The palpitations that WPP’s acquisition of Y&R caused for Dentsu were soon allayed when Sir Martin gallantly wrote giving wholehearted support for the Dentsu Young & Rubicam joint venture, which handles much of Dentsu’s business across Asia.

Dentsu’s management could then return to practising the skills they know best building market share in Japan. This has more than the usual urgency. With an IPO due towards the end of 2001, it is especially important to Dentsu to show solid revenue growth in the run up to the offering. With the domestic market flat, or in slow decline, market share growth of at least one point and preferably two for 2000 and 2001 is desirable.

Since Dentsu already has roughly a 24% share of Japan’s £23.7 Billion advertising market, any increase in share will inevitably cause pain to other agencies.

Two developments in the past month should help Dentsu on its way.

At the start of June, Dentsu formed a new joint venture agency with NTT DoCoMo, a Dentsu client and the dominant force in Japan’s mobile voice and wireless Internet markets. Called D2, the agency doubles as a media representative and is the sole route for advertisers wishing to advertise on I-mode, DoCoMo’s wireless Internet service. I-mode currently has about 7.1 million subscribers and is expected to have 13 million by year-end. D2 is expected to take a 10% share of Japan’s Internet advertising spend during its first year. Since neither of DoCoMo’s rivals has yet accumulated enough subscribers to make their own wireless Internet services viable as advertising media, D2 becomes the gateway for all wireless Internet advertising in Japan. Dentsu’s 46% equity share of D2 should help consolidate its leadership position in the fast-growing Internet advertising market in Japan.

A short while later, BCOM3 announced they were merging their Leo and D’Arcy shops in Japan to create a new agency, Beacon, in which Dentsu will take a significant minority interest (in addition to its 20% stake in BCOM3). According to Phil Rubel, president of Beacon, the new agency will bill Yen 45 Billion at outset and aims to join Japan’s top ten within three years. Such growth targets call for the agency to increase its billings by about 50%.

Rubel believes Beacon creates a new and highly competitive force in Japan’s advertising industry "Not only international companies want their brands in Japan treated by Global Standards, so now do the majority of domestic Japanese clients. What they don’t want to lose are the tactical advantages of working with very large Japanese agencies. We can now offer a unique alternative we have the combination of two sophisticated agencies long established in Japan that are international and the unparalleled resources of Dentsu’s Japan’s largest agency," Rubel said.

Beacon’s official launch date is October 1st, by when STARCOM are also expected to start-up in Japan.

The net effect of both initiatives should be to increase Dentsu’s market share on an equity-adjusted basis by almost 2% by the end of 2001. The squeeze on other agencies has already begun, working as a troika, Dentsu, Burnett, and D’Arcy have already prized Coca Cola’s canned coffee account and Polaroid from Hakuhodo.