Agencies Agency Leadership Dentsu Group

Can Dentsu’s new Americas boss turn falling US revenues around?


By Sam Bradley, Journalist

July 28, 2023 | 10 min read

Michael Komasinski, Dentsu’s new boss for the Americas, sits down with The Drum to share his plan to meet the holding company's mounting challenges.

Michael Komasinski, the new CEO of Dentsu Americas

Dentsu’s new Americas chief discusses his plan for the future of the business / Dentsu

For those watching to see what kind of business it becomes after emerging from the restructuring chrysalis, Dentsu’s Americas business offers a vision of the holding company’s future.

Anchored on Merkle, founded in the US, and including the now-rebranded remnants of the Aegis network, the Americas operation is ahead of the rest of the group. Dentsu aims to eventually take half of its revenue from ‘transformation’ briefs, though that income stream currently only provides 35% of its turnover worldwide, its Americas business has already hit the target.

That would be encouraging if it were fueling commercial growth. As of Dentsu’s latest set of financial results, it’s not. In the first quarter of the year, slower spending among US tech clients, and customers of the group’s digital transformation services pulled organic growth in the Americas down to -4.9%.

“Generally, client appetites for big digital transformation have slowed. We certainly saw a slowdown in the first half of the year, just like everyone else,“ says newly installed chief executive Michael Komasinski.

Dentsu’s Japanese business also experiencing a stall in growth, at the same time as its former executives are on trial for alleged bid-rigging in the run-up to the Tokyo Olympics. The group’s chief executive officer Hiroshi Igarashi – in charge of the entire international business after a leadership reshuffle last year – could do with some good news.

A Merkle executive whose tenure with the firm predates the Dentsu acquisition, Komasinski is four weeks into the top job after a “surprise” decision by his predecessor, Jacki Kelly, to jump ship and join Interpublic Group (IPG). “We weren’t planning for that,” he says. “It all happened rather quickly.”

Igarashi (’Igarashi-san’ to Komasinski and his fellow Dentsu employees) allows for “plenty of autonomy“ for regional leaders, in exchange for the occasional late-night call with Tokyo.

For Komasinski there’s an additional objective: “Improve our competitive and drive our organic growth rate to be the best in the industry.”

New business focus

With spending pauses hurting its margins, winning new work – and spinning up the clients Dentsu already has into deeply involved, integrated accounts – is the priority, he says.

“If you want superior growth, you’ve got to be able to win the integrated deals and transform your big accounts into big integrated accounts.”

Other than brewer Carlsberg’s global media account, which was won by iProspect, those wins haven’t been forthcoming, while reviews set by the kinds of companies Dentsu is targeting – Jaguar Land Rover, Siemens and Phillips – have gone to competitors. Komasinski says the group can improve its win rate in the US by pitching more selectively, and by focusing on expanding the accounts it already has.

”We’re going to put more focus on client retention and pitch less. Pitching is inherently expensive and even if you have an outstanding win rate, you’re probably at 30% or 40%. Those aren’t great odds. Focus on retention and growing integrated accounts. Be selective about what you pitch, that is usually the most economical, effective approach and it’s better, frankly, for our existing clients.”

To that end, he adds that the company needs to become more effective at cross-selling its services. “You’ve got to orchestrate integrated long-term partnerships with clients. And I need to improve that in this region.”

In Komasinski’s eyes, Dentsu already has the components in data, media and creative businesses to achieve that. The company has held a good hand, it just hasn’t played the cards quite right.

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But, he adds, “you can’t change your multi-year strategy because of a couple of soft quarters. We still believe strongly in the long-term growth trends around technology-driven transformation.”

He argues that the integration of Tag – the acquisition was announced this spring, but the deal itself was only finalized within the last month – should help add petrol to the fire at Dentsu Creative.

“The teams need a little time to weave that story together and team up on joint accounts. But I’m encouraged about what tagged does for our broad creative offering. It provides a compliment that makes our creative offering much more scalable.”

“Our ability to create insights that drive targeted audiences, and the ability to activate those in innovative and cost-effective ways really should make a best-in-class media offering,” he says.

“If you look at, our media offering, in Merkle, iProspect, Dentsu X, we have some of the best and deepest digital media capabilities of our competitive set. We have some of the best capabilities in data and identity with our Mercury platform. We need to leverage those strengths maybe a little more effectively.“

“I just need some time to orchestrate it as effectively as we want,” he says.

AI and long-term client relationships

One of the reasons Dentsu bought Tag was its proximity to the emerging, AI-enabled marketing production sector. New tech is set to supercharge that business and help it add more value to Dentsu’s creative services.

“We bought the largest independent creative production company in the world. It stands to reason that any type of innovation and automation that we can put into that business makes it stronger. New capabilities have a really dramatic impact on that type of a business," he says.

This week, Dentsu unveiled a partnership with Microsoft to provide clients with enterprise-level access to its AI products, Azure and Copilot.

That partnership is also helping Dentsu create its own tech products. Merkle, for example, is in the process of developing a bespoke generative AI solution for clients, one that Komasinski hopes will appeal to marketers concerned about IP and copyright risks.

Custom large language model (LLM) solutions, which would draw upon a closed dataset cleared of bias and copyright exposure, could help marketers use generative AI tools without opening up their brands to legal risks – and potentially, depending on the data that goes into the training model, without creating copy or imagery that sounds and looks like every other bland AI-generated media.

Called GenCX, he says it’s a “large knowledge model” rather than the more familiar LLMs behind apps such as ChatGPT.

“I emphasize the word ‘knowledge model’ over ‘language model’ because it has to do with building models for clients that they can own inside their own firewall. You won’t be training engines from proprietary data, and that’s one of the biggest concerns that our clients have in the AI space – how to leverage it without necessarily allowing for IP leakage.”

It’ll be available to Dentsu-wide clients, not just Merkle, and clients will own the systems built for them by Dentsu (rather than a software-as-a-service arrangement).

“Modern marketers want to own their capabilities. That’s the type of long-term partner that you need to be. If they want to in-house something, well, we’re going to be the partner that helps them to figure that out,” he explains. The approach mirrors Dentsu and Merkle’s continuing push to take more revenue from client transformation accounts.

“If they’ve got the type of first-party data that allows for it, it’s more effective for them in the long term to own it. We need to think about helping clients build capabilities for the long term.”

Clients want guidance on investment in AI that’s worthwhile, he says. “It will be an arms race. The companies that win will be the ones that put the most effective investment into it – not necessarily the most investment, but the most effective.”

Agencies Agency Leadership Dentsu Group

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