Wednesday 26 October 2016

'Digitally mature businesses are 25pc more profitable', meaning huge opportunities here

Liam McDonnell of Dentsu Aegis Network tells John McGee why it's on the look-out for more online acquisitions in Ireland

John McGee

Published 17/07/2016 | 02:30

Liam McDonnell, CEO of Dentsu Aegis Network Ireland, would love to go 100pc digital
Liam McDonnell, CEO of Dentsu Aegis Network Ireland, would love to go 100pc digital

With 190 staff and annual billings of €145m a year, Dentsu Aegis Network (DAN) is one of the top marketing communications groups in Ireland and services a wide range of blue-chip clients in different sectors, providing them with everything from media buying and planning right through to more complex e-commerce applications and platforms, performance-based marketing and outdoor advertising services.

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Owned ultimately by the Japanese agency group Dentsu which reported global revenues of nearly €7bn in 2015, it also employs over 47,000 people in 140 different countries.

Its Irish operations include media agencies Carat and Vizeum as well as three digital businesses - ISOBAR, iProspect and Amnet, the latter being a relative newcomer to the stable and focuses solely on programmatic advertising. It also includes the out-of-home (OOH) businesses Posterscope and PML Group.

"They are all at different stages of their development.," says Liam McDonnell, CEO of Dentsu Aegis Network (DAN), the holding company for all seven businesses in Ireland.

"Carat is a very mature business and is a strong global brand with a solid client base and won Media Agency of the Year this year at the Media Awards this year.

"Vizeum is our second media agency brand and is also doing very well but both businesses have had to reinvent themselves in recent years because the market has changed so dramatically and it's going to change even more over the next 10 years, such is the pace of change in this industry."

The omnipresence of digital with the marketing mix, of course, is driving a lot of the changes taking place across the advertising industry as advertisers seek out audiences wherever they may be and this is reflected in DAN's €145m annual billings for 2015, says McDonnell.

"About 44pc of our business is now digital," he says. "We would love to grow that to 100pc by 2020. Of course, I don't think we will ever be 100pc digital but it's certainly what we aspire to and in many ways it's become a mind-set for us."

He points out that while the prevalence of digital businesses like Google and Facebook has been good for the economy, a lot more could be done to harness digital's potential across the wider economy.

"There's still a huge opportunity for us as an industry to add value to the Irish economy in terms of our digital capabilities and the opportunities far outweigh any threats.

"The reality is that digital is going continue to grow and we know that digitally mature businesses are anything up to 25pc more profitable that those that are not. So, there's a huge opportunity for Ireland and the economy," he says.

"I know we have all the big players like Google and Facebook here - and it's great to have them - but sometimes I think we hide behind them and boast that our digital industry is up there with the best.

"But it could be so much better because there's huge untapped potential amongst our own indigenous companies. And I think our industry can play a huge role in making this happen."

A key trend within the global industry in recent years has been the acquisition binge most groups have embarked upon. While organic growth is a key metric for most agency groups, growth by way of acquisition has also played a considerable role in bolstering the numbers.

Although not quite up there with the likes of WPP or Publicis Group in terms of size, Dentsu has been playing catch-up and last year the acquisition-hungry company bought 36 different businesses around the world.

So far this year, it has snapped up another 20 agencies in countries like Mexico, Brazil, Denmark and Taiwan.

Acquisitions in Ireland have also loomed large in recent years, including the purchase of Lucidity Digital, which was rebranded as ISOBAR, in 2014 and the purchase of the OOH company PML Group towards the end of 2015. If the right opportunity presented itself again in Ireland, McDonnell says he would have no hesitation in looking at it.

"We want to grow our business and we need to grow it. We see this happening organically, through diversification and through acquisitions. We are ultimately owned by a Japanese company that can give us access to low cost capital if we need to make an acquisition but it has to be for the right reasons.

"Culture is hugely important to us and that has to work out.

"It's not just about buying a business and pegging it on to our existing businesses. The culture has to be right and in this industry, that can be difficult. We've had conversations with lots of different people over the years and for various reasons they didn't go any further," he says. "But we are always on the lookout," he concludes.

Sunday Indo Business

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