The investment follows organic growth from the agency network for the year of 13.1%
In its ambition to see half of its revenue delivered by digital transformation and technological services, Japanese agency network Dentsu has announced its intent to spend up to $2.6 billion on investment activity over the next three years.
The group, which owns advertising services agencies including McGarryBowen, Carat and Isobar, reported organic growth for the last year of 13.1%, while its operating profit increased year over year to $1.55 billion (179,028 million Japanese Yen).
Organic growth at the Dentsu Japan Network was 17.9% while Dentsu International recorded 9.7%, with the significant rebound in performance due to both the recovery in media and client spend around digital transformation projects.
By country, the Americas saw organic growth of 10.6%, while EMEA recorded 11.1% and APAC 4.7% growth.
As a result of these strong numbers, Hiroshi Igarashi, president and CEO of Dentsu Group Inc., said that the business aimed to deliver organic growth of 4-5% over between 2022–2024, an increase from the previous target by 1%. This would come largely from the structural growth area of customer transformation and technology, where the company sees “a long period of investment” from clients who aim to better understand customer behaviors.
“The greatest opportunity for brands today, as they build strategies for re-emergence from the Covid-19- driven recession, is customer experience transformation. This is the transformation of a company into a market leader through the implementation of a customer-centered strategy and infrastructure,” he continued, revealing that the company had created an investment fund of between $2.17 billion–$2.61 billion (250-300 billion Japanese Yen) for the coming three years.
“This acquisition fund will be spent growing our exposure to customer transformation and technology—our aim is to reach 50% of our revenue from [this sector] over time. This reflects our vision of where the future growth in the industry lies: data, technology integrated with creativity and innovation to deliver top-line growth for our clients,” he added.
Meanwhile, Wendy Clark, global CEO of Dentsu International described 2021 as “a defining year” for the business following the restoration of growth across each of its regions, taking it one year ahead of plan.
“This performance is testament to the talent, focus and resilience of our people who delivered our topline growth through more than 4,000 new business wins and expanded assignments with our largest clients. Today, 83 of our top 100 clients are now working with us across two or more service lines. At the same time our transformation and cost restructuring efforts have delivered a 30% YOY improvement in our underlying profit,” she added.
Rival network Publicis has already revealed that it plans to spend between $450-680 million this year as it aims to strengthen its data and tech capabilities.
