Dentsu and Hakuhodo, Japan’s leading two agencies are building new business via the Internet.

Hakuhodo, who long ago abandoned hopes of building a strong agency presence in the USA are targeting the USA with a new Internet venture that will provide on-line greeting cards allied with a sweepstakes service. This will bring Hakuhodo’s proprietary on-line greeting card with sweepstakes technology to the USA through a new wholly owned US company, SharedGreetings Inc. (www.sharedgreetings.com).

Hakuhodo has offered on-line greeting cards with sweepstakes in Japan since 1996. Clients include Nissan, Toyota, Mazda, Japan Airlines, All Nippon Airways, Nomura Securities, Kirin Brewery, Asahi Brewery, and Sony.

The service has proved a hit in Japan where over 2.9 million cards were sent by 2.4 million people last New Year, making this one of the largest Internet events in Japan to date, according to Hakuhodo.

Targeting the US on-line greeting card market marks a new departure for Hakuhodo. The hope is that both the basic business models and expertise from the Japanese greeting card service will translate successfully to North America where Hakuhodo hope to send 24 million cards and project revenues of US$ 20 million for next year.

Dentsu, meanwhile, are strengthening their position in Japan through a new joint venture with a major US provider of Internet services, marchFIRST, called DENTSUmarchFIRST which will provide "new economy services" to Japanese companies. Services will run the gamut from web site creation and hosting through to complete end-to-end e-commerce and CRM solutions as well as a wide range of strategic consulting services.

The two forecast that DENTSUmarchFIRST will achieve sales of Y850 million in its first year, a modest start for a market they estimate will be worth Y2.8 trillion in 2001. They predict sales will grow to Y3.23 billion in 2002.

Dentsu Director Koichi Segawa, who becomes chairman of the JV predicted that the company would break even sometime in 2003, when sales are forecast to reach Y6.08 billion. Robert Bernard, marchFIRST’s chief executive, called the sales estimates "conservative" and said he is optimistic that the joint venture can assume "a leading position in the Japanese market in six to 12 months."

The new venture, adds more muscle to Dentsu’s portfolio of Internet-related companies. These already include D2, a media representation and advertising agency with a monopoly for advertising sales on NTT DoCoMo’s i-mode mobile Internet service, Dentsu Tech, another web services provider, and ISID who provide systems integration and IT services.

Years ago, Dentsu executives said they were determined that their share of new media and Internet related businesses would be no less than their 25% market share of traditional media in Japan.

That goal may well be surpassed this year. If so, the next target will be to match their share of prime time TV, around 40%. Is this achievable? ‘There’s nothing standing in their way,’ said a director of a rival agency. But while Dentsu moves aggressively to provide its clients with a wide range of sophisticated services for the new economy, that same vigour and creativity remains utterly concealed on their own web site, which harks back to the earliest days of the intenet and the bureaucratic decision taking that are hallmarks of Japan’s old economy.