Opinion

Q&A with McCann Worldgroup Japan boss Yasuyuki Katagi: It’s tough to compete with the big three, but we’re still growing

Katagi-sanYasuyuki Katagi is the president and CEO of McCann Worldgroup Japan, where the network is now regionally headquartered. With 650 staff and 50 years of experience in the market, McCann is the largest non-Japanese agency in Tokyo.

In this Q&A interview with Mumbrella Asia’s editor Robin Hicks in his office in Tokyo, Katagi talks about the current market conditions in Asia’s second largest ad economy, and how agencies can compete with the might of ‘the big three’, Dentsu, Hakuhodo and ADK.

How confident are clients in the market right now in Japan?

I would say some multinational clients are confident. A decade ago, they invested in China or India, but have shifted some of that investment back to Japan. And Japanese brands are spending to compete in the domestic market, both with local and foreign competition.

The 2020 Olympic Games will provide a boost for the advertising market, but after the Games are over, I am concerned that the situation may become challenging because of Japan’s declining and ageing population, and smaller labour force.

Tell us about the competitive environment for McCann and other agencies in Japan at the moment?

McCann has always competed well with top local giants, Dentsu, Hakuhodo and ADK. We all know they have the power to invest to maintain their hold on the market. It’s difficult to compete against them. But we have maintained our size and grown as a group while some other international agencies are getting smaller, only relying on globally aligned clients. McCann is still winning local business. From the clients I meet, McCann is regarded in the same breath as Dentsu, Hakuhodo and ADK, as an alternative, their fourth agency in Japan, and the leading international agency.

What’s the key to survival for international agencies in Japan? BBH, for instance, a strong brand in the UK and Singapore, didn’t make it here.

McCann is the largest international agency in the market. The other major international agencies are JVs and cannot avoid the influence of their major local partners. As well as other international agencies, they also cannot buy media themselves. We have IPG Mediabrands who can plan and buy media directly with a 50+ year’s track record. This is another major factor how and why we are able to compete.

We have to operate taking advantage of our size – not too small, not too big. Dentsu has 7,300 staff, we are only 700 people. Clients often talk about being everywhere, and in all channels, but are frustrated in their ability to orchestrate all these channels together, and coordinate many third parties. The problem with big operations  is that they are silo. To compete and survive, we have to act small and have the talent to orchestrate those different resources. We need talent  who can understand their clients, but also the resources and expertise; a point person who can manage everything for the client. It’s a tough job, but if successful the client will fully rely on us. For account management and planning, there can be a single person to oversee the business, and for execution you need specialists from different disciplines

How difficult is it to hire the best people in Japan, given the likelihood that top talent will want to go to the likes of Dentsu and Hakuhodo?

It’s not easy to hire the best talent, although I believe this is true in any market. Top graduates obviously will tend to go to the big local agencies opting for a secure option. They don’t have to worry about severance action, they will get lifetime employment. Even if they fail, they will be offered another opportunity within the company, so they don’t have to be too aggressive or ambitious with their careers. However, there are people who lived abroad, or have worked overseas who prefer to work in a more open global company. There are also talent who do not agree with the seniority system that is typical of Japan and are seeking employment at international agencies like ours.

I recently I had the opportunity to speak with a member of one of the top three agencies. He said their concern is that there is a fixed mentality among their staff that they belong to one of the top three agencies, and there’s little scope to move either up or down, and that affects their competitiveness. 

What about the tendency for people in Japan to stay with one company. Doesn’t that make it even harder to poach people from Dentsu or Hakuhodo?

People who have not worked abroad tend to stay in Japan and never consider moving jobs. But those with experience of working overseas are more open to it and think more carefully about their career progression. And at international agencies there is more opportunity to work overseas around the network.

Talking of the status quo, the dominant advertising format in Japan is still the 15-second TV commercial, with celebrities shouting the product’s name. Any signs that a shift is happening away from that formula?

Japanese advertising is led by the 15-second commercial vs 30’s and 60’s [TV media in Japan is expensive, hence the shorter format being the most popular], and that won’t change for now. And if commercials feature shouting celebrities, well, they mirror the TV shows, which also feature shouting celebrities. That’s the tonality and approach that fits the environment, and in my view that again won’t change anytime soon. But of course consumers aren’t only convinced by TV ads, they need greater depth or a story and connection with the brand that comes through other channels.

An issue in Japan is that there are major groups that want to maintain the status quo, and others that want to embrace change and move to where the consumer has moved. The market leaders have historically built their business on promoting and selling mass media.  For a long time, agencies have talked to their clients about media, and creative had not been involved in the discussion.

We saw a need there and last year, we set up a unit called Data-Driven Integrated Communications to address this issue. It has proved to be successful, doubling its business compared with the previous year. We see consultation to be key for clients. So securing talent who can combine creative and media together is our challenge. Digital media and digital creative combined together for an optimised solution is an area that we will be pushing further to support our clients.

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