In its second-quarter earnings statement, Dentsu’s CEO Hiroshi Igarashi declared his intent to find a buyer for all the holdco’s assets outside of Japan, which is its own fiefdom and has always been kept separate from the rest of Dentsu. Hiring Morgan Stanley and Nomura Securities, it translates to putting the former holdco Aegis holdings up for sale. Igarashi-san told analysts on Dentsu’s latest earnings call that “[the] international business continues to face negative growth across all regions, resulting in a challenging overall performance.”  

What are the strengths and weaknesses of these holdings? Who are the potential buyers? And what does that do to the power balance among the holdcos? We’ll try to offer some insights if not answers (since no one yet knows what will ensue). 

What’s for sale and what value does it have?

While WPP’s woes, Publicis’ growth, Havas’ public spinoff from parent Vivendi and the IPG-Omnicom merger have each hogged headlines, Dentsu’s underperforming international businesses have flown under the radar in recent years. Along the way, they picked up businesses that have value in today’s marketplace, namely Merkle, which Dentsu bought back in 2018. And regionally, some of Dentsu’s media agencies have performed well, including Carat and iProspect (less so Dentsu X, which just lost its U.S. CEO Leah Meranus to Publicis). 

But the holdco has endured a series of restructuring schemes that started in 2019 and are still ongoing today (the most recent phase included a 8% global headcount cut); cultural initiatives designed to export Japanese corporate sensibilities and vocabulary to its global offices; and a series of major acquisitions, including the takeover of Merkle. 

The company has had to weather constant internal tensions between the poles of Manhattan and Tokyo. U.S. leaders perennially (and mostly privately) complained that decision-making power was concentrated on the other side of the globe. When international CEO Wendy Clark abruptly left the business in 2022, it seemed confirmation that Igarashi’s patience was running thin; ever since there’s been a veritable conga line of leaders that have come and gone, including Clark’s replacement Michael Komasinski. 

“The idea of ‘One Dentsu in Japan coming together with the network, it wasn’t ever real,” acknowledged a Dentsu insider. “They never wanted the two businesses to be together. If they did, they would have made the APAC region inclusive of Japan.” 

Most analysts Digiday spoke with agree the holdings on the block will likely be sold in entirety rather than in pieces, mainly because the media assets, including the tech stack, have more value to a suitor. “Dentsu’s tech stack, it definitely matches and Merkle is as good technically as any of the holdcos,” said Ryan Kangisser, chief strategy officer at MediaSense. “But in terms of their operating systems and investment in tech, it’s not at the same level of the others.”

“Dentsu’s media business is a strong media player in the marketplace — it’s well portfolio’d,” agreed Jay Pattisall, vp and senior agency analyst at Forrester. “The gem of it is its media activation technology that leverages Merkle’s Mercury platform.”

So who might be a buyer? 

Speaking to a number of analysts, potential suitors include Havas, Accenture, WPP and, crazily enough, even Meta — which it’s no secret is trying its best to get advertisers to circumvent agencies and spend directly within its platform. (Google’s not far off from its intentions, but is unlikely to make a move for a holding company when it’s still fighting off governmental legal cases.) 

“Imagine Meta being able to offer Meta data across Whatsapp and Facebook and Instagram … that could be their version of Epsilon, and much stronger, because it isn’t second party or third party data, it’s first party data,” said Ruben Schreurs, group CEO at Ebiquity. He also noted that, even though private equity is circling a lot of agencies and agency groups like sharks around a sunken ship, it’s unlikely PE would swoop in here, given that these are parts rather than a complete asset.

Among holdcos and marketing services firms that are potential buyers, Havas tops the list. For one, Yannick Bolloré has been vocal about being acquisitive — and for another, the move would give it a much stronger European and North American foothold, if it wants to really compete with WPP, Publicis and a merged Omnicom/IPG. 

But Accenture as a buyer makes a lot of sense to Ebiquity’s Schreurs. “Very little of [Accenture Song] is media, so they are not winning these like integrated accounts like Mars,” he said. “They’re not considered because their lack in terms of media activation capability worldwide. They’re great on strategy and transformation and production, and now with AI, they have a really strong positioning there, but the media activation part is the piece that’s missing.” 

Stagwell, Horizon Media and others have all been suggested as possible buyers, with Merkle as the carrot at the end of the stick. But to Brian Wieser, longtime media analyst, maybe no one is the right buyer. “There’s so many possibilities, and none of them are also possibilities, meaning it could be that no one wants to buy at the price that Dentsu wants,” said Wieser. “Can you make a case for any of a dozen different possible acquirers or scenarios? Sure, but there’s no one scenario that seems more likely than any other.”

The balance of power

In the end, Dentsu’s intent to sell could upset the hierarchy of holdcos as it currently stands — current king of the hill Publicis, soon-to-be-biggest OmniPublic, recovering WPP. They all could face greater competition if any of the above scenarios comes to pass. 

Color by numbers

Marketers have a never-ending fascination with and desire to reach Gen Z, and increasingly, Gen Alpha, in hopes of winning their attention and loyalty. Video ad-tech platform PreciseTV conducts an annual report on the cohort, dubbed PARTY — Precise Advertiser Report: Teens & Youth — to figure out how teens 13-17 (with input from their parents) consume content, engage with ads and now increasingly use AI tools. Here’s what it found: 

• 69% of U.S. teens use AI platforms, with ChatGPT being the most used, followed by Google Gemini;
• 91% of teens watch YouTube, the most popular platform among all formats — that’s an 18% lift over 2024;
• 67% of parents and 38% of teens recall seeing their last purchase-driving ad on YouTube.

Takeoff & landing

• In what was a relatively quiet week in account moves before the Labor Day long weekend, VaynerMedia consolidated media AOR duties for tax consultancy H&R Block, from social media and creative.
• In what represents the end of the upfront marketplace, Amazon last week said it wrapped its upfront sales, saying it exceeded its expectations (but offering no numbers to support that sentiment).
• Personnel moves: Dentsu named Kyla Jeffers as its first-ever chief growth officer for North America, coming over from WPP where she was evp of global growth and marketing in charge of the Coca-Cola account … Noble People hired Ben Hurst to be its president, coming over from online betting firm Evoke, where he was vp of strategy and operations … Brainlabs hired former Monks head of performance media Adam Edwards as chief product officer. 

Direct quote

“An under-discussed topic in this business is, when you’re leveraging all this data and doing all this stuff, how much are you adding to the price — to the point where the payout isn’t proportionally related to the increase to what you would have done at a lower cost? … What often gets talked about in the industry is, better targeting is better universally. Theoretically that’s right. But at what cost? The cost is a part of that equation, right? It can’t be dismissed wholly. That’s where we need to [find] balance.”

— Swapnil Patel, co-president of Attention Arc, the newly merged media agency that’s part of Cheil Agency Network. 

Speed reading

• After first uncovering Amazon’s move to sit out of buying through Google Shopping for a month, Sam Bradley was the first to report its return, and how that’s thrown a bit of a wrench into performance marketers’ plans. 
• Sam Bradley also secured a Confessions from an independent creative agency exec on how an over reliance on generative AI by the agency’s founder put the shop out of business. 
• I joined colleagues Seb Joseph and co-hosts Kimeko McCoy and Tim Peterson on the Digiday podcast to discuss how generative AI is impacting the agency world, for better or worse.