As a sign of changing times, the Japan Association of Advertisers explored the issue of accountability at a seminar for advertising managers this summer.  

Accountability is a new word in Japan’s advertising lexicon, introduced by a decade of recession that has hammered corporate profits and prompted the need for greater discipline in managing how money is spent.

 Addressing the subject at the JAA seminar  was Hide Koizumi, Director of Strategic Planning at  SPI, Japans’ only independent strategic media planning company, and the only media specialist in Japan to be admitted as a member of the JAA.

 According to Koizumi, “The two faces of accountability in Japan, as elsewhere, are efficiency and effectiveness. Both are critical. Efficiency is largely a price driven issue. In Japan’s opaque media market this continues to be a challenge.”

 Two traditional practices hinder advertisers who wish to improve efficiency. Firstly, Japanese agencies do not disclose the net prices they pay for media  the advertiser only sees an invoice showing the gross cost he must pay. Secondly, media companies often set their base prices differently for each advertiser. The differences reflect not only objective factors such as media volumes, but also more subjective values like the quality of the relationship, and the prestige of advertiser.

 But, according to Koizumi, “through increased client interest, plus services such as SPI’s TV Audit, this situation is slowly improving”.

SPI’s TV Audit provides clients a comparison of their cost per GRP against the market average by TV station, by region, by month. Observing these trends also allows SPI to monitor and  manage their clients TV costs vs. spot market rates and improve performance against what each client has achieved historically.

 Although Japanese advertisers continue to tolerate the market’s inefficiencies, foreign advertisers are more demanding. Indeed, advertisers such as Unilever, Coca Cola, Procter & Gamble want the same quality of media services in Japan that they experience in other major markets. But Western multinationals account for no more than about 12% of Japan’s  Yen 5,759.7 Billion (1998) advertising market and lack the clout to force change.

 “ There is an enormous need for media auditing in Japan,” says Michael O’Sullivan, managing director of Asian Media Management, a London-based consultancy. “ Global clients are constantly trying to achieve media transparency in this market and they’re getting frustrated at the lack of progress.”

 O’Sullivan worked in Japan for a number of years as Media Director of DMB&B and experienced the problems first-hand.  “ Audit firms have tried to set up in the past in Japan  in co-operation with international advertisers but they’ve had little success as Japanese clients would not participate,” he observes.

That indeed has been the experience of Media Audits. “We’ve made a number of presentations to Japanese advertisers,” says Michael Cluff, the Media Audits director responsible for Japan. “Though individual executives are often very positive about the need for change, their companies have so far been unwilling to implement changes in the way they control and manage their media moneys.” Part of the problem in Japan is that change requires a  consensus of approval, which takes time to build, and which can be blocked or delayed by executives who prefer the status quo. Media Audits handles projects for its global clients in Japan but does not plan to open in Tokyo until there is sufficient commitment from advertisers there..

 Media auditing is not the only example of a media service where Japan lags the West. Outside the main metropolitan areas it is still very difficult for advertisers to be sure their commercials have even been transmitted as scheduled. Following revelations two years ago that a number of TV stations regularly sold more commercial airtime than they could broadcast and simply pocketed unlucky advertisers’ funds, monitoring has improved but still does not reach the levels of coverage and reliability considered normal elsewhere.   When problems are discovered, there is still a strong preference in Japan for resolving matters secretly behind closed doors and without recourse to either the police or the courts. Consequently it is not surprising that media auditing has made little progress.

 A further hindrance in  establishing the necessary benchmarking services is the lack of  co-operation from Japanese agencies as well as their clients. Essentially agency co-operation means support from Dentsu and Hakuhodo, Japan’s two largest agencies, who command a third of the market between them but  have so far been unwilling to pioneer the development of modern media services in Japan. Unlike the West, where agencies are independent of media, Japanese agencies are often primarily media sales companies. All Japan’s major media groups operate  agency subsidiaries. Four  of the ten largest agencies in Japan are partly owned by  media companies: Daiko and Asahi Agency are both partly owned by the Asahi Shimbun; I&S and Yomiko  are both linked to the Yomiuri Group. Consequently the interests of media companies often outweigh those of the advertisers when change is discussed.

 Most of the very limited volume of media auditing work in Japan goes through  SPI, who currently have Yen 9.5 billion of advertising funds under management. Kim Walker, SPI’s co-founder and president estimates 10-20% of their business each year is media auditing. “. When SPI performs an “audit” we’re basically advising clients how, through smarter planning and buying, they can improve the efficiency of their marketing communications,” says Walker.

 Though media auditing services would bring greater clarity to Japan’s media markets, alone they may not be sufficient help advertisers improve the productivity of their media budgets. So concludes Paul Broeren, managing director of Media Discovery a Hong Kong-based joint venture between MindShare and PriceWaterhouseCoopers. 

 “In today’s marketing environment I do believe we should talk about independent advertising investment consultancy instead of media auditing. Although conventional media auditing  has earned a respectable place in some European media markets, it is not a service proposition providing clients with a framework for structural improvement  in their business performance. In Asia,  advertising investments continue to grow at a higher rate and markets need to get more professional sooner rather than later.  In this rat race there is a temptation to buy cheaper media than your neighbor without regard to effectiveness of media choice.  This short-term policy has proven to be insufficient to keep up with, let along out-perform, developments in the market (i.e. media inflation, media clutter and required consumer contacts), explains Broeren. 

So what are advertisers looking for? In Broeren’s view, “ . . . .  a more holistic assessment of their advertising investment, providing them with a platform for management control, sophisticated performance benchmarking  and highlighting structural opportunities for improvement. In demanding and rapidly developing market places conventional media auditing alone might have great difficulty to meet today’s expectations of the market. 

Accountability, transparency would both help make Japan’s medieval advertising industry more productive and ensure advertisers could use their media monies to greater effect. This in turn would lead to prospects for growth rather than depressing expectations for stasis or decline.  “ Japanese advertisers are very unhappy with the quality of service they are getting from Japanese agencies,” says Hotaka Katahira, professor of Marketing Science at Tokyo University. “ I think it is only a matter of time before they begin to demand significant changes from their agencies to help them in the planning and management of their media spends.