For an agency about to be floated, the loss of $42m (29.3m) could have spelt disaster, but not in the case of Dentsu, which has written off that amount in bank guarantees provided earlier this year to ISL, the bankrupt Swiss sports marketing company founded by former Adidas chief executive, Adi Dassler, in 1982.
Dentsu owned 49 per cent of ISL but reduced that to ten per cent in 1996. ISL was a jewel in Dentsu’s crown and led to its dominance of sports marketing in Japan, especially for international events such as the Olympics and World Cup.
As ISL won broadcasting and sponsorship rights, Dentsu auctioned these to its own clients in Japan, earning both a commission on the deals and a share of ISL’s resulting profits.
ISL’s failure initially caused consternation in Tokyo, where sponsors and broadcasters worried whether FIFA would honour ISL’s commitments for the 2002 World Cup, to be hosted jointly by Japan and Korea. Not to worry, Dentsu had already banked a letter from FIFA president Joe Blatter, giving the necessary assurances. As a result Dentsu recently signed both Toshiba and NTT as corporate sponsors for the 2002 World Cup, in addition to Fuji Xerox, Fujifilm, JVC, all who signed earlier.
With sponsorships costing an estimated $40m (27.9m) each and associated media spends estimated at $150m (104.7m) for each sponsor, Dentsu’s 2002 World Cup account could still show a healthy surplus and beat all previous records, provided that Korea and Japan can remain on speaking terms.
That is the problem. A long simmering dispute about the way Japan’s occupation of Korea is described in Japanese school textbooks erupted earlier this month when Korea stopped the import of various Japanese products and cancelled cultural, political, military and commercial exchanges between the two countries. South Korea is upset by the failure of the Japanese textbooks to mention tens of thousands of Korean women who were forced to serve as sexual slaves for Japanese soldiers during World War II, and by the gloss put on the activities of Japan’s military in Asian countries.
Pointedly, a Korean spokesman said they did not expect the problem to interfere with co-operation over the World Cup. Nor should it if the textbooks are revised.
For Japan, the stakes are especially high. The World Cup is expected to generate 11bn in additional economic activity across Japan and may even rekindle enough consumer confidence to help stabilise an economy in serious decline.
The World Cup was also expected to provide the right environment for Japanese marketers to promote their wares aggressively in Korea for the first time in more than 50 years, aided of course by Dentsu, which has spent the past five years preparing its Seoul agency, Phoenix Communications, for this occasion.
Even with the latest problem solved, it will be a warning to Japanese advertisers that political disputes may yet derail their plans for Korea.
Cosmetic products in Asia
Percentage of respondents agreeing to the question: Have you purchased the following cosmetic products in the past three months?
Cosmetic Products China Hong Kong Singapore Korea Malaysia Taiwan Blusher/rouge* 5 13 7 5 10 11 Eye shadow* 11 12 12 14 8 16 Eyebrow pencil* 19 21 16 17 14 25 Eyeliner* 9 8 14 11 13 7 Face powder* 16 14 35 23 38 21 Foundation/ concealer* 15 20 23 39 14 28 Lipstick/liner/brush* 60 63 48 38 38 66 Mascara* 13 10 8 16 7 11 Nail polish products* 19 31 15 12 10 19 Total 167 192 178 175 152 204
Consumer Products China Hong Kong Singapore Korea Malaysia Taiwan Perfume/eau de toilette/body spray* 25 33 29 12 31 25 Aftershave? 7 7 15 11 12 4 Cologne/eau de toilette/body spray? 14 11 19 7 35 11 Total 46 51 63 30 78 40
* females only questioned
? males only questioned
Source: Asia Market Intelligence Survey