Dentsu Aegis Network, the international arm of Japanese agency conglomerate Dentsu, will cut all employee salaries by 10% in response to the economic fallout of the coronavirus pandemic.
Senior executives took a higher salary deduction, a Dentsu Aegis spokesperson said, but declined to specify how much.
Dentsu Aegis Network employs about 45,000 people across 145 countries and owns agencies such as Carat, 360i, Amnet, iProspect and Mcgarrybowen.
“As a result of COVID-19 business impacts, we are activating a set of cost saving measures across the company to ensure business continuity and to safeguard our people’s livelihoods around the world,” the spokesperson said in a statement. “We consider our people to be our greatest strength and are doing everything we can to ensure we have a healthy and sustainable business for them and our clients, after this crisis passes.”
Dentsu isn’t the first major holding company to cut salaries in response to COVID-19. In late March, WPP cut executive committee salaries by 20%. Omnicom, IPG, Havas and Publicis Groupe have not announced any changes to employee compensation.
Agencies are vulnerable to the economic fallout of the coronavirus crisis as their clients slash ad budgets for the year. One quarter of brands are pausing ad spend in Q1 and Q2, according to the IAB, leaving their agencies to scramble on back office tasks such as website updates or try to become more consultative to continue adding value.
With live sports and production pilots canceled, agencies will also have to reestablish their value in negotiating upfront deals. And creative agencies must rethink their entire process to make room for quick turnaround assets that can be produced without expensive in-person shoots.
Dentsu’s stock price had already been cratering pre-pandemic. The company reported an organic revenue decline of 4% for Q4 2019 and 1% for the year, blaming underperformance in Australia, Brazil, China, France and the United Kingdom. Dentsu’s stock price as of today is down to $19.88 from $41.56 in April 2019, a 52% YoY decline.
“Since the coronavirus outbreak Dentsu Aegis Network’s primary priority has been to protect our people, preserve and nurture our client relationships and to support the local economies and communities in which we operate,” the spokesperson added.
Update: This story has been updated to reflect that Dentsu Aegis Network’s executive teams took a higher salary deduction than staff.