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THE ACQUISITIONS GAMEPLAN: HOW IT MAKES SENSE FOR DAN

New Delhi: Ashish Bhasin, Chairman and CEO, Dentsu Aegis Network, South Asia decodes the network’s acquisition gameplan; latest addition of SVG Media strengthens DAN’s hold on digital business even as it spreads its footprint across PR, OOH, Social Media and Events.

Japan’s biggest advertising agency Dentsu first entered India in 2003, through a partnership with media entrepreneur Sandeep Goyal. But, it was in 2012 that everybody sat up and took notice of Dentsu when it managed to outdo the big guys and acquire a 51% stake in the hottest independent creative agency Taproot. Since then, acquisitions have been an integral strategy for the agency to grow, more so since Ashish Bhasin took over as Chairman and CEO, Dentsu Aegis Network (DAN), South Asia, formed after Dentsu acquired UK’s Aegis Media. Since 2012, DAN has acquired 10 media companies in India (11 if you consider Grant Group in Sri Lanka and take into account South Asia). In numbers, DAN’s revenues have grown by 2200% in the last eight years; the business has grown by 2100% and the head count is now about 3,300, up from just 45-50 when Bhasin took over.  Talking about revenues, Bhasin says, “We have crossed Rs 4,500 crore in billings and if all goes well, we will end this year with well over Rs 5,000 crore.”

Commenting on DAN’s slew of acquisitions, Bhasin says, “Acquisition is an integral part of my strategy. I would like to get to a scenario where 50% of my growth should be organic and 50% should come from acquisitions. We are not quite there, but not too far from it either.” He adds, “Acquisitions are really important because among other things, they bring in great talent into our group. We only do acquisitions for strategic reasons, not for turnover, profit or financial gain, but for critical, strategic inputs.” Though a relatively late entrant into the India market, acquisitions have helped DAN build up scale and Bhasin claims the most recent acquisition, SVG Media, will make DAN the Number 1 digital agency network in India.

CHALLENGES ALONG THE WAY

Drawing an analogy between acquiring a company and marriage, Bhasin says that both parties need to adjust for the partnership to be successful. Calling it “always work in progress”, Bhasin adds that there are five values – collaborative, ambitious, agile, responsible and pioneering – that DAN treasures and abides by, and these are articulated to the prospective partner, who in turn is also measured and judged by these very parameters.

According to Bhasin, “That’s what we measure the other party, partners, employees, acquisition targets by. The emphasis is how do we make sure that these values are similar and how do they get imbibed top to bottom in the organization.” Explaining this further, he says, “Anybody we are talking to should be collaborative as our whole process is geared to one P&L account. We have no place for prima donnas in our company. We are very ambitious and have come from virtually nowhere to become the second largest agency network in India. Our ambition is to grow much faster than the market for the next few years. We are quick in decision-making, much quicker in our movement and action and in the context of acquisition. We take fast decisions and close deals fast.” Bhasin also stresses on being responsible towards DAN’s shareholders, clients, employees and to society and environment. He adds, “Everything we do must be pioneering in nature. For example, Carat was the world’s first independent media buying and planning agency. Dentsu too has several innovations to its name.”

FOCUS ON ONE P&L

The group’s focus on one P&L has paid rich dividends and an example of this has been the ability to move around talent to be able to provide the client a solution. And, this is something which the competition has taken note of. Bhasin says, “Most of our competitors have now seen the one P&L and are desperately trying to get that but they are so structured in silos. The different wings – media, creative, digital – do not interact with each other. The legacy agencies in particular are finding it very difficult.” He continues, “This is one instance where we have a first mover advantage and we learnt from the mistakes of others. We made sure that the impact of silos was minimized in our business. Everybody will love to move to a one P&L scenario. Sooner than later they will also get there but at the moment we are well ahead and most of them are finding it very difficult.”

AN ENTREPRENEURS’ GROUP

Most of DAN’s acquisitions have been companies started by entrepreneurs and on its part DAN prides itself in giving all the companies which are part of the group “utmost freedom including retention of branding in many cases”. However, each M&A brings about its own unique set of challenges particularly when it comes to systems and processes. Bhasin says, “I won’t say it’s a challenge but the integration exercise and process is very important and we pay a lot of attention to integration. It’s very easy to carry out an acquisition, the harder thing is to make sure that that acquisition is successful and it gets integrated and works together, particularly for us where one P&L is the most important aspect.”

Remarking on the continuing role of the entrepreneurs within the group, Bhasin says, “The beauty of our group is that we have an impeccable track record with most of our entrepreneurs whose companies we acquired.  We are a company that is built on entrepreneurs. They stay on even after their stipulated time with the company is over. We know what entrepreneurs feel and therefore are very proud that they stay on with us.” He proudly cites the example of Vivek Bhargava – whose company Communicate 2, now called iProspect, was acquired by DAN in 2012. Bhargava chose to continue with DAN even after his time was over and has in fact taken on a larger role as CEO of DAN Performance Group.

SERVICING CLIENTS’ NEEDS

So what decides which company would be on DAN’s radar next?  Bhasin says that he just follows his clients’ needs and also anticipates their needs. “I should be able to get the maximum share of wallet of my clients’ marketing and communication spends,” he declares. This rationale led to the acquisition of the Perfect Relations Group in September 2016, as lack of a PR offering meant that clients’ spends were going elsewhere. Similarly, anticipation that social media and search would become big led to the acquisition of Communicate 2 and WATConsult. The acquisition of Milestone Brandcom gave the group size and scale in the OOH space and with group firm Posterscope, has come the much-needed consolidation that has resulted in DAN cornering 35%-40% of market-share.

Looking ahead, Bhasin sees virtual reality, artificial intelligence, augmented reality as the future trends. He says, “We are doing some of it organically but if any good company develops and becomes big, we will be very happy to partner with them.” He continues, “We are overweight on Digital and get almost 35% of our revenues from Digital. We are also overweight on New Age Media, Out of Home, Activations… all areas which we feel are fast growing. We will always keep looking out for any area which will interest our clients.”

According to RECMA 2016 qualitative rankings for Indian media agencies, DAN stood at No 6 with 6.7% market-share. However, DAN recorded the highest growth rate of 76% (YoY), with Carat growing by 145%, Dentsu Media by 36% and Vizeum by 8%. In addition to the acquisitions last year that will add to the group’s topline. DAN has also won some big media mandates such as General Motors, Mondelez and Maruti Suzuki India Limited.

Full Article: https://www.impactonnet.com/impact-feature/the-acquisitions-gameplan-how-it-makes-sense-for-dan-5273.html

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