Dentsu plots international expansion

03 September 2009

TOKYO: Dentsu, the Japanese advertising holding company, is aiming to expand its operations around the world, and is considering making purchases in Asia, Europe and the US in order to achieve this goal.

Earlier this year, the Tokyo-based firm released its medium-term management plan, covering the period to 2013, in which it announced an intention to boost its consumer insight and digital capabilities.

Making further inroads internationally is also the subject of a greater degree of emphasis as the ad market in its home country is expected to suffer a substantial contraction during the economic downturn.

"As Japan's domestic market shrinks and Japanese companies consolidate, a strong network of clients overseas becomes even more important now," Tatsuyoshi Takashima, Dentsu's president/ceo, said.

Dentsu currently derives just 8.7% of its total revenues from outside Japan, but has purchased the US shops mcgarrybowen and Attik in the last two years, and also recently stated an interest in heightening its presence in the UK.

Moreover, Takashima now says that "if there is a chance, we are open to acquisitions not just in the US, but also in Europe and Asia."

"We're not just targeting firms with digital technology, but also firms in other aspects of marketing communications, though we have no specific target yet," he continued.

Although Takashima did not identify the exact amount which had been set aside for potential purchases, he argued an acquisition on the level of Publicis Groupe's $530 million (€373m; £326m) recent takeover of Razorfish was possible.

Dentsu bid against Publicis for the digital agency, which was previously owned by Microsoft, and also owns a 15% share in its French counterpart.

According to Takashima, it will "continue collaborating on projects with Publicis while also looking into growth opportunities of our respective entities, such as in the case of Razorfish. What is important is that one of us got the deal."

He added that his own company has benefited from increased political adspend in the recent Lower House elections in Japan, and predicted the policies set to be implemented by the new government could help stimulate consumer spending.

Similarly, even though there has been a spate of mergers among major advertisers in Japan, such as that between Panasonic and Sanyo – meaning ad budgets may fall – he said billings would still "enter an upward trend from next January" in the country.

Data sourced from Wall Street Journal; additional content by WARC staff