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arters, spent time in the U.S. as president of the company's DCA Advertising for seven years until 2004. He says the new local emphasis in the States is part of Dentsu's broader view. "In the past, we've expanded our network for Japanese clients, but now we know that at the same time we should have more and more local business," he says. "It's key in people, expertise, assets, creative work. We need more of that balance."
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esearch Credit ill True esearchpsearchu Mortgagecompaniesloans True osearchi Tag to Credit Asearchisearch,searchR Www s Credit ia n Www True th Tag r True co Tag ntriesearch, Mortgagecompaniesloans s Tag ys Tag Toyohiko Shigeta, Dentsu's regional director, headquarters for Americas. "This is the best market to learn about professional practices."
To the extent Dentsu has had a profile in the U.S., it's been a grab bag of joint ventures and investments in local companies. Past incarnations include DYR, HDM, Lord Dentsu and DCA, among others. It has also been closely linked to its home country, which carried the danger of seeming culturally out of touch—or of alienating American managers at Japanese firms' U.S. divisions, who crave local control.
Dentsu Holdings, Dentsu's North and South American operation, rings up around $44 million in revenue from its U.S. agency brands Dentsu America and Dentsu Next and a majority stake in Renegade, a New York interactive and event-marketing company. At Dentsu America, with $20 million in revenue, Toyota and Canon account for 60 percent of billings; other clients include Bandai Toys, BusinessWeek, Harper Collins, the NBA, NEC, Toshiba, Japan Airlines, Bridgestone and Newton Vineyard. Dentsu Next handles conflict accounts Suzuki and Sharp Electronics. (Japanese agencies like Dentsu have tended to use multiple shops abroad to handle the kind of conflicts that pose no problem at home.) The head count at Dentsu America is 108; at Dentsu Next, 55.
In the past 16 months, Andree has focused on rationalizing his agency assets and getting his people right. Apart from Wilson, he has brought in former Gotham and Sony executive John Roberts to head up new business. Other hires include Ogilvy creatives Paul Laffy and Bruno Corbo and executives from Team One, Merkley + Partners and Lowe. As Wilson builds the creative department, he has also worked with freelancers like Brent Bouchez and David Page. In Japan, Dentsu's digital and hybrid media work is among its most award winning, and Wilson wants to bring more of that influence to bear in the States. Future acquisitions are expected to support that new direction.
Over the past year-plus, the agency has picked up new work from Bridgestone, Jet Express and the NBA, and Andree was able to get into the early stages of the review for Best Buy, which eventually went to BBDO.
As part of Andree's rebranding, the New York office is moving this month from midtown to a more collaborative, airy loft space in the same Tribeca building that houses Bartle Bogle Hegarty. The update is overdue: One past agency visitor recalled an atmosphere that was once akin to a teahouse, with a demure Japanese woman sitting at reception while Japanese music played in the background. One of the first things Andree did last year was to rebrand DCA Advertising as Dentsu America. In July, he renamed Colby and Partners as Dentsu Next. Those who know Andree, a former NBA draft pick, say he is a team player, in keeping with Japanese business culture, but one who plays to win. Sources expect he will be angling for more U.S. assignments from core marketers like Toyota, whose lead agency, Saatchi & Saatchi, has the lion's share of the business.
"We're a startup with a billion-dollar name on the door," says Andree. "Japan is a service culture, and total client commitment is a Dentsu tradition. We want to customize the Dentsu way for America. This is not like [Dentsu's past investments, joint ventures] Bcom3 or DYR. This is really the first solid attempt to build a Dentsu presence in the U.S."
The hoops star and the Army brat
The path to marketing for Andree, 46, was an improbable one. The onetime Chicago Bulls prospect ended up playing in Europe and then Japan, where he landed a job at Toyota. (At 6-foot-11, Andree refers to himself as "the world's tallest Japanese corporate executive.") In his 14 years at Toyota, including nine of them back in the U.S., he was part of the launch team behind Lexus and started the automaker's corporate advertising pitch.
In 1998, Andree moved to Canon to head its marketing and communications before taking the same role at the NBA in 2002 and then BASF. The youngest of 12 children, whose parents never finished high school, the Detroit native attended Notre Dame on a basketball scholarship and is still known for his relentless work ethic. "Tim would say he'd do something, and it would be on my desk in the morning," recalls NBA commissioner David Stern. "I didn't realize he'd spend the night at the office doing it. We're a very aggressive organization, and he fit right in. He brings that athletic competitiveness to business."
U.S. agency skeptics question how much autonomy Andree really has in his new job. Dentsu's Machida responds: "If he wants to make a big investment or make some important decision, we must talk. But it's significant he was part of the [Fuji] climb."
Wilson, meanwhile, made his name at Ogilvy on DHL, Kodak and American Express Blue. Past colleagues say the 43-year-old copywriter is not shy about taking on tough management duties. "He's the guy you want to lead you out of the burning building," says Ogilvy group cd Fred Lind, Wilson's former partner. "He's got a reputation for liking a disciplined, hard-line approach, but he also has an incredibly soft, sincere side."
Wilson, a laconic, self-described Army brat who moved around a lot growing up, began his career on Wall Street, and colleagues say he's a creative who appreciates business challenges. "I have always believed in doing 'smart' work—work that's not only award winning, creative and has scratch, but also stuff that works hard for the client," Wilson says. "We'll always have to take chances and push; that's the only way to break through the incredible clutter. But we need to do that with an end in mind."
Wilson spent 10 years at Ogilvy and struggled with the decision to join Dentsu, but concluded it was too good an opportunity to pass up, one with none of the personal financial risks associated with most startups. He oversees Dentsu America's New York creative department, comprised of four full-time teams and an art buyer, and two creative teams in L.A. He's quickly made his presence felt. Recent work includes a lighthearted Canon campaign with Maria Sharapova, shot by Joe Pytka, slim Newton Vineyard ads running in the gutter of Wine Spectator, and a new Toyota image campaign set to break this fall, co-directed by Bob Richardson, director of photography on films like The Aviator and JFK, and Erich Joiner, the director of Wilson's DHL work at Ogilvy.
Longtime Toyota marketing exec Steve Sturm, now in a new role as group vp, strategic research, planning and corporate communications, is excited about the new direction. "It reflects a new image for the company," he says, "and I think it will be one of the best corporate campaigns out there. It's very innovative."
A dominant force at home
Keeping Toyota happy—the client is on course to becoming the world's largest carmaker—is a top priority at Dentsu's soaring headquarters, built on the site of Tokyo's first train station. (Dentsu's commitment to client service can't be overstated: When the 47-story building was completed in 2002, account execs worried that marketers entering the offices would feel looked down upon.) The building, designed by French architect Jean Nouvel, is the 11th tallest on Tokyo's crowded skyline, a testament to Dentsu's looming profile in Japan's corporate landscape. Some 6,000 employees walk through the immense marble and steel lobby each day, with their movements up the building's 70 elevators tracked in real time on Dentsu's Web site. Beautiful young receptionists, seemingly art directed in fashionable uniforms and matching manicures, stand out at their round station amid the building's angular lines. Dentsu effectively operates as five separate agencies within the building, with competitive clients firewalled in separate areas accessible only by certain elevators and security clearances.
Advertising is a well-regarded business in Japan, and Dentsu is its formidable overlord, working with 6,000 clients. (By comparison, the industry's largest holding company, Omnicom, works for 5,000-plus clients across all of its properties.) The agency's 28 percent share of Japan's media market makes it a partner of choice for local multinationals and international marketers alike. Dentsu's media is heavily skewed toward TV, where marketers in the country spent 34 percent of their ad budgets in 2006. "TV is the focus of Japan's three largest agencies," says an observer. "Japan is different. The average Japanese client has nine media agencies. While they will use Dentsu and Hakuhodo for TV, they might use a smaller, Tokyo-based agency for magazine buying in Nagoya, for example."
For all of its global brand influence, Japan is also a very insular society, and thanks to the country's unique industry model, Dentsu has developed in relative isolation from larger trends, like unbundling media. The agency continues to operate on the double-digit media commission system, although it includes other services in those fees.
Dentsu's ties to local media go beyond transactional deals. Three of its top shareholders are Jiji Press Ltd. and Kyodo News, its two largest investors, and Tokyo Broadcasting System. Many of Dentsu's international competitors in Japan snipe about how the agency never reveals its true cost of media, so marketers don't know how much profit the agency makes. According to a 2005 Japan Advertisers Association survey, when asked, "How much do you pay your agency?" 66 percent of marketers responded, "I have no idea. … We pay gross commission." Some 88 percent of them said they had a relationship with Dentsu.
"There's no transparency, and if you ask about costs, they won't tell you," says one rival.
Some clients have tried to get the agency to reveal details about its pricing of media, but there is no real impetus for it to do so, given its market leverage. Dentsu, whose execs confirm they do not disclose media costs, buys media in bulk and effectively resells it to clients.
"I don't know why international agencies here complain about that. You come to a place and play by the local rules" says Kevin Ramsey, president and CEO of McCann Worldgroup Japan. "Dentsu's attitude is: 'We're taking the [financial] risk, so it's our business [about what we paid] as a result.' "
Dentsu developed its asset model by expanding into other services around the company's media-buying origins. That approach laid the groundwork for developing integrated strategies, before such thinking became commonplace in the global industry.
"Dentsu started as a media company that went into advertising and has expanded from that into things like TV production and technology licensing," says Lowe Worldwide CEO Stephen Gatfield, who got to know the company when the former Burnett executive set up the Beacon joint venture with Dentsu. "Total communications is the way they look at things."
An example of that hybrid thinking can be seen in Dentsu's work for search-engine client Goo.com. In 2005, Dentsu launched an ambitious effort throughout Tokyo that used digital, outdoor and guerrilla marketing. Using outdoor ads that looked like Goo.com Web inquiries, the campaign invited residents to assemble at key points in the city to take part in a question-of-the-week challenge. The answer was available only through the search engine, which the gamers accessed through their mobile phones. The effort became a social phenomenon in Tokyo: Huge numbers of people gathered at strange locations at odd times of the day, texting to win the quiz.
While television still remains a powerful medium, spending in Japan's four major media decreased by 2 percent last year as Internet advertising surged 29.3 percent. Dentsu's new president, Takashima, has made development of digital skills a priority alongside international expansion. The company's growing expertise was apparent in 2006 when it won three top interactive Lions at Cannes. Dentsu is developing resources internally and investing heavily in new digital alliances. (Competitors' jaws dropped earlier this year when the agency spent $236 million for a 5 percent stake in Tokyo's Recruit Co., a retail and promotional shop that utilizes electronic money technology.)
"It's one of the great urban myths of modern marketing that Dentsu is a great monolithic beast incapable of dynamic or innovative behaviors," says Jonny Shaw, a principal at Naked Communications in Japan, a new Dentsu partner. "Dentsu is, make no mistake about it, a truly future-facing business with an incredible ambition for change. They are more active in producing forms of marketing than many other agencies that simply pay lip service to the 'brave new world.' "
Jim Stengel, global marketing director at Dentsu client Procter & Gamble, tries each year to attend the agency's renowned, multi-city, daytime New Year's party, which is used to share knowledge developed over the previous year. "They're excellent in intellectual capital and expertise across all fronts," Stengel says. "They're showing a very holistic view."
Japan is the most sophisticated mobile-communications market in the world. And just as Dentsu was instrumental in creating Japan's mass media industries, the agency has played a lead role in promoting digital marketing communications including QR mobile marketing. (See sidebar.)
"Dentsu is sneaking its way to true diversification through content, sponsorship and digital in ways far more complete than most of the Western holding companies," Greg Paull, a founder of Asian industry consultants R3, says.
Dentsu has also become one of the world's sports powerhouses. It owns distribution rights to soccer's FIFA World Cup and has been involved in marketing activities of the Olympics since Los Angeles in 1984. It has also sold worldwide and regional rights to a half-dozen other major world sports championships. Dentsu has also expanded into long-form film and TV (its film Spirited Away won an Oscar for best animated feature in 2003) and, through alliances, funds production of Japanese animation programs overseas and promotes sales and distribution of them globally. Dentsu also owns some of Japan's most highly rated TV programs, including soccer and other sports, and uses them as a perk for favored clients.
While Dentsu's integrated work wins awards, the agency has been a proponent of lucrative 15-second T
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