Dentsu Aegis Network posts first-quarter revenue declines
Dentsu Group, parent of Dentsu Aegis Network, posted its first-quarter earnings report on Wednesday morning after initially delaying the release of its results due to the coronavirus pandemic.
For the first quarter, Dentsu Aegis Network posted a total revenue decline of 2.6 percent and an organic revenue decrease of 3.3 percent, blaming "weakness across APAC."
The larger Dentsu Group, which posted a total revenue slip of 0.4 percent and an organic revenue decline of 0.8 percent for the first quarter, also pulled its 2020 earnings forecast "due to the level of uncertainty related to the impact from COVID-19."
Dentsu Aegis Network in the Americas reported organic growth of 1.2 percent for the first quarter, and in the U.S. alone, organic revenue was up 2.2 percent. In EMEA in the first quarter, organic revenue fell 0.4 percent, and in the APAC region which was hit hard by the pandemic, organic revenue was down 19.5 percent.
The group said the strong performance in the Americas was driven by its CRM business and M1, its people-based identity and data platform.
Dentsu President and CEO Toshihiro Yamamoto warned of further revenue declines in a statement.
"COVID-19 is causing a slowing in demand across our industry, and we are not immune," Yamamoto said. "This has put pressure on our performance in Japan and the International business. We are therefore anticipating a material decline in revenues across our business in [full year] 2020."
Dentsu said it has "taken a number of cost actions in the first quarter to mitigate the impact of the expected revenue decline" and is "targeting a 7 percent cost reduction" across the company.
Earlier this month, Dentsu Aegis Network merged its Mcgarrybowen and Dentsu brand shops into one agency called Dentsumcgarrybowen. The agency is part of a line of business comprised of creative, content, design and experience shops outside Japan and also includes Isobar, John Brown and Dentsu PR firms such as Mitchell.
The consolidation is a further step in the holding company's push toward becoming "One Dentsu"—a strategy that has been led by Tim Andree, executive chairman of Dentsu Aegis Network, and is similar to Publicis Groupe's "Power of One." That strategy saw the creation of three lines of businesses last year: creative, customer relationship management and media. Within creative is now Dentsumcgarrybowen and Isobar; within CRM is Merkle and 360i; and within media is Carat and iProspect.
The consolidation followed last month's announcement that Wendy Clark, former DDB Worldwide global CEO, would be joining in the new role of global CEO of Dentsu Aegis Network. That same month, Dentsu Aegis Network carried out furloughs, staff cuts and salary reductions across the holding company and its agencies.