As pointed out in PRWeek's Editors' Choice feature in December, every major agency network is scouring the market for acquisitions, both in the PR space but also other areas, especially digital.
And we didn't have to wait too long in 2013 to see evidence of this, though Dentsu probably wasn't top of the list of holding companies you'd expect to make the first move, with its acquisition of Arkansas-based Mitchell Communications.
The Japanese agency behemoth may not be as familiar in the US as Omnicom, WPP, Interpublic Group, and even Publicis and Havas, but it is easily the biggest single-brand network in the world, and is in the midst of closing a groundbreaking $5.1 billion deal to acquire London-listed media giant Aegis.
Dentsu Network's CEO Tim Andree name-checked the Aegis deal when announcing the Mitchell Communications acquisition, referencing Dentsu's aspiration to offer a seamless suite of services to clients, even though the Mitchell deal is a relatively small initial step into the US PR market.
Elise Mitchell's agency posted revenues of $11.3 million in 2011, but it has grown exponentially in the past two to three years and was named PRWeek's Small Agency of the Year in 2011. Under the leadership of Mitchell, a ferocious networker and well-regarded member of the PR community, it punches above its weight and numbers blue-chip clients such as Walmart, Procter & Gamble, Hilton Hotels & Resorts, Tyson Foods, Southwestern Energy, and Sam's Club on its client roster.
Dentsu has attempted to expand its global scale beyond its Japanese heartland several times, most recently via a high-profile but fractious alliance with Publicis Groupe that started in 2002 but was finally wound up last year when the French network purchased back most of its remaining stake in Dentsu.
Its challenge is to translate its Japanese culture and the “Dentsu Way” of doing things across global markets where things work very differently.
In Japan, Dentsu is a national institution. Its iconic Japanese HQ is home to client teams that work on heavily competing advertising accounts seemingly without the problems agencies encounter elsewhere in the world. Dentsu and the second player in the market, Hakuhodo, have a virtual monopoly on the advertising and media businesses in Japan. PR services have often been given away free as a sweetener to snag lucrative paid media accounts.
Outside Japan, Dentsu traditionally concentrated on servicing its Japanese clients in local markets, rather than growing new business. It has always propagated a theory of integrated services, but the shift toward communications in a social age has accelerated the need for truly global scale combined with local expertise.
It is significant that, at least initially, Mitchell Communications will retain its branding and not become Dentsu PR. Dentsu acquired McGarryBowen in 2008 and retained the advertising shop's branding. It also rebranded its European Dentsu operations under the McGarryBowen banner last year.
It is a sign that client conflict is much more of a problem in the rest of the world than it is in Japan, so having a network of separate brands is crucial in navigating this increasing problem.
The 6' 11” tall, Japanese-speaking Andree is a former professional basketball player and senior marketer at Toyota, Canon, and BASF. He is credited with formulating Dentsu's best attempt so far at expanding its footprint outside Japan and he co-authored The Dentsu Way, a book outlining the agency's history and unique approach to advertising and marketing. He clearly understands Dentsu's heritage as well as the extra elements required of a truly global network.
The major holding companies have a new PR player with which to contend and it will be fascinating to see what comes out of the mutually energetic approaches of Mitchell and Andree as they construct a global network to complement the advertising, media, and digital components of the Dentsu jigsaw.