What you need to know: 

• Merkle has cut circa 50 roles from its operations in Australia and New Zealand, taking the tally of redundancies at the Dentsu CX agency so far this year close to 100.
• The redundancies come a month into the tenure of the agency's new boss Kim Douglas, who joined Merkle with over 20 years of CX creds, including exec leadership roles at Capgemini and Sapient. 
• Once hailed by former boss Angela Tangas as the growth engine for Dentsu ANZ, Merkle has had to "review the shape" of its business as clients prioritise short term ROI and "take their foot off the accelerator of change", per Douglas. He said there's also been a focus on de-duplicating roles on account of Merkle's acquisition-led growth strategy.
• Madison and Wall CEO Brian Wieser said Merkle's performance across markets is difficult to compare, but he suggests Dentsu's broader struggles are symptomatic of a difficult global shift to a Japan-led structure. 
• Others suggest Merkle's perceived skew towards systems integrator services in recent years has forced the agency to backtrack and return to its end-to-end digital heritage. 

A further 50 staff have been made redundant at Dentsu's CX unit, Merkle. 

New Merkle boss Kim Douglas is understood to have delivered the news to affected staff last Tuesday. The former Capgemini Invent APAC and Publicis Sapient Asia chief joined as the agency’s ‘practice lead’ in July, reporting into Kirsty Muddle.

Dentsu would not confirm the agency’s remaining headcount, citing global policy, but confirmed it has had to “review the shape” of the business in response to market forces, with a particular emphasis on “reducing duplication” after six years of acquisitions and mergers.

“There is a huge opportunity on the horizon for experience led transformation businesses powered by data and tech across the B2B and B2C sector with investment predicted to increase as the economy stabilises and disruption drives innovation,” said Douglas in a statement.  

“However, in today’s economic climate we’re experiencing clients prioritising short-term ROI as they take their foot off the accelerator of change causing spend and large-scale tech transformations to be delayed or reduced in size.”

The latest cuts bring the tally up to around 100 over the last six months, with circa 40 roles already gone as of April under a sweeping restructuring effort that saw Dentsu reshaped into a single consulting-style model. Merkle’s then-chief executive Steve Yurisich had been among the big names to go, swiftly following predecessor John Riccio's departure from his new role at the helm of the CX unit’s APAC operations.

It's far cry from the growth engine described by Angela Tangas in 2021, off the back of a boom-time for digital transformation driven in no small part by the impact of the Covid pandemic.

“CX is certainly a big growth area for our business – the biggest. And certainly we're focusing a lot of investment for growth there,” the former Dentsu ANZ boss told Mi3 at the time.

Full circle

Beyond the broader economic malaise, Madison and Wall's Brian Wieser, known for his analysis of the major holding companies' financial results and investors calls, said it's difficult to isolate "the performance of Merkle with much precision" – i.e. we can't drill down into how the local CX unit tracks with other markets. 

More broadly though, he said Dentsu's challenges aren't unique to this territory, with the company struggling to find its footing amidst a structural shift to a single Japanese-led global organisation. 

"It’s having an impact everywhere, presumably as a consequence of managerial changes which then leads to other executives experiencing uncertainty around their roles and clients noticing all of this change," Wieser told Mi3. 

Others have speculated that Merkle's maybe changing tack and rethinking a shift towards a systems integrator approach fuelled by acquisitions of three major Salesforce shops by the end of 2022 – Amicus Digital, Davanti and Aware Service.

While Merkle ANZ continued to deliver its services across design, data, AI, e-commerce and tech, parts of the market increasingly saw the agency as a pure-play systems integrator, a move that risked it being pigeon-holed between major global consultancies, and local, lower cost providers.

Against that background, and with clients pulling back from large-scale tech transformation, the cuts may signal the agency’s plans to refocus squarely on its heritage.

“It’s never nice to have to make these decisions, but we must be positioned to deliver what clients are looking for today and into the future,” said Douglas. “Our focus remains unchanged, ensuring we continue to build a strong and fierce reputation as an experience-led transformation business across ANZ for our clients, partners and our people.”

It’s understood the agency will be focused on better leveraging the globally acquired and integrated capabilities of Tag and Extentia. Meanwhile, the agency's B2B unit – Merkle B2B – is unaffected by the cuts. It is transitioning to a group-wide proposition as Dentsu B2B. 

A short but colourful history 

The Merkle brand has a relatively short legacy in the Australian marketing, having only made its debut in the Australia market in 2018, via performance media brand Columbus. But an aggressive acquisition-led growth strategy saw the agency merged and scaled into Dentsu's banner brand for customer experience by 2021.

Amicus, Davanti, DWA and Gyro brands were all rolled into the CX unit in the early stages of Angela Tangas’ consolidation effort, which would see the holding group go from 25 to eight (now five) agency brands during her tenure.  

The same year, Merkle got another headcount boost when Isobar Australia folded. The agency took on the latter’s CX team, made up largely of the earlier WiTH Collective and Accordant acquisitions, while creative unit BWM Dentsu scooped the remaining design team and rebranded to BWM Isobar. 

There’s more to it, but here's a simplified timeline:

• September 2016: Dentsu acquires WiTH Collective, team of 75 CRM and digital experience professionals led by Justin and Dominique Hind.  
• May 2017: Dentsu acquires Accordant, a customer experience and Adobe CRM shop with 100 employees, founded by Steve Knowles and Scott King.
• December 2017: Dentsu acquires DWA, global performance media firm with around 20 heads in its Sydney office.
• March 2018: Merkle lands in Australia via Columbus, Dentsu’s performance media brand then with upwards of 100 performance, experience and data talent. DWA becomes part of the Merkle group.
• August 2018: Dentsu acquires Amicus Digital, a Salesforce specialist with 65 staff led by Blair Cooke and Jessie Mitchell.
• July 2019: Dentsu acquires Davanti, a NZ-based tech consultancy and Salesforce specialist with 125 staff.
• November 2019: WiTH Collective rebrands as Isobar Australia.
• January 2021: Dentsu consolidates CX units, folds Amicus, Davanti, DWA and Gyro into Merkle. Accordant is rolled into Isobar.
• June 2021: Isobar folded, CX team merged into Merkle, design team merged into BWM Dentsu to create BWM Isobar (since merged into Dentsu Creative).
• December 2022: Merkle acquires Aware Services, a Salesforce specialist with 115 staff led by Paul Stewart.