Japan’s agencies take to the Net

The two biggest agencies in Japan are adopting very different Internet strategies – one is moving into consulting while the other is offering greetings cards.

Dentsu and Hakuhodo, Japan’s leading advertising agencies, are building new business through the Internet.

Hakuhodo, which long ago abandoned hopes of building a strong agency presence in the US, is now targeting that country with an Internet venture that provides online greetings cards while giving both the sender and the recipient a chance to win a prize. Hakuhodo’s proprietary online greetings card with sweepstakes technology will be offered through a new wholly-owned US company, SharedGreetings (www.sharedgreetings.com).

Hakuhodo has offered online greetings cards in Japan since 1996. Clients include All Nippon Airways, Asahi Brewery, Japan Airlines, Kirin Brewery, Mazda, Nissan, Nomura Securities, Sony and Toyota. The service has proved a hit in Japan where more than 2.9 million cards were sent by 2.4 million people last New Year, making this one of the largest Internet events in Japan to date, according to Hakuhodo.

Targeting the US online greetings card market marks a new departure for Hakuhodo. The hope is that the basic business models and expertise from the Japanese greetings card service will translate successfully to North America, where Hakuhodo hopes to send 24 million cards and produce revenues of $20m (£14m) next year.

Dentsu, meanwhile, is strengthening its position in Japan through a joint venture with marchFIRST, a US provider of Internet services. DENTSUmarchFIRST, will provide new-economy services to Japanese companies. These will range from website creation and hosting to end-to-end e-commerce and customer-relationship management solutions, as well as a wide range of strategic consulting services.

The two companies forecast that DENTSUmarchFIRST will achieve sales of – 850m (£5.4m) in its first year, and they predict that sales will grow to – 3.23bn in 2002.

Dentsu director Koichi Segawa, chairman of the joint venture, predicts that the company will break even sometime in 2003, when sales are forecast to reach – 6.08bn. Robert Bernard, marchFIRST’s chief executive, calls the sales estimates “conservative” and says he is optimistic that the joint venture can assume “a leading position in the Japanese market in six to 12 months”.

The new venture adds more muscle to Dentsu’s portfolio of Internet-related companies. These already include D2, a media representation and advertising agency with a monopoly of advertising sales on NTT DoCoMo’s i-mode mobile Internet service; Dentsu Tech, another Web services provider; and ISID, which provides systems integration and IT services.

Years ago, Dentsu executives said they were determined that its share of new media and Internet-related businesses would be no less than its 25 per cent market share of traditional media in Japan. That goal may well be surpassed this year. If so, the next target will be to match its share of prime-time television business, which stands at about 40 per cent. Is this achievable? “There’s nothing standing in their way,” says a director of a rival agency.

But while Dentsu moves aggressively to provide its clients with a wide range of sophisticated services for the new economy, that same vigour and creativity remains utterly concealed on its own website, which harks back to the earliest days of the Internet and the bureaucratic decision-taking that are hallmarks of Japan’s old economy.

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