Dentsu Aegis Network acquires Accordant to drive programmatic advertising business

HAMPTON, September 2, 2016 — By Seth Ulinski, Technology Business Research, Inc.

Below is TBR’s commentary on Dentsu Aegis Network acquires Accordant to drive programmatic advertising business.

Dentsu Aegis Network positioned for platform-driven agency landscape

On Sept. 1, 2016, Japan-based agency conglomerate Dentsu Aegis Network announced its acquisition of programmatic advertising technology specialist Accordant Media, expanding its portfolio of communications services. This move comes on the heels of an investment to take a majority stake in Merkle, a CRM and database marketing services firm.

By combining traditional digital agency services and proprietary platforms maintained by Accordant and Merkle, Dentsu is on the path to achieving its goal of Dentsu Aegis Network being a “100% digital economy business by 2020,” per Nigel Morris, CEO Americas and EMEA. That “agency” is missing from Morris’ statement is telling: Digital agencies are evolving beyond traditional creative and media buying services to add value across the customer experience and capture a larger piece of the $40 billion digital marketing services (DMS) market. This requires capabilities in areas such as consulting, data science, systems integration and programmatic platforms.

Climbing the ranks with traditional peers while facing new competition

While Dentsu is ranked 5th in revenue among major agency holding companies, assets and personnel from Accordant and Merkle will allow it to capture share from larger peers (e.g., WPP, Publicis and Omnicom). However, as Dentsu Aegis Network expands the breadth of its portfolio, it increasingly competes with IT services heavyweights such as IBM, Accenture and Deloitte, which are encroaching on agency turf directly by launching digital creative and content production studios as well as larger business transformation projects that include DMS.

Furthermore, outcome-based engagement models are gaining momentum with clients. This development favors services-led firms such as Dentsu Aegis Network that are acquiring complementary proprietary tools, as these tools can offset risk by increasing margins on higher-value services (e.g., consulting) and arbitrage media or data as needed. The caveat is that some data-driven clients are asking for business transparency from DMS partners, which may squeeze business opportunities for providers that comingle services, proprietary assets and third-party tools.

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