Few people (outside of Japan, at least) probably know that Japan is the world’s second largest advertising market. Even fewer still probably know that the largest brand agency in the world is from Japan. The agency in question, Dentsu, aims to raise its international profile in various ways, including a strategic alliance with Publicis Groupe, in which it is an 11% stakeholder (with 15% voting rights). Even greater evidence of the fact that Dentsu wants to make clear to the world that it is much more than a regional player is that it has pooled all of its North American, Latin American and European businesses (excluding Russia) into one giant operating organisation, Dentsu Network West (DNW). Shusaku Kannan, PR spokesperson for Dentsu, highlights their strategy for growth, which also zeroes in on digital content creation and sports marketing. “It’s all about innovation, innovation, and innovation.” Dentsu’s success and dominance in Japan stems from its long history as a media agent. They reportedly produced the first newspaper advertisements as well as the first television commercials in Japan. To be precise, Dentsu was founded in 1901 by Hoshiro Mitsunaga, a journalist from Osaka. Mitsunaga is said to have actually founded two closely related companies: his Telegraphic Service Company was an international news wire service, and his Japan Advertising Ltd. brokered advertising space. Mitsunaga often took payment for his wire service in the form of ad space in newspapers, then resold the ad space to his clients. The two companies merged in 1907, under the name Japan Telegraphic Communication Co., Ltd. (Nippon Dempo Tsushin-sha). This compound name became shortened to Dentsu. Dentsu was the largest broker of advertising space in Japan almost from its inception. However, the agency was practically dismantled in the pre-war years. Post-war, in the 1960s and 1970s, the Japanese economy grew in double digits, carrying Dentsu with it. By 1968, Dentsu’s billings were just behind the leading American firms J. Walter Thompson, Young & Rubicam and Interpublic. The company had 5,000 accounts, including the biggest Japanese firms and the Japanese business of some American companies. In 1973, Dentsu overtook J. Walter Thompson and became the largest advertising agency in the world. Internationalisation was always part of the Dentsu agenda but didn’t seem a huge priority. The company had opened offices in New York, Bangkok, Chicago, Los Angeles, Paris, Melbourne, Taiwan, Singapore and Hong Kong in the 1960s, but not all of these actually offered advertising services. Dentsu was cautious about expanding abroad, even though this was clearly the agency’s next step. Several international alliances have been established since, the most recent one being with Publicis Groupe, the French multinational advertising and communications company, headquartered in Paris, France. As both companies operate in the same space, they cooperate in the field of sports marketing and together established iSe (International Sports and Entertainment), which so far has notably engaged in the sales and management of the official hospitality programme for the 2006 FIFA World Cup™ in Germany. On November 25, Dentsu Public Relations Inc., Japan’s largest public relations firm, agreed to a comprehensive business alliance with MSLGROUP, a subsidiary of Publicis Groupe. Meanwhile Dentsu has been quite hard hit by the global economic downturn, which had a severe impact on the Japanese advertising market overall other companies, while pursuing restructuring of the media business. On an international scale, the company wants to secure a stable foothold and increase competitiveness in BRICs and other growth markets in accordance with the circumstances of each country, thereby winning more local clients and global accounts, as well as the accounts of Japanese clients operating in those markets. Dentsu’s global business plans are particularly interesting and ambitious. In October of this year, the Tokyo Stock Exchange listed company notably announced the establishment of Dentsu Network West (‘DNW’) dedicated to accelerating Dentsu’s global strategy and particularly in 2008 and 2009. But things are picking up again or so it seems. In Dentsu’s financial report for the six months ended September 30, 2010, the company reports that the Japanese economy is showing signs that it is on track to recovery as exports are increasing again and the Japanese government’s economic stimulus packages are showing positive results. However, in the advertising industry, clients in certain sectors remain cautious about spending their advertising budgets. Under such circumstances, Dentsu has implemented a broad range of tangible measures under its Medium- Term Management Plan dubbed “Dentsu Innovation 2013” which was announced in July 2009. Furthermore, the Group pursued a diverse array of business opportunities including those related to the 2010 FIFA World Cup South Africa™ and Japan’s 22nd Elections to the House of Councillors. On the subject of the “Dentsu Innovation 2013” medium-term management plan, Mr. Kannan points out that it is mainly focused on inspiring ‘innovative thinking’ on all levels of the Dentsu organization. The company, he explains, has defined five specific areas for innovation: Services Innovation, Business Model Innovation, Global Business Innovation, Human Resources Innovation, and Cost Innovation. Getting into more detail, he adds that they want to strengthen collaboration of the different companies within the Group, while promoting the specialization of each Group company. Dentsu has also prioritized gaining keener insight into consumers, know the client issues precisely and deliver solutions, by drawing upon the Group’s capabilities or by collaborating with other companies, while pursuing restructuring of the media business. On an international scale, the company wants to secure a stable foothold and increase competitiveness in BRICs and other growth markets in accordance with the circumstances of each country, thereby winning more local clients and global accounts, as well as the accounts of Japanese clients operating in those markets. Dentsu’s global business plans are particularly interesting and ambitious. In October of this year, the Tokyo Stock Exchange listed company notably announced the establishment of Dentsu Network West (‘DNW’) dedicated to accelerating Dentsu’s global strategy and to strengthening and expanding its business in the Americas and Europe. DNW will oversee the Dentsu Group’s operating and management companies in the Americas (North America and Latin America) and in Europe (excluding Russia), and should further enhance services to existing clients in those regions, while acquiring new clients, providing new services, and, above all, further strengthening of the Dentsu Group’s position as a competitive global network. Together with the launch of DNW, Dentsu Inc. has established a Global Solutions Center within its headquarters to boost and strengthen global solutions capabilities. The Global Solutions Center will work to build up a worldwide network, establish a framework for mutual cooperation to share know-how and other expertise, not only within DNW but also with the company’s bases in China and other countries in Asia, and to further improve client services. “ DNW should help us reach our ambition of getting revenues back to the level they were in 2006,” Mr. Kannan points out. “We believe we are well positioned to do so. We have more than 6,000 clients around the world, representing some of the world’s biggest brands, including Toyota, Honda, Sony, Pfizer, Disney, and Coca-Cola. Our clients are active across all industry verticals.” From a service perspective, he adds, Dentsu is particularly strong in integrated communications. “Building on our proprietary planning system we can do pretty much everything related to advertising and PR ourselves, and that’s including content production across all platforms, from print to radio through to television and digital.” Internationalisation and content creation in the digital arena, that’s where Mr. Kannan believes growth will mainly come from for Dentsu in the next four years. He also sees sports marketing as an area with plenty of growth potential for them. With the successful sales of sponsorship for the 1984 Los Angeles Olympic Games, Dentsu’s sports marketing has expanded beyond the framework of traditional advertising services to the area of marketing rights, which the company handles for major international sporting events such as the Olympic Games, FIFA World Cup™, IAAF World Athletics Series and FINA World Championships. In addition to global sporting events, Dentsu sells the broadcasting rights in Japan for Major League Baseball, and is the exclusive agent in Japan for UEFA (Union des Associations Européennes de Football). “The beauty of sports marketing is that you contribute to creating a market for advertising,” says Mr. Kannan. “The winter Olympics helped us a great deal that way last winter when things were generally really bad in advertising.” The main challenge for Dentsu, Mr. Kannan maintains, is to continue to innovate. “We want to grow but we need innovation to grow.” a service perspective, he adds, Dentsu is particularly strong in integrated communications. “Building on our proprietary planning system we can do pretty much everything related to advertising and PR ourselves, and that’s including content production across all platforms, from print to radio through to television and digital.” Internationalisation and content creation in the digital arena, that’s where Mr. Kannan believes growth will mainly come from for Dentsu in the next four years. He also sees sports marketing as an area with plenty of growth potential for them. With the successful sales of sponsorship for the 1984 Los Angeles Olympic Games, Dentsu’s sports marketing has expanded beyond the framework of traditional advertising services to the area of marketing rights, Dentsu at a glance One of the largest advertising conglomerates in the world, Dentsu is the #1 ad firm in Japan. Its numerous agencies operate in about 30 countries and provide creative services for more than 6,000 clients, although sales outside of Japan only account for a small percentage of revenue. Dentsu also offers a host of other services, including public relations, media and event planning, and market research. The company has expanded its operations in Asia through a partnership with USbased Young & Rubicam and owns an 11% stake in ad conglomerate Publicis Groupe. Dentsu has offices in 30 cities in Japan and about 40 cities internationally. top - home