Japan-based global advertising company Dentsu Group is planning for a “slow” recovery from COVID-19 in the second half of this year and a “gentle” lift in business next year.
The company made a profit for the first half to June after slashing costs to meet a revenue drop caused by the economic fallout from the pandemic.
Organic revenue for the six months to June was down 8.9% but underlying operating profit was up by 14.6% to 52.7 billion yen.
Dentsu is tracking ahead of a targeted 7% cut in costs in response to COVID-19.
The company, like other holding groups, is driving business to digital, looking for “sustainable, less cyclical” revenue growth.
In a briefing to analysts post the profit announcement, Dentsu said: “We are planning for a slow recovery scenario in the second half of this year, as we refocus the business and opportunities within CRM, digital media and digital solutions, supporting our clients through Integrated Growth Solutions.”
And: "We continue to plan on the basis that the downturn will continue, but at a reduced rate with a gentle recovery next year."
Dentsu is reviewing its business to focus on long-term "structural growth opportunities" while shrinking operating expenses.
CEO Toshihiro Yamamoto says major transformations, like many of the greatest leaps in business and technology, take place in bursts during a short period of time, driven by pivotal events.
“And we are now at such a turning point,” he says, according to a translation from Japanese.
“In this time of change, we help our clients to fast track business critical transformations through end-to-end commerce solutions that integrate true digital transformation, technology services, data analytics, MarTech, creative consumer experience and media content.
“This true digital transformation will drive growth for our clients.”
Dentsu’s digital revenue reached 52.7% in the first half, with Japan at 32.2% and the international side, DAN, at 68.5%.
“This is the first quarter in which this ratio reached over 50%, supported by our fast growth areas such as digital solutions,” Yamamoto says.
“Through offering integrated solutions that include digital, we can solve bigger problems our clients are facing, and bridge the online and offline customer experience.
“Through our powerful alliances with technology software companies, we can deliver true integration in marketing with data-driven creativity that communicates at the individual level, while driving results at scale.”
As part of a restructure, Dentsu is creating four regional hubs in Tokyo, New York, London, and Singapore with 12 key priority markets.
"Through connecting and integrating our own capabilities within the group, we can deliver holistic solutions that serve our clients to drive their top-line," Yamamoto says.
"These solutions will connect our capabilities in creative, media and consumer insights by leveraging our experience in data and analytics, implementing MarTech solutions to deliver digital transformation for our clients.
"Our global presence enables us to drive transformation relevant to each local market. What drives our differentiation versus our new competitor set is our innovation, creativity and rich consumer insights in solving these problems."
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