Picking up the pieces after Japan’s media overcharging scandal

Picking up the pieces after Japan’s media overcharging scandal

“Mum’s the word” has been an unwritten though implicitly understood part of doing business in Japan since time immemorial. What is on the surface versus beneath are often polar opposites.

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It was an Australian publication, Adnews, who initially hot pressed the story that Dentsu, the media and marketing goliath, had admitted overcharging a key client, Toyota for digital work. The scoop was picked up by the Financial Times, before Dentsu held a press conference 2 days later to admit “improper activities” affecting over 100 companies. Only then did mainstream Japanese media like the Nikkei and others cover the story.

It’s the second time this year that Dentsu has unwittingly found itself in the media spotlight. The first was over unsubstantiated allegations it had helped broker the Tokyo Olympics using shadowy consultancy arrangements.

Suspicions aired on Japanese social media were roundly that had the news not been broken from outside, no one would have been the wiser. One comment I read said simply (in Japanese) “Dentsu and NHK are unnecessary.” 

NHK, the publicly owned broadcaster, modelled on the BBC, has had its political impartiality widely questioned in 2016. 

Why the Nikkei, Japan’s pre-eminent business newspaper, which now owns the Financial Times, did not simultaneously publish the Dentsu story is not known; its failure to do has surely fuelled the suspicion it’s too beholden to heavy spending advertisers.

Digital is no longer a niche and forecast to account for over 30% of total media spending in Japan by 2020. 

Yet the challenge to agencies, of whom Dentsu is by far the largest, is increasingly clients are choosing to handle digital in house. Some big spenders like Unilever are actively looking at new business models beyond the linear client-agency one. Debacles on billing transparency do not support the argument for outsourcing.

A 2015 UK survey showed that 27% of brands work with no digital marketing agencies, a big jump just on 2014. Unlike with traditional media, many clients find it’s quicker. Other advantages include cultural and business fit. Posting updates on social media can often only be done by those with the closest knowledge of the company’s plans.

I set up a health beverage business a few years ago (www.saikahealth.com) and we are very active on social media. I can’t imagine, even if we could afford it, how an agency could be so agile or knowledgable to add significant value.

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