Dentsu : A Quick Read

At a Glance

1
Based on gross profit
2
Source: Advertising Age, May 4, 2015 edition
3
Media billings of WPP, Publicis, Omnicom, Interpublic Group and Havas are based on overall activity billings in RECMA Overall Activity Rankings 2014. The Dentsu Group’s media billings are a simple sum of Dentsu Aegis Network’s media billings and Dentsu’s non-consolidated media billings. Dentsu Aegis Network’s media billings are based on overall activity billings in RECMA Overall Activity Rankings 2014. Dentsu’s U.S. dollar-denominated non-consolidated media billings are converted from yen to U.S. dollars using the average exchange rate for 2014 (calendar year).
4
Based on gross profit of Internet-related marketing services, entrusted development and sales of information technology systems
5
Source: THE GUNN REPORT SHOWREEL OF THE YEAR 2014
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Represents the constant currency year-on-year growth after adjusting for the effect of business acquired or disposed of since the beginning of the previous year
7
5.8% for the Dentsu Group (Consolidated)

Expansion of International Business

The global business operates with 380 offices and 43,000 employees in 124 countries around the world.

In terms of the percentage mix by major region, Japan accounts for 49%; EMEA,1 20%; the Americas,2 17%; and APAC,3 14%.

1
Europe, Middle East and Africa
2
North, Central and South America
3
Asia Pacific (excl. Japan)

With the acquisition of Aegis Group plc in March 2013, the international contribution to the Dentsu Group’s gross profit grew significantly, and its business structure is much more regionally diverse.

Positioning as a Global Network

Dentsu ranks as the No. 1 brand agency globally1; the 3rd largest media agency group in the world2; and in Japan it has a leading share of the market. The Dentsu Group is evolving into a truly global network:

No. 1 Brand Agency Globally 2014 Ranking by Revenue1

No.1

3rd Largest Media Agency Group 2014 Ranking by Billings2

No.3

No. 5 Ad Agency Group 2014 Ranking by Revenue1

No.5

Dentsu’s Leading Share of the Japanese Advertising Market3 Net Sales in 2014

No.1

1
Source: Advertising Age, May 4, 2015 edition
2
Media billings of WPP, Publicis, Omnicom, Interpublic Group and Havas are based on overall activity billings in RECMA Overall Activity Rankings 2014. The Dentsu Group’s media billings are a simple sum of Dentsu Aegis Network’s media billings and Dentsu’s non-consolidated media billings. Dentsu Aegis Network’s media billings are based on overall activity billings in RECMA Overall Activity Rankings 2014. Dentsu’s U.S. dollar-denominated non-consolidated media billings are converted from yen to U.S. dollars using the average exchange rate for 2014 (calendar year).
3
(1)
HDY is the total of net sales by Hakuhodo, Daiko Advertising and Yomiuri Advertising.
(2)
Under JGAAP, net sales are calculated in calendar 2014.
Sources:
Advertising and Economy, Current Situation of Japanese Advertising Agencies and 2014 Advertising Expenditures in Japan (Dentsu)

Unique Operating Model

Leveraging the structural advantage of “One P&L” per market in a unique, scalable operating model

The Dentsu Group has established a “One P&L” per market operating model, which is unique and collaborative. Group companies are incentivized to collaborate across agencies and countries. This model enables Dentsu to provide integrated and specialist services for clients across markets and regions.

In an age of marketing convergence,* advertisers are looking for integrated and specialist services from their agency partners. Our operating model offers a source of differentiation that gives the Dentsu Group an edge over the peer group, and has been a key driving force in our strong performance in recent years.

*
New marketing paradigm reflecting spread of digital media and social media in recent years as well as changing consumer behavior patterns and progress in all kinds of technologies

Capabilities by Business Domain

Digital

The Dentsu Group has established a leading position in the digital domain. The digital domain ratio in the international business increased to 43% in fiscal 2014.

The Dentsu Group’s market-leading digital brands

Media

3rd largest media agency group in the world1

1
Media billings of WPP, Publicis, Omnicom, Interpublic Group and Havas are based on overall activity billings in RECMA Overall Activity Rankings 2014. The Dentsu Group’s media billings are a simple sum of Dentsu Aegis Network’s media billings and Dentsu’s non-consolidated media billings. Dentsu Aegis Network’s media billings are based on overall activity billings in RECMA Overall Activity Rankings 2014. Dentsu’s U.S. dollar-denominated non-consolidated media billings are converted from yen to U.S. dollars using the average exchange rate for 2014 (calendar year).

The Dentsu Group’s market-leading media brands

Creative

Dentsu placed second in the “Most Awarded Agencies in the World in 2014”2 rankings.

  • Key International Ad Award Wins
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Source: THE GUNN REPORT SHOWREEL OF THE YEAR 2014
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The 55th Annual CLIO Awards: Agency of the Year
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ADFEST 2015: Grande Lotus in the Design category/Advertising Agency of the Year/Interactive Agency of the Year/Branded Content Lotus
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The 42nd Annual ONE SHOW AWARDS: Best In Design
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The Cannes Lions International Festival of Creativity got its start as a cinema screen advertising contest within the Cannes International Film Festival but became a separate event in 1954. It has gained particularly high recognition among numerous international advertising awards for its scale, the composition of its judging panel, and the high level of award-winning works.
Sports Marketing

Dentsu has enjoyed long-term, successful relationships with a number of major sports federations. Dentsu was designated as the exclusive marketing agency for the Tokyo 2020 Olympic and Paralympic Games.

Operating Highlights

With the growth in operating profit, gross profit reached a record-high ¥676.9 billion in fiscal 2014.

Billions of yen, YoY

In terms of organic growth, Dentsu Aegis Network significantly outperformed the peer group.
  • FY2014 Organic Growth Rate
1
Underlying operating profit: KPI to measure recurring business performance which is calculated as operating profit added with amortization of M&A-related intangible assets, impairment loss, gain/loss on sales of non-current assets, acquisition costs and other one-off items
2
Operating margin = Underlying operating profit ÷ Gross profit × 100
3
Underlying net profit (attributable to owners of the parent): KPI to measure recurring net profit attributable to owners of the parent which is calculated as net profit (attributable to owners of the parent) added with adjustment items related to operating profit, revaluation of earnout liabilities/M&A-related put-option liabilities, tax-related, NCI profit-related and other one-off items
4
Organic growth rates of the Dentsu Group, Dentsu Aegis Network and WPP are based on gross profit. Other competitors’ organic growth rates are based on revenue.

The Dentsu Group’s Management Structure

The Japan business is spearheaded by Dentsu while the international business is led by Dentsu Aegis Network, which includes Aegis and Dentsu’s legacy international businesses.

  • The Dentsu Group’s Management Structure