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Japanese advertising giant Dentsu has reported a challenging 2023, with a slight revenue increase of just 0.7%. However, organic revenue declined by 6.6% in Q4 and 4.9% for the entire year, placing it significantly behind its competitors in the advertising industry. The company anticipates only 1% organic growth in 2024.
Dentsu attributed these disappointing results to delays in “large transformational projects,” which made up 32% of its revenue, although the company had aimed for 50%.
In addition to these financial struggles, the company announced the departure of its global CFO, who had served for 20 years. This is part of a broader trend of non-Japanese executives leaving as Dentsu centralizes its operations in Japan.
Global CEO Hiroshi Igarashi commented on the outlook for 2024, noting that while some challenges are expected to ease, the company’s performance is likely to be stronger in the second half of the year. He emphasized the importance of continuing to execute strategic objectives to return the company to growth.
As part of its strategy, Dentsu is implementing the “One Dentsu” initiative, which aims to create a client-centric, efficient organization by removing internal silos, simplifying practice areas, and aligning profit and loss structures to better serve clients. The company also plans to drive profitability through its existing core business assets.
Dentsu International, once led by former DDB executive Wendy Clark, has effectively been dissolved. There are concerns about whether Japan-based One Dentsu can maintain a strong presence in the US and Europe. It may be more practical for the company to focus on Japan and the still-growing APAC region in the long term.