Shawn Lim
Feb 14, 2024

Dentsu expects organic growth of 1% in 2024 after a challenging 2023

Overall organic revenue for Dentsu in 2023 was lacklustre, with the agency largely seeing growth in its home market of Japan.

Dentsu expects organic growth of 1% in 2024 after a challenging 2023

Dentsu's Q4 FY2023 results indicated a moderate increase in net revenues by 0.7% year-on-year, with an overall net revenue growth of 1.6% for FY2023. Despite the uptick, organic revenue fell by 6.6% in Q4 and 4.9% for the entire year.

This decline was attributed to the delays of large transformational projects within Customer Transformation & Technology (CT&T), mainly due to the increased cost of capital globally.

However, Dentsu's CT&T revenues reached 32% of Group revenues in FY2023, showing that the company is progressing towards its strategic goal of having CT&T generate 50% of net revenues.

The Japanese ad giant’s home market demonstrated strength in CT&T, with organic growth of 0.9% in Q4 and 1.6% for the entire year. In contrast, the Americas, EMEA, and APAC regions experienced declines due to project delays and reduced client spending.

Notably, Dentsu's operating margin for FY2023 was reported at 14.5%, exceeding their guidance by 100 basis points (16.1% excluding Germany, Austria and Switzerland (DACH) & severance costs).

One of the significant setbacks was an impairment loss of JPY 53.1 billion ($353 million) related to the APAC region, which was not included in the initial full-year earnings forecast.

Dentsu blamed this loss on a goodwill impairment test based on the future business plan, considering the soft outlook for FY2024 and beyond due to the performance challenges faced in FY2023.

Looking ahead, Dentsu is focused on returning to growth in FY2024, with the guidance set at approximately 1% organic growth and an operating margin of around 15%.

“2023 was a challenging year for the Group, with internal and external headwinds impacting our organic revenues and profitability. The leadership team and I remain focused on returning the Group to growth this year,” said Hiroshi Igarashi, president and global chief executive of Dentsu.

“As we look forward to 2024, we see some headwinds dissipating. We expect to see a return to spending from technology clients – particularly in the US market. However, we will balance this with cycling out-of-account losses in the first half 2024, making our 2024 performance second half weighted. We will continue executing our strategic objectives to return the Group to growth. Implementing One Dentsu will ensure the suitable structures are in place for a client-centric, winning organisation. Progress includes removing internal silos, simplifying practice areas, and aligning P&Ls to serve clients best to deliver Integrated Growth Solutions. We will continue to drive profitability through our existing core business assets.”

Regional breakdown

Dentsu's Japan region experienced a slight organic revenue growth of 0.9% in Q4 2023, contributing to a yearly organic growth of 1.6%. This growth was primarily driven by the CT&T division, which achieved double-digit increases despite the media business's weakness in TV and internet advertising.

CT&T's net revenue share rose to 30.8%. Operating profit was higher than expected due to delayed IT spending and cost management, which will roll into 2024.

EMEA's organic revenue significantly declined by 13.6% in Q4, with an annual decrease of 10.9%, impacted by reduced client spend and issues within the DACH (Germany, Austria and Switzerland) cluster, which experienced a complex business transformation.

Despite this, the fourth quarter saw new business growth in the media sector and new account wins for Merkle and Dentsu Creative.

APAC (excluding Japan) also faced a drop in organic revenue, with 8.6% in Q4 (up from 8% last quarter) and 8.2% annually. The region underwent a strategic cost review and is expected to benefit from a new integrated cluster strategy.

In China, macroeconomic challenges have reduced client expenditure amidst prevailing uncertainties. Despite these challenges, North Asia showed resilience with stable growth in Korea and Hong Kong throughout 2023.

The formation of the Greater North Asia cluster, comprising Mainland China, Hong Kong, Korea, and Taiwan, under the leadership of Jennifer Tang, is expected to enhance innovation, market speed, and solution delivery through an integrated strategy.

The ANZ region also faced macroeconomic uncertainties and increased competition, impacting client spending and business losses. Nonetheless, SMG Studios, an Australian gaming business, exhibited positive year-on-year growth in FY2023, providing stability alongside key media client retentions.

India saw a continuation of client losses in media from Q2, compounded by project delays and cancellations from startup clients. However, Southeast Asia experienced a recovery, particularly in Thailand, which saw an 8.1% rebound in Q4 following political stabilisation and the formation of a new government in August 2023.

Vietnam also maintained a strong growth trajectory, with a 5.1% increase in FY2023. In contrast, Indonesia faced challenges with weak advertising spending throughout 2023, attributed to the Advertising-Based Video on Demand (AVOD) switch resulting in reduced client confidence and a backward trend in the advertising market for the first time in a decade.

Finally, Americas faced a decline, with Q4 organic revenue down by 9.3% and a total yearly organic revenue decrease of 7.2%. The region struggled with lower spending from technology and finance clients and saw project delays in CT&T.

Nonetheless, the creative sector grew about 1% in FY2023, and new business strategies like the release of Merkury are expected to bolster future performance.


For 2024, Dentsu plans to return to organic growth by reviewing its business portfolio and making internal investments to accelerate the delivery of integrated growth solutions to clients.

Dentsu forecasts organic growth of approximately 1% and operating margins of around 15% in 2024.

Internal investments will focus on enhancing data and technology capabilities, investing in people and culture, and strengthening business operations and enterprise platforms.

The agency plans to form a finance committee to ensure improved shareholder value through sustainable growth and sound financial governance. This committee will serve as an advisory body to the board of directors, consisting mainly of outside directors, to ensure thorough financial governance.

The ‘One Dentsu’ operating model continues to be a critical strategic initiative, aiming to provide a unified client contact point globally, thus fostering agility and enhancing operational efficiency.

Dentsu also outlined specific strategies to foster growth within the APAC region. The agency wants to improve organic growth in priority markets by revitalising core businesses in China, Australia, New Zealand, and India.

Dentsu plans to implement best practices throughout the APAC region, drawing on successful strategies from markets like Taiwan and Thailand.

The agency will also review client strategy to enhance the delivery of integrated growth solutions to vital local clients and further concentrate on Japanese clients operating within the APAC region.

Finally, Dentsu aims to enhance cost efficiency through a comprehensive review of the overall cost structure, aiming to reduce expenses and improve the efficiency of business operations, as it's already begun doing so in regions including China.

Campaign Asia

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