Dentsu buys out JV partner in India

MUMBAI: Dentsu Inc. has bought out its joint venture partner in India for an undisclosed amount, a move indicative of the consolidation that is taking place in the advertising world as the global agency seeks to pursue its ambitions independently.

According to Industry sources, Dentsu has paid Rs 2.4 billion for buying out the stakes held by Mogae Consultants, a company owned by Sandeep Goyal, in the three joint venture full-service advertising agencies operating in India.

Mogae held 26 per cent each in Dentsu Communications, Dentsu Marcom and Dentsu Creative Impact.

As part of a strategy to grow the Dentsu brand in India, the three companies, together with other companies under the Dentsu Communications umbrella that includes Dentsu Mediatech and Clickstreamers, are being integrated into the Dentsu India Group.

Goyal, the incumbent chairman of the Dentsu India Group, will resign his position. He will also resign from the boards of the three advertising agencies.
Goyal will, however, continue to support the Dentsu India Group as its founder chairman. Tanya Goyal will also resign from the boards of directors and will become a Principal Advisor to the Dentsu India Group.

Says Dentsu Inc. executive officer in charge of global business development Yuzuru Kato, “By making these three companies wholly-owned Dentsu subsidiaries in the rapidly developing and increasingly important Indian market, we aim to enhance our infrastructure to provide the best integrated solutions to our clients in all the business domains. Focusing on the area of communications, we will implement marketing communication strategies that solve the management and business issues facing advertisers and media content companies today. Ideas that reach beyond the imaginable. Technology that crosses the bounds of possibilities. Entrepreneurship that surpasses the expected. We will use these three sources of strength stated in the Dentsu Group corporate philosophy to create innovation.”

Since the establishment of Dentsu Communications and Dentsu Marcom in 2003, and Dentsu Creative Impact in 2005, Dentsu has been steadily expanding its business in India through the three agencies.   

In view of the recent growing importance of the Indian market, however, and faced with the need to provide an increasingly higher level of unique services to its global clients, Dentsu decided that the time had come to make the joint-venture companies into wholly-owned subsidiaries. With this move, Dentsu will be able to positively expand its business domain from advertising to other areas such as sports and digital-related services.

According to a recent forecast by ZenithOptimedia, India’s advertising market, which grew slightly in 2009 to $4,463 million, is expected to grow 13 per cent in 2010 and 13–15 per cent in 2011–2013, year on year,  

The total projected market size of $7,548 million in 2013, an increase of 69 per cent when compared to the 2009 figure, will make India one of the world’s leading advertising markets.

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