Dentsu Has Appetite For Digital Expansion, May Weigh Other Acquisitions

by Joe Mandese, Jan 27, 2010, 8:30 AM

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Dentsu, the Tokyo-based agency holding company that is frequently overlooked in the Western Hemisphere, wants to change that -- and it's going to flex its digital muscles to do it. For Dentsu Holdings USA, the unit that oversees the Japanese ad behemoth's Western operations, acquisition of Innovation Interactive is its first move, says President-CEO Tim Andree. The next step will be leveraging its newly acquired assets, including 360i, SearchIgnite and Netmining to accelerate its presence in the digital media marketplace. The next stage, he said, could include other acquisitions.

"We're the world's largest agency brand, and we're described as the fifth-largest agency holding company, but it's hard to describe us as a classic holding company when 90% of our revenue comes from Japan," Andree explained to Online Media Daily, adding that even though Japan is the "second largest marketplace in the world," Dentsu needs to diversify and expand in North America, South America and Europe to fulfill that vision.

That diversification and expansion strategy, Andree said, would be largely via digital advertising and media services.

Andree noted that Dentsu has been beefing up its presence in North America with the acquisitions of hot creative shops such as ATTIK and mcgarrybowen over the past couple of years, and said Dentsu already has a strong "traditional media" presence -- primarily in Japan -- but that the path for growth is clearly digital, and that the best way to do that would be via acquisitions.

"Dentsu has a massive media organization as well. In Japan we have about 30% of the overall market," he explained. "We have the traditional media capability there, but we haven't really unbundled our services. It's within our traditional agency. We have to build out a really strong digital media offering. So we may be looking to make some additional investments in digital media."

He declined to specify what Dentsu's next play might be, or how much it paid for Innovation Interactive, but he said its leadership team, including co-CEOs Will Margiloff and Bryan Wiener, would be central to executing the strategy. He also clarified the role of Dentsu America media chief Scott Daly, noting that he would continue to play a primarily traditional and/or integrated media role, but would not be overseeing the overall digital strategy of the organization.

"One of the things that Will and I found so attractive [about Dentsu], is that we could be a core part of their Western growth strategy, rather than with most holding companies, which would have been figuring out how to integrate into their strategy," said Innovation Interactive's Weiner.

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0 comments on "Dentsu Has Appetite For Digital Expansion, May Weigh Other Acquisitions".

1. David Shevock from DecisionStep
   

   commented on: January 27, 2010 at 11:36 a.m.

   Smart strategy. Digital agencies are morphing before our eyes. Its no longer good enough to have great creative, great execution and great service. That is table stakes. Now they need to have unique IP, distribution network, owned assets to leverage or something that gives them a further advantage.

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