Hakuhodo may give in to TBWA

A joint venture based around Nissan will enable Hakuhodo to realise its global plans and TBWA to increase its presence in Japan. An independent solution seems impossible, says David Kilburn.

Hakuhodo president Takashi Shoji is planning to establish the agency as one of the world’s ten major global advertising agencies, up from 13th position in 1998. Shoji explains that as far as possible, Hakuhodo will achieve this independently of other agency groups.

Though it has a joint venture with Lintas in Tokyo, Hakuhodo has no major international partnerships that could compare in scale or complexity with those Dentsu has forged with Y&R, the Leo Group, and MacManus or those Asatsu-DK has established with WPP.

Over the past few years, Hakuhodo has resisted the advances of Interpublic, Publicis, and Omnicom. But now Omnicom’s TBWA agency has crafted a proposal that Hakuhodo may be unable to resist.

As described by executives in Tokyo, the two agencies are discussing the formation of a worldwide joint venture, which would – initially at least – be devoted to Nissan, Japan’s third-largest global spender after Toyota and Sony.

With billings over $1bn (&£600m), the agency could redefine how Japan’s global advertisers view their options in a world fraught with account conflict problems. In theory, such an agency could deliver an unparalleled level of integration and efficiency in the planning and execution of Nissan’s communication strategies. But could it retain the same high levels of creativity that are generated in the multi-client environment of a classic agency? Or could it operate as a virtual agency while drawing on the resources of Hakuhodo and TBWA? For the moment, there are more questions than answers about the form such a venture might take.

This idea of a joint venture is not wholly new. In 1989, with some gentle prompting from Nissan, Hakuhodo and TBWA formed a European joint venture – TBWA/NETH-work Inc – to handle Nissan’s pan-European account, then worth $10m (&£6m). To its surprise, Hakuhodo found itself the minority 49 per cent partner but since the arrangement worked successfully for Nissan, Hakuhodo was content.

In 1992, Hakuhodo won virtually all Nissan’s domestic business to become its lead agency in Japan. Today, Nissan accounts for over ten per cent of Hakuhodo’s billings and is their largest single client.

TBWA’s 1998 purchase of Nissan’s house agency Nippo Advertising provided an entry to Nissan in Japan because terms of the agreement require Nissan to spend 25 per cent of its domestic budget through TBWA for four years.

Now TBWA wishes for a greater slice of the action and to bond itself and Omnicom with Japan’s second-largest media buyer – which would provide a good platform to launch OMD in Japan. Failure to do so could limit the future of their newly-bought Tokyo agency.

For Hakuhodo the choices are difficult ones. But it is a good time for both agencies to explore ways of enhancing the value of their services to Nissan. In doing so, both may find there are limits on what each can achieve independently of the other.

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