By Kate Holton
LONDON (Reuters) - The boss of Dentsu Aegis Network plans to exploit the weakness of rivals such as WPP by snapping up the most attractive businesses in the advertising sector to protect its above-average growth.
Jerry Buhlmann, a Briton who runs the operations of ad giant Dentsu outside Japan, said the group would continue its M&A drive to see it through a revolution in the advertising industry that has upended so many of its rivals.
WPP, the world's biggest advertising agency, is embarking on a programme of "radical change" after it failed to grow in 2017, while rivals Omnicom and Publicis have recently reported disappointing trading.
Dentsu Aegis, focused on the faster growing areas of media buying, digital marketing and analytics, has outperformed its peers, helped by new business wins, the sale of more services and a structure that promotes collaboration.
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The fast-talking 58-year-old who runs up Mount Fuji for fun said it was important to flex your muscles when others were struggling, especially in a market that is changing so rapidly.
"(We have) access to capital in Tokyo ... a very strong balance sheet. If you compare that with some companies that are based in the UK that have very significant debt, it gives us a competitive advantage," he told Reuters in an interview.
"It is a strategic advantage for us that we need to leverage, and we do."
Buhlmann declined to put a figure on how much he would spend but said the group expected to maintain its recent rate of expansion. It has done around 150 acquisitions since 2013 and was the top acquirer in the sector last year, with purchases such as a small Indonesian digital agency called PT Valuklik.
He said it would fully integrate its new assets, an approach which has not always been shared by rivals.
The world's major ad holding companies have for years run their agencies as independent businesses to promote competition, with different agencies providing different services from mobile ads to online analytics, media planning and creative work.
Dentsu Aegis already operates a "one P&L" system to encourage its agencies to work together for clients, while remuneration packages promote collaboration by tying part of the payouts to the overall group's performance.
That helped it enjoy a record year for net new business in 2017, including from AB Inbev and American Express, and it predicts the $5.2 billion of media billings will drive it above peer group organic growth in 2018.
Clients also include Microsoft, Diageo and P&G, serviced by agencies Carat, Isobar, McGarryBowen and Merkle. It has enjoyed particularly strong growth in the United States.
The impressive performance has drawn attention to Buhlmann, a tall triathlete who prides himself on his ability to keep working and survive jet-lag. Analysts have said he is a leading candidate to head WPP after long-time chief executive Martin Sorrell departed in April.
Asked if he would want to run the company of 200,000 staff, Buhlmann said he enjoyed the role he had. "I've run everything outside Japan for (Dentsu) for five years now," he said.
"I've absolutely loved it, business has gone from 15,000 people to 50,000, huge amount of growth, massive loyalty, good team, hired really good people, bought some good businesses, been a great success, and I'm given a huge amount of autonomy to build and run the business.
"I'm very committed to Dentsu, full stop." Asked if that meant he would not be interested in the biggest job in advertising he replied: "I just answered the question".
(Reporting by Kate Holton; Editing by David Holmes)
Disclaimer: No Business Standard Journalist was involved in creation of this content
