Hakuhodo had a couple of big goals for 2022. One was to grow beyond traditional advertising and media to concentrate on more integrated, ‘full-funnel’ marketing services. New business partnerships with call centers and HR firms, along with the hiring of more than 100 engineers are helping to diversify the kinds of business solutions it provides.   

Another objective was to connect more closely with its Asia business outside of Japan. It took a sizable step in this regard by teaming up with sister digital media agency DAC to form H+, a cross-company organisation spread across 22 firms and 10 APAC markets to fast-track digital service development for clients throughout Asia by tapping into all its top technology-focused teams in the region.  

Hakuhodo’s initiative is worth applauding, but we’ll have to wait another year to see if there are real dividends. The bulk of Hakuhodo’s business still remains in creative for TV and other traditional media. In the meantime, it continues to turn out good, if not spectacular creative work, but still needs to address culture and DEI concerns if it wants to get ahead across the region. 

Category 2022 2021 Business B   C+ Innovation B B- DEI and sustainability C- D+ Creativity and effectiveness B- B Management C C+ *2021 scores adjusted to new numeric scale. Read about the grading methodology

Business (B)

The agency reports a very good year for business in 2022 with record-high billings that grew 10.7% over the prior year. Gross profit gained even more, up 13.6% according to its filed income statements, factoring into our higher grade this year. In Japan, a good portion of the extra billings can be attributed to its acquisition of Sold Out, a large Japanese publicly-traded independent agency with at least 20 office locations.

But Hakuhodo also managed to significantly increase its work from governments and municipalities as Covid rules became relaxed and more services returned, requiring new communication. It also saw increased work from Japanese automakers as semiconductor shortages eased. 

Outside of Japan, Hakuhodo says it also benefited from the return and pent-up demand for live events in markets like Singapore, Vietnam and Taiwan, while marketing activity in Thailand rebounded along with D2C clients. India, it says, also benefited from renewed demand for martech services. Meanwhile, the agency grew its footprint in Malaysia with the acquisition of Kingdom Digital.  

Like other Japanese-based agencies, Hakuhodo doesn’t report new business wins or losses and keeps clients confidential. But we can say that some of its major wins across Southeast Asia included a Chinese auto manufacturer, a global FMCG client and a large alcoholic beverage company across ASEAN markets, in addition to a telecom company in the Philippines. 

Innovation (B)

Innovation is an area where Hakuhodo traditionally excels. The agency has not been afraid to start new ventures or invest in commercial trends. Its ‘Creative technology lab beat’ is a case in point, having rolled out 4 products including a movie resizer and an AI-optimised search ad tool to make creative work more efficient.

Like other agencies, it invested in the AR, metaverse and virtual reality space in 2022 in a new venture with Singapore’s Stake Technologies and through its Hakuhodo-XR team, though sizable returns in client spend here remain elusive. In the AI realm, it set up a new marketing data-science boutique to advance client data projects through machine learning.  

More importantly for its mission to develop ‘full-funnel’ marketing capabilities was the creation of a new tech company, Hakuhodo Technologies, with an R&D budget of more than 10 billion yen ($75 million) to support the wider holding company in this mission. This, and the aforementioned H+ digital network across APAC represent sizable investments and warrant an upgrade here. 

DEI & Sustainability (C-)

Hakuhodo remains a laggard in DEI with abysmal levels of female leadership (less than 10% in Japan and about 30% in APAC) despite forming more than a quarter of Japan’s permanent staff and more than half in APAC. No pay gap audit has been done and there’s no indication it will be.  

This year the agency did take a few baby steps toward making its staff feel heard by conducting employee attitude surveys, setting up ‘consultation desks’ to help advocate on issues related to staff pregnancy and LGBTQ+ inclusion, and by conducting seminars on caregiving, childcare and menstrual challenges.

More progressive were the steps taken at Hakuhodo’s joint venture with TBWA, which registered common law and same-sex marriages on a common footing with others at work and allowed menstrual leave.

On sustainability, Hakuhodo has made progress in its annual reports on cutting emissions and waste, but figures for 2022 are not yet available. Clients are offered decarbonisation scores and there are new procurement guidelines for suppliers to uphold corporate social responsibility, but these moves are still playing catch up with other networks.  

For its DEI initiatives, the grade pulls slightly higher but Hakuhodo still has to show it believes in DEI and make it a real priority. Until that day, this score won’t be rising any further.

Creativity & Effectiveness (B-)

While Hakuhodo garnered more than 100 awards in the region last year, including 34 Spikes and 7 Lions if you include shortlists, the award haul largely reflects Hakuhodo’s work from 2021. In contrast, its creative work this year was somewhat disappointing, with one outstanding campaign being the notable exception.  

The agency network gets an honorable mention here in addition to its design awards for its Shizuoka plastic modeling project, where it redesigned city service infrastructure like mailboxes, telephones and playground into plastic model sets, reflecting an important source of industry in the city. Likewise, its efforts to create a citizen-to-citizen ride-sharing initiative in the local town of Asahimachi is a good example of work contributing to society. 

But far and away Hakuhodo’s crowning creative glory was its work with artist Kenshi Yonezu for Sony Playstation’s ‘Play Has No Limits’ campaign. The whimsical work by Hakuhodo-owned Six Inc served as both the artist’s music video and Sony’s campaign, much like the same agency did five years ago with the Double-A paper company and band OK Go. This time, however, the exceptional video received twice the amount of views (38 million) and embodied the full idea of ‘playfulness’ to fit the brand perfectly. It’s this campaign that lifts Hakuhodo’s creative score above ‘average.’ 

Management (C)

Although Hakuhodo did not share exact turnover figures, retention tends to run high in Japan where more workers stay with one company for longer periods. In the rest of APAC, however, it remains a challenge.

For this reason, along with its goal to diversify the skill sets of its workforce Hakuhodo dedicated more time to career interviews (5,736 hours) and launched 200 new external skills training programs that were voluntarily taken up by more than half of those eligible. 

Yet, the agency receives a lower grade for management this year. Hakuhodo’s higher grades in business and innovation reflect a greater ability to earn money and spend it, but the lower scores in DEI and creativity reflect that challenges remain in creating a strong agency culture and its leadership itself is among the least diverse in the industry. 

While it may have written up newer, more ethical procurement guidelines, its own management found itself caught up in the Tokyo Olympics bid-rigging scandal, resulting in its offices raided as Hakuhodo staff were reported confessing to collusion with Dentsu and the Games to be the sole bidders on certain projects.

The ethical lapses here, while hopefully the work of just a few, nonetheless could have been more strongly condemned internally and externally beyond promises to ‘cooperate fully with the investigation’ and its public apologies, even if sincere.

TV (35%) Marketing & promotion (26%) Internet media (16%) Creative (14%) Other media (9%) Sustainable marketing services  Cross-category service platforms Creative technology Central Department Store Honda Kao Mitsubishi Motors Morinaga Nissan Panasonic Suzuki Sony  Toyota B+: We had a significant increase in billings (historical high) and aggressively expanded our areas of marketing services, from increasing metaverse solutions to the establishment of numerous specialty businesses to tackle and solve societal issues.