Revenue growth slows at Dentsu even though digital strategy seems to be paying off

Revenue growth at Dentsu is slowing markedly: new half year numbers show revenue growing by 2.3 per cent in the first half of 2016 against the previous year although gross profit growth at constant currencies was 9.6 per cent, showing that the Japanese-owned company is well able to turn a profit even though it’s been splashing the cash on a large number of acquisitions.

Most of these have been at Dentsu Aegis Network, the business outside Japan now run by Jerry Buhlmann which includes Carat, Vizeum and creative agency Mcgarrybowen. Dentsu Aegis organic profit growth slowed to six per cent.

250px-Shiodome_Dentsu_buildingDentsu says digital now accounts for 35 per cent of its business, 19 per cent in Japan and 50.1 per cent at Dentsu Aegis which shows the effect of its buying spree among digital agencies. It says it plans for digital to be 100 per cent of its revenue by 2020, which sounds rather improbable but it depends how you define digital.

In the meantime Dentsu Aegis’ core media buying business is facing a large number of reviews, in common with its marcoms rivals. These are opportunities as well of course but Aegis is really the Carat brand with some support from the much smaller Vizeum. This ought to lead to conflict problems but Aegis seems pretty adept at sidesteppinhg them. It’s pitching for Fiat’s international business, for example, even though it handles General Motors.

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