New Delhi: With an approximate billing of Rs4,500 crore for the year 2016, big ticket account wins and a slew of acquisitions in digital, creative and public relations segments, Dentsu Aegis Network is on a roll. And Ashish Bhasin, chairman and chief executive, Dentsu Aegis Network (DAN) South Asia is upbeat about his ambitious target of dethroning the Interpublic Group of Companies (IPG) from the number two spot by 2017.
“We are definitely meeting the target well before time. In the last three years, we have been the fastest growing group in the country with our growth rate being three times higher than the market,” said Bhasin who took over the operations of Dentsu India in June last year.
The Indian advertising industry stands at Rs48, 000 crore growing at the rate of 12%.
“I’m impressed by Dentsu’s rapid growth. However, no one really knows the real size of any agency. Global media agency rating firm RECMA tracks only print and television. The outdoor, creative and digital businesses are opaque and it is difficult to quantify their numbers. Dentsu makes a lot of money on outdoor and digital and the agency might be more profitable,” said a senior leader from the fraternity on the condition of anonymity.
He further added while DAN has managed to beat American and British advertising conglomerates like IPG and WPP in rapid acquisition, its real challenge will be to ensure integration of acquired companies in its network. “For instance, what will happen when Dileep Cherian leaves Perfect Relations?” he said.
Perfect Relations, the public relations firm owned by Dileep Cherian, was acquired by DAN in September for estimated Rs200-250 crore. This was followed by creative marketing agency Happy Creative Services’ acquisition for estimated Rs300 crore. It recently acquired experiential design studio Fractal Ink for Rs250 crore.
In the last five years, the network has acquired companies such as WAT Consult (social media), Milestone Brandcom (outdoor), Fountainhead-MKTG (event and experiential), Taproot (creative) and Webchutney (digital). These companies have filled the gaps in Dentsu’s capabilities, brought talent and also a host of non-Japanese clients reducing the business from Japanese clients to 11-12%.
“At the moment the revenue coming from the acquired firms is not large. I’m hopeful that 50% our growth will come from acquired businesses. Currently, organic business comprises 70% of our revenue and we want to hit the 50:50 mark,” Bhasin said.
Apart from acquisitions, the network also managed to win some big ticket accounts. Swedish furniture giant Ikea’s Rs200 crore account is one of the biggest win for Dentsu Impact, the creative agency of the network. The group has also won accounts across media, creative and digital businesses including marquee brands such as Maruti Suzuki, Airtel, Aditya Birla Financial Services Group, Flipkart, British Airways, MasterCard, Nokia, Microsoft, General Motors, Sony and Mondelez.
“Dentsu India has helped launch Melorra in India this year as a disruptive fine jewellery brand and has shaped the brand’s creation working closely with us,” said Saroja Yeramili, CEO, Melorra.com.
DAN is taking a collaborative approach when it comes to servicing clients. “We pitch and work on briefs together as composite teams from across different units such as creative, media, digital and innovation. We create bespoke teams for clients based only on how best we can work together to create the results clients are chasing,”said Narayan Devanathan, group executive and strategy officer, Dentsu India.
With the growing business the network invested heavily in hiring talent taking the agency headcount from 50 to 2,700 in the last eight years out of which 1000 are digital specialists.
“More than one third of Dentsu Aegis Network’s revenue comes from digital. I feel delighted when my old world competitors say that digital only comprises 10% of the entire advertising market but it is growing three and a half times faster than the market growth,” said Bhasin.
However, advertising industry experts feel that while Dentsu might be on the growth path, overtaking IPG (represented by agencies such as MullenLowe Group, FCB Ulka, McCann and Lodestar UM) may be a distant dream.
“IPG Group is way ahead of Dentsu in terms of billing, revenue and profit. The gap is so much that it can’t be covered in a year’s time,” said a senior media executive on the condition of anonymity. Among the acquisitions Dentsu has made, only the activation and PR firm will fetch profits. Digital agencies hardly make money, he pointed out.