ASIA: Team-ups save smaller agencies

Japan’s media advertising spend has dropped by 2.1 per cent on last year. To beat the slump, smaller agencies are teaming up in an attempt to challenge the front-runners, says David Kilburn

Total advertising spend in Japan dropped a mere 0.9 per cent last year to ¥6,058bn (£32bn), a surprisingly small decline considering the severity of the country’s economic problems. But the aggregate figures mask a grimmer picture. While spending on sales promotions was almost unchanged, media advertising dropped by 2.1 per cent – more than half in newspaper advertising. This was bad news for a handful of large agencies that rely heavily on newspaper advertising and are partly owned by the newspapers themselves.

For instance, about 60 per cent of tenth-ranked Asahi Advertising’s gross revenue is generated by newspaper advertising, even though newspapers account for only 20 per cent of Japan’s adex. Declining revenues obliged the agency to ask Hakuhodo to bail it out by taking equity. Hakuhodo declined, but invited the agency to join a media buying consortium it had formed with two other media-controlled agencies: Daiko Advertising and Yomiko. Viewed as a consolidation, the group has a media-buying share of about 18 per cent, compared with Hakuhodo’s share of about 12 per cent and Dentsu’s 24 per cent.

Whether the grouping will have the unity of purpose to affect the media buying landscape remains to be seen. However it does place three large agencies loosely under the Hakuhodo umbrella. This was a disappointment for third-ranked Asatsu-DK, which had been hoping to do something similar and challenge Hakuhodo for the number two slot. Despite a market share of almost six per cent, Asatsu-DK may prove too small to challenge either Hakuhodo or Dentsu without some radical ideas – which could well come from WPP Group, which owns 20 per cent of the agency.

While it is debatable how much restructuring is taking place in the ranks of the top ten agencies, the pressures lower down the hierarchy are clear to all. After talks lasting almost a year, Sony has sold 40 per cent of its loss-making agency Intervision to Dentsu. Reborn, the agency will handle all Sony’s advertising in Japan, as well as developing new media content. It will also have oversight of all Sony’s advertising in Asia, though how this will be achieved has yet to be worked out. According to Sony, their goal is to have one agency responsible for media in each major region – the US, Asia, and Europe – in order to save money and improve media performance.

Despite the problems, it is still too soon to pull the shrouds over Japan’s house agencies. Suntory-owned Sun-Ad has just bought another struggling medium-sized agency, Senkosha, in the hope that the merged company will be viable than the two individuallly.

For 2002, Dentsu forecasts a further 3.2 per cent decline in media spending. Again, the pain is most likely to be felt in mid-sized Japanese agencies and those that rely heavily on print media for their business. As the shake-out gathers force, there should be more opportunities for Western agencies. These will include both acquisitions, and opportunities to win large accounts, as Japanese advertisers search for better partners. Both JWT and Omnicom-owned I&S/BBDO have won major chunks of business so far this year.

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here