Hakuhodo in new global push with Omnicom/TBWA alliance

Hakuhodo and Omnicom Group's TBWA plan to form a global alliance with the establishment of a new Hakuhodo/TBWA advertising agency in Asia, Europe and the US. TBWA Asia Pacific regional chairman Keith Smith told MEDIA the venture is just a formalisation of the partnership with Hakuhodo. "TBWA Europe has been working with Hakuhodo for 10 years," said Mr Smith, adding the new venture will serve primarily on the Nissan account. Hakuhodo and TBWA Worldwide will enter a joint venture to set up an advertising network in Europe, the US and Japan which will cover the Asia region as well. Hakuhodo will take a majority stake in the new venture in Japan, while TBWA will have majority ownership in Europe and the US. The new venture agency, whose name has yet to be finalised, will have no impact on the two agencies' current operations around the world, said Mr Smith. It is understood that Nissan's drive for a worldwide standard played a significant role in pushing through this sort of horizontal global advertising network merger, such as Proctor & Gamble being the catalyst for the merger of the Leo and MacManus Groups to form BDM, now BCom3. TBWA handles Nissan on a worldwide basis in about 30 countries but not in Japan. Hakuhodo handles the automaker's advertising business in Japan. After years of restructuring and operational trimming, Nissan plans to centralise its global advertising and promotional activities in a bid to reduce costs and to establish a more consistent global branding position similar to rival Toyota. TBWA Worldwide's acquisition of a majority stake of the Nissan-owned advertising agency Nippo and creative shop Nissan Graphic two years ago paved the way for Nissan's new advertising strategy. Industry sources from Japan told MEDIA that mergers were an inevitable trend to combat the increasingly consolidated advertising landscape. The current flurry of M&A activity around the world spurred Hakuhodo to search for an overseas partner to secure its position in the domestic and overseas markets. Recent developments in Japan has included Dentsu allying with the Leo and MacManus Group and WPP holding 20 per cent of Asatsu-DK. Industry analysts said this sort of Japan/multinational marriage takes a long time to come to fruition, with the trend being to start off with an alliance to test the viability of the relationship. The M&A activity in Japan underlines the fact that Japanese agencies need a global partner to strengthen their networking clout to meet the rapid globalisation of many Japanese companies. At the same time, the multinational agencies need a Japanese partner to ensure a strong presence in Japan. Meanwhile, new leadership at Hakuhodo - top-flight salesman Toshio Miyagawa succeeded the presidency from Mr Takashio Shoji, who came from a commercial production background - has established a new corporate culture in the agency, which experienced a dip in profit over the past year. New objectives for Mr Miyagawa are to strengthen the agency's competitiveness in Japan and overseas, and to prepare its planned listing on the stock exchange in 2004. Hakuhodo currently has no specific alliance with any MNC advertising network since it broke ties with McCann-Erickson in 1994.

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