Japan's Advertising Giants: Masao Inagaki

In her final interview from Japan, Jade Garrett talks to the CEO and chairman of Asatsu.

Seventy-seven-year-old Masao Inagaki, the chairman and CEO of Asatsu, shuffles into the agency's boardroom with his eyes fixed firmly on his feet.

He delivers a deep bow and hands me his business card before apologising for not being able to conduct our interview in English. We are

accompanied by Koichiro Naganuma, the agency's managing director, who acts as our translator.

Asatsu, Japan's third-largest agency, has a reputation for persistently

challenging the status quo in its local market. It was the first Japanese agency to float on the Tokyo stock exchange in 1987 and since that time its revenue growth has been twice the industry's average. Now its deal with WPP has given it a global presence.

Inagaki was instrumental in setting up the agency in 1956 and became the company's first president in May the same year. Under his charge, Asatsu is now considered to be the most modern agency in Japan and one that has opened itself up to foreign influence while others have been more cautious.

"I have worked in this industry for more than 50 years," Inagaki says, "and the cultural exchange between different countries is still what I enjoy most. The nature of our business is always looking to the future. Work that we create today is for tomorrow's world so every day is new and fresh."

On paper, Inagaki is an awe-inspiring man but, in the flesh, he is somewhat different. By Western standards he is probably the least dynamic-looking person I have ever met. He comes across as shy and rarely makes eye contact with me. When I ask what his legacy to Asatsu will be, he simply says: 'I don't expect to be remembered for much.'

Instead it is the agency's adoption of Western thinking, strong investment in the digital market and a corporate philosophy of 'management by all' that Inagaki pin-points as the driving force behind the agency's growth.

'A lot of responsibility and authority are delegated, which means that we expect all employees to work as management. Our employees will never say, 'Let me go back to the office and talk with my boss.' That kind of attitude is not encouraged. This is not typical but very unique to Asatsu,' Inagaki says.

His words are borne out when I'm taken to see his office. He has opted out of the palatial suite where most agency heads of his status sit in splendour. His desk is out on the floor with everyone else's and there is nothing to indicate that it belongs to the agency's chairman.

More than 15 years ago, Asatsu took, for that time, the ground-breaking step of forming a business tie-up with the Omnicom-owned BBDO Worldwide.

It was a lengthy partnership spanning nearly 14 years but was finally dissolved amid rumours that Omnicom was trying to call too many of the shots. Was that the case?

'Allen Rosenshine (the CEO of BBDO) said that Asatsu is a powerful agency so it would be difficult to colour it to the BBDO way,' Inagaki explains. 'I think Omnicom wanted to have a strong presence in the Japanese market but the BBDO-related clients were so small. They wanted a presence, so they made a purchase.

'I noticed a big difference between the Japanese and American cultures. Spiritual richness in Japan is very important. The American culture was more geared towards the material rewards,' Inagaki adds. When the partnership dissolved, Omnicom formed BBDO Japan as a standalone agency.

Then in 1998 Asatsu announced that, as of 1 January 1999, it would merge with an agency ranked seventh in Japan, Dai-Ichi Kikaku. Asatsu-DK became Japan's third-largest agency behind Dentsu and Hakuhodo.

Even so, the collapse of the BBDO alliance made way for Martin Sorrell, WPP's chief executive officer, and, in September 1998, the WPP Group and Asatsu established a new holding company, WPP Japan Holdings. Inagaki became chairman of the new group.

The deal involved reciprocal equity stake holdings, again a brave move for Asatsu. WPP took a 20 per cent stake in Asatsu, worth dollars 208 million, and in turn Asatsu took stock of an equivalent value in WPP, giving it around 4 per cent of the group's enlarged share base.

Given the rumours surrounding the break-up with BBDO, what were Inagaki's biggest concerns on entering a deal with Sorrell?

'One thing that we had to consider was the 20 per cent share that we sold. We said that 20 per cent was the most we would sell. We want to maintain and keep control otherwise we become uneasy,' Inagaki says.

Inagaki and Sorrell were already close contacts, having first met nearly 20 years earlier, when Sorrell was the financial director at Saatchi & Saatchi. 'When I first met Sorrell we were already engaged in discussion with BBDO. About 80 per cent of the deal had been concluded so it was too late for us to change our partner and the Japanese always respect the first-comer,' Inagaki says.

'Our alliance with BBDO lasted about 14 years but during that time we were still in contact with Sorrell. The deal lived on in his mind.'

The WPP connection provides Asatsu with a huge global network with a presence in more than 90 countries around the world, adding to its own overseas network which operates in 11 countries - the majority of which are situated throughout Asia.

Inagaki is realistic about the challenges facing Asatsu. 'Japan already has two giant agencies, Dentsu and Hakuhodo, and both have a history spanning almost 100 years. In order to compete with them on their level, we have to do something different. We have realised that we have to change our practices to keep up with global trends.'

WPP Japan Holdings also supplies WPP's agencies with valuable insight into the notoriously hard to crack Japanese market. But perhaps the most exciting facet of the deal is the effect on Asatsu's and WPP's media arms.

At the moment, MindShare is responsible for the group's planning facility, and Asatsu handles media buying. Inagaki will not commit himself to divulging whether the two companies will merge, but admits that making the most of the MindShare brand name is a top priority.

The agency is also having to live with an increased degree of media transparency since its flotation.

'Many Japanese agencies feel that they get commission from the media owner rather than the client. But our business is based on the client, not the media owner, so this is a perception that we need to change. Yet media owners like to control agencies, so they don't want to change.'

However, Asatsu is already tackling the issue. 'For most Western clients, we disclose our net costs and show them the agency commission and then the media owners question our decision to do that,' Inagaki says.

In Japan, advertising agencies are often viewed as the gatekeepers to media first, and partners to their clients second. There are less set-top TV audience monitors in Japan than there are in China so, amazingly, no-one really knows who watches what in a society that is drenched in media. With the Asatsu/WPP and BDM deals in place, the race is now on to acquire the necessary Western models to change this out-dated system.

On the international front, unlike his contemporaries at Hakuhodo, Inagaki says he welcomes the arrival of BDM, the joint holding company established by Leo Burnett, Dentsu and MacManus at the end of last year.

'Asatsu does not feel any threat from it because we made our move first. Dentsu has become the fourth global agency through BDM and this will enhance the Japanese advertising industry's reputation. But we won't be giving up, we will just go our own way.'

In fact, Naganuma tells me that Inagaki encouraged Dentsu to make the BDM deal. 'Mr Narita (Dentsu's president) is the chairman of the Japanese Advertising Association and Mr Inagaki is the vice-chairman, so they are always sitting together. He advised that Dentsu should not just focus just on Japan, but look at the world.'

Inagaki also prides himself on the agency's ability to innovate creatively.

Television ads in Japan are typically just 15 seconds long and often action-packed, loud and colourful, with an overwhelming number of the top 100 advertisers using celebrities.

Indeed, Japan's approach to branding is markedly different to that in the West. In Japan, the corporate brand takes precedence over the product name. Traditionally, Japanese companies have focused on the homogeneous domestic market of 129 million people. New products are launched at a fast pace with the makers of most FMCG brands estimating about a three-month honeymoon before a competitor brings out a rival brand.

Brands are then given about a year to succeed and, if they fail, marketing support is withdrawn and the brand is left to die. In the meantime another brand will be launched to take its place. As a result, brand loyalty is to the corporate name as product brands move too fast to generate any real following.

The Japanese consumer's attitude to advertising is also different from their western counterparts. Inagaki tells me that the Japanese prefer indirect, vague and non-committal expressions in their dialogue and do not like being pressed for a decision. It is very difficult for them to say 'no' even if they completely disagree with what they are being told.

So it was a brave move when Asatsu adapted the first advertising for Pepsi that actually pitched the brand directly against its main rival, Coca-Cola. The TV spot featured the US rap singer, MC Hammer, drinking Coke before going on stage, and then crooning Feelings.

A fan hands him a Pepsi, one sip of which produces his trademark rap.

While the advertising was at the time driven out of BBDO Worldwide, Asatsu's decision to run the ad at home was a bold one.

From the Asatsu boardroom, I can see the site for Dentsu's new head office building which is due to open in 2003.

'Mr Narita tells us that the new building is going to be 55 stories high, so it will be blocking out all of Asatsu's sunlight,' Inagaki says with some amusement.

Does the obvious symbolism of Dentsu towering over Asatsu bother him?

'My philosophy on life comes from an old Chinese poem which translates as: 'I stand in the universe and I take a walk between the universe and earth.' We have a big scale mentality at Asatsu and we welcome change and innovation.'

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