[Company analysis] Dentsu Inc. (電通)

「Dentsu Inc. (電通)」is the largest advertising agency in Japan and the fifth largest in the world. Their sales scale is about four times bigger than「Hakuhodo(博報堂)」, which is the second largest Japanese advertising agency. They achieved very high market share in Japan, so their market oligopoly is regarded as a problem. In recent years,「Dentsu」has aggressively bought overseas advertising companies and expanded their scale. The number of consolidated employees is approximately 62,608.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Dentsu Inc.
Company name (Japanese)	電通
Date of establishment	Monday, July 1, 1901
Headquarters location	〒105-7001 東京都港区東新橋1-8-1
Capital	74,609
Consolidated sales	1,018,512
Consolidated operating profit	111,638
Consolidated total assets	3,638,488
Consolidated capital	1,110,749
Capital adequacy ratio	30.5%
Consolidated number of employees	62,608

 

 

 

2. Summary and Features

 
「Dentsu」was founded in 1901 by Mitsunaga Hosiro(光永星郎), under the name of「Nihon Denpō Tsūshin-sha(日本電報通信社)」. its abbreviation was "Dentsu". They have conducted news business during the founding period, but the profitability was relatively low. So they decided to transfer the new department to other company as of 1936. During the period of the Pacific War, according to the government policy, all advertising agencies became closed. But only「Dentsu」was abled to operate, and soon after, they gained an overwhelming position in the Japanese advertising industry.　

 

After that,「Dentsu」has been a leading company in Japanese advertising industry. In addition, this company recruits a large number of employees, who are the children of political and business circles and entertainers. Although it has abundant human resources,「Dentsu」is athletic tempered company with "win at all cost philosophy". That is the reason for extremely long work time of employees and bad work life balance.

「Dentsu」is basically a company with strengths in the fields of television advertising and mass media. In particular, They have a strong influence in Japanese mass media with abnormal relationship network. Especially in the sports related business such as the Olympics and Paralympics,「Dentsu」has almost absolute position.

 

Nonetheless, as for the current market share of the Japanese domestic advertising market,「Dentsu」achieved 24% and「Hakuhodo」has 21%, showing no significant difference in the Japanese market. However,「Dentsu」bought the「Aegis Group」, a UK advertising agency in 2013, and has begun global expansion. Now oversea business accounts for 60% of total sales, as a result,「Dentsu」is four times bigger than「Hakuhodo」in total sales.

 

Also in the digital field,「Dentsu」is conducting its business through affiliated companies. And they are actively utilize the data that they obtained from digital business. By this, their digital sales increased from just 27% of total sales by 2013 to 43% in 2017.

 

 

3. Major Business

 

■ Marketing

■ Digital marketing

■ Creative

■ Promotion

■ Media

■ Content

■ Global business

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated revenue		838,359	928,841	1,018,512
Consolidated operating profit		137,681	137,392	111,638
Consolidated total assets		3,155,230	3,562,857	3,638,488
Consolidated net assets		981,961	1,150,134	1,110,749
Breakdown of revenue	Japan Domestic business	420,387	416,671	430,292
	Oversea business	430,016	519,405	600,140
	Adjustments	-12,044	-7,235	-11,920