From complexity to creativity: How dentsu is tackling global advertising challenges

Takeshi Sano, CEO of dentsu Japan, has been a pivotal figure at the agency since joining in 1992. Rising through the ranks, he played a key role in the agency’s business and digital transformation divisions before assuming the current leadership position in 2024. His three-decade-long tenure reflects his deep commitment to fostering innovation, sustainable growth, and organisational reform.

These attributes came to the fore after the agency faced significant challenges in 2023 when the Tokyo Metropolitan Government and the Japan Association suspended it from bidding on public contracts for a year due to compliance issues. dentsu, Japan’s largest advertising agency, represents 28% of the country’s total ad spend. The suspension dealt a significant setback, impacting both its reputation and business operations.

Quickly responding to this debarment, dentsu formed the Mindset and Behaviour Reform Committee in May 2023 under President Hiroshi Igarashi to address fairness and transparency, introducing 17 reform initiatives, including a whistleblower platform.

Simultaneously, the agency implemented structural changes, including hiring freezes and cost-saving measures, to achieve long-term efficiencies amid a global economic slowdown. Talking to Campaign, Sano said that he believes that restructuring is essential for sustainable growth, while also underscoring the importance of retaining diverse talent.

With organic revenue growth of 2.1% in Japan’s first half of 2024, driven by digital and business transformation projects, he remains optimistic. dentsu's regional reorganisation and focus on initiatives like the ‘One dentsu’ strategy aim to enhance integration and operational agility, particularly as the agency eyes growth opportunities in India.

Here are edited excerpts from the interview: 

What key stand-out transformations have you witnessed in dentsu since starting with the agency in 1992?

I consider our 'working environment reform' and 'mindset behaviour reform' as significant transformations. During times of change, I believe it is essential to ensure that people are motivated to take action, and for this, cultural transformation plays a vital role.

As dentsu Japan’s CEO, I continuously drive reforms with the goal of enabling each employee to realise their full potential, thereby unlocking limitless possibilities through their collective efforts. We aspire to become a true Integrated Growth Partner (IGP); our proposition in Japan. This nurtures sustainable growth for our clients and partners while contributing to the betterment of society. To achieve this, we place great emphasis on nurturing a strong and evolving culture.

In February 2023, the Tokyo Metropolitan Government and the Japan Association for the 2025 World Exposition, barred dentsu from bidding on government contracts following bribery charges. Given Osaka Expo’s scale, how has this suspension impacted the agency’s financial performance and overall goodwill?  

Currently, dentsu's eligibility to participate in bids has been fully restored, and we are now able to participate in public tenders. While transactions with public agencies are limited in scale compared to the overall Group revenue, we aim to contribute to further invigorating our clients and society by fulfilling our roles in projects that have significant social importance.

Dentsu formed the Mindset and Behaviour Reform Committee in May 2023, led by president Hiroshi Igarashi, to enhance fairness and transparency. What measures has it introduced to prevent compliance issues, strengthen internal culture, and promote ethical practices?

We are implementing 'Mindset and Behaviour Reform' to enhance our sense of responsibility and transparency towards society, and to clarify the rules and processes we must adhere to. We have established three pillars of measures and defined our goals, with 17 specific initiatives formulated to achieve them.

10 initiatives have been completed, seven are partially completed, and all are expected to be completed within the year. One key measure involves improving the internal reporting process by introducing a new platform. We have rolled out the global internal reporting platform Speak Up@dentsu, which is accessible not only to employees but also to external parties, creating an environment conducive to consultation.

To ensure accountability, we have set KGIs and KPIs to track the progress of reforms. The Reform Committee regularly reports updates to the Board of Directors, enabling us to apply the PDCA cycle effectively. This continuous monitoring supports the advancement of recurrence prevention measures, while driving improvements in business processes and corporate culture.

The agency posted organic revenue growth of 0.2% in Q2 2024, with Japan seeing 1.8% growth, but its international division continues to face challenges. How is dentsu reinforcing its market position in Japan to maintain client relationships, increase pitch win rates, and mitigate potential client losses?

At dentsu Japan, we are committed to becoming a ‘true IGP’ that contributes to the growth of clients and society by all means. In a highly advanced and complex society, advertising has evolved into an integral part of marketing and broader business activities, expanding their scope. We provide holistic support for corporate activities, extending beyond the boundaries of ‘traditional advertising’.

To achieve this, dentsu Japan places the utmost importance on human resources, supporting the diversity of approximately 23,000 employees across 150 subsidiaries. Additionally, it has a wealth of knowledge and expertise in ‘moving people's hearts’, cultivated over 120 years, and through deep dialogue with client companies, we have been creating optimal solutions from scratch.

The increasing complexity of client challenges and the expansion of the advertising domain are global phenomena, including in India. By harnessing the strengths of our diverse workforce in India—a country rich in cultural diversity—and leveraging our ability to ‘move people's hearts’ and develop bespoke solutions through meaningful dialogue, we are well-positioned to support both local clients and Japanese companies operating in India.

Dentsu’s ‘One Dentsu’ strategy aims to integrate its capabilities globally, promoting cross-functional alignment. How can this strategy benefit client outcomes in Japan and drive operational efficiencies, particularly as Dentsu prepares for intensified cross-selling initiatives?

Under the One dentsu framework, we are establishing a unified global network to integrate our strengths across countries, ensuring consistent, high-quality services for client companies worldwide. With many Japanese companies seeking to expand their business in India, dentsu leverages its extensive experience supporting such clients to drive their growth and contribute to the development and value creation of Indian society.

For instance, even when a client’s initial challenge revolves around media strategy, it often expands to encompass creative needs or business transformation. Dentsu’s framework enables us to address these evolving challenges seamlessly, providing one-stop solutions and smooth cross-border support.

In August last year, we launched dentsu BX (business transformation) in India. By combining marketing, technology, and consulting, we are developing innovative strategies and solutions to address complex challenges and promote sustainable growth.

Additionally, we plan to officially launch dentsu Lab in Mumbai and Bengaluru, following the success in Japan. By combining cutting-edge technology and creativity, we aim to accelerate the creation of innovations that impact consumers, society, and businesses alike.

In the first half of the year, dentsu Japan achieved 2.1% organic revenue growth, supported by significant gains in internet media, business transformation, and digital transformation. How has increased spending from established and new clients contributed to this growth, and what opportunities do you see for further expansion in these sectors?

While I cannot disclose specific client details, this year has witnessed substantial progress in digital and business transformation projects involving both existing and new clients. By integrating creativity with technology, leveraging social media, and enhancing UI/UX, we have supported clients not only in boosting brand recognition but also in crafting innovative business models.

Particularly with dentsu BX, we provide actionable solutions centered on innovation and sustainability, often in strategic partnerships with external organizations. This expands the possibilities for client companies and contributes to achieving sustainable growth in a rapidly changing modern society.

The internet media market continues to expand, and as businesses increasingly prioritise speed and innovation, our ability to seamlessly combine creativity with technological solutions positions us as a key partner in driving business and corporate transformation. With growing client demand in these areas, we are optimistic about the opportunities ahead to further support business and digital transformation initiatives.

Dentsu’s recent underwent regional reorganisation, including hiring freezes, spending cuts, and other cost-saving measures. What are the anticipated long-term efficiencies of these decisions?

Restructuring in response to business environments is a strategy for sustainable growth. Our restructuring and related measures are aimed not only at our own sustainable growth but also at contributing to the sustainable growth of our clients’ businesses and society.

Have these actions impacted talent retention?

For us, as a service-based organisation rather than a product manufacturer, our most valuable asset is our people. People are everything, and I personally consider human resources as one of the key areas, focusing on diversity and empowering all.

Creating an environment where diverse employees can exert more than 100% of their abilities is not an easy journey and it may not yield visible results in the short term. But, if I may speak about Japan, we are seeing increasingly better results in job rankings and workplace rankings. I am proud of our employees who have shaped such a group and aim to further support this positive momentum.

With global macroeconomic uncertainty and shifts in consumer confidence, how is dentsu collaborating with clients to maintain a focus on innovation and marketing investments?  

The 'Hokkaido Ballpark F Village' project is a prime example of how we are driving innovation and creating value through collaboration. This initiative centered around the development of a new stadium for the Hokkaido Nippon-Ham Fighters baseball team and the urban regeneration of the surrounding area.

The ‘Hokkaido Ballpark F Village’ project.

In the face of challenges like population decline and rural depopulation, we approached revitalisation by addressing issues such as education and health through the power of sports. The project involved over 150 partners, including businesses and local governments, and resulted in an economic impact of ¥840 billion, with the land price increase rate being the highest in Japan for two consecutive years.

Our strength lies in our ability to create innovations that solve various challenges beyond advertising and marketing, leveraging our producing capabilities and creativity to engage and move people.

How has dentsu effectively integrated recent acquisitions while preserving their strengths and team expertise?

Regarding acquisitions and partnerships, we carefully consider all aspects, including whether they enhance or expand dentsu's capabilities and whether synergies can be created, taking into account corporate culture. To succeed in acquisitions, it is essential to integrate the strengths and resources of both companies while respecting the purpose of the acquired company.

Diversity is crucial for sustainable growth. We aim to create dentsu where diverse talents with different backgrounds and strengths can fully exert their abilities, not only in Japan and India but globally.

In August, Dentsu expanded its ‘Marketing for Growth B2B’ model to enhance B2B marketing initiatives. Since its original launch in January 2024, how was it leveraged to intend data and AI to adapt to evolving B2B trends and drive higher marketing ROI for clients?

Dentsu’s global B2B strategy focuses on integrating solutions through initiatives like ‘Merkle B2B’ and the ‘dentsu B2B global practice’, addressing challenges like longer sales cycles and diverse buyer groups. Tools like the ‘Merkury’ platform, with data on 90 million U.S. individuals, have been crucial to this success.

The ‘Marketing for Growth’ model leverages intent data to understand decision-makers’ behaviours, enabling tailored strategies that drive successful negotiations and higher marketing ROI (mROI). In Japan, the ‘dentsu B2B Initiative’ unites 13 companies to tackle industry-specific challenges using intent data and AI for precise targeting.

In India, dentsu’s growing presence across technology, financial services, and automotive sectors is fueled by advanced data technology and partnerships with key clients like AMFI, Intel, Lenovo, and Mastercard. Collaborations with LinkedIn further enhance B2B targeting, leveraging APIs and innovative programs like Creative Inspire to deliver impactful content strategies.

Globally, dentsu uses AI for audience simulation and precision targeting, driving better mROI across APAC, including India. The company remains committed to expanding its B2B capabilities while adhering to strict data protection and governance standards.

Besides London, Amsterdam, Warsaw, Mumbai, and Bengaluru, will additional dentsu labs be launched in other regions?

As a leader in the creative sphere in Japan, dentsu Lab is committed to blending local insights with global expertise to drive innovation. With the recent openings of Dentsu Lab offices in Mumbai and Bengaluru, we are underscoring the strategic importance we place on India. This expansion reflects our deep commitment to delivering innovation tailored to the specific needs of the local market. It also highlights our determination to remain grounded in India, harnessing the country’s exceptional talent and unique perspectives to fuel creative solutions that resonate both locally and globally.

How do you identify and empower local leaders with specialised expertise in areas like AI, mobile technology, IoT, and rapid prototyping?

In establishing operations in different countries, identifying and nurturing local leaders is critical. These leaders must not only possess the necessary skills and expertise but also demonstrate innovative thinking, agility in adapting to change, and the ability to drive transformation with vision. To achieve this, we will continue to leverage the collective knowledge and expertise we have built through the One dentsu approach, ensuring we attract, empower, and develop the right talent for the future.