What exactly is happening at dentsu in India?

A sudden slew of top level exits at the network has shocked the advertising fraternity. Is this churn related to consolidation, culture, financial auditing, or a combination of factors?

In 1984, management scholars Donald Hambrick and P Mason published the ‘upper echelons theory’, which stated that organisational outcome depends on the managerial background of its top-level leaders. Loosely put, the people make the place.

Over the last few weeks there has been significant movement in the upper echelons of dentsu International, in India.

In just a matter of days, several senior level executives have moved out of the network; reported names include Gopa Menon (COO, Isobar), Rubeena Singh (CEO, iProspect), Vivek Bhargava (CEO, DAN Performance Group), Shams Jasani (Group MD, South Asia, Isobar), Gautam Mehra (chief data and product officer, APAC, and CEO, DAN Programmatic), Agnello Dias (CCO, Taproot Dentsu), and, Anand Bhadkamkar (CEO, dentsu India, who was formerly CFO).

Update: Few days after this story was first published, Santosh Padhi, co-founder and CCO, Taproot moved out of the dentsu system. Then, Haresh Nayak, president, Posterscope APAC, quit.

Few mid-level executives from less storied departments, like finance for instance, have also quit. Between now and October, more resignations, across department and rungs, are expected.

Between 2020-21 senior executives who moved out of the network include Harjot Singh Narang (GM, Taproot Dentsu and president, Dentsu One), Himanka Das (CEO, Vizeum), Nabendu Bhattacharyya (CEO, Milestone Brandcom), Malvika Mehra (CCO, Dentsu India and creative head, Dentsu India Tomorrow Lab), and Soumitra Karnik (CCO, Dentsu Impact, dentsu India and Happy mcgarrybowen), among others. These movements may be unrelated to the current slew of exits and the reasons for them, but it’s a quick snapshot, nevertheless.

Recently, there have been a couple of high-profile hires at the network as well – few weeks ago Mindshare’s Vinod Thadani joined as chief digital growth officer, dentsu Media Group and CEO, iProspect. Ajay Gahlaut moved from Publicis to dentsu Creative India as group CCO, last week.

What has led to so much churn at the network in India? There are two theories.

Global Order, Local Chaos

Preliminary analysis points to the global management’s desire to consolidate and restructure all its agency brands, to make dentsu 2.0 the ‘most integrated network’ by 2024. In India, the target appears to be 2022-end.

Wendy Clark, global CEO, dentsu International, went on record early this year about her vision to “move from 160 agency brands to six globally” a plan that will bring with it “the loss of 6,000 jobs” including “a quarter of its top 1,000 leaders” (reported by Campaign Asia in its UK editor-in-chief Gideon Spanier’s piece dated February 18, 2021).

The six agency brands the network is looking to consolidate its business within include: Carat, Merkle, dentsu X, iProspect, dentsumcgarrybowen and Isobar. In India, a seventh brand will be around for another year or so – Posterscope, a location-based/outdoor marketing agency.

Could a move designed to infuse order into the network’s global operations be the cause of so much chaos in India? Is the current churn the unfortunate fallout of global consolidation? In part, perhaps.

But if this structural overhaul is taking place across markets, what makes the network’s India ops particularly vulnerable? For one, dentsu has between 25 and 30 CEOs in India.

“No other network has so many CEOS running so many different units. All can’t be scalable and profitable. Besides, it’s easier to consolidate VPs. We can’t have CEOs report to CEOs,” shrugs a former dentsu hand, speaking about the interplay of power dynamics and nomenclature.

There’s another related yet different take. “Future of advertising is not service; it’s tech. For agencies to compete with ad tech/mar tech firms and consultancies, like the Accentures of the world, they need to restructure and consolidate. No major consultancy has 20-30 ‘company brands’ in a single market. So, going forward, networks will have to operate with lesser agency brands,” says an adman turned entrepreneur, who feels the concept of ‘conflicting accounts’, something that birthed ‘second agencies’ and ‘third agencies’ back in the day, is redundant. Because, in the digital era, specialisation is what clients need, goes the argument.

Moreover, dentsu has built its operations in India on the back of aggressive acquisitions over the years, mostly specialist firms with niche expertise. If business is going to collapse into no more than six agency brands, what happens to all its home-grown, entrepreneur-led, India-only agency brands?

“Dentsu has been an ‘entrepreneur company’. Now it is doing vertical integrations like HUL and P&G. With country heads reduced to admin heads, and entire divisions reporting to divisions, the entrepreneurial spirit is hurt,” says an agency head, agreeing with others who feel dentsu didn’t “absorb the founders of the companies it acquired well enough”.

Origins and Acquisitions

Dentsu is a 120-year-old, Japanese-born media and advertising network. In 2012, dentsu acquired the London-headquartered media planning firm Aegis, giving birth to the Dentsu Aegis Network. It was rebranded as dentsu International in 2020, part of an exercise that boiled its services down to three streams – media, creative and CXM.

The network’s India story began in 2003, through a JV with Sandeep Goyal’s Mogae Media; four full-service advertising agencies were part of the mix then – Dentsu Communications, Dentsu Marcom, Dentsu Creative Impact and Dentsu Mediatech. In 2008, Ashish Bhasin ended his 20-year-long stint at Lintas to join Aegis, which in turn became a dentsu company four years down the line. In 2015, Bhasin took over Dentsu Aegis Network's India assets from Rohit Ohri.

Compared to rival networks, dentsu is a relatively late entrant in India, having come here many decades after WPP and Interpublic Group. Quick, broad strokes: In India, major agency brands under WPP, the network with the largest share of business, include Grey, Ogilvy, VMLY&R, Wunderman Thompson and GroupM. Key agency brands under the IPG umbrella include MullenLowe Lintas, FCB, McCann and IPG Mediabrands. Publicis Groupe includes agency brands like Leo Burnett, BBH, L&K Saatchi & Saatchi, and Publicis Media. Omnicom has brands like BBDO, TBWA, DDB Mudra, and OMD in its stable.

Presently, the dentsu network has over 3,200 employees and over 200 clients – including big brands like Mastercard, Intel, Microsoft, Toyota and Maruti – in India. Globally, dentsu is present in over 143 markets and employs over 66,000 people.

Quick recap of some of the shops acquired by dentsu in India over the years:

· Taproot (advertising, 2012)

· Communicate2 (performance/search marketing, 2012; first merged with iProspect to create iProspect Communicate2 and re-branded to iProspect India in 2015)

· Webchutney (digital, 2013)

· Milestone Brandcom (OOH, 2014)

· WATConsult (digital, 2015)

· Fountainhead Entertainment (events/experiential, 2015; merged with dentsu’s experiential marketing arm psLIVE to create Fountainhead MKTG in 2016)

· Perfect Relations (PR, 2016)

· Fractal Ink Design Studio (experiential design, 2016; it was made part of Isobar)

· Happy Creative Services (advertising, 2016; it was made part of the global mcgarrybowen network of agencies)

· Sokrati (mar tech/performance marketing, 2017; acquisition of the Pune-based firm marked the entry of Merkle in India)

· SVG Media (digital media, 2017; it was made part of Columbus, dentsu’s digital marketing brand in APAC then)

· In January this year, dentsu announced the integration of Vizeum into iProspect.

Exhausting list, but far from exhaustive. Some are of the opinion that while dentsu’s premise for acquiring all these specialist shops was on point, it didn’t merge them all well enough. As a senior executive at a rival network puts it, “Synergies were missing.” While the idea was to keep clients within the network for any kind of service they may require, a list of too many agencies, each with its own leadership, was perhaps “frustrating”. The new leadership, she feels, will be tasked with fixing this.

Lending an alternative perspective, Meenakshi Menon, advertising, media and marketing expert who founded media audit firm Spatial Access in 2003 (now a Deloitte company), says, “These exits could also be because a lot of the agencies DAN acquired in India are coming to the end of their three-year earn out period. That could be coinciding with the consolidation related exits. Maybe the tenure of some of these companies has reached a certain life-stage. So it could be related to cleaning up financials.”

Beyond Consolidation

Agency insiders are quick to point out that consolidation-led changes and decisions are not put into action in the middle of the year, especially not at the cusp of the market’s festive season. The ongoing exodus, then, has more to do with two other C’s in the mix, one of them being culture.

There’s no smoke without fire and there’s nothing like wagging tongues to fan that fire. Some agency executives threw my own headline from 2016 back at me when I asked them about the culture at dentsu – Ashish Bhasin had scandalously said back then, “If you can’t handle pressure in the agency business, get out or die young.” Sure, the last 18 months have been incredibly hard for all agency employees, burnout is real, and morale is bound to be down when there’s a slew of senior level movements. But is pressure really the reason for this exodus? Probably not. In fact, many dentsu folk spoke highly of the network’s efforts to take care of its employees while the market was being battered by a health and economic crisis.

What then? Well, there’s a third C that’s being discussed and we’ll resist spelling that one out. The financial books of several agencies at dentsu are being looked into, internally as well as externally, – a special audit by PwC was done, confirm sources – for serious reasons, including major billing related discrepancies and lack of transparency therein. “Per se, there’s nothing wrong with agencies making volume deals with media owners, but the question is – does the client benefit from it?” fumes a former dentsu employee. A MoneyControl report (originally published on September 3, 2021) mentions Fountainhead MKTG in this context. Several sources have named Posterscope and Isobar, among other digital, media and creative agencies from the network, in response to afaqs!’s queries on the subject. Is there a connection between the recent exits and this audit? Possibly.

Many believe dentsu probably didn’t do a thorough job of integrating the books of the agencies it acquired over the years. “Dentsu does have one P&L, but every dentsu agency operates its own ship independently,” said a former dentsu employee. And that’s not surprising; seeing as how so many of dentsu’s agencies are entrepreneurial, autonomy – operational and financial – is something agency heads crave.

Ironically, Bhasin, the network’s APAC CEO and India chairman (photographed in the solo picture at the start of this article), said in my 2016 interview referenced above, “…our 'one P&L' model has started resonating very well with clients… all the agencies within DAN have linked their destinies together…”

But what will become of the destinies of the individuals that comprise the greater whole? For now, they’re in the eye of the perfect storm.