Slimmer model emerging

The holding group is slimming down its operating model, with outdoor once again sitting within client teams throughout Dentsu's three core media agency brands, Carat, Vizeum and Dentsu X.

Industry observers say it's unlikely the Posterscope brand would be dissolved due to global alignments, similar to the changes that occurred last year when Dentsu's independent investment arm Amplifi was reintegrated into the three respective agencies.

While in part due to the loss of several key accounts over the course of the last 18 months, the slimmer operating model is in-line with the global shift to a 'pure' holding group structure.

Last year it was revealed the global network would take on a new structure built around more flexibility and the removal of internal agency walls throughout its entire portfolio of brands.

Taking effect from January this year, brands outside of Japan will still operate under the Dentsu Aegis Network name, with a centralised HQ looking after key regions, including APAC.

"I am confident the restructuring of the international business will deliver the necessary savings and changes to our organisational structure that we need to deliver growth and margin improvement in 2020 and beyond," said Toshihiro Yamamoto, president and CEO, Dentsu Group.

"In January, Dentsu transitioned to a new group structure, bringing the Japan and the International business closer together under the shared understanding of 'one Dentsu'. This structure will create a solid foundation to allow our people to work across markets and across brands, to deliver growth for our clients."

A spokesperson for Dentsu confirmed the changes:

"With regards to Posterscope, I can confirm that in line with our ongoing transition to Dentsu's new business model (Creative, Media and CRM), we have made some organisational changes to Posterscope Australia," they stated.

"This approach will further simplify our business model, optimise our out-of-home capabilities, and enhance client experience by making it easier to do business with Dentsu.

"Posterscope continues to be an important part of our business."

More changes ahead

Mi3 understands current Posterscope ANZ boss Bryan Magee will exit the business following the completion of the reintegration process. Magee had been with Posterscope since 2016, joining from WPP-owned shop Ikon, where he had been chief investment officer.

It remains unclear if there will be major impacts to the Posterscope team, however, it is likely there will be some downsizing in line with the account loses that have come out of the group.

Last year, Tajer said parts of the Dentsu organisation in Australia were "over-engineered" and required more "difficult decisions" to be made throughout the course of 2019, around both structure and people.

These siloed agencies within Dentsu, including Amplifi, were often the object of frustration from media owners and even those inside the company.

Now under the leadership of Tangas, a former iSelect marketer, the business is preparing to enact its latest blueprint which is said to help the market return to growth and provide "much-needed transformation".

The changes will also be watched closely by Dentsu's recently promoted APAC CEO Ashish Bhasin, who was deeply involved in Australia's operations following the ejection of Tajer and ANZ CFO Reg Davidson.

It is understood that this will involve more moves within the holding group locally in a bid to mirror the global plan of becoming a more agile and streamlined business for clients.

Current Financials

• In FY2019, the Dentsu Group delivered total growth of revenue less cost of sales of 3.3% (constant currency basis) and organic growth of -1.0%.
• The international business, Dentsu Aegis Network, delivered 3.5% growth of revenue less cost of sales (constant currency basis) and -1.9% organic growth. The FY2019 performance was adversely affected by continued challenges in some key markets, with Australia being named one of the five.
• In the APAC region (excluding Japan), Dentsu Aegis Network reported -12.3% organic growth in FY2019 and -17.9% in Q4 FY2019.
• Australia continues to be impacted by client losses seen through FY2019. While some of those losses will impact FY2020 results, the market is seeing some stabilization under the new leadership of Angela Tangas.