For the other four companies, organic growth fell more sharply than headcount reductions. Dentsu's organic growth came in at a weak -11.1%, but the company’s headcount at year-end 2020 was down just 2.8% vs. a year earlier.
Dentsu is in the midst of a broader reorganization. The company last August announced a “comprehensive review and accelerated transformation program” intended to simplify its business, reduce operating expenses, improve its balance sheet and maximize shareholder value.
As part of that reorganization, the company’s Dentsu International network—which manages operations outside Japan—plans to consolidate to six “global leadership brands” (Carat, iProspect, Dentsu X, Dentsumcgarrybowen, Isobar, Merkle) from more than 160 brands within two years. With this reorganization, Dentsu International expects its total headcount to decline about 12.5% by the end of calendar 2021 vs. the staffing level in the fourth quarter of 2020.
In a statement to Ad Age, Dentsu said: "This new structure will be more transparent for our clients, enabling us to serve them better by de-duplicating the services offered to our clients. It will also enable us to reduce costs as our operations become simpler with more common systems and processes. The transformation will also include all service lines, functions and central teams."
The reorganization follows years of acquisitions and investments as Dentsu built an agency network outside its home market of Japan. Back in 2016, Dentsu made 45 deals (the largest number in its history), including a majority stake in data marketing agency Merkle. Dentsu in 2020 bought the remaining stake in Merkle.
Propelled by acquisitions, Dentsu worldwide staffing has more than tripled since 2009, when the industry was near the depths of the Great Recession.