The previously announced reorganization of Denstu will eliminate redundancies and reduce agency brands from 160 to six. Denstu was hit hard by the Tokyo Olympics postponement and warns of second straight year of losses. Dentsu Japan revealed a $856 million restructuring program with redundancies and brand consolidations meant to stop the losses.
AdAge reports that Denstu will reduce brands to 160.
The international operations of Dentsu are headquartered in London, and the latest measures will affect 12.5 per cent of its 46,560-strong workforce based outside Japan. Dentsu declined to provide a regional breakdown of the job cuts.
Financial Times reports; "In Japan, where Dentsu controls almost 30 per cent of its domestic market and employs nearly 20,000 people, about 230 staff have applied for early retirement."
Dentsu has struggled to offset the downturn in telivision and print as they haven't adopted digital marketing in its home market enough. The resilience of digital marketing helped soften the blow of advertising spending shrinkage after Covid.
Financial times also reports: "In addition to the pandemic, Dentsu was central to Japan’s efforts to host the Olympics in Tokyo this year — a project that, by some estimates, may end up costing about $30bn and which were postponed when Covid-19 hit earlier this year.
Dentsu executives presented the sponsorship opportunity as a matter of patriotic duty, according to managers at several of the Olympics’ roughly 50 big Japanese sponsors."
Dentsu said it expected a net loss of ¥23.7bn ($227m) for the fiscal year to the end of March, compared with a year earlier loss of ¥80.9bn. Its revenue is expected to fall 11 per cent to ¥928.7bn.