Harsha Razdan on being the ‘outsider’ Dentsu enlisted to turn around its fortune

Harsha Razdan, who joined Dentsu to add stability to its leadership team, at a time when the agency saw a massive exodus which included founders of several acquired agencies moving on, is focusing on building brands for society, which is a global endeavour for the group.

 

He also wants the group to undertake a people-centric transformation, while looking at the convergence of marketing and technology.

 

In a chat with Campaign India, he also reveals how his experience of being an ‘industry outsider’ should help Dentsu in the country and why he believes the creative side of the business is facing a ‘difficult’ time.

 

Edited excerpts:

 

You've worked with Pepsico, Unilever, Accenture and KPMG before taking up this role. How do you think this experience can help you with the Dentsu role?

 

I’ve been in the area of advertising, and marketing for quite some time. Pepsi and Unilever gave me the experience of working on the client side. My experience at Accenture was around new-age tech and digital transformation. I also did a lot of work on the consulting side around the efficiency of marketing. Then, at KPMG what I offered were client solutions. I think these are critical for every client-servicing company right now. It’s all about understanding the client’s needs and trying to solve them.

 

Typically, we (the agency side) are always selfish in a sense when we try to offer our solutions without trying to pay attention to what the client wants. In one way, I’ve seen life from outside as a client, and consultant and now come to the agency world, which is a good completion of the group for me.

 

We’ve seen and heard of a lot of people moving from the agency world to what’s considered to be the future of advertising – the consulting groups. You’ve done the opposite. Do you think this will help make Dentsu future-ready?

 

You’re bang on with that. Our positioning globally is about how we’re a company at the intersection of marketing, technology and consulting.

 

While we’ve always offered marketing, technology is the biggest disruption that’s been happening in our industry for some time. When we’re talking about consulting, it’s not from the point-of-view of big-ticket consulting, but we sell our mind and our services versus selling products. We’ve always been consultants in that nature. Even many years ago, we had planners talking to brand managers about what’s best for the brand. This is powered by creativity which is the positioning we need to sharpen up.

 

We are in one way the agency of the future and are building the future. We are lucky that we have consolidated into one P&L structure globally and in India. We don’t have brands reporting into regions and the globe. Essentially everyone reports to the country CEO.

 

Dentsu has made a slew of acquisitions in the last decade and more. Over the last three years, a lot of the founders of those agencies have exited. While you’ve announced some appointments, there’s a perceived talent gap. How do you plan to address this?

 

When I look back and see the people who have quit – they left for logical reasons because we had so many agencies and when we went to clients they thought it was complicated to manoeuvre.

We had 23 companies with 23 CEOs and it was complex. So as we consolidated, we had a lot of people leaving.

 

Narayan Devanathan gave me this statistic that nine of out ten chief creative officers in the top list in India have worked with Dentsu. And that in a way is a good thing because it’s been a good alma mater.

 

Now, we are no longer a pure creative or media agency. We are a marketing x tech x consulting company and we’re looking to build talent accordingly. Our competitive set is more than the top five or six media agencies that media or creative agency people talk about. It’s anyone in the tech and marketing space now so the landscape of play is more than 50 times of what we are operating in.

 

The 23 companies and CEOs came as a result of acquisitions. Do you think Dentsu over-acquired during that time?

 

No. In the past, we had a rapid acquisition strategy and that helped us reach where we are. In the natural consolidation of the agencies, we got down to three businesses – creative, media and customer.

 

At that time, the need was to build scale and presence in the country.

 

Now, it’s a little different. While we’ve lost some talent, the pool is still significant, and we continued winning lots of awards, including at Cannes (Lions) this year and last.

 

We are looking to grow organically as the first step and then find niches in creative and media for some innovative or different skill sets that we may not have. 

 

The data, tech, commerce and experience space is big right now but is relatively smaller for us as a company. We will take calculated bets in this space and try to scale up and be a large-scale player here thus balancing our portfolio. We will be powered by creativity and innovation and won’t become an Accenture or IBM but be at the intersection of marketing and tech.

 

Are clients ready for this or are they still looking at traditional skill sets?

 

Over the last five months, I’ve met about 60-70 CEOs and asked for point-blank feedback. No one is saying they won’t have a creative or media agency, but what they are valuing is and as luck would have it that I’m from outside the industry, is the different approach in solving for clients.

 

As a company, yes we’ve always solved for clients, but we could have done it much better. This would mean that if a client has a problem, it’s not always solved by an ad. Many more elements can be used and as partners, we have to help clients. 

 

The tech landscape is blasting through the roof, and as a CEO/CMO, you are looking for trusted partners. So, there’s a journey for Dentsu to travel to get there, and that is an area where we need talent. Whether that’s acquiring organisations or upskilling internally, it’s an exciting journey, and I don’t think it’s travelled by anyone else. So, people may be worried, but that is an opportunity I’m excited about.

 

So the acquisition route remains open?

 

Yes, we are looking out. But this is not through a machine gun approach. We will make calculative acquisitions in data, tech and commerce. If we find niches in creative and media agencies too, which we don’t cater to currently, we’ll be looking to add them.

 

Is any announcement in the pipeline?

 

Not right now because I’ve spent only five months at the agency. It’s early days for me and the first responsibility I have is to stabilise the company. I’ve been addressing the challenges I’ve had in the company and want to do justice to the people in it. I want to get the team aligned to the vision I have for it first and once that’s done, the house will be in shape and then we can engage with the outside world.   

 

One of the first few announcements that came from Dentsu under you was the merging of capabilities of Sokrati and iProspect. What was the thought behind this? Do they continue to work as separate entities?

 

A lot of the skills at the operating level are common and we realised there are a lot of cross-learnings between the two of them. Sokrati is a home-grown, fast-growing promoter-led company and iProspect is a global powerhouse that’s doing a lot of brand work now versus doing performance work earlier. We want to synergise the two and not carry on with the old way of competing.

 

Also, we’ve had staff at Sokrati wanting to move across to iProspect since it’s a global brand. We are getting people to move and synergise across different parts of Dentsu in India and as part of our global services team.

 

They will continue to operate as separate agencies. We don’t plan to change any of our brands because they’re the reason we exist.

 

Overall, the second quarter of 2023 saw a revenue dip globally and in India. How's this quarter been for Dentsu globally and in India? We've seen the likes of WPP face difficult quarters globally too…

 

I’m not in a position to comment on the global results. In India, the first half of the year for the industry was relatively good. However, at dentsu, we lost a couple of clients (Maruti Suzuki and Reckitt in media). In the second half, we gained some clients in the media world like Carlsberg and Berger Paints and the creative mandate for Xpresso by Dailyhunt and Aditya Birla Capital among others. So, at a group level, the win and loss tally will be pretty much the same.

 

But the big thing in the second half is the tightening of budgets on the commerce side. 

 

Funding was drying up in the first half and has become tighter in the second half. All the apps we were using had incentives and coupons in the first half and they’re drying up now as profitability pressures are coming. This is leading to media spending being controlled too and that’s what has tightened the industry.

 

If you look at other sectors, they’re still cautious and if you look at their results, rural demand is under pressure. When that kicks in, brands usually go hard on media spending.

 

For us, it’s a game of managing limited growth and costs.

 

But from the ICC Men’s ODI World Cup to the elections next year, do you see more spends?

 

You hear some people saying they’re doing well. But if things were all hunky-dory, everyone would be spending more. I think it’s under pressure but better than July and August. But we could have been much better overall.

 

We are all hopeful with the elections coming in, and the likes of the IPL, India-Australia series, things will pick up. The elections will put some money in circulation which will help all of us.

Secondly, if you look at the market, the ad expenditure isn’t declining. The area which is under pressure is the creative side and we see a lot of announcements by companies in this space. The category is under pressure because of artificial intelligence and other tech advancements.

 

For Dentsu, we are rapidly looking to expand the CX (customer experience) area which is data, experience, commerce and cloud and that’s the area clients are continuing to spend. I want Dentsu to get our fair share in this category.

 

Your focus areas for your first year at Dentsu?

 

I want the agency to be client-obsessed. This doesn’t mean that we were not client-obsessed in the past, but we want to solve for what the client wants rather than solving for your solution and going to the client.  

 

We can’t have non-playing captains and everyone has to be on the field. Even if it’s HR and legal, they need to contribute. Secondly, we want to be strong on collaboration. Collaboration is working with a team member and being there through the good and bad times.

 

Thirdly, the biggest thing for the agency is to catapult. We can’t think normally. We have to think that we can grow and think big. It’s okay to make mistakes, but I’d rather fail fast than steady and safe play. Everyone has stretched targets and everyone needs to maximise them. Everyone won’t meet them together but say if 50% of them achieve it, we’ll grow. Now, with the leadership stabilising with me coming in, we’ll have a different Dentsu to look forward to.

 

Do you think the leadership has stabilised now or you’re on your way to achieving it?

 

The leadership team in South Asia is stable but we could have talent coming in from outside. We are doing things which we may not be naturally inclined to do whether it’s leadership or leadership plus one or plus two.  No one knows everything and is a superhero. Hence, we have to get mixed talent and a great deal of gender diversity. I also don’t want clones and by that, I mean nobody should have the exact profile as me or any other existing employee in the leadership team.  I also don’t want clones and by that I mean nobody should have the exact profile as me or any other existing employee in the leadership team.