The Greek philosopher Heraclitus once said, “The only constant in life is change.” And this seems to stand true for advertising conglomerate Dentsu India. From a series of exoduses to loss in business to once again firing the engine, the ad network has gone through its series of ups and downs. And now it claims to be ready for the next chapter of growth.
In a conversation with BrandWagon Online, Harsha Razdan, CEO, South Asia, Dentsu talks about how he plans to fuel growth in the advertising conglomerate. (Edited Excerpts)
How have you addressed internal and external affairs since you joined and what specific issues have been resolved? Additionally, what aspects or challenges are still pending and require attention or fixing?
It’s been only six months, so there’s still a significant amount of time. The primary focus during this period has been on establishing stability within the company, ensuring there’s someone who listens, cares, and is actively involved in planning the India strategy. Meetings with various individuals have been a key part of this process, emphasising the importance of engaging with anyone in the office during visits.
Two essential aspects have been addressed including encouraging open communication and recognising the career opportunities available within the company. Despite facing some losses, the primary objective has been to shift the focus towards client-centric approaches. Aligning efforts with clients’ needs, ensuring timely contracts and billing, and prioritising client-related problem-solving has become the central focus.
Looking ahead, the emphasis is shifting from stability to growth. The company’s marketing positioning underscores its identity as a convergence of marketing and technology. Beyond being a creative or media agency, the broader goal is to operate as a value chain company, incorporating CX, data, commerce, technology, ad-tech, and martech.
Moving forward, the focus is on powering up existing businesses by embracing technology for enhanced efficiency and quicker client offerings. In the world of Customer Experience (CX), there’s a plan to upgrade talent from within and explore external talent through acquisitions or recruitment to drive growth in this relatively new business area.
Where does Dentsu currently position itself in the CX market, considering the presence of specialised CX-focused companies in India and internationally? Is Dentsu contemplating acquisitions in the CX domain, and if so, what specific types of CX firms are being considered for acquisition?
If I were to assess our current standing, it’s evident that we have a substantial journey ahead. Admittedly, certain competitors have outperformed us. Globally, we’ve set a strategic goal for 50% of our business to be focused on Customer Experience (CX) by 2030. When I refer to CX, I’m encompassing anything related to data, particularly data and cloud combined. We have partnerships with database providers include Amazon Web Services and Google Cloud Platform. This extends to Software as a Service (SaaS) platforms, covering various aspects such as commerce, including CRM platforms on the martech side, ad tech platforms, and website creation.
While we may not currently hold a prominent position in this space, we firmly believe we have the right to win, which we must prove. As our global CEO emphasises, we are a people-centred transformation company. Initially, it took me some time to comprehend this concept until he visited India. I realised he wasn’t just talking about HR standpoint but delving into the understanding of consumer, client, and employee psyche. This understanding, coupled with our expertise in the creative and media domains, positions us to play a more substantial role in the value chain.
Expanding into domains that align with this vision, we’ve made acquisitions such as Sokrati and Fractal Ink. While these acquisitions may not fully reflect our aspirations, they represent significant steps toward our goals. As our clients invest more in this area, we are expanding our focus from a pond to an ocean. While we may be relatively small in the ocean, defining our specific area of expertise allows us to excel within our chosen domain.
How is Dentsu navigating the impact of India’s digital data protection laws on data, cloud, commerce, martech, and ad-tech? Is the company prepared for a potential five percent capex increase, considering the government’s six-month compliance timeframe?
From the perspective of our current clients, we are already on track. While it will contribute to growth in our existing services, it may not meet my expectations. To achieve the desired growth, additional services need to be added. While I may have capabilities in all of them, these capabilities may be at a starting level. Organic growth is essential in expanding proficiency in these domains.
Are there specific services or technologies you plan to bring from Japan, as Dentsu is headquartered there, to enhance its capabilities in this domain?
Indeed, the Japanese team visited last month, and discussions were held regarding offerings. One notable aspect of Dentsu’s approach is the Japanese philosophy of operating in a collaborative manner. They acknowledge their assets and ways of working but seek input on issues such as aligning with the local market. There’s no imposition; it’s about finding the right fit.
Their assets extend to specialised offerings in the marketing and tech space, termed ‘Dentsu Consult.’ This involves leveraging existing assets for sustainable marketing. So, yes, there will be assets like these introduced in India. Beyond consulting, Japan has strengths in areas like sports and entertainment. Learning from and leveraging these assets and relationships will contribute to scaling up our business.
While the current portfolio may not be at the ideal scale, increased collaboration, which was limited until about a year back, is changing the landscape. The recent visit of our global CEO to India signifies a deeper understanding of the market beyond PowerPoint presentations. Interacting with industry professionals, understanding the nuances, and building trust have reinforced the commitment of the Japanese team, seeing India as their market.
With your background in P&L, and considering Dentsu’s P&L practices in India, what is the current standing of Dentsu’s business in the global revenue chart? Looking at the P&L, what strategies do you plan to implement to enhance profitability and elevate the company’s EBITDA for a more robust financial performance?
Dentsu India is among the top 15 markets for Dentsu globally, and it will be intriguing to see where we end up. My aspiration is to become the largest cluster in Asia, excluding Japan, within the next three to four years. This is particularly my aspiration P&L-wise, considering my experience in P&L roles.
This move involves transitioning to a genuine one P&L, especially for large clients. It’s not just about claiming to have a unified P&L but truly integrating operations. Currently, collaboration with clients often involves multiple colleagues from different business units, which can be counterproductive. The intent is to move towards a genuine one P&L, aligning people’s KPIs with client success.
In this phase of change, we’re emphasising that if the client doesn’t grow, and country-wise performance doesn’t happen, requests for salary increases and positive ratings might not be considered. Simultaneously, we aim to achieve synergies within the company, envisioning it as having a single engine rather than multiple ones. While different brands exist, the focus is on learning from each other in the backend operations.
Will we witness you optimising manpower costs as part of your strategy?
I don’t intend to optimise manpower costs because I’m a growth-oriented person. Cost optimisation alone doesn’t lead to success; it’s growing that builds careers and successful companies. To achieve this, we need to follow the larger vision of client management and expand the scope of services. While acknowledging that optimization may be necessary in the challenging industry, it will be approached with prudence and cost management.
I’ve been challenging people to use technology to enhance efficiency. For instance, our target is to have 25% of our deliveries to clients through AI. By achieving this, each person can contribute 15-25% more. This not only enriches the individual but also benefits clients who are already incorporating AI in their processes. Resisting change and ignoring technological advancements won’t help the situation; embracing it is the key to progress.
In the next three to five years, where do you see Dentsu?
We aim to be among the top two in whichever domain we operate. While we’re not solely a creative agency, media agency, or data agency, we have multiple domain areas. If, within my area of marketing and tech, we can secure a top-two position across all of them, that would signify success for me. I believe in the philosophy of setting ambitious targets and striving to achieve them. Even if we come close but fall short, I appreciate that more than setting a safe target and achieving it. Winning doesn’t always come from playing it safe. I’ve emphasised to the team that meeting a challenging target and trying hard, even if it results in a mistake, is more valuable than achieving a safe target. Budgets are there for accounting purposes; they don’t build people’s careers.