Dentsu’s declines remain in double digits

The holding co is in the midst of a comprehensive review of its brands, as well as office space, shared services and more.

Dentsu is the latest holding co to report its Q3 figures and, like most agencies, it is seeing some signs of recovery from what felt like a bottoming out in Q2.

But its figures for Q3 were still decidedly mixed; across the network, revenue less cost of sales was ¥18.3 billion (approximately CAD $240 million). This represents a drop of 14.2% year-over-year. Operating revenue was ¥2.3 billion (approximately CAD $28 million), a dip of 24.4%.

Revenue for Dentsu in the Americas was down 15.3% in the quarter and 10.7% for the fiscal year so far.

Dentsu (formerly known as Dentsu Aegis Network) is behind some other holding cos in terms of recovery: while Omnicom’s organic revenue was down 11.7% year-over-year, WPP’s organic revenue was down 7.6%, Publicis’ organic growth declined 5.6%, and IPG’s organic net revenue was down by 3.7%.

However, Dentsu pointed to some positives in its results. CEO Toshihiro Yamamoto said in the company’s release that “client confidence” has steadily returned, with new pitch activity across markets beginning to pick up. He noted expanded relationships with Kraft Heinz (an account won by Carat in Canada and in the EU), Amex and Heineken.

Despite some wins, Yamamoto remains cautious about Q4, expecting revenue to continue to fall in the double-digits in Q4, between 12% and 12.5%.

The group is also in the midst of a “comprehensive review and accelerated transformation program involving every region,” according to the release. The final outcome of the review will be presented in February 2021. The result could be a consolidation of brands within the network.

Yamamoto described the looming restructuring as “radical” and one which will be “more logical and transparent for our clients… it will also enable us to reduce costs significantly as our operations become simpler with more common systems and processes.” Besides a potential elimination or merging of brands, Yamamoto said this would increase Dentsu’s use of shared service centres, “rationalize” office space and review its property ownership globally.