Dentsu doubles down on integration strategy as Q1 revenues decline

Dive Brief:

Dentsu Group reported a global organic revenue decline of 3.7% to $183.8 billion (¥286.4 billion) for Q1 2024. The decline was in line with internal expectations, according to the network’s earnings release.
Japanese operations posted organic growth of 2.4% during the period. However, this could not offset declines of 6.6% in the Americas, a 9.4% drop in the Europe, Middle East and Africa region as well as a 7.1% decline in Asia Pacific (excluding Japan).
Dentsu, which still expects 1% organic growth for the year, last week launched a new global brand platform, “Innovating to Impact,” which the holding company said encapsulates its strategy to leverage the transformative strengths of creativity, media, data and technology to drive growth.

Dive Insight:

Despite an overall drop in organic revenue in Q1, Dentsu’s leadership expects an upswing in the remainder of the year, as economic headwinds ease and revenues from new business wins in the Americas begin to flow in, including Dentsu Creative’s Apple+ TV win last year and the shop’s appointment as lead creative for T-Mobile earlier this year.

Part of the company’s strategy to return to growth will be to accelerate the One Dentsu model for integrating the holding company’s diverse capabilities. Introducing the new “Innovating to Impact” brand platform could also help drive growth with messaging focused on the group’s commitment to helping clients with business transformation.

In Q1, Dentsu’s Customer Transformation & Technology practice area accounted for 30% overall revenues, a drop from last year which the company said is due to a cyclical industry downturn and a “realignment of revenues” internally.

“Clients are searching for a marketing transformation partner that can deliver true integration of media, dynamic content and data insights via solutions that seamlessly connect brand potential to business impact,” said Hiroshi Igarashi, Dentsu president and global CEO, in a statement accompanying the company’s latest earnings report.

For the holding company, Japan still accounts for 43% of its overall net revenue. The group’s second largest region is the Americas, which accounts for 28%. EMEA accounts for 20%, while APAC (excluding Japan), accounts for 9% of overall revenues.

In addition to the revenues generated by Dentsu’s account wins in the U.S., future earnings reports this year could get a boost from the annualization of client accounts lost in 2023. EMEA will also see an easing of comparables from the second quarter and APAC has seen improvements in markets such as China.