- Advertising company Dentsu is going through a massive overhaul of its agencies, with data-based media and performance marketing agencies Merkle, iProspect, Dentsu X, and Carat emerging as the big winners.
- Traditional creative agencies and smaller media agencies will fade as Dentsu seeks to create teams focused on single clients.
- A Dentsu spokeswoman declined to comment.
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Japan-based advertising giant Dentsu is slashing jobs and winnowing down its 160 agency brands to six in the face of financial challenges, with traditional creative and media agencies taking a back seat to data-focused ones.
Dentsu, which employs more than 60,000 people globally, is going from more than 160 brands to six: Carat, Merkle, Dentsu X, iProspect, Dentsumcgarrybowen, and Isobar.
Winners include performance marketing agency Merkle, which is gaining more power within Dentsu; data-focused agencies iProspect and Dentsu X; and Carat, the company's biggest media network, showing how advertisers are trying harder to measure the return on their spending.
Traditional creative agencies and weaker media agencies will either disappear or lose power because their services have been commoditized, insiders said.
Last week, the company announced it would cut 6,000 jobs or 12.5% of employees outside Japan, but the bulk of cuts are being felt by creative agencies like Dentsumcgarrybowen in the US while data and media agencies like Carat and Merkle have been relatively unscathed.
Business Insider reviewed notes from a person who attended a December 11 town hall for Dentsu media agency employees and an internal document laying out US mergers and rebrands that are set to take place over the next couple of years. Dentsu will tell employees about the changes on December 14 but doesn't plan to announce them publicly, according to the source's notes.
A Dentsu spokeswoman declined to comment.
Read more: Advertising giant Dentsu just announced huge job cuts. Insiders are speculating about how they'll play out and the growing influence of data agency Merkle.
Another person with direct knowledge said Dentsu planned to leverage the Dentsu name and shift emphasis away from agency brands by encouraging executives to use the Dentsu name with clients.
Among the big shifts planned:
- In two of the largest mergers by revenue, media agency Vizeum and Facebook specialty firm MuteSix will fold into performance-based agency iProspect. One former executive said Vizeum's performance has been weak and that absorbing MuteSix would help iProspect cater to direct-to-consumer clients that spend heavily on social media.
- Digital agency 360i, known for its viral 2013 "dunk in the dark" Oreo Super Bowl tweet, will merge its media planning and buying functions with Dentsu X to form a new US-only media brand called Dentsu X Powered by 360i while retaining its own name to do creative work for clients. The shift shows how Dentsu wants to make the most of its agencies' specialties by rebranding them, but it could confuse US clients because Dentsu X isn't as well-known in the US.
- According to the town hall notes, Carat will integrate the digital ad operations and ad tech capabilities of Dentsu X and iProspect and absorb brands including investment platform Amplifi, production company Story Lab, and outdoor ad business Posterscope.
- Dentsu's 13 customer-experience management brands, including agencies like Media Storm, Gyro, and Filter, will merge with Merkle by 2022 in a sign of Merkle's growing importance.
- All Dentsu media agencies will pool their resources into four practice areas, which one source said would let all agencies access these services and avoid infighting over who claims the revenue they generate. The four areas are: investment management handling clients' programmatic and outdoor ad budgets; performance; media effectiveness; and audience insights and research.
- Dentsu also plans to create single-client teams, in line with rivals that have multi-agency teams like Publicis Groupe's Publicis Imagine, which handles the Disney account, the town hall attendee said.
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