Why Dentsu is in a tearing hurry to scale up in India
Dentsu, Japan's biggest advertising agency, has been looking to expand business outside its slowing
home market. The purchase of a 51 per cent stake in Taproot in India by the company's local subsidiary in end-August was part of that strategy.
Dentsu has been on a roll ever since it gained full control of its India operations after buying out joint-venture partner Sandeep Goyal in January last year. "I came on board in August 2011, and it has been a very exciting time since then," says Rohit Ohri, Executive Chairman, Dentsu India Group. And productive too - he has bagged more than 15 business accounts since then (see Win-Win) with a total budget of about Rs 100 crore.
Dentsu, Japan's biggest advertising agency and the world's fifth-largest, has been looking to expand business outside its slowing home market. The purchase of a 51 per cent stake in Taproot in India by Dentsu's local subsidiary in end-August was part of that strategy and comes within weeks of Dentsu deciding to acquire the UK-based Aegis Group for $4.9 billion. "Our goal is to serve more clients in more places with more capabilities, not just in India, but on a global scale," says Tim Andree, President and CEO, Dentsu Network, an umbrella organisation of the group's agencies outside Japan set up earlier this year. "We have further acquisition plans in India that will complement our current practice."
The group entered India in 2003 through a partnership with Sandeep Goyal, who held a 26 per cent stake. Apart from its Taproot investment, Dentsu has three full-fledged advertising agencies here - Dentsu Marcom, Dentsu Communications, and Dentsu Creative Impact - as well as Dentsu Digital and Dentsu Media. The association with Goyal helped the agency establish a firm footing and gain accounts outside of Dentsu network, such as Aircel, Suzlon and Raymond.
But, clearly, the agency had reached a point where more processes were required. Industry observers say there was a difference between Goyal's style of doing things and the Dentsu way. "No doubt, Sandeep (Goyal) was a very passionate, aggressive salesperson and had excellent personal relationships that made things work, but as a client you want a more stable system, continuity, better processes and collaboration," says a candid Alok Bharadwaj, Senior Vice President, Canon India, who has been a client of Dentsu Marcom for a long time.
Referring to Ohri, he adds, "Now what I see is a CEO who is reasonably good with relationships but, importantly, is addressing the issues of building a stronger organisation." Before Ohri took charge there were murmurs in the market about the agency's inability to hold on to talent and nurture middle-level managers. "It was stressful dealing with a new face from the agency very often," says Bharadwaj.
Ohri, who worked at advertising agency JWT for 21 years before joining Dentsu, assiduously worked at putting together an aggressive team. He understands only too well the power of the communication messages that agencies create.
Even before the Taproot deal, he had been living the popular tagline Taproot created for client Bharti Airtel - Har Ek Friend Zaroori Hota Hai (You need every friend you have).
It helped that Ohri had worked with Taproot co-founder Agnello Dias at JWT. "Dentsu group seemed sincere and genuine about maintaining our independence and letting us grow the way we were," says Dias. Ohri also brought in old associate Soumitra Karnik from JWT as national creative director for the Dentsu group in India. Karnik was behind JWT's acclaimed 'Youngistan' and 'Aamsutra' campaigns for Pepsi and its fruit drink brand Slice, respectively. He also roped in other stalwarts - Arijit Ray as CEO of Dentsu Communications, Glen Ireland as head of Dentsu Digital and Divya Gupta as the chief of its media business. He persuaded Titus Upputuru to rejoin as national creative director at Dentsu Marcom.
Dentsu will derive dual benefits from the Taproot buy. The deal brings into the Dentsu group's fold not only Taproot's immensely creative team of founders Dias and Santosh Padhi, but also the big-ticket accounts such as Bharti Airtel, PepsiCo, Marico, Karbonn Mobiles and Times Group that Taproot held. Taproot, set up only in 2009, had made a major splash in a short time with a host of much-admired campaigns.
However, Ohri has a larger aim of bringing the Dentsu agencies into the mainstream, and creating a stronger identity among mid-level agencies in India.
"Yes, we get the best creative team with this partnership, but we are in the perception business and people have to acknowledge that we speak a language that connects us here," he says. Industry observers feel the Taproot deal gives Dentsu a more 'Indian' identity and removes a lingering view that the Japanese agency works only for select clients.
Is anyone worried about this new aggression? Not really, say industry insiders. They point out that Taproot will continue to function independently, though it will have support from the Dentsu network. Industry players say India's advertising market would have been shaken a bit had Dias and Padhi become creative heads at Dentsu. "The Taproot acquisition appears to be only a financial transaction. I do not see it impacting Dentsu's other three agencies in any direct way," says Prabhakar Mundkur, CEO, Percept/H, a joint venture of Percept and Hukuhodo, Japan's second-largest communication network.
There are expectations the Taproot team will pitch in with inputs for Dentsu's local business as and when required. But it remains to be seen if the deal is a precursor to a total sell-out by Taproot's founders. "Why would they contribute if they know that they need to exit after some time," says a highly placed source. "The challenge for Ohri will be to hold on to the new people." He may well take inspiration from two of his successful taglines - 'Find Better' for Monster.com and 'What makes us Click!' for Canon PowerShot - to realise his goals.
People have to acknowledge that we speak a language that connects us here: Rohit Ohri
| Win-Win Some recent accounts Dentsu has won: DENTSU MARCOM Canon Powershot, DS Group (Chingles, Pass-Pass), Honda Dream Yuga, Honda CB Shine, Monster.com DENTSU COMMUNICATIONS Ingersoll Rand, Manchester United Caf Bar, S. Kumar's World Player, Taj Hotels DENTSU CREATIVE IMPACT Vini Cosmetics, Tetra Pak, Max India, Antara DENTSU DIGITAL Monster.com (social media and mobile), Canon (social media), ITC Foods (Aashirvaad) DENTSU MEDIA Indo-Nissin TAPROOT Airtel, Pepsi |
But, clearly, the agency had reached a point where more processes were required. Industry observers say there was a difference between Goyal's style of doing things and the Dentsu way. "No doubt, Sandeep (Goyal) was a very passionate, aggressive salesperson and had excellent personal relationships that made things work, but as a client you want a more stable system, continuity, better processes and collaboration," says a candid Alok Bharadwaj, Senior Vice President, Canon India, who has been a client of Dentsu Marcom for a long time.
Referring to Ohri, he adds, "Now what I see is a CEO who is reasonably good with relationships but, importantly, is addressing the issues of building a stronger organisation." Before Ohri took charge there were murmurs in the market about the agency's inability to hold on to talent and nurture middle-level managers. "It was stressful dealing with a new face from the agency very often," says Bharadwaj.
Taproot's ads for Pepsi
Even before the Taproot deal, he had been living the popular tagline Taproot created for client Bharti Airtel - Har Ek Friend Zaroori Hota Hai (You need every friend you have).
It helped that Ohri had worked with Taproot co-founder Agnello Dias at JWT. "Dentsu group seemed sincere and genuine about maintaining our independence and letting us grow the way we were," says Dias. Ohri also brought in old associate Soumitra Karnik from JWT as national creative director for the Dentsu group in India. Karnik was behind JWT's acclaimed 'Youngistan' and 'Aamsutra' campaigns for Pepsi and its fruit drink brand Slice, respectively. He also roped in other stalwarts - Arijit Ray as CEO of Dentsu Communications, Glen Ireland as head of Dentsu Digital and Divya Gupta as the chief of its media business. He persuaded Titus Upputuru to rejoin as national creative director at Dentsu Marcom.
Dentsu will derive dual benefits from the Taproot buy. The deal brings into the Dentsu group's fold not only Taproot's immensely creative team of founders Dias and Santosh Padhi, but also the big-ticket accounts such as Bharti Airtel, PepsiCo, Marico, Karbonn Mobiles and Times Group that Taproot held. Taproot, set up only in 2009, had made a major splash in a short time with a host of much-admired campaigns.
However, Ohri has a larger aim of bringing the Dentsu agencies into the mainstream, and creating a stronger identity among mid-level agencies in India.
"Yes, we get the best creative team with this partnership, but we are in the perception business and people have to acknowledge that we speak a language that connects us here," he says. Industry observers feel the Taproot deal gives Dentsu a more 'Indian' identity and removes a lingering view that the Japanese agency works only for select clients.
Taproot's ads for Airtel
There are expectations the Taproot team will pitch in with inputs for Dentsu's local business as and when required. But it remains to be seen if the deal is a precursor to a total sell-out by Taproot's founders. "Why would they contribute if they know that they need to exit after some time," says a highly placed source. "The challenge for Ohri will be to hold on to the new people." He may well take inspiration from two of his successful taglines - 'Find Better' for Monster.com and 'What makes us Click!' for Canon PowerShot - to realise his goals.
| {mosimage} 'Growing outside Japan is not our ultimate goal' Tadashi Ishii, President and CEO, Dentsu Inc, spoke to the Indian media for the first time in an email interview with Shamni Pande. Why has it taken Dentsu so long to expand outside Japan? We don't think it has taken a long time to expand outside our domestic market in Japan. Historically, we have had a large presence in Asia, and our decision to further expand our business outside Japan is driven by our clients' needs for us to deliver high quality services in more geographies. In 2010, we launched Dentsu Network West, followed by the launch of the Dentsu Network in April 2012. It operates in 82 offices in 29 countries around the world. How are you looking at further growing your presence? Growing our presence outside Japan is not our ultimate goal. It is much more important that we contribute to our clients' businesses by providing enhanced quality service in any given market. This will, as a result, grow our presence overseas. There are various measures to improve the quality of services we offer our clients, including the hiring of people with expertise in specific fields as well as conducting M&As [mergers and acquisitions]. How are you addressing the issue of bringing in talent from other cultures and letting it thrive? Japanese companies may be famous for their conservative approach, but that is not always true. Here at Dentsu, we implement certain empowerment procedures so as to speed up our decision-making processes where necessary. In addition, we have non-Japanese senior executives, for example Tim Andree and Rohit Ohri, who are in charge of local management. We are happy to have people on our team who share the same values of entrepreneurship and innovation despite their coming from different cultural backgrounds. That's the key to our success in working effectively as one global team to meet client expectations. |
