EDITOR’S COMMENT: Sorrell’s Japanese deal adds muscle in a global market

One of the more enduring images of the past year was the head of a Japanese investment house crying in public as he admitted responsibility for its imminent collapse. Still, one man’s misfortune is another man’s profit. Step forward the WPP boss, Martin Sorrell, who this week swooped to take advantage of the continuing malaise in Japan, acquiring a 20 per cent stake in its third-largest agency, Asatsu.

One of the more enduring images of the past year was the head of a

Japanese investment house crying in public as he admitted responsibility

for its imminent collapse. Still, one man’s misfortune is another man’s

profit. Step forward the WPP boss, Martin Sorrell, who this week swooped

to take advantage of the continuing malaise in Japan, acquiring a 20 per

cent stake in its third-largest agency, Asatsu.



Actually, it was more interesting than that. Simultaneously, Asatsu

announced an agreed takeover of Dai-Ichi Kikaku, Japan’s seventh-largest

agency. This makes Asatsu a firm number three with a 6 or 7 per cent

market share, and a serious challenger to the hegemony of Japan’s big

two: Dentsu and Hakuhodo.



What’s more, Asatsu takes a 10 per cent share of the Japanese offices of

J. Walter Thompson (14th-largest agency in Japan) and Ogilvy & Mather

(26th). WPP’s pounds 103 million investment in Asatsu will be

reciprocated, giving the Japanese agency 4 per cent of the UK group’s

shares.



Why am I telling you all this? Well, for a start an announcement

concerning a joint media planning and buying venture between Asatsu and

MindShare is imminent, bringing the prospect of a genuinely global media

outfit that much closer. As one analyst said this week: ’You can’t

really call yourself global unless you’re in Japan.’



Also, here’s a snapshot of the Asatsu/Dai-Ichi Kikaku client list:

Mitsubishi Trading, IBM, Unilever, Nikon, Suntory, Pepsi, Kellogg,

Warner Lambert, Toshiba, Shiseido, NTT, Sega, Seibu, Pioneer, TDK,

Kirin, Asahi, Cartier, Dunhill and many more.



Perhaps older lags will quietly roll eyes skywards in the knowledge that

both Dentsu and Hakuhodo have enjoyed only qualified success in

channelling their clients around their international operations. But an

association with WPP is different. There’s no doubting the strength of

its two major agency brands around the world. And if no new business

flows as a result (which I doubt very much) then at least it will serve

to consolidate existing WPP client relationships.



If anyone should doubt that, then you only need look at

McCann-Erickson’s experience in Japan. Fourth in the marketplace when it

enjoyed a joint venture with Hakuhodo, it has now struggled back to

ninth since the two separated. That still makes it the most successful

western agency in Japan without an affiliation. No western agency will

get much bigger on its own.



Having said all this, the previous experience of Japanese agencies

overseas doesn’t exactly send fear coursing through the veins. But

estimates are that the Japanese ad industry will recover in two years’

time (just as we’ll be gripped by recession). We can’t say that we

haven’t been warned.



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