The international arm of Dentsu is to cut one in eight jobs across the agency group – about 12.5% of its staff – as part of a major restructuring.
Dentsu International said it employed about 48,000 people and a 12.5% cut would mean the loss of about 6,000 jobs.
The exact number of roles that are being cut was not immediately clear. Dentsu said the time scale of the cuts would vary by market.
In a sign of the scale of the cuts, Dentsu International will run up a US$850 million cost, including $545 million in 2020 and the remainder in 2021.
Dentsu, the Japanese parent company, also warned it would be loss-making for the second year in a row, after reporting a loss in 2019 before the pandemic.
The international arm, which recruited Wendy Clark from DDB to be its chief executive earlier this year, is also slashing the number of agency brands from more than 160 to six global leadership brands within two years.
“This transformation programme will initially be led by our largest markets, which cover over 80% of Dentsu international’s revenue, but will include all markets,” the company, which owns agencies such as Carat, iProspect and Merkle, said.
“The transformation will result in an approximate 12.5% reduction in total headcount across Dentsu International, subject to local regulations.”
Dentsu’s biggest international markets include the US and UK.
The Japanese group was the worst performer of the big six global agency holding companies in Q3, behind Interpublic, Publicis Groupe, WPP, Omnicom and Havas.
Dentsu said in today’s announcement of the job cuts that it expects revenues to be down about 12% to 12.5% this year.
The cuts at Dentsu International, which operates outside Japan, add to a list of other significant job losses, including 6,100 at Omnicom, 5,000 at WPP and about 700 at IPG.
Dentsu said the 12.5% cut to its international employee headcount and other changes should save more than £400 million (US$533 million) on an annual basis from the end of 2021.
Dentsu International added: “Consumer intelligence is at the heart of everything we do at Dentsu International. We believe integrating our business around the consumer is the greatest advantage we can give our clients and the greatest competitive advantage we can give ourselves.
"We will do this by accelerating the transformation journey we started last year to simplify further how we operate, delivering even greater agility through a focused portfolio of six global leadership brands with prioritised investment and resources in capabilities of high client demand and growth.
"In our H1 2020 financial results, we announced a comprehensive review of our business. As we work through this, we will take the critical and necessary steps, that many other companies are, to address the impacts the global pandemic has had on our business and ensure we work closely with our people and our clients as we move through this period of accelerated transformation.”
Dentsu’s international operation was previously known as Dentsu Aegis Network, following the £3.2 billion ($4.3 billion) acquisition of Britain’s Aegis Group in 2012.
Dentsu rebranded Aegis Group as Dentsu International in September 2020.