Dentsu Group reported another tough quarter of financial results today with Q3 organic revenue falling 6%. The firm further downgraded its full-year outlook to an organic decline of 5%.  

The company started the year projecting 4% organic growth for 2023 but reduced that figure to between 1% and 2% at the end of the first quarter. By the time it reported Q2 results the outlook was in negative territory. 

The firm is the latest holding company to report it will lose ground in 2023. Stagwell recently indicated it’s expecting a 4% decline organically and S4 Capital said it will be down as well but has not indicated by how much. 

Interpublic expects to be roughly flat for the year and WPP expects to eke out growth of between .05% and 1%.  

Omnicom said in October it expects to grow organically by 4% this year and Publicis Groupe recently upgraded its full-year growth projection to between 5.5% and 6%.  

Madison and Wall analyst Brian Wieser called out a trend impacting the mid-sized holding companies (S4, Stagwell and possibly Dentsu)--weakness primarily with smaller clients. “If correct, a focus on trends from differently-sized marketers could explain the gap between this group of three” and the five other major public holding companies.  

Wieser also noted that “a significant amount of competition in the middle market for agency services has emerged in recent years,” including dozens of “scaled privately owned agency groups with thousands of employees each.”  

Wieser also opined that “massive expansion” in revenues from AI driven products at Meta and Alphabet and rapid growth at Amazon and retail media “could very well be disproportionately capturing spending from mid-sized marketers, leading to less demand for many agency services.” 

At Dentsu meanwhile, Japan was the one region that showed Q3 growth—up 3%--led by its customer transformation & technology offering.  

The Americas region was down close to 7% with continuing weakness in client spending by the technology and financial sectors, combined with CT&T project delays. “The operating environment remains challenging particularly in the US market,” the company said. Reduced client spending and client losses continued to impact media revenues in the quarter and CT&T business was also down. Dentsu Creative reported growth in the quarter both organic and from new business. Canada was up 2% organically.  

“We have seen progress in the US market with the accelerated roll-out of One dentsu,” the company’s new global operating model, said company President and CEO Hiroshi Igarashi. “Revenues have stabilized and we have a number of account wins that demonstrates what we can achieve when we drive collaboration and empower our people to thrive.” 

EMEA was down 17% and APAC (excluding Japan) was down 9%. Dentsu cited project losses and less CT&T business.