Japanese advertising and communications agency Dentsu Inc is scouting the Indian market for acquisitions in the areas of public relations, market research and events, as it seeks to beef up its presence in the country.
The company set shop in India eight years ago through a joint venture with Mr Sandeep Goyal-led Mogae Consultants. Recently, Dentsu acquired the 26 per cent stake held by Mogae and Dentsu India Group became a wholly-owned subsidiary of Dentsu Inc. As Dentsu's India arm transitions from an entrepreneurial entity to a full-fledged communications agency, Dentsu is keen to beef up its presence and offerings in the Indian market.
“For eight years, we have enjoyed good growth in India. But for accelerated growth, we decided to make Dentsu India 100 per cent owned by Dentsu worldwide,” says Mr Yuzuru Kato, Chairman, Dentsu India Group.
Ranking
India is not in the top 10 markets for Dentsu, which is strong in the regions of America, China and Taiwan. According to an independent research agency, Dentsu is ranked number 12 in India, while the global ranking is 5. But Dentsu sees the India business scaling up in the years to come.
“India is in the middle of great economic and infrastructure growth - similar to what Tokyo was 50 years ago. Since then, Tokyo has enjoyed good economic growth. India too will enjoy that kind of growth in the next 50 years. And that means advertising companies have a big opportunity. Dentsu has a big commitment to India. The country will get into our top five markets in 3-5 years, says Mr Kato, who was recently in India to chalk out strategies post stake acquisition.
Dentsu's target is to get more non-Japanese companies into its network. Currently, Dentsu India has 40 clients with a 50:50 split between Japanese and non-Japanese companies. “But we need a strong network and collaboration not only with Japan but also with Indian companies.”
Dentsu India, with revenues of Rs 1,200 crore, has 400 people across its offices in Delhi, Mumbai, Chennai and Bangalore. It is looking to ramp up manpower this year, especially looking for experienced people.
Expand services
The company is also looking to expand its services in the Indian market. Currently, Dentsu India has five divisions offering communications, creative planning, marketing communication, new media and digital services. The company is looking to bring to India more peripheral services available globally such as sports marketing, events and PR in the next couple of years. It is also looking at acquiring Indian companies in the areas of events, research and PR.
“Potential companies have to share the same philosophy of our company – that of good innovation. They will not only cater to the Indian market, but also to clients globally as knowledge sharing across the network is our philosophy.”
Mr Kato says: “Dentsu has 110 years of history and rich know-how in techniques developed in Japan across media planning, buying and creative. We will provide case studies from Japan and the US to the India market and also hold talent development and exchange programmes and seminars in India.
“We are always exchanging know-how from our global network with India as well. But there were certain limitations. With Dentsu India becoming a 100 per cent subsidiary, these boundaries will go away and there will be more knowledge sharing and exchange.”
‘Japanese brands not hit'
The recent tragedy in Japan may have a negative effect on the Japanese economy but the perception of Japanese brands globally will not get affected, says Mr Yuzuru Kato, Chairman, Dentsu India Group.
“Due to the disaster, fish and food supplies from Japan have been disrupted. But the perception of other Japanese brands will not get affected.”
The advertising industry in Japan will face a blip this year, as advertisers curb ad-spends. “For 4-5 days after the earthquake, spot commercials were not broadcast on TV; newspaper ads too were stopped as an expression of solidarity. They are coming back gradually. But still, we expect ad spends to dip this year. There won't be any flashy advertising for sure. All this will have an impact on business in the ad industry.”