Japanese advertising giant Dentsu Group announced on Friday that it will reduce the number of its overseas subsidiaries by up to 30% by fiscal 2028, as part of a major restructuring effort to address the challenges posed by artificial intelligence in the advertising industry [1]. The company is responding to heightened competition from consulting and technology firms such as Accenture and Google, which are leveraging AI to disrupt traditional advertising models [1].
Dentsu reported a return to profitability for the January-June period, following a loss in the same period last year, though no specific financial figures were disclosed [1]. The restructuring is aimed at streamlining Dentsu's global portfolio, focusing on core businesses, and divesting from less strategic units in order to restore and sustain profitability [1].
A company spokesperson emphasized that these decisive actions are intended to ensure Dentsu remains competitive and profitable in an era increasingly dominated by artificial intelligence [1]. The spokesperson added that concentrating resources on areas with the potential for sustainable growth will allow Dentsu to deliver greater value to its clients [1].
No details were provided regarding the valuations of the subsidiaries to be divested or the exact financial impact of the restructuring. However, the company reiterated its commitment to maintaining market leadership and improving operational efficiency as the advertising sector undergoes rapid transformation due to AI technologies [1].
CONCLUSION
Dentsu's decision to shed 30% of its overseas subsidiaries reflects a strategic pivot to address the disruptive impact of AI and intensifying competition in the advertising industry. While the company has returned to profitability, the restructuring underscores its focus on operational efficiency and sustainable growth. The market is likely to view these actions as a proactive step toward maintaining Dentsu's competitive edge.