TOKYO: It was once viewed as a cheetah making a smooth and speedy dash to the finish tape as it went about muscling itself with acquisitions. But, hardly a decade later, in 2025, Dentsu, Japan’s largest advertising group and one of the industry’s oldest names, is considering pulling the plug on its international ambitions after more than a decade of struggle abroad. The Tokyo-listed company has hired Mitsubishi UFJ Morgan Stanley and Nomura Securities to approach potential buyers for its overseas creative and media arm — a sprawling business that includes the former Aegis Group, US consultancy Merkle and digital production house Tag — according to a report in the Financial Times on Thursday.
The move could culminate in a deal worth several billion dollars, insiders told the paper, and would mark a dramatic retreat for a group that only a decade ago sought to rival WPP, Publicis and Omnicom on the global stage. Options on the table range from the sale of a minority stake to an outright divestment of the entire overseas division, which generated $4.5bn in revenues last year but remains chronically underperforming.
The potential sale underscores the failure of Dentsu’s boldest bet — the £3.2bn ($5bn) purchase of Aegis Group in 2012, then one of Britain’s largest media-buying companies. The deal was meant to be Dentsu’s passport to the global top tier. With Aegis, the Japanese powerhouse — already near-hegemonic at home — vaulted into the ranks of the world’s top five ad holding groups.
But integration proved difficult. Dentsu’s Japanese arm remained culturally and operationally distinct from its international business. The London- and New York-led operations frequently clashed with Tokyo headquarters, leaving the business fragmented. Over time, larger rivals poached key clients, while the promise of scale failed to materialise.
Even subsequent purchases, such as the $1.5 billion acquisition of US-based Merkle in 2016, could not reverse the trend. Instead, the group accumulated goodwill impairments and rising restructuring costs. Earlier this year Dentsu wrote down $1.38 billion on its American and EMEA units and earmarked $327 million for further restructuring, including IT upgrades and headcount cuts.
The pressure has intensified this year. In February, Dentsu unveiled weak 2024 results and suspended dividends. In August, it reported a 0.2 per cent drop in organic revenues in the first half, cut 3,400 jobs — about 8 per cent of its global workforce — and downgraded full-year guidance from 1 per cent growth to flat. It now expects an operating loss of ¥3.5bn ($24 million) for the year, compared with a previous forecast of ¥66 billion profit.
Hiroshi Igarashi, the group’s president and global chief executive, offered a rare public apology: “I deeply regret this situation and offer my sincere apologies on behalf of the company.” In a call with analysts, he admitted that the international unit “continues to face negative growth across all regions”. Japan, by contrast, delivered record revenues and profits.
Industry analysts say the bifurcation of Dentsu’s fortunes reflects a deeper problem: a business structurally divided between a dominant home base and underperforming overseas assets.
“Dentsu’s ownership of the international business was somewhat unusual because of the complete separation between it and the domestic business,” said a media observer. “Japan’s idiosyncratic isolation within the global agency industry meant the leadership in Tokyo was not plugged in to the rest of the world.”
That disconnect became even clearer after Wendy Clark, then global CEO, quit in 2022, triggering an internal restructuring aimed at closer integration. Yet the changes failed to stem the tide.
According to people close to the discussions, potential suitors include Accenture Song, large independent networks, and private equity funds that have circled the sector in recent years.
IPG and Omnicom, however, are seen as unlikely contenders. The two American giants are preoccupied with completing their own merger — a blockbuster deal set to close by year-end, creating a North American behemoth. Meanwhile, Havas has been spun out of Vivendi into a standalone public company, and WPP has fended off repeated speculation about being a takeover target itself.
That leaves Accenture — which has aggressively expanded into creative services — as perhaps the most credible buyer. Private equity funds could also be tempted by the chance to carve up the business, but the declining revenue outlook, heavy job cuts and uncertain future of traditional agency models may weigh on valuations.
Any sale would also take place against the backdrop of an industry in flux. Artificial intelligence, once seen as a tool to aid campaign targeting, is now automating functions from media planning to creative production. Rivals such as WPP and Publicis are pouring hundreds of millions into AI platforms that promise cheaper, faster and more personalised ads.
“Revenues are already shrinking,” one person familiar with the sale process told the FT. “It’s been bad and could get worse as no one knows what AI will do to the industry.” For Dentsu’s global unit, which has struggled even in the best of times, the disruption could prove
For Dentsu, a sale would be nothing short of a reset. At home, the company remains unrivalled, commanding more than 25 per cent of Japan’s advertising market. Its domestic operations continue to churn out record profits and steady growth. By contrast, its international adventure has been a costly distraction.
Back in 2023, Igarashi insisted that selling was “totally not part of my mindset”. Today, facing mounting losses and a fragmenting industry, he has softened his stance, saying only that “strategic alternatives” are under review.
A sale of the international arm — once Dentsu’s vehicle for global expansion — would symbolise a retreat from ambition to pragmatism. It would also leave the advertising world reshaped yet again, in a year already marked by consolidation, divestments and upheaval.
Whether buyers emerge — and at what price — may be the truest test of how investors now value traditional ad agencies in an AI age.
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