Dentsu's New Year's Resolution: Buy PR Agencies
Over the past few years Dentsu has concentrated on acquiring creative-, digital- and most recently, with its massive merger with Aegis, media-agency assets. But now it's turned its sights to the public-relations space with the acquisition of independent PR shop Mitchell Communications Group.
"Our clients have been asking for PR and strategic communications and capabilities and we haven't been able to provide it," said Tim Andree, who serves as senior VP of Dentsu Inc. and president-CEO of the Dentsu Network. In recent years, he's led the rapid expansion of the Dentsu network in regions outside of Asia with the purchase of shops such as McGarryBowen, 360i and Firstborn. He also has been working on exporting those brands outside of the U.S. to handle more global client work and was a major driver of one of the biggest deals adland has seen in recent times, the merger of Aegis and Dentsu.
"The clients have been driving what we invest in ... PR is another area where we're going to have to provide a global capability," Mr. Andree told Ad Age .
Until now, Dentsu America has had a small, embedded communications capability and very little PR expertise. Adding to it will help the company compete against competitors such as Omnicom Group and Interpublic Group of Cos. in presenting integrated-marketing solutions to clients in pitch scenarios.
To be sure, the company is wading into PR gently. This is a relatively small deal with a small agency -- the Arkansas-based firm has 75 employees and generated just over $13 million in revenue in 2012. But CEO and founder Elise Mitchell, who Mr. Andree met for the first time last June, will now be responsible for helping identify other potential deals.
Though small, the 18-year-old PR shop has consistently come up as one of the most-coveted during acquisitions talks. It touts some of the world's biggest brands as clients, including Walmart, Procter & Gamble, Hilton Hotels and Tyson Foods, doing work for them in the U.S. and abroad. It has a unique culture as well, thanks to energy brought by Ms. Mitchell, an avid motorcycle rider, runner and foodie. Under her guidance, the firm nearly doubled its revenue in 2011, generating over $11 million -- up from $6.5 million the previous year, according to PRWeek's Agency Business Report.
Ms. Mitchell will remain based in Arkansas and continue as CEO at Mitchell Communications, but she will also spend time in New York. She is joining the executive team and operating committee of Dentsu Network, reporting to Mr. Andree. In that role, she will be responsible for helping the network identify more PR-agency targets.
"We may make investments to expand Mitchell, open up PR in existing brands" and "are certainly going to be looking to make further acquisitions," Mr. Andree said.