The development of in-house marketing tools and the rise of direct consumer brands are recent advertising industry disruptions that threaten to squeeze income at ad agencies that have thrived in the middle ground between companies and their customers.
Masaki Mikami, Senior Corporate Officer of Hakuhodo DY Media Partners Inc., is, however, optimistic about the future of Japanese agencies helping Japanese corporations re-invent their businesses in a world rocked by technological change.
“Rather than thinking about what the future of agencies is, perhaps it is better to consider whether Japanese companies can grow and innovate again and whether we can be their partners in doing that,” Mikami said during a panel discussion at the ad:tech tokyo interactive advertising and technology conference in Tokyo on Oct 4.
Mikami, who is responsible for innovation at Hakuhodo was joined at the Tokyo International Forum by Shigeyuki Tomomatsu, VP of digital marketing at American Express for a discussion, on the theme of “Technology Transformation is Changing Everything and How to Prepare for It,” moderated by Wes Nichols, the co-founder of marketing analytics technology company MarketShare and a board partner at investor Upfront Ventures.
The global business landscape has transformed since Asia’s biggest gathering of marketing executives hosted its first convention in Japan ten years ago. Back then Apple had yet to launch its game-changing iPhone and companies that have come to dominate the connected economy were little known or didn’t exist at all.
Nichols, who made the opening remarks at the show, also noted that since 2008 there has been a major financial crisis, the sharing economy has taken hold and disruptive services such as iTunes, Spotify, Uber and Airbnb have mounted a challenge to traditional businesses. Voice technology such as that used in Amazon’s virtual assistant Alexa, along with drones and the blockchain technology behind crypto currencies were only just beginning to make a mark, he added.
That disruption has been welcomed by many in the U.S. as an opportunity. Nichols asked his two panelists about Japan.
Mikami told Nichols it was forcing older established Japanese companies to look for new ways to do business, with many struggling to adapt.
“It’s hard for companies to scrap business models that have made them money and I think that is a bigger problem in Japan than elsewhere,” he said. “For the past 50 to 60 years Japanese companies have succeeded around the world, which I think explains a lot of that resistance. Companies have been too successful.”
The pioneer of digital marketing since the advent of the internet age two decades ago explained that there was a clear gap between individuals and organizations in Japan, with people showing a greater willingness to adopt new technology and practices than companies.
“Japanese people like to experience new things, something you can see if you look at our young people. Japanese companies, however, focus their efforts on minimizing failure.”
Responding to the same question, Tomomatsu noted that even the branches of foreign firms often become “Japanized”.
Nichols also asked Mikami and Tomomatsu about the impact on marketing of direct to customer brands (DTC).
Mikami said he was aware of the threat posed to agencies by the digital technology trend that let companies build a direct relation with their customers. Doing so delivers a trove of first person data that can assist in in-house brand creation, promotion and product development.
Marketers and the agencies they hire have closely monitored distribution and retail networks for years to try and understand who buys daily consumer package goods such as beverage, foodstuffs and toiletries, and why and how they purchase them. “Data driven marketing may in fact be the ideal way to do that,” Mikami told the audience in Tokyo.
When Nichols asked Tomomatsu where future marketing career opportunities lie, he predicted that companies will focus more on internal data mining.
So far, few Japanese companies have shifted their marketing away from agencies to in-house, but when they do, said Mikami, those long-established corporations will still need the ad agencies to help spark innovation that exists at the intersection of creativity and technology.
“I think a key phrase will be ‘working with others’,” Mikami said as he alerted Nichols and Tomomatsu to an agreement announced that day by carmaker Toyota and technology company Softbank to jointly develop self-driving cars.
Innovation could range from major projects such as revamping brand business ecosystems to smaller tweaks to day-to-day operations and an external viewpoint is a necessary component of that. “Innovation comes from bringing together different viewpoints and by combining different technologies,” Mikami told the ad:tech audience.
“The key question for agencies is how we position ourselves as innovation partners to construct new models and tear old ones down.”