Dentsu X doubles size in China by integrating &c agency

Dentsu Aegis Network (DAN) is expanding the Dentsu X brand in China by absorbing sister agency &c and its roughly 200 staff. The move effectively doubles Dentsu X in size to more than 400 employees based in Beijing, Shanghai and Guangzhou in a bid to provide a more integrated offering. DAN expects no job losses from the move.

In January 2018, &c had been ‘strategically aligned’ with data and CRM specialist Merkle, taking the new name ‘Merkle&c’. Its CEO, Michael Zhang, will now take on a newly created CEO role at Dentsu X China, reporting in to new DAN China CEO Michelle Lau, who joins on April 1st.  Jonathan Tse, existing president of Dentsu X China, will remain with the agency in a senior leadership role.

Merkle China, which operated alongside Merkle&c, will not be affected by the move and will continue to operate as a CRM and data-analytics specialist with 600 employees in Beijing, Nanjing, Shanghai and Guangzhou, led by general manager Frank Zhang. It will also continue to retain the Baidu-focused &c performance-media team that joined Merkle China in 2018.

What Chinese clients want

Clearly, Dentsu Aegis sees a better fit in combining &c’s digital marketing services, which include social, e-commerce, mobile, interactive creative and design, with Dentsu X’s media, technology, content and data insights business for clients.

“The cooperation between &c and Merkle so far is collaboration in the digital and data areas,” Dentsu X global president Mitsuyuki Nakamura told Campaign Asia-Pacific in an exclusive interview. “But by adding the Dentsu X team together with &c and continuing collaboration with Merkle, I believe we can provide a more deeply integrated service.”

This type of end-to-end, full media service with larger scale is what clients are asking for, Nakamura said.

"CMOs want [fewer] agencies to tackle bigger solutions," he added. "So ideally our direction of consolidation and integration are very much in line with the needs of CMOs around the globe."

Chinese brands in particular expect much more strategic understanding from both media and creative partners. “This is a challenging time in China,” Dentsu X CEO Michael Zhang told Campaign. “Now we need new synergies and integrated solutions where the right hand is about the content and ideas and the left hand is about data and performance.”

Sarah Weyman, chief growth officer of DAN China argued that Dentsu X is well positioned in China to connect its deep understanding of the Alibaba and Tencent platforms, where consumers reside, to the creative content that is shared and distributed there. 

Dentsu X’s proposition of bringing more creative experience to media services is borne out in China by its joint work with Dentsu Beijing and Isobar for clients like Glico. And on the more technical side, Dentsu X will still partner with Merkle for martech, adtech and data-marketing capabilities. The two recently collaborated to win a consumer profiling project for Facebook in China, for instance.

Dentsu X-factor

Dentsu X’s recent growth trajectory has been swift, both in China and internationally since its formation in 2017 from the rebrand of Dentsu Media.

Dentsu X has expanded in recent years from 15 Asia-Pacific officers to now 37 globally, including Europe and North America.  In China, it has seen more than 60% business growth (organic and new wins) in the past three years according to a RECMA listing in 2019.

By adding &c, Dentsu X will most significantly boost its Guangzhou team by doubling in size but just as importantly, adding strong digital specialisations.  Dentsu X will now be the largest global agency in that city, Zhang says.

See also: Agency Report Card 2018: Dentsu X
A leadership departure was offset by some sizeable new business, while the company invested in insight generation and knowledge sharing technology to create a stronger network.