What’s behind Dentsu’s decision to acquire London agency Tag Worldwide?
The Japanese holding company has agreed to buy Tag from its private equity owners. Can it use the deal to boost its digital transformation business?
Dentsu will add Tag’s 2,800 staff to its own network, though the brand will stay intact / The Drum
Dentsu is set to acquire British agency Tag Worldwide, a creative, production and customer transformation business, from private equity group Advent International.
It’s the second deal to be announced this week for Dentsu, which is also merging Shift7 into data business Merkle in the US as part of efforts to boost data and digital transformation revenues.
Though the final details of the deal haven’t yet been struck, the two parties have settled on an ‘agreement to acquire’. David Kassler, the London-based global chief executive officer of Tag, said: “We can’t wait to start this next phase of our journey and couldn’t be happier to be joining the Dentsu family.”
The Japanese holding company hopes to use Tag’s customer transformation expertise, as well as its Digital Interact platform, to scale its own digital transformation business.
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The group took around $2.6bn from that service line last year, accounting for 32% of its full-year global revenues. It predicts the acquisition will boost revenues from that sector by 2% overnight, upon completion of the deal.
Kassler added: “The market is moving incredibly fast towards integrated services – the combination of Tag’s global technology-enabled content production with Dentsu’s broader marketing, technology and consulting skills will be tremendously additive for both sets of our wonderful clients.”
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Hiroshi Igarashi, president and chief executive of Dentsu Group, said that the corporation aims to incorporate Tag into its growing customer transformation business – a service area from which it aims to take 50% of its revenues. He commented: “Tag will truly enable us to scale our CT&T business for global clients with a technology-driven solution. By applying mass personalization across the three services lines, we will create a best-in-class, horizontal creativity offering.”
Tag is already a large agency business. It has 29 offices and a foothold in South America, Australia, Mexico and emerging Asia Pacific markets such as Vietnam and Thailand, as well as western Europe and India.
Following its 2017 acquisition by Advent – it was founded in 1972 – it expanded rapidly, with six bolt-on deals totaling around $105m in investment. It now has around 2,800 staff and its clients include household names such as Ralph Lauren, Calvin Klein and New Balance.
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Tag’s specialisms in digital production are key if Dentsu is to realize its target. Clients require high volumes of digital creative assets – a demand the holding company hopes Tag’s global production facilities will help satisfy. Its proprietary martech platform, Digital Interact, helps to manage and optimize campaigns and content, adding further value to that offer.
Despite Dentsu’s wide-reaching reorganization of its agency networks across the globe, Tag’s brand will remain distinct from the wider business and Kassler will stay in place as its chief exec.
Lazard is advising Dentsu during the acquisition.