Dentsu at the Crossroads: Can Japan’s ad giant rebuild its global reputation?

During my many trips to Tokyo, I was enamoured by the status of Dentu-san and Hakuhodo-san - the two advertising giants of Japan, Dentsu being the much larger one. If I lost my way, I would just ask any passers-by for the building of Hakuhodo-san, and they would point it out to me.

The Dentsu–Hakuhodo Duopoly

Dentsu and Hakuhodo DY dominate Japan’s advertising industry. Dentsu alone controls about 25–30% of all ad spend in Japan. Together, the two handle a majority of big-brand budgets and have long-standing ties with media outlets. Because of their scale, they effectively act as gatekeepers, deciding which media get what share of spend. Smaller agencies have little influence compared to this duopoly.

The Japanese advertising powerhouse Dentsu is currently navigating one of the most turbulent phases in its history. While the company’s home market continues to deliver record revenues, its overseas operations have become a drag on performance, forcing deep restructuring, cost-cutting, and even discussions about selling off large parts of the international business.

Financial Strain Outside Japan

The numbers tell a stark story. In the first half of 2025, Dentsu slipped into heavy losses, reporting an operating deficit of around ¥36.5 billion and net losses approaching ¥74 billion. Much of the hit came from impairment charges tied to the international arm, which has consistently underperformed even as the Japanese operations clock nine consecutive quarters of record highs.

To stem the bleeding,  Dentsu has announced plans to trim about 3,400 jobs worldwide, roughly 8% of its staff outside Japan. The cuts are concentrated in back-office and support functions, and management expects the move to generate annual savings of more than ¥50 billion by 2027. Dividend payouts have also been suspended, underscoring how urgent the situation has become.

Strategic Alternatives on the Table

The most dramatic possibility being weighed is a partial or complete exit from overseas markets. Investment banks including Mitsubishi UFJ Morgan Stanley and Nomura are advising the company on options that could range from partnerships to outright sale of its global network, which brings in billions in revenue but little profit. While no decision has been finalized, insiders suggest a clearer roadmap will be announced before the year closes.

Regulatory Heat in India

On top of financial setbacks, Dentsu has been pulled into legal and regulatory battles in India. The Competition Commission of India (CCI) is investigating alleged cartelization in media buying and ad rate negotiations. Interestingly, Dentsu has positioned itself as a whistleblower, supplying evidence under the CCI’s leniency program, even as raids were carried out on multiple global ad giants earlier this year. This proactive stance may help mitigate penalties, but the case continues to cast a long shadow over the company’s credibility.

Balancing Crisis With Innovation

Despite the turbulence, Dentsu has not abandoned long-term investments. In Mumbai, the company recently launched a new Dentsu Lab, aimed at fusing creativity with emerging technologies and contributing to its global network of innovation centres. This dual track cost-cutting abroad and innovation-led positioning in key markets reflects an effort to reset the group’s future.

The Road Ahead

For decades, Dentsu has been synonymous with dominance in Japanese advertising and ambitious expansion abroad. Now, it faces a fundamental question: whether to double down on global integration or retreat to its profitable home market. With mounting losses, workforce upheavals, and ongoing regulatory scrutiny, the next few months will be decisive in shaping whether Dentsu remains a global player or redefines itself as a domestically anchored giant with selective international reach.

While there have been murmurs in the media about Sandeep Goyal aiming for a buyout of the Indian arm, the chance of Goyal himself buying Dentsu outright is very low. Goyal is likely to need big-pocket partners, but the chance of him fronting or co-leading a buyout consortium is possible, especially if Dentsu chooses to divest India separately. He has the legacy link and industry clout, but not the financial firepower on his own. Also global clients might prefer multinational agency partnership. Except that with the CCI cartel probe, buyers may be wary of legacy risks.

Prabhakar Mundkur is a veteran advertising professional, musician and commentator. He lives in Mumbai, and writes frequently in the media. The views expressed here are personal.