Japan-owned denstu is reducing the local business’ P & Ls to create a more unified holding group after years of mergers.
Locally, dentsu reorganised in April for a more simplified model, seeing Fiona Johnston step into CEO of client and commercial Australia, Kirsty Muddle leading product and practices across both Australia and NZ, and dentsu Aotearoa CEO Robert Harvey completing the lineup.
The trio report to Patricio De Matteis who remains at the group’s helm.
Despite prior Johnston looking after media client relationships as the 2iC to Danny Bass and Muddle assuming creative, the current roles are not separated by traditional agency silos; rather Muddle is focused on the craft teams, with all agency brands reporting in to her, while Johnston manages client relationships for an "agnostic" way of bringing teams together.
This was established to better organise the group’s offerings and adhere to today's more complex client needs - something the Group has been seeking out for years.
Dentsu, more than any other holding group in the country, according to Johnston, has merged and acquired more people than anyone else through its Australian history.
“The reality of the business before any of our time, even back in (Harold) Mitchell’s days, is dealing with the impact of acquiring a large amount of businesses and people,” Johnson told AdNews.
“That's also the challenge, because how do you put that together in a way that makes sense?”
Over the years dentsu has acquired BWM, With Collective, Amicus Digital, Soap Creative, Aware Services and most recently production powerhouse Tag.
Johnston rejected the notion that the structural changes were designed to slim down the business: “I think we’ve looked at the business to make it more agnostic and boundaryless."
Depending on the client brief, dentsu can then pitch as a holding group which could see client work be spread across Carat, iProspect, dentsu X or Dentsu Creative depending on best fit.
But this does not remove the commercial realities yet, as the Group has not currently formed one country P & L.
Currently there are still internal discussions on where revenue sits between agencies.
But this new structure is a step forward, as the very nature of going from multiple CEOs to two has already led to less silos.
“Anything that gets in the way of having a single minded solution, would be managed by the business,” Johnston said.
“I'm very confident that if Kirsty or I need to do something in a certain way the business will support that.”
Kirsty Muddle, Fiona Johnston and Patricio De Matteis.
The changes are also leading to a better local reputation, under De Matteis, Muddle and Johnston’s leadership.
Johnston acknowledged that the interest in dentsu is not always positive, “quite often we’re the ones to bash,” adding that while it is annoying, the business is focused on more important matters.
“I’m more concerned about whether our people like us and keeping our clients happy,” she said.
Locally the business has accumulated losses of $563.5 million, with its parent company in Japan paying off the debts.
Johnston believes that these losses were also a result of years and years of mergers but the business isn’t worried as the future looks brighter with this better structure.
Last week dentsu posted a 0.2% organic revenue growth in the June quarter, reporting a higher client pitch win rate.
Johnston is hopeful the industry will start to recognise the team as “well intentioned, honest and authentic about what we are creating, with a very human vision on the future".
Dentsu also plans to be louder in the market by highlighting the Group’s achievements such as its long client tenure. For example, Woolworths and Endeavour Group has been an over 20 year relationship and Medibank over a decade.
“I say to our clients and our team, we're great at marriage, but we're not very good at first dates,” Johnston said.
“We need to get better at first dating because we want to continue to grow our business.”
Giving clients less, not more
The new structure aims to make the business fluid so that it can mirror a client entity when needed and simplify client offerings depending on needs.
“This is not about giving clients more stuff. It’s about ensuring that we are set up so our solutions can be as seamless as possible which is the right thing to do for our clients and our people,” Johnston said.
“If a client needs a bit more CX, media or creative, Kirsty and I can shape shift accordingly, pulling together the right people and capability based on what the client needs.”
Which sounds obvious, Johnston said, but sometimes it's not.
Sometimes agency networks try to do too much for the clients, aiming to be a one stop shop for everything.
But clients don't really want a one stop shop for everything.
“Conflict of interest is one reason, clients want to keep different entities separate for certain reasons as well - some clients have their marketing team acting very separate,” Johnston said.
“Our model is about encouraging and supporting, and championing, our client teams and all of our teams to really listen to what a client needs or what they don't need.”
This fluidity is necessary because the only common factor for a client is change.
“Clients have always been dealing with multiple changes - changes are the only constant,” Johnston said.
“I have never known this industry to not be in change. So if anything we create more friction by trying to make it not change rather than going it's always going to be that kind of fluid piece.”
All businesses globally are facing the same problem - uncertainty.
“We're in multiple states of issues around the world, sort of a perfect storm of social, political, health and other things that contribute to a very fear based environment around the world right now,” Johnston said.
“Fear combined with constant change in our industry and digitization of all the things means that the ground is always moving under your feet.
“So when the ground is always going to be shifting for us, it's really important to have a firm and flexible approach to client models, client ways of working and parallel planning, marketing.
“We have to be nimble, we should be making our clients' lives easier and more fun.
“I don't think this is about being everything to everybody. It's about being open minded and agnostic to what the client problem could be or should be.”
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