kicking his suitcase along with his feet because he couldn’t use his arms – to meet his driver, who was "laughing his head off" at the sight.

Buhlmann isn’t bragging as he recounts the story to Campaign while sitting in the London headquarters of Dentsu Aegis Network near Regent’s Park. 

The 56-year-old is still recovering, so he can’t compete for Great Britain in the triathlon again this year. He came 28th in his age group in the 2014 world championships.

Competitive start

Buhlmann, tanned and over six feet tall, brings a similar competitive streak to his day job. At the age of 29, he co-founded an independent agency, BBJ, in 1989. Within a couple of years, his two co-founders had departed but he kept on rising. He was always someone who thought far ahead. "You’re better at your job if you take the long-term view," Buhlmann says.

"My experience is if you add value to your clients, they are quite often happy to pay you properly"

He "made a few bob" selling BBJ to Aegis in 1999 and went on to become chief executive of the FTSE 250 group in 2010, before selling to Japan’s Dentsu for £3.2bn in 2012.

The question that everyone wants to ask is how Buhlmann manages the cultural divide when there is only one other Westerner, Tim Andree, on the board of Dentsu.

"I get on really well with them," Buhlmann – who has a fluent, focused answer to every question – responds. "Yes, culturally they are very different but the values are unbelievably similar. The issue about working across cultures is not about ‘Is your culture different?’ but ‘Are your values the same?’ If you want to look at a different culture, just go 20 miles across the Channel to France." The business language of Dentsu is English, he adds.

"The absence of legacy and preponderance of digital is a competitive advantage to us. Legacy is an obstacle to high growth"

Yet working with the Japanese is different. Later in the conversation, Buhlmann recalls being with his chief financial officer, Nick Priday, on the 48th floor of a Tokyo skyscraper when a mini-earthquake shook the building: "The Japanese are used to it, so they looked over at me and Nick to see how we were reacting. We both thought: ‘We’re British – we’re going to go down with you and look like we don’t care.’" The meeting carried on as if nothing had happened.

Buhlmann is widely regarded as having done a good job turning around Aegis, which had drifted before 2010. "I rate him very highly," Lorna Tilbian, head of media at Numis Securities, which advised Aegis until its sale in 2012, says. "He’d be a good candidate to succeed Sir Martin Sorrell at WPP."

Last year, Buhlmann increased gross margin by 9.4% and revenues hit £2.2bn (Asia and Europe grew faster than the US). The company made a record 34 acquisitions and bolt-on investments in areas such as content creation and technology. No ad group, except WPP, made more acquisitions in 2015.

Critics carp that revenues are only up so strongly in recent years because margins have taken a hit, but Buhlmann insists that is not the case except in the year after the completion of the Dentsu sale: "It is absolutely not about growth at the expense of margin."

He claims success has come from a "one P&L" strategy, which means agency leaders get 50% of their bonus from the performance of their shop and 50% from the group – either ona country or international basis, depending on seniority: "Everyone is incentivised to work together. It is one of the reasons why our organic growth is two-and-a-half times the market."

Buhlmann is scornful of rival Publicis Groupe’s reorganisation into four "silos" and claims the company has been suffering "indigestion" after lots of big digital acquisitions. 

He chairs Dentsu Aegis’ mergers and acquisitions committee, so when it comes to convincing someone to sell, "it helps" that Buhlmann founded and sold his own agency. He thinks the group could "do more M&A", adding that the one P&L structure makes it easy to integrate acquisitions and align interests on both sides.

But these are difficult times for a global ad group such as Dentsu, the fifth-largest in the world outside Japan and third-largest by media buying. Advertisers have cut margins and been asking questions about how much agencies have been taking rebates from media owners and buying inventory as principal and reselling it at a mark-up.

Like other agency chiefs, Buhlmann has gone on the counter-attack after an investigation by the Association of National Advertisers in the US. He describes its findings as "subjective" and insists the controversial practices in the report "do not exist within our US business". More generally, clients audit their spend regularly and "if there are any gaps in the business, we rigorously police those".

Added value

Does the media agency model need reinventing? "No," he replies. "What clients want is for you to add value to their business and to demonstrate it. My experience is if you add value to your clients and have a good, strong, transparent contract with them, they are quite often happy to pay you properly – so long as they understand what they’re paying you, what you’re earning and what they’re getting for it."

The move to digital means greater "performance and accountability", Buhlmann insists, because there’s so much data: "Making our business more accountable is great because it makes us more valuable if we’re doing a good job. It puts performance at the heart of the business."

There’s "a boatload of opportunities" as clients want fewer agencies that can do more. He wants Dentsu Aegis to be "a highly competitive, well-integrated, data-led, client-focused, global business that adds value, that drives brand commerce, that builds trust with consumers, that gives immersive experiences in real time and that is addressable" because "that is the solution that is going to build business and drive commerce for our clients". He continues: "If you’re in this business, it’s because you can do relentless, because you always want to improve, because you want to do fantastic work for your clients."

Dentsu Aegis is known for driving a hard bargain – it had a tussle with ITV over trading terms earlier this year, although the two resolved their differences. The UK business is also contending with a glut of pitches: Vizeum is facing reviews by Fox, Ikea and BMW, while Carat has lost Asda and is defending British Gas. Both agencies changed UK managing directors in recent months.

Asda moved its media and creative accounts to Publicis Groupe in the name of greater integration but anyone who thinks it heralds the return of "full service" is "wrong", Buhlmann argues. Media agencies split from creative shops a quarter-of-a-century ago precisely because media is a "specialism", he adds.

Legacy is an obstacle

Unlike its bigger rivals, Dentsu Aegis does not own creative networks with august pedigrees, but Buhlmann insists: "The absence of legacy and preponderance of digital is a competitive advantage to us. Legacy is an obstacle to high growth."

Dentsu Aegis has "momentum" because "we’re organised around platforms and systems", he says, referring back to the "one P&L" approach and a growing range of services across search, mobile, programmatic, data and content.

Buhlmann, who lives in Surrey and has three children and two stepchildren, had the best part of £10m in stock when Aegis was sold and will have been rewarded to stay. The unnamed highest-paid director at Dentsu Aegis last year earned £5.7m, according to UK accounts.

Buhlmann is in no mood to retire in an industry where global chief executives can stay for decades: "I’ll keep working as long as I enjoy it and I feel rewarded. I’m very happy. I’ve got plenty of energy. It’s all about energy."

His tidy office gives clues to his world view, with a copy of The Economist and a Chelsea match-day programme on show and a large world map on the wall. The only surprise is that the map isn’t laid out on a desk like a game of Risk to plot world domination. "What makes you think we don’t do that?" Buhlmann jokes.

Jerry buhlmann in his own words

On the Mediapalooza of global reviews

"There will continue to be a robust volume of pitching – 70% of advertisers are looking to reduce their roster."

On future M&A activity

"We generate enough cash to do big acquisitions. The key thing about a large acquisition is: does it move your business on? Quite often, you’re paying very high multiples for businesses that might be difficult to integrate."

On the return of full service reuniting media and creative

"Whenever everyone says ‘the return of’, they’re always wrong because what happens next is always new. The ‘return of’ never happens and never will."

On his Brexit fears

"It will stall and delay investment decisions for two years."

On why he took up the triathlon a decade ago

"As you get older, your knees wear out. It’s quite a good old man’s sport. It’s all straight lines."