Reporter | Ma Yue
Edit | Ya Han Xiang
The economic downturn caused by the epidemic has made the already battered advertising industry worse – according to the Nikkei Chinese Network, Dentsu Group announced on December 7 that it will lay off nearly 6,000 employees engaged in overseas business by the end of 2021. Under the COVID-19 epidemic, the economy has stagnated, companies have reduced advertising fees, and Dentsu's advertising business in various regions has been sluggish. As of the end of December 2019, Dentsu employed approximately 47,000 people in overseas business, and about 12.5% of the employees were laid off.
According to Dentsu's financial report released on December 7, Dentsu will also face a huge loss this year, and the consolidated final profit and loss (IAS) for fiscal 2020 (ending December 2020) is expected to be a loss of 23.7 billion yen (previous year's loss of 80.8 billion yen).
Dentsu's sales revenue in fiscal 2020 is expected to be JPY 928.7 billion, down 11% year-on-year, and operating profit and loss is JPY 11.4 billion (loss of JPY 3.3 billion in the previous year). As a result of the COVID-19 pandemic, businesses have seen fewer campaigns such as advertising in magazines and newspapers.
Dentsu's layoffs are part of its organizational restructuring to cut costs. Dentsu will promote the abolition of overseas subsidiaries outside Of Japan and unify them into six major brands, and the specific subsidiaries to be integrated will be announced in the future.
Including layoffs, Dentsu's entire overseas business will cost 87.6 billion yen over two years, of which 56.1 billion yen will be included in Dentsu Group's expenditure in 2020.
In Japan, Dentsu's employees over the age of 40 may face "early retirement." Regarding the layoffs of personnel in its domestic business, Dentsu Group said that it is "also under consideration, and it is possible."
In April this year, under the influence of the epidemic, Dentsu Aegis announced that it would carry out a series of cost-saving measures, including layoffs, salary cuts, unpaid leave for employees, and a 10% reduction in the salaries of global employees, and a greater reduction in the salaries of middle and senior executives. This is another personnel cost optimization after Dentsu Aegis announced at the end of 2019 that it will cut 11% of employees in seven markets: China, Australia, Brazil, France, Germany, Singapore and the United Kingdom.
Dentsu Group is the largest advertising group in Japan and one of the top 5 advertising giants in the world. In fact, Dentsu's large-scale layoffs are only one thing affected by the new crown epidemic, and in recent years, its institutional complexity and lack of efficiency in the advertising industry "big company" and poor performance are more important reasons.
In order to cut costs and improve efficiency, Dentsu said that it has carried out a series of organizational reforms in the past two years, and accelerated the pace of restructuring in August this year. Over the past two years, it has gradually consolidated its 160 institutional brands into six major global brands. "Integrating our business around consumers is the biggest advantage we can bring to our customers and the biggest competitive advantage we can bring to ourselves." Dentsu indication.
In September, Dentsu Group had just undergone a name change – from the earlier Dentsu Aegis Network to Dentsu International. In 2013, Dentsu acquired the British media agency group Angis for £3.2 billion; dentsu gradually merged its international business outside the Japanese domestic market with Angis to form dentsu Angis Group, which achieved 100% ownership.
Dentsu's senior leadership has also made a series of changes. In February, Former Dentsu Global CEO Tim Andree announced his departure, and Toshihiro Yamamoto, CEO of Dentsu Group, temporarily served as Acting Executive Chairman and CEO of Dentsu Aegis. It wasn't until April of this year that Dentsu officially appointed the new global CEO Wendy Clark.
In terms of leadership structure adjustment last year, Dentsu's Asia-Pacific business was integrated from the original five major markets into the three major markets of the Great Northern Region, Mainland China, Hong Kong, Taiwan and South Korea), Great Southern Region (southeast Asian countries, around India) and Australia and New Zealand, and the decision-making process was flatter, and many titles in the Asia-Pacific region were cancelled.