dentsu international cuts 12.5% of jobs, consolidates 160 brands

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Dentsu International is cutting about 12.5% of its total headcount overseas, as part of the comprehensive review and accelerated transformation programme which was in August. According to dentsu international, the review is aimed at lowering operating expenses, simplifying the business for both clients and its operations, enhancing the efficiency of its balance sheet, and maximising long-term shareholder value. As of 2019, the network had 47,000 individuals under its wing.

At the same time, the agency is also integrating about 160 brands to six global leadership brands within two years. The transformation programme includes all service lines, functions and central teams and will initially be led by its largest markets which cover more than 80% of dentsu international's revenue.

Meanwhile, it is also currently designing a wider transformation programme for its operations in Japan, as the business is simplified into four operating pillars. The agency launched the early retirement programme in Japan in the third quarter of this year which it says will structurally lower operating expenses moving forward. Full details of the business restructuring will be announced in February next year.

While dentsu's spokesperson did not comment on the impact of Asia Pacific, it told MARKETING-INTERACTIVE that as it works through the review, it will take the critical and necessary steps, that many other companies are, to address the impacts the global pandemic has had on its business and ensure it works closely with its people and its clients as the agency moves through this period of accelerated transformation.

“Consumer intelligence is at the heart of everything we do at dentsu international. We believe integrating our business around the consumer is the greatest advantage we can give our clients and the greatest competitive advantage we can give ourselves. We will do this by accelerating the transformation journey we started last year to simplify further how we operate, delivering even greater agility through a focused portfolio of six global leadership brands with prioritised investment and resources in capabilities of high client demand and growth," the spokesperson added.

Just yesterday, the agency said it expects organic revenue decline for 2020 to be towards the higher end of the range of -12.5% to -12.0% and operating margin at 13.0% to 13.5%, which remains unchanged from its third quarter earnings announcement. The estimated cost for 2020 and 2021 at dentsu international is expected to be about US$854 million.

The past year has witnessed headcount cuts at dentsu. In April, the agency implemented cost saving measures, as a result of COVID-19 business impacts. Its spokesperson in Singapore told MARKETING-INTERACTIVE then that this was to ensure business continuity and to safeguard its employees' livelihood worldwide. The measures included implementing an immediate hiring freeze, delaying salary reviews in 2020 and temporary salary reductions with the top management team taking the highest percentage cut.

Last December, it also restructured its business and reduced headcount by about 11% in seven markets - Singapore (including regional headquarters), Australia, Brazil, China, France, Germany and the UK (including the global headquarters of the international business). This represented a reduction of 3% of the total headcount of the international business, as well as property rationalisation and other related impacts. Meanwhile, Dentsu said its Japan business "has been in line with its expectations".

Aside from that, it also ditched the "Aegis" name seven years after it was incorporated into the dentsu network in 26 March 2013. The agency is currently led by global CEO Wendy Clark, who joined from DDB earlier this year. Before she came on board, dentsu witnessed a series of leadership changes in the Asia Pacific market. Meanwhile in Asia Pacific, dentsu appointed Ashish Bhasin to the role of Asia Pacific CEO based in Singapore, and Prakash Kamdar to CEO, Dentsu Aegis Network Singapore last year.

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