Media Buying Briefing: Is Dentsu’s latest restructure the solve it needs to get back to growth?

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Japanese-owned agency holding company Dentsu has a bit of a history, perhaps even a reputation, for restructuring the company in search of better results. Its latest, engineered under the auspices of no-longer-so-new Americas CEO Michael Komasinski, may have unlocked the value Dentsu has been missing the last two years. New alignments have brought new clients, in the hopes of returning back to growth. (Dentsu forecasts an anemic 1% of organic revenue growth in 2024.)

What’s changed at Dentsu since Komasinski, formerly CEO of Merkle, stepped in for Jacki Kelley, who returned to IPG right after Cannes Lions in 2023? For one, the company streamlined its media brands down to three: Carat, Dentsu X and iProspect and rejiggered them with new missions and a new boss in Sean Reardon, who moved from a CEO role at programmatic firm MiQ to become CEO of Americas media practice at Dentsu in January. 

Merkle, the data, tech and media firm Dentsu purchased in 2016 and has underpinned many of the holding company’s prior efforts at creating a data spine like its competitors (Omnicom’s Omni platform or Publicis’ Spine, etc.), is being put to different use in the creation of a suite of SaaS tools and products. 

The latest result is Merkury for Media, which aims to place all of Dentsu’s media for clients against first-party data coming out of Merkury, a global data, identity, and insights platform. It’s another step toward trying to optimize to business outcomes in all Dentsu’s linear and digital media planning and buying.  

When he addressed the Dentsu media troops in early April about Merkury for Media, Komasinski explained it this way: “We have reset our go-to-market around our power brands, reenergized them and made them more interoperable. This product suite, and the data and tech platform that it sits with is the perfect complement to that, because we want to have a set of tools that are grounded in identity, work across channels, and allow for identity-driven connected experiences for our clients.”

It’s that jump from ideation to execution that Komasinski said has stymied prior restructure attempts. “What we had before with M1 [data platform] was a great way to build audiences, but then it started to fall apart in the media planning process and in some of the activation of that. This [restructure] is solving for much of that.”

Jay Pattisall, vp and senior agency analyst at Forrester, has studied Dentsu’s moves and feels it’s a step in the right direction. “They’ve done a very good job at creating a more unified Dentsu media proposition and that is bolstered by their technology strategy, their consolidation and the restructuring actions that they’ve taken to take some of the media capacity and performance creative capacity out of Merkle and reallocate those into other areas of of Dentsu,” he said.

Pattisall said the move to productize data and tech assets out of Merkle — in the form of Merkury for Media — unlocks a value that’s largely been unrealized since Dentsu bought it in 2016. 

Data is part of why Kraft Heinz last fall handed its U.S. media duties from Starcom to Carat — consolidating most of its global media work within Dentsu. “Through the pitch, we understond more about what Merkury can do. When you think about where the consumer is and continues to go, it’s about personalization,” said Diana Frost, global chief growth officer at KraftHeinz. “So the ability to work with their first party data connected with ours, and get really tight on audiences and what that means for consumers … are key parts of this.”  

Independent analyst Brian Wieser, who tracks the financials of all agency holding companies, said restructures often take up to 18 months to effect a positive change in revenue and profit — if the company gets it right. 

“To make the decision to productize your offering in that way takes time to see what the right product mix is,” he said “Figure out the right way to sell it and to package it. Twelve to 18 months after you’ve got your team in place is not a crazy amount of time. You’re lucky if after a year you’re back to an industry level” of growth or exceeding it.

In terms of finding the right leader to oversee the media agency brands, Komasinski said Reardon’s hire was a bit of a unicorn moment for him, given the latter’s varied experience. “He was the only candidate that I met that had a really strong mix of running big integrated clients, running big media agencies and being a CEO of a standalone company [MiQ]. You just don’t find very many people with that profile,” he said.

For his part, Reardon believes the data element will be the differentiator in what he terms the Pepsi Challenge with other holdcos. “The level of customization in how we use it enables just a lot more nuance to be considered, so that we can have flexibility to apply MerKury for Media across our different media brands,” said Reardon. “It also gives us an ability to apply it to every client we have, no matter where they are on their digital journey.”

Liz Rutgersson, CEO of iProspect since last September, explained that the blending of iProspect’s performance driven heritage with Merkle’s data abilities, rounded out its offering to clients at a time when clients want performance results but also to seek out new customers. It’s helped iProspect win new media business from Ferrero and financial firm Moneygram in recent months, she said. 

“Having identity at the core of what we’ve been doing in media [via Merkle], bringing that mindset and merging it with the performance heritage of iProspect really sets us up to be the identity-driven performance approach to building brands in this market,” said Rutgersson. 

Dentsu X, meantime, blended its global reach with 360i’s U.S.-based digital chops under Leah Meranus who became CEO of North America at the start of 2023. She describes the agency as a boutique, in that “we are defying convention to deliver business outcomes,” Meranus said. “Our job is to understand what clients have done in the past — what worked, what didn’t — understand where they need to be in the future, and then drive those connective paths, and get them on the path to growth.” 

To that end, Dentsu X just landed southern restaurant chain Zaxby’s as a new client, Digiday has learned. And though it couldn’t be confirmed at deadline, sources with knowledge said Tropicana is moving its media business from Omnicom’s OMD to Dentsu — additionally it couldn’t be confirmed which of the Dentsu brands has won the client.  

Finally, Carat has had its share of wins in recent months besides Kraft, including Papa John’s media business. Mike Law, CEO of Carat North America, a longtime veteran of the agency, said he feels this time the restructure’s gotten it right. 

“I’ve been here for a long time and I’ve seen a lot of iterations,” said Law. “This solution is focused on exactly that word: solution … we can work across our data platform, our media agency, our creative agency [and offer solutions] with as little friction as possible.”

There are still wrinkles that need smoothing. As one source with past connections to Dentsu remarked, the purchase just over a year ago of Tag Group should have been more visible by now. And Wieser pointed out an obscure reference in Dentsu’s 2023 financial results of “operational problems” of Dentsu agencies in the German-speaking part of Europe. 

Luckily for Komasinski, that’s not something he needs to worry about. 

Color by numbers

Live shopping continues to be talked about more than acted on in the U.S. compared to its popularity in Asia, but things could be changing. Engagement platform Agora surveyed 1,000 consumers on live shopping experiences on platforms like TikTok Shop. Here are some findings:

  • 46% of respondents – particularly those under age 55 (61%) – expressing interest in livestream shopping events.
  • The trend is still developing, with 28% still preferring traditional online shopping and 25% showing no interest in live shopping events.
  • 40% point to convenience and ease of shopping as the main appeal for live shopping, while 36% mention product demonstrations being useful. — Antoinette Siu

Takeoff & landing

  • Independent media agency Canvas Worldwide said it’s partnering with AI specialist BrXnd to apply the tech to research initiatives financial streamlining and to use the latter’s Natalie consumer insights platform. 
  • Independent OOH specialist agency Billups expanded into Australia and New Zealand with the acquisition of Billie Media — its fourth purchase since last September. 
  • Attention firm RealEyes partnered with CreativeX to craft predictive attention tools under the banner AttentionX — Mars has agreed to use it. 
  • Client moves: Havas Media Network landed Famous Footwear’s U.S. media AOR duties … Stagwell’s Assembly unit landed design and fashion company Fossil’s global media business … Omnicom’s Hearts & Science won furniture brand Lovesac’s U.S. media AOR business … Mortgage firm Rocket Companies put its media business, currently with IPG’s UM, into review.
  • Personnel moves: IPG’s Kinesso hired Tom Amies-Cull as its global COO, coming over from Dentsu where he was global COO of media & global clients … Assembly hired Pele Cortizo-Burgess as its first global chief strategy officer, coming over from IPG’s Initiative where he had overseen strategy and then culture and inclusion …  Publicis’ Team One hired Rosabel Murai has its chief media officer, coming over from OMD where she was a managing director. 

Direct quote

“Managing things that are at an aggregate level with things that are at a very individual granular level are two things that we’ve struggled with. We couldn’t connect the two. And I believe and I hope that some of the advances in AI will help us do that.”

— Arun Kumar, explaining how AI can help those in charge of understanding consumer data. Click here for more on Kumar’s thoughts. 

Speed reading

  • Ronan Shields, with a slight assist from me, posed the question of whether agency holding companies need to consider breaking up, in light of rumors around several holdcos. 
  • Antoinette Siu covered independent agency Boathouse’s move to help in the area of diversity, equity and inclusion by launching a supplier diversity program — even as many companies move away from DEI efforts. 
  • Sam Bradley takes a look at what brands are doing already to ramp up Olympics-related marketing efforts already — with the games still two months away.

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