• Reportage
• Viewpoints

Source: Campaign India

Hakuhodo Inc’s president and representative director discusses the agency group’s push into technology and consulting, its AI strategy and the challenge of turning integration into sustainable growth.

Hakuhodo is trying to redefine what an advertising group can be. Its ambition extends beyond campaigns and media operations to consulting, technology, business incubation and closer involvement in clients’ wider business challenges.

Yet the Japanese group’s transformation raises a fundamental question: how does it expand into new areas without diluting the creative thinking and understanding of people that have long distinguished it? At the centre of this effort is Sei-katsu-sha Insight, Hakuhodo’s philosophy of understanding people not merely as consumers, but in the wider context of their lives.

The group is also investing in artificial intelligence, integrating capabilities across its businesses and looking to markets such as India for talent and technology expertise. Kenji Nagura, representative director and president, Hakuhodo Inc, tells Campaign how the group intends to turn these ambitions into a more sustainable business model.

Edited excerpts:

Hakuhodo’s Sei-katsu-sha philosophy has long been central to its identity. How do you ensure it remains a competitive advantage rather than institutional language, particularly as platforms, algorithms and AI increasingly mediate consumer behaviour?

Our research institutes and think tanks explore emerging changes in people’s lives, marketing and creativity, sharing their findings and experiments to inspire new perspectives. We also provide training that encourages employees to revisit Sei-katsu-sha Insight from different angles and translate it into fresh ideas and approaches.

This commitment is particularly important in an environment increasingly shaped by platforms, algorithms and AI. While technology can help us understand behaviour and identify patterns at scale, data alone cannot fully explain the motivations, emotions and aspirations behind people’s choices. By combining technological capabilities with a deeper understanding of sei-katsu-sha, we aim to uncover insights that go beyond what is immediately visible, strengthen the connection between brands and people, and create new value that contributes to the development of society.

The Hakuhodo DY Group introduced its global purpose, ‘Aspirations Unleashed’, in 2024. What does it mean in practice, and how is it taking the group beyond traditional advertising?

‘Aspirations Unleashed’ represents our commitment to unleashing the aspirations of sei-katsu-sha, organisations, and society, and transforming them into a driving force for the future. Since its launch, we have been translating this purpose into action through Sei-katsu-sha Value Design, a framework built on Hakuhodo’s core strength in sei-katsu-sha–centered creativity. It encourages us to work with clients from the outset to define not only their desired business outcomes, but also the positive impact they want to create for society, by placing these ambitions at the heart of our strategic planning and creative development.

This vision is also driving our transformation beyond traditional advertising. By bringing together our diverse talent, culture of co-creation, global network, and deep stakeholder relationships with advanced technologies such as AI, we are expanding our ability to create value across a broader range of businesses.

Hakuhodo has established the Human-Centered AI Institute and is developing tools that combine AI research with creative expertise. What does ‘human-centred’ mean when AI increasingly influences decisions about audiences, content and media?

It means using technology not simply to automate tasks, but to deepen our understanding of people and create new value for sei-katsu-sha, our clients and society. As AI becomes increasingly involved in decisions about audiences, content and media, we believe it is essential to keep people, their needs, emotions, values and aspirations, at the heart of how these technologies are developed and applied.

“As AI becomes increasingly involved in decisions about audiences, content and media, we believe it is essential to keep people, their needs, emotions, values and aspirations, at the heart of how these technologies are developed and applied.”

Through initiatives such as Hakuhodo DY Group’s Human-Centered AI Institute, we are exploring how AI can foster a deeper understanding between sei-katsu-sha and companies and brands. We are also developing co-creation solutions that combine our extensive sei-katsu-sha data and insights with the creativity and expertise of our people.

Examples include Virtual Sei-katsu-sha, which enables a deeper understanding of people, and Strategy Bloom Concept, which incorporates the creative expertise of TBWA\Hakuhodo’s chief creative officer, Takahiro Hosoda. These initiatives demonstrate how AI can expand our capabilities and help us uncover new perspectives in marketing and creativity.

Where do you draw the line between augmenting human creativity and automating it away?

Ultimately, we see AI as a means of augmenting human creativity, not replacing it. AI can enhance efficiency, analyse patterns and support the development of ideas, but its greatest value comes when these capabilities are combined with human insight, imagination and judgement. That is why we are investing not only in AI tools, but also in developing AI capabilities across our organisation, from employees to senior leadership. Guided by our human-centred philosophy, we aim to harness AI to elevate the quality and impact of our work while continuing to create meaningful value for people and society.

Creativity Engine Bloom brings data, creativity, media and distribution together. How has it changed the way client briefs move through the organisation?

Creativity Engine Bloom’s introduction in June 2024 marked an important step in our efforts to bring together capabilities that have traditionally operated across separate domains. Developed as an integrated marketing platform, it connects data, strategy, creativity, media, activation, CRM, commerce, and distribution, enabling us to approach client challenges more holistically and link marketing activities more directly to business growth.

At present, the platform is being used within the Hakuhodo Group to improve how we develop integrated proposals for clients. Professionals across account management, strategic planning, media, creative, activation, and commerce can draw on shared data and tools to develop strategies and business growth roadmaps. Its interconnected modules, supported by Human-Centered AI, help us move from understanding market structures and defining target audiences to identifying value, establishing KPIs, and translating strategy into coordinated execution. This enables us to work across disciplines more effectively and accelerate the cycle of planning, implementation, and improvement.

This is closely aligned with our broader efforts to strengthen coordination across the Group’s functional companies and build a more integrated business structure. We have made progress in bringing together expertise and improving the quality of our integrated proposals, while continuing to build a more comprehensive shared dataset through practical use of the platform.

Our next priority is to embed this way of working more deeply across the organisation, so that collaboration becomes a natural part of how we respond to client needs rather than an additional step in the process. Over time, we also aim to extend Creativity Engine Bloom beyond internal use, helping clients identify new business opportunities and create sustainable value.

Hakuhodo has been present in India for over 25 years and its acquisition of a majority stake in Auburn Digital Solutions points to a more strategic role for the market. What capabilities does India offer the global group, and how will you measure the success of this investment?

India is strategically important to Hakuhodo for reasons that extend well beyond the size and growth potential of its domestic advertising market. The country offers exceptional creative and strategic talent, a deep technology and digital ecosystem, and valuable insights into how people and businesses are evolving in a rapidly changing market.

Equally important, we see India’s potential to become a strategic hub for specialised capabilities and a center of excellence serving the broader Hakuhodo International network. Rather than viewing India solely as a domestic market, we want to connect its talent and capabilities with opportunities across other regions, including the Middle East, Africa and beyond.

“Our ambition is for India to become not only a stronger market in its own right, but also an increasingly important contributor to Hakuhodo’s global growth.”

The addition of Auburn Digital Solutions strengthens our digital and technology capabilities, complemented by the Hakuhodo International Tech Initiative (HITI), an internal, cross-organisational team that supports technology-driven client projects across the Hakuhodo International Collective in areas including AI, digital transformation, MarTech, and e-commerce. HITI also aims to elevate the network’s collective expertise by sharing innovative technology solutions developed in India across the network, reflecting our broader ambition to build scalable capabilities and foster collaboration across markets.

Ultimately, we will measure success not simply by our growth in India, but by the broader value the market creates for Hakuhodo. This includes sustainable business growth, stronger client relationships, deeper digital and technology expertise, greater collaboration across our international network, and the ability to bring Indian talent and solutions to clients in other markets. Our ambition is for India to become not only a stronger market in its own right, but also an increasingly important contributor toHakuhodo’s global growth.

Having experienced firsthand the remarkable energy and momentum of India’s market, I believe there is significant potential for India and Japan to learn from one another and create value together. Beyond supporting growth within India, we see opportunities to connect talent, ideas and capabilities across markets, contributing to India’s sustainable development while fostering broader collaboration and long-term growth.

Hakuhodo’s integration of creative and media appears to have improved its pitch win rate, although the underlying figure is not public. What is driving that improvement, and can the approach be replicated beyond Japan?

Our ability to win business increasingly comes from combining the strengths of our people with technology to deliver more integrated, insightful, and effective solutions for clients. By bringing creative, media, data, and digital capabilities closer together, we can develop richer proposals that address not only communications challenges but also broader business needs.

AI is an important enabler of this approach. Solutions such as Virtual Sei-katsu-sha help us deepen our understanding of people and generate insights that inform strategic planning and creative development.
This allows us to move beyond the traditional boundaries of advertising and explore new ways to help clients address business challenges and create value.

We are also applying AI internally to improve the way we work. For example, Hakuneo One, Hakuhodo DY ONE’s proprietary generative AI platform, helps employees access AI capabilities securely and streamline a range of tasks and workflows. By reducing time spent on routine activities, we can createmore opportunities for our people to focus on strategic thinking, creativity, and collaboration across disciplines.

Ultimately, our advantage is not simply the breadth of services we offer or the speed at which we develop proposals. It is our ability to combine human insight, creativity, data, and technology in ways that are relevant to each client’s needs. While the specific solutions and capabilities required may differ by market, this approach can be applied across our international network.

With client spending under pressure and AI putting executional margins under strain, what are the concrete levers for improving growth? Which do you expect to contribute first?

Our approach to materially improving growth is to build new revenue streams while strengthening the value we deliver to existing clients. The current three-year medium-term business plan, launched in fiscal 2024, is focused on establishing a foundation in consulting, technology, incubation, and other areas that will enable us to move beyond the traditional scope of the advertising business and address a broader range of client challenges. We see this as a long-term transformation: our priority is to sow the seeds of new growth today and translate them into tangible results over the next five years.

A key part of this transformation is changing how we create and capture value. Historically, advertising companies have relied heavily on the scale of their media operations. Going forward, we must demonstrate the value of our broader capabilities and develop business models that allow us to receive appropriate compensation for that value. These could include fee-based consulting and services delivered alongside clients’ teams, success-based models tied to marketing outcomes, and revenue-sharing arrangements in which we develop new businesses jointly with clients.

“We do not see long-term brand building and immediate performance as competing priorities.”

Technology, particularly AI, is another important lever… accelerating research, automating tasks, and improving efficiency across marketing activities. At the same time, as AI-generated outputs become more widely available, the differentiation they offer may diminish. We believe our competitive advantage will come from using AI to amplify our core strengths in creativity and sei-katsu-sha insight.

Ultimately, our growth will depend on how effectively we combine our long-standing strengths in creativity and sei-katsu-sha insight with technology, specialised expertise, and close collaboration with clients.

As clients spread marketing budgets across an increasingly fragmented media landscape, how do you protect talent retention and client relationships when procurement pressure is rising?

Hakuhodo believes our people are our greatest asset and the source of our competitiveness. In an increasingly fragmented media landscape, where clients are under pressure to make every marketing dollar work harder, retaining talented people and enabling them to deliver high-value, creative solutions is essential.

Our approach to retention is closely linked to creating an environment where employees can grow, feel motivated and focus on work that makes the best use of their expertise. We invest in people through diverse learning opportunities, encourage self-directed development, foster a culture of collaboration and co-creation, and strengthen creativity grounded in our Sei-katsu-sha Insight philosophy. We also promote collaboration and knowledge-sharing across the group through inter-company personnel exchanges and cross-group training.

We are also taking practical steps to improve the employee experience and enable our people to focus on higher-value work. These include encouraging employees to take sufficient time off to recharge, outsourcing certain standardised and routine tasks to reduce workloads, and introducing AI tools to help automate repetitive work and improve operational efficiency. Ultimately, protecting retention means creating the conditions for our people to do their best work… and continue to deliver meaningful value to clients—even as marketing budgets come under increasing pressure.

What evidence convinces you that clients still value long-term brand-building enough to pay for capabilities that may not produce an immediate return?

The strongest evidence is the longevity of our client relationships. Since its founding, the Hakuhodo Group has been guided by two core principles: Sei-katsu-sha Insight and Commitment to Partnership. We believe that understanding people’s needs, engaging in dialogue, and working alongside our clients are essential to finding the right solutions and building lasting value together.

Today, we work with more than 3,000 clients, including leading Japanese companies with which we have maintained business relationships for over 70 years. We take great pride in these enduring partnerships. They reflect the value of having a partner who understands a client’s business over time, can respond to changing market and consumer needs, and provides consistent support as the business evolves.

Of course, the expectations placed on marketing have changed, and clients need to demonstrate business results. But we do not see long-term brand building and immediate performance as competing priorities. The challenge is to connect brand value with the consumer journey and the business outcomes that matter today, while continuing to build meaningful relationships between brands and people.

End article
Read article at:
https://www.campaignindia.in/article/technology-alone-will-not-make-us-fully-integrated-kenji-nagura/43926mexs2t6q55vfw1rws3k51