Printer Friendly

Partnerships under pressure.

IN early June, Dentsu and Asatsu-DK announced a joint venture to explore "next generation" advertising in Japan and Asia. Specifically, the firm will explore new approaches to using digital terrestrial TV, the Internet, cellphones and "other aspects of the 21st century media environment."

It sounds innocuous enough, but it is the culmination of eight months of maneuvering in which both Dentsu and Hakuhodo DY Partners hoped to entice Asatsu into their camps. Asatsu's 6 percent market share is enough to bring Hakuhodo DY's share almost to Dentsu's 24 percent, and enough also to give Dentsu an unassailable lead over rival Hakuhodo DY's 17 percent.

According to sources, Dentsu and Asatsu-DK have also discussed linking their media activities and taking cross share-holdings in each other, but both felt that the time was not ripe for either move. Dentsu denied these reports as 'hearsay,' just as they earlier dismissed advance reports about the new joint venture. Asatsu-DK did not respond to questions.

The new joint venture carries no implications in itself for the UK's WPP, and their 20 percent shareholding of Asatsu. However, whether it presages a new international grouping that would see WPP and Dentsu move closer together--or a conflict as Dentsu seeks a greater say in Asatsu's affairs--is a story yet to unfold. In any case, Dentsu and WPP are already linked via DY & R, the Asian joint venture between Dentsu and WPP-owned Young & Rubicam.

Though new approaches to 21st century media will certainly be valuable, they will not help either agency with today's problems.

[ILLUSTRATION OMITTED]

Japanese advertisers increasingly see their media budgets as an investment, rather than a cost of doing business. As an investment, advertising is required to provide a measurable return. A strict focus on ROI places on Japanese agencies new pressures for greater accountability and transparency

Many of Dentsu's Japanese clients now have senior managers who have worked overseas and wish to bring the best international practices to Japan. Sony, for example, recently recruited Billets, a UK consultancy, to conduct a worldwide media audit of their advertising spending. The goals are simply to get better returns from the global budgets and to move media planning to a more consistent footing in each country.

Japan is excluded from the current brief, but, according to Frontage, the agency (partly owned by Sony) overseeing the process, the ultimate goal is to achieve the same standards in Japan that are met worldwide.

There is also pressure to bring media costs down through smarter buying. This hurts agency margins and also squeezes the many media-owned agencies who act as intermediaries between their parent companies and other agencies.

Combined, these powerful market forces have already led to some consolidation among agencies--the formation of Hakuhodo DY Partners by Hakuhodo, Daiko and Yomiko being the major recent example.

Against this background, there would be clear benefits to both Dentsu and Hakuhodo in moving close enough together to pool their media buying resources.

[ILLUSTRATION OMITTED]
COPYRIGHT 2004 Japan Inc. Communications
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Japan Inc.
Date:Sep 1, 2004
Words:491
Previous Article:Spinning Japan: one resident's solution to the tourism campaign.
Next Article:Daylight savings in Japan?


Related Articles
Bumblebee energy: what's the buzz?
Bombardier beetles: nature's 'buzz bombs.'
New bug-repelling clothing not exactly flying off the shelves.
This week a busy one for buzzing.
Mobile Biz Buzz[TM]: wireless fashion for the security conscious.
The author's response.
A new ball game.
Defense budget: pay now or pay later?

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters