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'Why buy a network that even Dentsu couldn’t fix?': Inside the gamble of Dentsu's international arm sale
The Japanese ad giant is exploring a sale of its international arm, including Aegis, Merkle, and Tag. For Indian agencies and tech giants, this could be a once-in-a-decade chance to go global: if they can solve a cultural puzzle that even dentsu couldn’t.
History shows that dentsu could not reconcile its acquisitions into a unified culture. The next owner must attempt what the Japanese giant could not: turning a patchwork into a network.
For over a century, dentsu has been synonymous with advertising in Japan. From stewarding brands like Toyota and Honda to dominating sports marketing at home, the company built an empire unmatched in scale and influence. But outside Japan, the picture has always been less certain.
After its landmark £3.2 billion acquisition of Aegis Group in 2012, followed by buys like Merkle and Tag Group, dentsu appeared poised to take on WPP, Omnicom, and Publicis on the global stage. Instead, its international business has bled red ink. Now, facing billions in losses, thousands of layoffs, and a leadership team conceding that “negative growth across all regions” has become the norm, dentsu is exploring the unthinkable: selling its international arm.
It has already annocuned of eliminating about 3,400 jobs in markets outside its home country- roughly 8 percent of its head count in those regions - as part of a broad restructuring. The company, which has faced slower growth in overseas markets, said it is considering “forming partnership for overseas operations” to improve efficiency and performance.
The move would put marquee assets- including Merkle’s coveted data and CRM capabilities- up for grabs. And that has triggered a tantalising question in India: could this be the moment when an Indian player finally buys its way onto the global advertising stage?
The Cultural Knot dentsu Couldn’t Untie
Even those who know dentsu best admit that its global push has been troubled from the start. Rohit Ohri, founder of culture consultancy OHRIGINAL and former executive chair at Dentsu India, is blunt: “Why buy a network that even Dentsu couldn’t fix?” He argues that while dentsu’s Japanese heritage gave it powerful client connections at home, it struggled to translate that strength abroad.
“This is a network with marquee Japanese clients in its DNA- Toyota, Honda, Suzuki, Sony, Toshiba - yet outside Japan, it has struggled to turn those relationships into profitable, sustainable growth.”
If dentsu, with its home advantage and century-old trust, couldn’t make its international network thrive, why should anyone else believe they can?
The reason, Ohri says, is cultural rather than structural.
“You can buy scale, but you can’t buy culture. And culture- not cost-cutting, not M&A spreadsheets- is what makes global networks work.” For him, the danger is that buyers will inherit not a global powerhouse but “unfinished work.”
Sandeep Goyal, chairman of Rediffusion and another longtime leader and observer of Dentsu, makes a similar point by tracing its history of failed bets. Simultaneously, Goyal is also eyeing to buy non Japanese ad business of Dentsu and is in active talks with investment bankers and potential strategic partners to evaluate the deal.
From the purchase of CDP in London in the 1990s to a sizeable stake in Publicis in the early 2000s, dentsu consistently wrestled with a dilemma: let local managements run independently, or parachute in Japanese expats?
The indecision proved fatal. “Dentsu has never really been able to make a stable global network outside Japan,” says Goyal.
“If Dentsu with 100+ years has not been able to run a global creative and media business, how will a TCS (if it is to buy dentsu's international arm) with zero understanding of the domain be successful?”
Chandan Sharma, General Manager–Digital Media, Adani Group, adds another dimension.
“I have worked closely with dentsu's global team, and they are very talented. Despite the talent and impressive pool of clients, a decade of expensive global M&A (Aegis/Carat, Merkle, Tag) never translated into durable organic growth. Post-COVID softness, China/Europe weakness, rising rates, and AI pressure hit margins; management has been ‘fixing the plane while flying.’
"Expensive buys don’t help unless you are damn sure it will work for you- hoping for a lot but strategizing for nothing. That’s why dentsu ended up taking goodwill impairments worth approx. ₹1.60 lakh crore internationally. They are cutting ~3,400 jobs, but we all know it may not end well,” says Sharma.
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A Rare Opening for Indian Players?
Despite the warning signs, the opportunity is undeniable.
Acquiring dentsu’s international portfolio would give an Indian buyer instant access to offices, talent, and blue-chip clients across the US and Europe- an expansion that might otherwise take decades. The crown jewel, Merkle, is especially attractive, offering advanced capabilities in CRM, data, and performance marketing that are still nascent in India.
Shiv Sethuraman, Chief Transformation Officer at Famous Innovations, believes this is a “once-in-a-decade” opening. “You suddenly get access to their network, to world-class Martech and CRM capabilities, and a creative reputation that usually takes years to earn,” he says. “It’s the difference between being seen as service partners to global brands versus actually shaping them.”
For Sethuraman, the risk is not about whether Indian companies can manage the business but whether they can think long-term.
“If an Indian player takes a long-term view here, they could build something far bigger than what private equity would do with it.”
Sharma agrees saying that if dentsu runs a formal process for the international arm (or carves it up), Indian agencies and corporates get a once-in-a-decade fast track to two things: one is a global portfolio with the likes of Carat, iProspect, DentsuX, Merkle, Dentsu Creative, Tag, etc., bringing Fortune 500 clients’ rosters and operating playbooks.
The other is capability lift with Merkle, which accelerates first-party data/identity, martech integration (Adobe/Salesforce), and performance. Meanwhile, Tag provides industrial-scale content operations that pair beautifully with India’s offshore delivery.”
Who Could Make the Leap?
The most obvious contenders are India’s tech giants. Infosys, TCS, and Wipro already have global footprints and are steadily bolting marketing services onto their technology core. Acquiring dentsu could catapult them into a new league, where creativity and technology fuse into a single offering.
Sethuraman admits it “could completely reset the way technology and creativity come together globally.”
But here the sceptics push back. Goyal points out that advertising is “a specialist business,” and the muscle that helps TCS or Infosys dominate IT outsourcing doesn’t translate to running a global creative network. “Difficult for a TCS to own and run a business that has very different contours,” he warns.
Sharma sees possible buyers lining up. “Infosys can be a perfect fit given its growing martech practice and WongDoody creative arm, with Merkle plugging perfectly into its CXM and data ambitions.
TCS, with its strong balance sheet and enterprise relationships, could leverage Merkle and Tag to supercharge TCS Interactive. Reliance has both the capital and strategic intent- through JioAds and Viacom18- and acquiring dentsu’s media or content assets would instantly expand its global advertising footprint. But whoever steps in must be ready to dilute some profits to accommodate such a big portfolio.”
Beyond IT, India’s corporate titans like Reliance and Adani- with sprawling interests in media, telecom, and retail- may see dentsu as a way to strengthen their consumer-facing ecosystems. Independent agency groups, too, may be tempted, though few have the scale or appetite for risk that such a deal would require.
As one executive put it off- the record: only those with deep pockets and patience could stomach the cost and complexity.
The fate of dentsu’s international arm now rests on whether buyers can see beyond the losses and dysfunction to the potential beneath. History shows that dentsu could not reconcile its acquisitions into a unified culture. The next owner must attempt what the Japanese giant could not: turning a patchwork into a network.
For Indian players, the stakes are high. Pull it off, and they could leapfrog into the global big league, forever changing how brands perceive India’s role in the industry. Fail, and they risk confirming that dentsu’s international empire was never more than a mirage.
As Ohri summed it up: “Buying dentsu’s international arm could either be a bold leap forward- or a very expensive rescue mission.”
Or, as Sharma puts it: “The real issue has been the tough integration of expensive acquisitions that never fully clicked. For IT firms and agencies, this moment could be a rare chance to leapfrog- picking up assets like Merkle or Tag wouldn’t just add revenue, it would secure a place at the global table of creativity and customer experience.”
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