Deconstructing Dentsu

Japan, Inc., July, 2008 by Makoto Goldstein

The advertising industry in Japan is a unique creature and many believe that it is driven, like so many other facets of Japan's history, by one major ruling body. In the marketing realm, the Shogun is Dentsu. Dynamic they may not be, yet all encompassing and all-purveying they most definitely are.

A former industry professional told us, "Dentsu, the Toyota of advertising in Japan, is still a force to be reckoned with, a supertanker, filled with people who are usually arrogant, over paid, and foot soldiers with a herd mentality."

It would be fair to say that Dentsu does not hold a great deal of credibility amongst its peers and competitors and that the common perception, particularly amongst the foreign agencies is that Dentsu lacks creative substance and relies more on old-school Japanese business practices and its monolithic market presence. Dentsu does however wield a huge amount of power and uses this to its full extent--just the penning of an article such as this could potentially lead to the plug being pulled on an entire publication. Smaller operators can be forced out of business when their clients are acquired by Dentsu and this is sometimes alleged to be executed fairly forcibly.

The facts

Dentsu's billings are more than double its nearest local competitors, Hakuhodo and ADK. 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. Dentsu started building its empire in the early part of the 21st Century and now it is infamous for utilizing this history to secure the lion's share of the modern market, showing net sales of a staggering [yen]2,057,554 million for fiscal 2007. According to a number of industry sources, a common phrase heard from Japanese clients when tendering against Dentsu is 'they are the oldest agency in Japan.' This cannot be argued with but there is definite cause to question the relevance of history (potentially lending itself to archaic practices) in one of the most cutting edge industries of the modern business world. In terms of actual grunt, the corporate offices of Dentsu amasses 48 floors rising to 213.34m, it is the eleventh tallest building in Tokyo and employs around 12,000 people. Orwell's Ministry of Truth Building is only slightly more impressive at 300m and holding 3000 rooms. And the similarities do not end there.

The rumors

Dentsu has a reputation for being a sweatshop for its employees, working them until all hours and shunning creativity to make room for corporate bullying and anti-competitive practices. Meanwhile, more international agencies in the vein of McCann, Weiden & Kennedy and Diamond are revolutionizing the local market with their ingenuity and daring to go where Dentsu has not ventured before. This, however, is not an easy battle. Recently it appears that Dentsu has realized this, with former CEO Mataki rallying his employees: "Energy, courage and an entrepreneurial spirit among all our employees will be needed if the Dentsu Group is to shed its skin, evolve and grow into something new. Now is the time for us all to bind our hearts together, looking forward to the victory that awaits us."

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The Japanese market in general is known to hold loyalty and longevity of relationship in very high regard when choosing partners to work with. Dentsu has effectively leveraged its historical presence to curry favor (to the value of billions of dollars) with the old boys club of corporate Japan. Dentsu however, is not invulnerable and the increasing pressure for more creative, dynamic and globally focused solutions in advertising and PR has meant that it has needed to develop more innovative survival tactics. One such tactic is rumored to be its strategic hiring policies. At the expense of developing innovation and nurturing new creative talent, Dentsu seemingly prefer to hire people with links to the center of power, i.e. children of politicians, notable public officials and influential business people. This can come in handy when competing for a large account.

There was much coverage in the press some time ago about fixed public meetings where the government had allegedly paid people to attend and lead the discussion in a direction preferable to them. Dentsu was very heavily involved here as they had been given the contract to promote and execute these public meetings. The Socialist Democratic Party's Nobuto Hosaka, through investigating these government meetings uncovered an interesting fact; it seems that Dentsu was only officially contracted to run these events 24 hours before the first one took place. Since promotion for these events had been running for months in advance at both local and national levels and the venues were pre-booked, it would be difficult to convince anyone that even Dentsu could achieve such a result in just one day (regardless of the fact that people were actually paid to attend). This is just one illustration of Dentsu's amazing talent of being able to effectively win government project competitions (loose tender systems) and eliminate the competition before the process is even in motion.