Dentsu Aegis Network is launching its Japanese-founded media agency, Dentsu X, in the UK by merging it with three sister agencies, Fetch, 360i and ICUC.
Dentsu X has been quietly operating in the UK since winning Jaguar Land Rover 18 months ago, but it will take on more clients, including United Airlines, Lidl, Converse and Square, by absorbing that trio of agencies.
Mobile shop Fetch, digital agency 360i and social outfit ICUC will be dropped as brands by the end of the year.
Dentsu X will have 200 staff in London and a mantra of "Experience beyond exposure" by "offering clients integrated marketing solutions that focus on the entire customer experience", the company said.
Euan Jarvie, chief executive of Dentsu Aegis Network UK and Ireland, said: "By bringing these four strong, growing agencies together under a single identity, we’ve not only created one of the biggest agencies in our UK network but underlined our commitment to offer our clients integrated services.
"It is a network designed for and by the digital economy and possesses nimble processes to get to results fast."
There is "limited sharing of clients currently" across the three existing agencies and there’s a lot of potential for their capabilities to be complementary, Jarvie said, adding that organic growth from existing clients can be a faster way to grow than pitching for new clients.
Patrick Affleck, UK chief executive of Fetch and a former managing director of 360i in New York, has been named UK chief executive of Dentsu X.
Affleck said clients want to create "more valuable experiences" for consumers: "Dentsu X has been designed by and for the digital economy. By bringing together such diverse and dynamic talent, we can tackle any challenge for our clients, devising more creative solutions to solve these in an effort to grow their brands and businesses faster."
Need for greater simplicity
The merger is part of a wider restructuring and simplification drive by Dentsu Aegis, the owner of more than 20 agencies in the UK and Ireland.
Jarvie, who has headed UK and Ireland since February, said Dentsu Aegis needs to make its offering to clients "more potent".
He explained: "One of the things I came across in my previous role, when I was looking after all the global clients in the group, was that there’s confusion sometimes about what our business is. That’s generally down to the fact we’ve grown very fast and we’ve acquired a lot of companies."
Jarvie wants to simplify the group and increase its expertise in key areas and is bringing all of its UK and Ireland agencies into five "houses" or "lines of business" to "reflect the way consumers interact with brands".
The five areas are:
- Creative, including Mcgarrybowen, Gyro, Woolley Pau Gyro, B2B International and BJL.
- Media and performance, including Carat, Vizeum, iProspect, Dentsu X, Amplifi and Posterscope.
- Customer experience and commerce, including Isobar, John Brown and Whitespace.
- CRM and loyalty, including Merkle and Periscopix.
- Sports, entertainment and principal buying, including MKTG, The Story Lab and Gleam Futures.
Jarvie said it makes sense to bring the disciplines together – for example, media and performance, which have been run separately until now – in response to clients’ needs.
"The purpose [of the restructuring] is to make it easy for people to understand and to navigate, and then for those leaders of those houses to bring the glue and bring that integrated model together," he said.
More restructuring of the agencies is likely. He added: "We are going to start migrating some of them into different places. You might see some of them disappearing as well inside those houses or lines of business."
Rival groups, notably Publicis Groupe, have carried out similar reorganisations to simplify their offering and improve costs.
Japanese and international operations are moving closer
The expansion of Dentsu X is significant because it signals that the ultimate parent company, Dentsu Inc, is bringing its core Japanese business, Dentsu, and its international arm, Dentsu Aegis Network, closer.
Mike Nakamura, global president of Dentsu X, has moved from Tokyo to London "in a demonstration of Dentsu Inc’s commitment to scale Dentsu X in western markets", according to the company.
Nakamura said: "Dentsu X UK will be one of our most advanced offices globally and will be the hub of innovation in Western markets, changing the centre of the gravity in our network and realising our meta-national concept."
He maintained Dentsu X has been one of the fastest-growing agency networks in recent years and it now operates in about 50 markets.
Jarvie was previously president of global clients before taking the UK and Ireland leadership role in February and said Dentsu X will stand out in the UK marketplace because of its Asian roots, since most rival agency networks have Western origins.
"Dentsu X is the first global media agency born out of the buoyant and technologically advanced Asian market," Jarvie said. "This immediately makes it unique within our sector."
Dentsu Aegis Network had considerable autonomy under its former global chief executive, Jerry Buhlmann, who previously ran Aegis and kept its headquarters in London following its £3.2bn sale to Dentsu in 2012.
Buhlmann left at the end of 2018 and Tim Andree, a long-serving Dentsu executive, has taken charge as executive chairman of Dentsu Aegis Network.
Andree hosted a recent global leadership meeting in Amsterdam, where he outlined the need to simplify Dentsu Aegis Network, which made 179 acquisitions under Buhlmann’s leadership.
Other leading markets are going to adopt this "line of business" approach.
Fetch’s closure in the UK means the end for a former star of the mobile marketing scene.
James Connelly founded Fetch in 2009 just as Apple’s iPhone was going global and the agency grew quickly, before selling to Dentsu Aegis Network in an estimated £30m deal in 2014.
Fetch’s fortunes faded more recently as the vast majority of internet marketing moved to mobile and it was caught up in a legal row in the US, where a client, Uber, sued over alleged fraud and Fetch counter-sued over unpaid bills.
Connelly left in March as part of a wave of leadership departures at Dentsu Aegis Network in the UK and globally.
Andree has sought to steady the UK and Ireland operation by appointing Jarvie and Nick Waters, who moved from Asia to become its executive chairman.
Jarvie described the UK ad market as "tough" with a "soft Q2" and "some genuine concern about what’s happening in Q3 and Q4".