With big client wins, strategic acquisitions and billings for 2015 touching Rs 3500 crore already, Ashish Bhasin, Chairman & CEO South Asia of Dentsu Aegis Network, has not only turned around the fortunes of the agency that was in sad shape earlier, but set his heart on being No. 2 in India by 2017.
BY ALIEFYA VAHANVATY
Loss of large clients, challenges in holding on to leadership teams, a staff strength of under 50 people, management decisions that led to a divorce with partner Percept Holdings and delay in investing in domains like digital and direct... This was the dismal state of affairs at Aegis Media (as it was before the Dentsu take-over) even in 2011.
Fast forward to 2012. On the global stage, Japan’s Dentsu stunned the advertising world with a £3.2bn cash deal to buy UK media group Aegis. That deal, finally completed in March 2013, created an international marketing services giant Dentsu Aegis Network (DAN) that is today posing a very real challenge to the dominance of market leaders. The deal shook up the established global advertising hierarchy by creating the fifth biggest player, with £3.8bn in revenues and more than £600m in profits, providing a new rival to WPP, France’s Publicis Groupe and US giants Omnicom and IPG.
Closer home, in India, the new chapter of DAN focused on two things: a client-centric approach and increasing their bouquet of services to become a one-stop shop for clients across domains. DAN India today aspires to become the second largest agency group by end 2017, overturning for the first time the existing ranking which has historically been in place for over 80 years in the country.
CHANGE OF GUARD
The man behind the ailing Aegis Media was its Chairman India and CEO South East Asia, Ashish Bhasin. In 2012, after the merger with Dentsu, the group consolidated its India operations under Ashish Bhasin as DAN’s chairman and chief executive for South Asia and Rohit Ohri as Executive Chairman Dentsu India and CEO, Dentsu Asia Pacific (South). Since June 2015, when Ohri exited to start a new innings with FCB Ulka, Bhasin took over administering the entire agency.
“When I took over at Aegis Media in 2008, there weren’t too many operations. There were only 40-45 people and it was a loss-making company. But today, it is a completely different group - we have more than 2,000 people and best in class in every one of the services represented here,” says Bhasin.
His enthusiasm is hardly surprising, given the marquee clients the agency has bagged in 2015 alone. In April, Maruti Suzuki India Ltd decided to align the company’s entire portfolio of mass segment brands as well as commercial segment brands with Dentsu. So did Mondelez recently at the global level as well as in India. Airtel, Honda Motorcycles, Toyota, Canon, Nikon, Unicharm, TVS, Aditya Birla Group, General Motors, Philips, Panasonic are some of the others that make up DAN’s impressive client portfolio.Billings for 2015 are in the vicinity of Rs3500 crore, according to Bhasin.
Bhasin isn’t known as the turnaround man in the industry for nothing. By his own admission, he spends less time on post mortems and more on planning with a sharp focus on the future. To his credit, he played a similar role in reversing the downward spiral at his previous stints with SSC&B Lintas, Initiative Media and Lintas Madras. For DAN India to aspire to be a contender for the runner-up position to WPP’s GroupM in a short span of three years is impressive indeed, and a lot of it is undoubtedly Bhasin’s handiwork.
For the last two years, DAN has been the fastest growing agency group in India, growing in scale and significance, and growing from one business (Carat) to 12 or 13 different businesses. Bhasin today skilfully negotiates the dual challenge of running India and South Asia and has ensured that India is seen as a case study within the group as well as the larger industry, as an example of a dramatic turnaround.
DAN has an inherent “last-mover advantage” in the sense that it is the first agency network to have been created in the digital era and, therefore, has less of a legacy burden, both in terms of mindsets and organizational structure. This aspect has played a very large role in amalgamating the cultures of a 114-year-old Japanese advertising group with that of its nimble and digitally-ruled UK partner, with the end result being the hungry and innovative company that DAN is today. “When you’re born in a digital age, you’re a different network. If you look at DAN in India today, out of the 2,000 strong workforce, almost 700-750 people are in Digital alone. That is disproportionate. The country average is probably 8-9%, but we have over invested in that because we know that is the future. Today, Dentsu Aegis in India gets about 35% of its revenues from Digital and we have got four digital companies – iProspect, Isobar, Dentsu Webchutney, and WATConsult. The others who have got 100 years of legacy, have already got side structures and people who only know how to produce 30-second TVCs. We have that advantage so why not take full advantage of it?” comments Bhasin.
Both on the Dentsu and Aegis sides, there was a great amount of complementarity. That’s the reason why this has been the most successful merger in the history of advertising, say experts. “I think the reason something works or doesn’t work out is the chemistry. There’s nothing to do with finances or whatever. Dentsu had the values that the former Aegis Media had and they were very, very complimentary.
We evolved a new set of values which actually didn’t need too much of change and incorporated the best of both companies. That’s the culture you see today at Dentsu,” Bhasin says. “Because of the way it was handled and the way we were able to communicate both within the organization and outside it to all our clients, businesses benefited and all our staff and employees benefited. So it’s actually worked out very well and this is the new culture.
Everybody is a part of it. On the one hand, nobody has noticed the change and on the other hand, everything has changed,” he states.
THE MAGIC FORMULA
DAN has a unique operating model designed for marketing convergence and globalization, the major driving forces of the advertising world. This operating model is enabled by a one-P&L-per-country structure, unique in the industry, which empowers Dentsu to offer specialist and integrated services to clients at a local level, supported by a regional and global infrastructure.
“What this really means is that, to our client, whether Digital is apt or TV or Print is apt, we have one P&L per country. Nobody in the organization has an agenda to sell any particular agency or any particular service. Whatever is best for the brand is all that we offer. Here, we have a distinct advantage particularly over our legacy competitors who are caught up in silos. We are able to deliver the best of specializations without the hassles of internal competition and that has worked very well for us at the agency level,” says Bhasin. Another important aspect of the DAN way is fluidity. Dentsu puts the client/brand need at the centre and arranges the network around it; so the network is fluid, it can be full service, specialist, a combination of specialist and partial full service. Depending on what the client, brand, consumer or market needs, the agency delivers, and that is the fundamental difference in the way DAN actually works versus its competitors, explain industry insiders.
However, finally it was integration internally at the team level that worked magic for Dentsu. “I think the biggest thing that helped the agency early on was that we built the best team in the country. One of the decisions I took earlier on was that I would put together one of the best management teams and let the company grow into the team rather than hire a team for what the company was. In any case, at that stage around 2011, we wouldn’t have been able to attract great talent. In hindsight, that strategy worked brilliantly well,” states Bhasin.
When asked about the advantages that the partnership with Aegis brought to the table, Bhasin pointed to the talent liquidity which essentially means that whatever is best required and suited for a brand, including key people and resources from across the network, can be engaged. For example, if it is a Dentsu Communications account, but if Digital is very important or performance marketing is very important to that client’s strategy and objective, the group easily pulls in say, iProspect, and includes people or resources from there as a part of the account team around that project or around that assignment.
Secondly, because of the culture of integration nobody has an agenda, Bhasin explains. Everybody is working towards that one common P&L and therefore, the client gets what is best for his or her brand and not what somebody from a particular agency or service is trying to push.
Thirdly, DAN does not work in silos. “There is an unquantifiable, huge benefit of team work coming together and creating magic. So it’s literally 1+1 is becoming 21. It’s hard for me to define and describe but on ground we see it in action every single day. Our OOH team has a client and finds an opportunity in that client and all of a sudden we’re already doing Digital for the client. Before you know it, we’re offering creative services and communication. So there’s that magic in the team which has been fostered from day one. These are the three biggest benefits of becoming DAN,” Bhasin states.
According to media reports, DAN in 2015 is the fifth-biggest agency in the world by revenue, and looks fairly certain to overtake IPG, the No.4, at some point soon. A critical element of its success is its acquisitions. “Part of our strategy - this is true from the Aegis Media side as well as the Dentsu side - is that acquisitions are an integral part of our strategy. We only go into acquisitions for strategic reasons. It has to be something that will add skill to our business. We don’t do acquisitions just for the sake of topline or bottomline profitability. It has got to have a strategic fit and in every case, we’ve tried to ensure we did the optimum for both sides,” insists Bhasin. Dentsu has also been merging media and creative agencies to come up with something that looks like the old full-service model. In India too, DAN has been on an acquisition spree. “We have been very lucky in the last few years to have had the best acquisitions in the country and therefore we have an edge over our competitors. Just to name a few, we have acquired Taproot Dentsu, Dentsu Webchutney, iProspect, Milestone Brandcomm, WATConsult and of course, the most recent one, Fountainhead. We have had a very good run on acquisitions and it will continue to be a part of our strategy going forward,” says Bhasin.
The creative agencies within the group are Dentsu-branded because many of them have clients which are clients of Dentsu Inc in Japan. Taproot is now Taproot Dentsu to maintain consistency within the group and Webchutney has been renamed Dentsu Webchutney.
The acquisition of Taproot in 2012 was a game-changer for Dentsu. “Taproot has always been synonymous with the highest quality of creative services in the industry, not just in India but also in APAC. Until recently, it was just Taproot but now we have rebranded it as Taproot Dentsu. This has helped raised the entire level of the creative product from the agency. The agency still retains its independence, but it is also now more closely and fully integrated within DAN. Having people like Aggie and Paddy is a huge asset not just for Taproot but across DAN. Sometimes creative people want to talk to creative people. They don’t want to talk to me. So I think that role is a hugely important one which Taproot has fulfilled beautifully,” says Bhasin.
Milestone Brandcom is another acquisition which has helped Dentsu not only maintain leadership position in OOH but also dominance. “We have about 33-35% market-share in the organized sector in OOH in India. What this acquisition gave us is scale and clout. And this is true across the network. While the front ends of all businesses are separate, wherever possible at the backend we try and negotiate together. So our clients get the benefit of volume and scale. The volume that Dentsu Aegis Network has on Outdoor, is at least twice that of our closest competitor,” Bhasin adds.
Digital is growing fast but within that social media is growing the fastest. “With the WATConsult acquisition earlier this year, Dentsu added to its fold 160-180 professionals who are the best in the business, and that is now helping the entire group,” Bhasin says. As an example, Bhasin cites Mother Dairy, which was a legacy client of WATConsult before acquisition.
“When rumours floated around in June this year alleging that samples from the milk company were found to be contaminated, the way the response was handled by the company and WATConsult made all the difference. There was an immediate clarification issued by senior people from the company and the public at large was reassured. Good and timely communication averted the rumour from snowballing into a disaster. WATConsult brings that agility for us in social media,” explains Bhasin.
Talent is the one challenge within the industry that DAN is addressing aggressively. “We’re an industry short of talent. All of us know it and all of us crib about it but none of us do anything about it. I think growing and grooming the right talent is imperative if our business is to sustain and grow,” states Bhasin. So DAN has started with Outdoor, and is in the process of developing a PG curriculum for Outdoor that’s going to be rolled out from the next academic year in partnership with Northpoint University. The entire curriculum has been developed by DAN and its team will also be teaching there, along with other guest lecturers from the industry and experts from outside. There will also be field training involved.
The whole idea is, at the end of that course there will be graduates with proper knowledge of the Outdoor industry and the industry starts getting professional as a whole. “It’s a zero sum game all agencies are playing right now. If I offer a prospective employee Rs 100, someone else will offer the same guy Rs 120. We’re not going for talent. We are just outsourcing the same poor quality talent and just out-pricing it and actually making the whole thing worse,” laments Bhasin.
“This is a hard-nosed, resilient business. We have to keep moving it forward. It is a huge problem in India and in the industry and unfortunately everyone’s focus is on how to poach somebody from somewhere. Nobody’s focus is on how to grow the universe of talent available. We want to make some difference there,” he adds.