Q3FY23: Dentsu India still seeing impact of slower client spend

Dentsu APAC (ex-Japan), Q3 organic revenue declined 9.1% while regional organic growth and proportion of net revenues for nine months dropped 8.0%. According to the official report, India is still seeing the effects of slower client spend in the media business and a weak pipeline. 

According to Dentsu's official release, macroeconomic conditions continue to impact the China business, with clients cutting back spend. However, North Asia has remained buoyant with strong growth in South Korea and Hong Kong. The recent appointment of Jennifer Tang as CEO, Greater North brings together a powerful leadership team with unique experience that will benefit the cluster markets of China, Hong Kong, Korea and Taiwan, with further reaching benefit into the region. In ANZ, economic uncertainty and rising inflation have driven lower consumer spend and business confidence resulting in reduced client spend and increased deferrals. 

“India continues to experience the impact of slower client spend in the media business and a weak pipeline. In Southeast Asia, spend continued to be weak in Indonesia due to the ATV switch off while political uncertainty in Thailand has seen hesitation in client spend impacting revenue,” read the statement.  

Hiroshi Igarashi, President and CEO, Dentsu Group Inc., said, “Our third quarter performance continued to show the impact of the reduced spend from clients in the technology and finance sectors, as well as project delays within Customer Transformation & Technology. I and the wider Executive team remain focused on returning the Group to growth.” 

He further added that through One dentsu they are creating a unified global network that combines client centricity with speed, agility and scale ensuring we deliver against our clients’ need for growth. To achieve this vision, Dentsu has aligned its leadership structure and talent around our core capabilities and strategic priorities. 

“We have seen progress in the US market with the accelerated roll-out of One dentsu. Revenues have stabilized and we have a number of account wins that demonstrates what we can achieve when we drive collaboration and empower our people to thrive. Following the acquisition of Tag, consolidated at the start of July, our integrated proposition has seen early success, resulting in a number of client wins. Our clients are looking to unlock marketing effectiveness and efficiency and Tag’s real time, personalized content production allows us to deliver that for our clients.”

The Group continues with the implementation of One dentsu to address clients’ needs for agility and integration of capabilities, said the agency in the statement. As a unified global network, dentsu will partner with clients to deliver Integrated Growth Solutions centered in the convergence of Marketing, Technology & Consulting. 

Group’s Q3 FY2023 net revenue grew 1.6% year-on-year (yoy), while organic revenue declined 6.0%. The group said that the Q3 performance was impacted by the continued reduction in spend from technology and finance clients; international markets experienced delays of larger transformational projects within CT&T, with the sales cycle remaining extended. CT&T in Japan remains strong. 

“The third quarter margin was impacted by further charges within the DACH cluster, excluding these charges, the Q3 FY2023 margin would have been flat yoy.”

Customer Transformation & Technology (CT&T) revenues reached 33% of Group revenues. In Japan, CT&T continued to report double digit growth driven by strong performances in Dentsu Digital and Dentsu Consulting. Internationally, the lengthening of the sales cycle impacted the EMEA and APAC regions, while the US CT&T market saw revenue stabilization.