Aim to garner 50% of our business from CX by 2026: dentsu's Harsha Razdan

Excerpts:

We read about your vision of transforming dentsu into a Martech consultancy firm. Is there any time frame you may have set to effect this transformation?

Dentsu is poised to become a firm with services at the intersection of marketing and technology, with its primary lines of business encompassing creative, media, and customer experience (CX). The overarching global objective is to have 50% of the business generated from CX by 2030. My specific aim is to realise this goal in India by 2026, capitalising on the abundant growth opportunities prevalent in the region.

While creative and media will undoubtedly play significant roles, the burgeoning landscape of consumer touchpoints presents a substantial opportunity in marketing x  technology. Failing to strategically play around marketing x technology may result in a loss of both talent and business prospects.

To do this, one needs a hybrid skill set of people who understand data science and technology and deliver effective solutions for business. Consultancy models should be backed by the ability to provide solutions. With your current talents and even the new appointments that are in the public domain, how are you equipped with conventional talents to change this perception to grow your consulting business aspects?

We have a two-pronged approach with regard to talent, focusing on both internal upskilling efforts and external talent infusion. The latter involves the incorporation of external talent through acquisitions. Over the past few years, we have successfully acquired a series of companies, and within the last 3–4 years, we have seamlessly integrated them, aiming to streamline our services for clients. While our in-house talent is undergoing organic upskilling, we are consistently on the lookout for additional talent or potential acquisitions, particularly in the CX space, encompassing areas such as data, commerce, and martech.

Do you believe the existing team possesses the capability to contribute to the agency's CX agenda by 2026? What ratio of external hires to internal staff do you envision in order to attain your objectives?

Our business will be 50% CX in a few years so the talent for CX will be a mix of internal talent that has been up-skilled and external talent that will be recruited. We can surely grow with the current set of talent, but if we wish for exponential growth, then we will have to make acquisitions and hire in the tech space.

Does this imply that the current workforce must inevitably acquire martech skills to secure their positions?

On the contrary, the current sectors of our business, such as creative and media, are not being downsized. There are growth opportunities in both media and creative, and it is perfectly acceptable for individuals to continue specialising in those areas. As we strengthen our capabilities in marketing x technology, our talent from existing lines of businesses can move to CXM and vice versa.

What types of companies are you targeting for acquisition?

We are primarily focusing on Customer Experience Management (CXM), specifically in areas such as data, commerce, and experience. Possessing in-house CXM capabilities is crucial, given that today's marketing challenges extend beyond the mere release of an advertisement. Active participation in broader problem-solving is consistently valuable.

How are your clients reacting to this pitch? How confident are you that they will accept you as a marketing tech consultant unless you change the Denstu DNA?

Clients have been very positive. I have not seen a single one who has been speaking a different language. While we are working on the Dentsu DNA, there isn’t a straightforward answer. I have an inherent advantage, which I’ve realised six months later—upon requesting meetings, I successfully secured appointments with every CEO I approached. This was a pleasant surprise, as I did not anticipate such openness, willingness to share thoughts, or the extent of engagement in discussions on various business challenges.

I’ve read all your interviews. You’ve mentioned that dentsu hasn’t been listening to its clients. What are the clients saying that dentsu was not listening to?

Addressing clients' challenges extends beyond the creation of advertisements. While media and creative services are within our offerings, we can also assist clients with additional marketing facets such as commerce and data. For instance, when a client seeks to boost sales, there are multifaceted solutions beyond the realms of advertising and media.

Currently, our team has refrained from active participation in the entire value chain because we have been focused on promoting our own solutions. However, by asking questions like "How can we solve this problem?" and "How can we increase sales?" we can initiate more comprehensive discussions.

We must tell the clients that, at times, the conventional approach is not the right solution. While this may result in a short-term impact on client revenue, genuinely addressing the client's needs rather than solely focusing on ad creation is a courageous stance. Over time, clients tend to appreciate this honesty.

Till now, you’ve only spoken about marketing technology. What about dentsu’s focus on creativity?

Creativity powers our services. But there are things to be considered beyond creativity. For example, packaging, visual merchandising, how the product reaches the consumer (retail, kirana shop or e-commerce) and the product itself. Creative is a very important element, but one out of many levers to pull. Just creativity as a whole is not enough to sell the products.

Your answer is very different from that of most of the advertising leaders. They put storytelling and creativity above everything.

Storytelling and creativity are important, but they are not the only levers. A product can’t be sold without a physical/online shop and needs to have a route to the consumer, even with the biggest of creative ideas.

You have been saying that you met up with close to 100 clients within your network and they are happy about that, but that’s the norm for the service industry, as client-centricity is the norm for the advertising & media industry for engagement to understand the business problems and offer customised solutions that they are seeking. But at the same time, most clients say that agency heads show their faces once a year, at the beginning of the contract, or the end of the contract. How do you want to react to this?

I can't comment on the past. However, we are currently implementing a structure wherein our senior client servicing personnel regularly engage with our major clients. I, too, plan to meet with clients as frequently as possible. In fact, I aim to engage with at least 100 clients on a rotating basis, with or without a specific agenda, once or twice a year.

While the clients appreciate the value-added services that advertising networks are offering as they compete with the Big 5 consulting firms that you have been part of, clients are still fixated on reducing creative and media commissions. Clients want these value-added services to be part of commissions, unlike a consulting firm’s fee structure. What is your strategy to overcome these commercial terms to be acknowledged as a competition to consulting firms?

The cost pressure will always be there. We have to live with that and try to optimise, work better, and be more efficient. Asking for freebies is common across industries. But you have to differentiate yourself. Clients have no issue paying for differentiated services. They are already paying hefty amounts to tech companies and consulting firms. Then why wouldn’t they pay us if we brought differentiated value-added services to the table?

Agency networks are hugely challenged by bottom-line profitability. It has been seen that most networks are managing profit margins by hiring freeze and silence layoffs. How is Dentsu dealing with this challenge when you need skilled talents for your business vision?

We are adopting a dual strategy. First and foremost, we aim to achieve a balanced portfolio across media, creative, and customer experience (CX) to ensure equilibrium in our growth trajectory. This strategic balance will contribute to greater employee retention. Secondly, our transition towards a ‘One Dentsu setup’ is another key element in retaining talent. While acknowledging the persistent challenge of cost pressures, we recognise the need to address this by winning new business. Merely optimising costs is not the solution; rather, sustained growth is essential to provide our talent with a promising future at Dentsu.

Dentsu has lost sizeable businesses like Maruti, Reckitt etc. and you spoke of the gain of business. How far Dentsu is in terms of compensating for these losses of sizeable business?

We have reasonably compensated for our business losses. We have won Berger Paints, Aditya Birla Capital, Carlsberg, and many others. We’ll be announcing two more big wins by January 2024. But we need to expand our focus beyond media and creative businesses to grow exponentially.

You’ve said that 2024 would be the year of growth for dentsu in India. How do you intend to bring about that growth? Is dentsu now ready for the growth phase?

We are well-prepared. In the initial 5 to 6 months of my tenure at Dentsu, we established stability and renewed our emphasis on clients and talent. FY24 is earmarked for expansion in creative and media, CX, data, commerce, and experience. Growth in emerging areas may be fueled by internal talent, external hires, and strategic acquisitions, all meticulously considered. While we remain open to acquisitions, even in media and creative, they must bring unique value and not be duplicative.

India is a very different market from the rest of the world. Traditional marketing plays a very important role here. TV and print advertising continues to be strong. Would you bring your focus back to the traditional media business as well?

I think there is no way that we are not going to focus on traditional media business. Everything that is new today will be old tomorrow. The world needs to find its equilibrium. A similar situation occurred 10-15 years ago when modern trade entered India, initially raising concerns about smaller retailers. However, over time, a balance was achieved.

It's analogous to your earlier question about whether we will reduce our focus on creative and media. That would be disastrous, as providing creative and media services is our bread and butter. I just want to ensure that the portfolio is balanced and that people in my company have higher chances of staying with the Denstu setup.

One of the aspects burgeoning the ad industry is transparency with clients in terms of media rebates and agency volume deals with broadcasters and publishers. Global clients are protected through their contracts, but local clients still need to regain confidence. What is your take on that?

Transparency is something that we all have to push through together. In fact, I'm still learning how we should be best providing that very clearly. I would also rely on my seniors in the media space like Prasanth Kumar and Shashi Sinha, who will guide us in terms of how we do this in the right manner. This challenge can definitely be tackled at the industry level.

Company culture is a very important aspect of people’s business. We are into people’s business. Clients tend to trust those agencies more which have a strong cultural positioning. In the last few years, Dentsu has lost clients, people, and brand value. There has been news about corruption in the past. What steps did you take to rebuild the culture at the agency? Is the clients’ confidence back?

In this context, I consistently emphasise my belief in the three Cs, all under the overarching umbrella of the company's culture. The first C centres on the client, urging an obsessive client focus.

The second C is collaboration, distinguishing it from mere brokering. True collaboration involves standing beside your colleagues in every circumstance, whether favourable or challenging. The third C involves catapulting thinking and embracing ambitious goals. It's acceptable to encounter failure; I support you in trying again, emphasising that failing is more commendable than achieving a safe target. In matters of integrity, there is no room for compromise. I may endure revenue loss, but integrity remains non-negotiable.

Amongst the Denstu India veterans, you have Kartik Iyer in the capacity of COO, Denstu International, as No. 2 to you. What is his mandate? Recently we heard of the sudden exit of Dentsu India CFO, Asha Suvarna, have you got a replacement?

Kartik has been in the system for a long time and is a very trusted person for us. He is our Chief Operating Officer helping us bring a lot of synergies to our operating model. As I pivot to the new structure of client-based selling, Kartik will play a key role in that and will continue to perform senior client relationship roles. I rely on him and some of the others like Anita Kotwani, Narayan Devanathan, Amit Wadhwa and Anubhav Sonthalia. All of them are going to be a part of the new client-facing structure that we create from January 1, 2024. Asha decided to leave dentsu to pursue new opportunities in September and we are aiming to fill her position by December this year.

Info@BestMediaInfo.com