Dentsu reported a 1.6% organic revenue decline for the first quarter of 2023 and said it was downgrading its organic growth outlook (which excludes currency and M&A impact) for the full year to between 1% and 2% from the previous 4%.
The company cited “strong comparables” versus last year’s first quarter when the industry was rebounding from COVID-suppressed earnings performance.
The organic revenue drop in the America’s was nearly 5% versus a year ago when growth topped 13%. In the US market the company said slower spending from technology clients impacted media revenues, offsetting growth in other sectors.
Customer Transformation & Technology was affected by slower decision making by clients in the second half of 2022 and against strong prior year comparables. The CT&T pipeline is more robust than a year ago, the company said, signaling “returning client confidence.”
Creative saw continued momentum with growth driven by expanding remits from existing clients and incremental revenue from new clients. Canada saw organic growth of almost 2%, benefiting from new client account wins.
In other regions, APAC (excluding Japan) was down close to 8%. Japan declined 0.2%. There was better news in the Europe, Middle East & Africa region which delivered growth of 3.4%, although that figure excludes the impact of Russian operations, which were affected by the war with Ukraine.
Hiroshi Igarashi, President and CEO, Dentsu Group Inc., said that “Our strategy of growing revenues in the fast growth market of Customer Transformation & Technology is progressing well.” He added that 35% of net revenues were generated by CT&T in the first quarter.
“We remain clear that the future of our industry is greater convergence and integration of services,” Igarashi said. “Our latest announced acquisition, [global production unit] Tag, will position us well to deliver the integrated solutions our clients are looking for at the convergence of marketing, technology & consulting.”