Opinion

Game of Thrones: The Dentsu Aegis power play

Dentsu and Aegis Media logos

Dentsu Aegis revealed good numbers last week with a strong performance from Asia two years after the Japanese ad giant acquired the British media buyer. But the exit of the head of the Australian operation a few days prior, after the removal of a Southeast Asia team the week before, are the latest signs that with marriage comes politics, writes Robin Hicks.

Cast an eye over some of the appointment announcements Dentsu Aegis has made over the last year or so and a pattern emerges that may cast some doubt over the official reason why the agency’s Southeast Asia team was removed at the end of January.

To “eliminate duplicate costs” was the explanation given in an email to staff by Dentsu Aegis Network APAC CEO Nick Waters, to merge the finance, legal, IT and communications team reporting to Southeast Asia boss Dick van Motman, into his own in Singapore.

But other regions, Greater China and South Asia for instance, have their own teams in those departments, so why did the axe fall on Southeast Asia? Was it simply a matter of too many people doing the same thing in Singapore?

To look at the company’s balance sheet, released last week, in which profits for APAC outside of Japan jumped by 11.4 per cent, a recent interview with Dentsu’s boss outside of Japan Tim Andree, in which he detailed 60 acquisition targets for this year, and the fact that Dentsu Aegis has just hosted its senior management team at a five-star hotel in Bangkok is enough to suspect another reason besides cost cutting.

It was, suggests a source, a political move within a company that has a flavour of Game of Thrones about it.

When Dentsu acquired Aegis Media in March 2013, and set up its international arm Dentsu Aegis Network in January 2014, a question so obvious few asked it at the time was what the cultural and political implications might be for a newly wed odd couple looking to blossom quickly.

The marriage of a creative-driven giant and a pure-play media group, the differences between how Japanese and Western companies operate, and whether Dentsu or Aegis bosses should lead the charge outside of Japan presented company bosses with a fiddly puzzle. The pieces needed to be carefully placed.

To begin with, an observer of the business suggests, Dentsu Inc was happy to give the reins of international expansion to Aegis people. Which probably made sense given the international experience of the London-based group, and the limited historical success with which Dentsu had expanded outside of Japan before the merger.

Rob Sherlock, the international president of Dentsu’s Japanese rival ADK suggested in an interview with Mumbrella recently that Dentsu Aegis is essentially a Western agency outside of Japan. Dentsu Inc bosses might not have enjoyed that comment. But in a sense it is true.

Granted, most of the brands that are housed within Dentsu Aegis Network have Western – and besides the acquisitions made after the merger – Aegis origins. Carat, iProspect, Isobar, Mcgarrybowen, Vizeum and Posterscope are headquartered in the US or Europe, even though they ultimately have Japanese masters in Tokyo. But most of Dentsu Aegis Network’s regional bosses, in Asia Pacific but also elsewhere, are gaijin (non-Japanese foreigners), or rather people with Aegis and not Dentsu resumes.

Nick Waters

Nick Waters

Running Dentsu Aegis Network across the region based in Singapore is Nick Waters, an astute, business-headed professional who moved into the top job just over two years ago, after four years leading Aegis APAC, with a CV that includes running Mindshare across Europe, Middle East and Africa, and before that across APAC.

Waters has a number of Aegis allies working for him in key roles. There’s Rob Hughes running North Asia (Hong Kong, Taiwan and Korea), Ashish Bhasin managing South Asia, and – until last week – Luke Littlefield at the helm of Australia and New Zealand. All three worked for Aegis in various guises for 20 years combined before the merger.

The exceptions to the Aegis rule of Dentsu Aegis Network are China and Southeast Asia. But there have been signs that Dentsu Inc wants more Dentsu people to run the show in APAC.

Business has been good post-merger, but “it’s not the Dentsu way,” a source says. They’re creative guys at heart. Dentsu Inc wants to “roll back in.”

Hibino

Hibino

At the start of this year, Dentsu Aegis Network moved Takaki Hibino from Tokyo from Singapore and into the role of CEO of Dentsu brand agency and Dentsu Media Asia Pacific, for markets outside of Japan. Hibino, who has in true Japanese fashion served Dentsu for all of his working life, reports not into the man he now shares an office with, Nick Waters, but Hiroaki Charlie Sano, CEO of Dentsu brand agency and Dentsu media, and based at Dentsu Inc HQ.

Although Dentsu and Dentsu media are technically part of Dentsu Aegis Network, these two brands continue to be managed by a Dentsu Inc executive, and the legacy Aegis brands by legacy Aegis people, it was explained to Mumbrella by Dentsu Inc in an email.

The reasons Dentsu gives for this are culture and client conflict.

Many of the Dentsu branded agency and Dentsu media clients are Japanese, and some of them are competitors. Which means that they must be handled separately, the agency explains. The Aegis brands also handle competing accounts, and so all the brands need to continue to operate in parallel.

But who these parallel businesses ultimately report in to, Dentsu Inc or Dentsu Aegis Network, and who controls the P&L (Dentsu announced introducing a single P&L for each market in APAC in 2014), is where it gets interesting.

Motohiro Yamagishi, Nubuaki Kyushima, KF Lee and Phil Teeman

Motohiro Yamagishi, Nubuaki Kyushima, KF Lee and Phil Teeman

The top job of running the newly merged Dentsu Aegis China at the end of 2014 went to Motohiro Yamagishi, who was head of Dentsu’s North Asia operation previously. Phil Teeman, who was CEO of Aegis Media China, was appointed group MD when the two agencies, which had for many years been competitors, came together.

Though Yamagishi was the clear choice for running the network’s biggest APAC market outside of Japan on paper (4,000 staff in 18 subsidiaries in 16 cities, now under a single P&L), Teeman had been backed for the position by Waters, a source says. But Yamagishi was given the nod by Dentsu Inc, who basically wrote his acceptance speech before he’d officially been given the job in a splendidly frank interview with Campaign Asia in July 2014, apparently given without official approval.

Campaign's interview with Yamagishi-san

Campaign’s interview with Motohiro Yamagishi

“We have gotten the agreement from Aegis Media to set this in motion, and we have the confidence we can carry it out well,” he said in a Q&A with Campaign journalist Jenny Chan, who had suggested to him that, despite now having a single P&L, true integration between Dentsu and Aegis in China would be “tough.”

“Even though there may be difficulties, I would like to take on the challenge,” he said, which even if loosely translated by his interpreter was a bold statement to make.

Though he technically reports into Waters, Yamagishi sits on the Dentsu Inc executive board, and has a direct reporting line into the most powerful man in the company, Tadashi Ishii, president and CEO of Dentsu Inc.

Rohit Ohri was asked why he left Dentsu?

Rohit Ohri was asked why he left Dentsu on Indian ad chat show Brand Equity

Another interesting post-merger leadership story broke in India in June last year.

Rohit Ohri, the man credited with the acquisition of well-regarded creative agency Taproot, was given a regional role running Dentsu branded agencies as APAC CEO after more than four years of establishing Dentsu as a force in India. He moved from Delhi to Singapore to take the job. A matter of weeks later he quit and returned to India to run stuttering outfit FCB Ulka, which had just lost its creative director. Takaki Hibino, as mentioned previously, later shifted from Tokyo to Singapore to replace him.

Asked why he had left the regional job so hastily in an interview on Indian ad industry analysis show Brand Equity, Ohri said he had realised that the role was more about administration than the work. “It was not so exciting, it wasn’t something I wanted to do,” he said in response to the question 44 seconds into this video.

A combination of factors were at play. A reluctance to leave India, arguably the region’s most exciting market and where Ohri was treated like royalty, and a disenchantment with the glorified accountancy role that is a regional posting these days, sure. But politics was in the mix too.

Who would lead Dentsu Aegis Network South Asia, a job Ohri had wanted (although the position he was given later was more senior) came down to a contest between him and Ashish Bhasin, sources suggest. Bhasin won.

A rival agency boss in India Mumbrella spoke with suggested a key difference between Ohri and Bhasin. “Ashish is more of a businessman, Rohit is more of an advertising practitioner.” The Dentsu Aegis Network job requires the political skills of the former.

Yang and MiyauchiSkip forward a few months to November 2015, change came in Taiwan, where Dentsu lifer Isao Miyauchi was placed into the top job. Ann Yang, who’d led Aegis Media Taiwan for the last nine years, moved on to, according to the press release, explore opportunities to help NGOs with her marketing experience.

Littlefield

Littlefield

In Australia a fortnight ago, local trade mag Adnews described the departure of Luke Littlefield last week as a “shock exit” when after almost a decade with Aegis, many of them loyal to inimitable agency baron Harold Mitchell, whose Mitchell & Partners was acquired by Aegis in 2010, was replaced by Simon Ryan, who for the last six years has been running the Australia operation for Aegis brand Carat.

Nick Waters and Simon Ryan

Publicity shot of Nick Waters and Simon Ryan after Ryan’s promotion

Australia hasn’t been hitting the numbers. And Littlefield, a former KPMG consultant who was landed the job of integrating Dentsu and Aegis after the merger, was replaced by a more spritely, aggressive character in Ryan who is Aegis through and through, and whose influence in the group – as Mumbrella’s Nic Christensen pointed out in an analysis piece on Littlefield’s exit – had grown after Dentsu bought Aegis and a chunk of billings was moved out Mitchell & Partners and into Carat.

Dick van Motman

Dick van Motman

Back to Southeast Asia, where Dentsu Aegis Network is run by Dick van Motman, who moved into the role after running Dentsu Asia outside of Japan for a year before the merger with Aegis, and recently found himself without the team he had built around him since, with four of his people shown the door.

Now Van Motman must rely on the APAC team, which has for some time reported into Waters, for comms, HR and finance support – unlike the regional bosses in Greater China and South Asia who have their own.

Isolating the Dutchman, a wily operator who has been around the block in Asia (he ran DDB China as president and CEO before joining Dentsu) and is not to be underestimated, is a curious hand to play and looks like a move to consolidate power.

Waters was unavailable for comment in response to the assertions raised in this article. But Dentsu Aegis Network’s APAC comms team told Mumbrella about the SEA job cuts: “With both Southeast Asia and Asia Pacific functional people in Singapore we had duplication. Duplication is wastage and removing this allows us to reinvest in front end client facing talent.”

In a statement responding to Mumbrella’s question about a political tussle between Dentsu and Aegis for control of the region, DAN APAC noted: “There are no politics between Dentsu Inc. and Dentsu Aegis Network. Dentsu Inc. has been highly supportive of Dentsu Aegis Network and appreciative of the exceptional results delivered.”

There is no reason to suspect that this internal game of chess will mean an end to strong results for the group, which looks in better shape than many of its rivals and can rightly claim to have gone through a successful merger (unlike the embarrassment that was the failed Publicis Omnicom deal). But it is worth keeping an eye on. Politics has the habit of muddying the waters of progress.

An agency boss who has worked with Waters before points out that regional jobs come with power, and the inevitable desire to protect that position and hold your ground. “Big international postings are complicated,” he says. “You need skills for another world beyond advertising and media. And with a merger like Dentsu and Aegis, those skills are being seriously put to the test.”

Robin Hicks is the editor of Mumbrella Asia

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