The Wall Street Journal shines its light on the Japanese ad market, showing just how closely held it is by the Japanese themselves. Recognizing this fact has led some international players like TBWA to invent new structures that work within Japanese business culture, instead of the lame (if not imperialist) “If it works in the U.S. it’ll work here too” approach.
For years, Western advertising agencies have had a hard time making inroads into Japan. The world’s second-largest ad market after the U.S. in terms of spending is dominated by two big agencies, Dentsu and Hakuhodo. Together, they control 40% of the media and advertising market.
Foreign ad agencies have only about 10% of the total $50 billion in advertising spending, according to the Japan Advertising Agencies Association, and that is mostly by foreign companies.
Now, TBWA Worldwide, a unit of Omnicom Group, is making a new push here. Last year, it formed a joint-venture agency with Hakuhodo, the No. 2 agency, called TBWA\Hakuhodo. The agency, in which Hakuhodo owns 60% and TBWA owns 40%, recently moved into a new office to formally start operations.
But many tie-ups between Western and Japanese agencies have failed before, plagued by cultural and operational differences.
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When some agencies can’t overcome the cultural differences within their own country, you don’t have to be surprised if they struggle abroad. Especially in a land culturally so different as Japan.