WORLD: ANALYSIS - Fallon utilises Dentsu's might via Gram partnership in Tokyo

Having Dentsu as its sister agency should be useful for Fallon Tokyo.

Fallon Worldwide's deal with Gram Advertising to launch Fallon Tokyo is an ambitious undertaking by the network.

Being so culturally different from the rest of the world, Japan is a tough market to crack for western agencies. Consistency and brand-building are key to western advertising; variety and celebrity endorsements are the traditional staples of Japan's creative output.

However, Pat Fallon, Fallon Worldwide's chairman, is aware of the risks involved: "We were respectful of the differences. Lots of agencies have failed in entering Japan so we took our time."

He is confident that the agency has met its creative and cultural match in Gram, an independent shop which opened its doors in April 2000: "Once we'd met Gram, that was it in our view. They matched us in terms of values: they are creatively driven, they have integrity and the dignity of their staff is important to them."

Both founding partners of Gram, Mitsuru Kubota, the executive vice-president and managing partner, and Tamio Koshino, the president and chief creative officer, will run the agency alongside Phil Rubel, formerly the chief operating officer of McCann-Erickson Japan.

A common reason cited as to why more agencies have not successfully cracked Japan is the dominance of Dentsu. The fifth largest advertising group in the world, founded in 1907, and based in Tokyo, has a staggering 45 per cent market share. Yet here Fallon Worldwide has a huge advantage in being part of Publicis: it can benefit from its strategic partnership with Publicis, struck a year ago as a result of the French holding company's acquisition of Bcom3 in September 2002. Fallon says: "We had associates in Japan who allowed us a way to piece business together, but we wanted quality control."

Gram's client base includes Mitsubishi and Callaway Golf. It also worked with Sony on a branding project which no doubt provided excellent common ground with its partner; Fallon's £70 million pan-European Sony win from the incumbent, Saatchi & Saatchi, ensured that it was one of the few networks to end 2002 with a smile on its face. Yet its other clients are also big in Japan, as Fallon is keen to point out: "Citibank has a big role to play in Toyko, as does United Airlines and Timberland."

Having friends in the right places, though, does not guarantee success.

Japanese advertising is completely different, in creative and structural terms, from Europe, the US or even other parts of Asia. Where independent shops have thrived for decades in other ad markets, Japan has few.

Yet despite being dogged by recession for more than ten years and a declining gross domestic product, investment in advertising has been steadily increasing.

This may suggest Japanese advertisers are starting to spend more on quality, which could work in Fallon's favour. In terms of creative output, Japanese work has earned its place on the international radar: Dentsu's TV ad "golf" for Matsudaira Real Estate picked up a silver at Cannes this year.

So perhaps the time is ripe for a new creative hotshop in Tokyo? Wieden & Kennedy has established a presence in the city over the past five years.

It opened in 1998 at the lowest ebb of Japan's recession. Arto Hampartsoumian, the managing director of W&K Tokyo, comments: "That was the best time as it was less of a risk. We've never had to pitch for business as we've had clients knocking on the door."

Fallon must be encouraged by the precedent set by W&K as they are often mentioned in the same breath: both are smaller networks born in the US and are famed for their more creative approach.

W&K's clients include Nike and Sapporo Beer, as well as the two-year branding project for the recent Roppongi Hills complex in Tokyo. Hampartsoumian says: "We want to be a Japanese agency with Wieden & Kennedy DNA." The agency has certainly gone the right way about this, wooing some of Japan's hottest creative talent into trying something new.

Advertisers appreciate the injection of fresh blood and it is having a knock-on effect on the old guard: Dentsu has opened up three small boutique agencies and Hakuhodo is reportedly following suit. Existing agencies are also growing: there were six people at W&K when it launched, today the headcount nudges 50.

In spite of a conservative headcount at Fallon - it inherits Gram's 20-strong team - Pat Fallon makes no secret of his ambitions for the Tokyo shop: "I hope one day our Tokyo office is as good as our London office." Kubota shares his grand plans: "We would like to establish a truly creative but small company with a big presence."

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