When Dutch-based tech and marketing agency Dept burst into the APAC region at the tail end of the pandemic, Campaign questioned whether its ambitious growth plans might quickly turn to growing pains, given the indigestion S4 Capital was experiencing after rapidly swallowing too many acquisitions.
Back in 2022, the company was two years into a private equity injection from Carlyle Group, had over 3,000 employees in 18 markets, and had the plans and means to scale to 1,000 employees in APAC, with regional aims to provide 10% of global revenue.
Two years later, Dept’s APAC footprint isn’t fully there yet, though it’s still adding to its current APAC headcount of 750 and expects to be closer to 1,000 by the end of the year. The 10% of global revenue, however, will take at least a few more years, CEO Dimi Albers told Campaign in a conversation with its APAC leaders in Singapore. This is because the US business in particular has been taking off and hard to keep pace with. The company has grown to roughly 4,500 employees in over 20 markets.
Nonetheless, APAC chief Vishnu Mohan still wants 10% to 15% of Dept’s business to come from this region to create the type of regional scale global clients expect. Its key acquisitions of Tekno Point in India and Two Bulls in Australia, supplemented by a key service partnership in Bangkok, has given rise to a small but viable regional network of specialised hubs. Dept is now not merely relying on global work, but also gaining traction with incoming Southeast Asian clients like Central Group in Thailand, NTUC Income in Singapore and Oona Insurance in the Philippines.
Tech-first work
Similar to Accenture Song, Dept rarely makes waves with big brand creative and media account wins. Billing itself as a 50/50 tech and marketing firm, much of its client work originates with the former rather than the latter. This is why it continues to fly under the radar like a consultancy and seldom makes splashy advertising AOR news, and also avoids some of the negative headlines from agencies recently involving cuts and consolidations. Most of Dept’s key client work in APAC these days revolves around digital transformation, commerce and product-based experience and enhancements.
In India, for instance, where APAC CTO Yash Mody leads Dept’s global Adobe practice, staff has grown from 370 to 550, alongside a small digital design vertical. The core work involves managing digital stacks for banking and financial clients, building their websites, mobile apps and writing their APIs to interconnect their programming. Applied AI work is also helping create better protocols and leads for sale agents in the field. On the commerce side, Indian teams are working on digital transformation projects for consumer product manufacturers like paint companies and tire makers, who are now starting to take advantage of the new customer outreach capabilities available to them instead of relying on retailers.
Going immersive
At its sexiest, some of this work uses Apple Vision pro headsets to let customers try on new clothes, apply new paint on their walls or test out new tires in virtual scenarios. The latter experience even involves going on a virtual family drive where better grip can make the difference between stopping safely or tumbling off a cliff.
Integrating Dept’s spatial computing expertise from Australia, some of the Vision Pro work includes using eye-tracking technology from a commerce platform or website, converting it into an analytics data set, pushing it into an analytics engine and building a cohort customer group. Such is the case with a financial literacy project for an Indian bank that aims to generate virtual libraries or articles based on what financial products and concepts customers have been looking at and trying to understand.
“The way in which people experience products is changing,” Mody says. “And enterprises build those products. So the ability to build an immersive experience around a product’s actual use [in a scenario] that’s going to happen is what we’re trying to bring to the market.”
Dept’s penchant for building immersive experience is not terribly surprising, given how enthusiastically it embraced metaverse projects a couple of years ago, launching a global 300-person team dedicated to blockchain, Web3 and NFTs and holding big virtual festivals.
Albers says this type of work only amounted to about 5% of Dept’s total revenue but now aids their current work as companies like Meta and Apple continue to develop new applications in the space.
“That was basically the precursor to some of the AR and VR work that we are starting to build for the next generation of hardware,” Albers says. “Skills built up in 2020 till 2022 are now translating into those newer, more mature and investment-heavy platforms.”
Mohan is also quick to point out that while some of their work has experiential elements, it is now more closely tied to performance: “It’s outcome-driven because you are pushing a certain recommendation to the client based on [their attention] that is going to lead back to an increase in conversion rate.”
For good health
Closely related is the spatial computing space, which has been embraced by the Australian hub. Evan Davey, Dept’s SVP of growth and head of Australia, tells Campaign they have seen ‘heaps’ of interest and applications in healthcare. This includes working with the University of Melbourne to commercialise their spatial tech health applications.
Healthcare in general has become a larger part of Australia’s work, following the creation of Dept Health globally last year. A large open-source project currently underway for the US Center for Disease Control (CDC) aims to democratise the CDC’s genomics platform to give wider access for health research.
Consultancy or agency?
Given that so much of Dept’s work centres around consultative technology projects, it feels a bit strange to profile them next to standard advertising agencies, which begin with core marketing practices and are now building out digital transformation work from there. Dept, however, has worked in reverse.
“The work we’ve done has always had a more tech and product focus which sets us apart from the existing landscape. With these relationships in place, it’s a great jumping board to then build out the marketing side of the business,” says Albers.
Here, Mohan jumps in, referencing new economy marketing clients like eBay, Twitch and Viber. The leaders also point out Australia’s recent hiring of their first ECD, who began in April.
“In Australia, because we have both, we’re seeing more tech engagements go across into full blown end-to-end marketing,” Davey claims.
Indeed, Dept’s Australian team has a blend of clients that include consumer brand and retail names like Grill’d in the QSR space, but much of the work still centres on tech projects like creating new ordering systems rather than pure marketing plays.
Size matters
This separates Dept from direct competition with the big advertising agencies but lands them in an arena facing consulting juggernauts like Accenture Song, Deloitte Digital, Capgemini Invent—while lacking their scale.
As much as the Dept leadership extols the virtues of being smaller, like agility and closer relations to clients, their goal has always been to get bigger. Hence the investment by one of the world’s largest private equity firms.
Now four years into Carlyle Group’s investment, it’s only logical that we could see a Dept IPO in the next 24 months, providing a steppingstone to growth.
Albers is used to being asked the question but can’t see an IPO happening in 2024 given the state of the market and what the impact going public could have on creating red tape and slowing down their agility.
“The moment that we decide together with Carlyle that we do want to find the right next partner for us we’ll go into the market and most likely focus on being able to retain what we are building,” says Albers. “This is our second round of PE and we know it’s not about the ‘financial event’ but about what we want to build as a business in five, 10 or 15 years. If that’s a good business, then people will want to pay a lot of money for it.”
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