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During the Franco-Prussian War (1870–71), however, news was still at the heart of the organization. With Paris under siege, Auguste Havas based himself in Tours in order to relay news of the capital to the rest of France, using carrier pigeons to communicate with the Paris office. In an attempt to cut off the supply, the Prussians released falcons to bring down the pigeons.

Towards the end of his reign, Auguste sold his share of the business to Emile d'Erlanger, an international financier. Other stakes were already in the hands of influential politicians, industrialists and businessmen. This contributed to the persistent impression that Havas was the intelligence service of the French industrial and political elite. Auguste died
in 1889, the last Havas to head the agency. He was succeeded first by Edouard Lebey, and then by Léon Régnier.

The agency found a new figurehead in Régnier, who ran Havas from 1916 to 1944 – a period of immense growth. As well as diversifying into international advertising and investing in telegraph links with northern Europe and the United States, Régnier won the contract to provide advertising space for the Paris métro system and news kiosks. In 1920, he merged advertising sales house SGA with Havas (although it remained a separate division called Havas Publicité). The agency now handled ad sales for the five largest French newspapers.

After the Nazis marched into Paris on 14 June 1940, the offices of Havas were requisitioned by the Occupation government. Havas took on a strange new half-life. Its ownership was split three ways, with 32.4 per cent remaining with its existing owners, 47.6 per cent going to the Germans and 20 per cent to the French state. And so the news agency became a propaganda tool for the occupier and the Vichy government. After the war, Havas was nationalized, with the state taking control of the shares previously held by the Germans.

In 1947, the agency was several million francs in debt and faced increasing competition from a renascent Publicis. But at least the division between its advertising and its news arms was now clear, with the press agency operating under the new banner of Agence France Presse. Havas diversified into tourism, setting up a number of travel agencies. Advertising revenues picked up and by 1957 more than 80 per cent of its income came from advertising sales (WARC profile in association with AdBrands, October 2006). It was during this period that Havas and Publicis – ostensibly arch-rivals – are said to have entered into a tacit agreement to divide the country's advertising spoils evenly between them in order to ward off international competition. This has never been officially acknowledged, but it seems plausible given their vast web of business and political contacts.

In 1959, Jacques Douce was named commercial publicity director, and he slowly began to shape Havas into something resembling the organization we know today. As a second string to the agency's existing creative arm, Havas Conseil, he founded the spin-off agency Bélier, in which he took a stake. In 1972 all of Havas's advertising-related operations were combined under the new name Eurocom. This entity began tentative explorations abroad, acquiring minor agencies in the United
States and entering into a joint venture agreement with Marsteller Advertising, a subsidiary of Young & Rubicam (a partnership that would unravel in the early 1990s).

In 1989, under newly appointed CEO Alain de Pouzilhac, Eurocom took a 60 per cent stake in UK advertising group WCRS. This was later increased to full ownership. Then, as we've heard, Eurocom acquired RSCG, eventually fusing all of its creative agency units under the Euro RSCG banner. By now Eurocom was operating virtually independently from Havas – which had become an unwieldy collection of businesses embracing television (it had launched Canal Plus in 1984), media sales, publishing and tourism.

In 1997, the structure was subsumed into the Compagnie Générale des Eaux (CGE), a former French utilities company that chairman Jean-Marie Messier was busy transforming into a media conglomerate, soon to be re-branded Vivendi. As the Vivendi saga unfolded, the empire once known as Havas was dismantled and sold off. Although it had been unthinkable only a few years previously, all that remained of the giant organization founded by Charles Louis Havas was the advertising division – now renamed Havas and functioning as an independent entity.

But the drama was by no means over. At the turn of the millennium Havas made two important purchases. In 1999 it merged its lacklustre media capabilities with those of Spain's giant Media Planning Group and the veteran New York media buyer SFM (which you may recall from the previous chapter). And in 2000 it bought the US group Snyder for US $2.1 billion, instantly propelling it into the prized top tier of communications groups.

Then the bad news began. A tentative bid for the British-based Tempus Group in 2001 was trumped by WPP. Economic turmoil, combined with restructuring costs, resulted in a loss for that year of 58 million euros. The company seesawed between profit and loss over the next couple of years. Its fragility attracted the attention of French businessman Vincent Bolloré, who built up a 20 per cent stake in the company. An urbane Breton with a wide range of interests, including paper, cotton, shipping and media, Bolloré was portrayed by the press as a corporate raider. Havas CEO Alain de Pouzilhac made no secret of the fact that he was violently opposed to what he described as a ‘creeping takeover' of the group.

In early 2004, Havas confirmed that it was considering making a bid for Grey Global Group. This worried some shareholders, who felt that
the company might be overstretching itself. The situation was resolved when Havas was once again beaten to its prey by Martin Sorrell and WPP.

Meanwhile, the antagonism between de Pouzilhac and Bolloré had escalated into a battle – magnified and encouraged by the media. Bolloré had demanded four seats on the Havas board, which de Pouzilhac was ill-inclined to give him. The Havas CEO feared for the future of the company – was it to be pillaged and sold on for profit by the Breton buccaneer? Why hadn't Bolloré clearly stated his intentions? The scene was set for a showdown at the Annual General Meeting of 9 June 2005. As shareholders and reporters filed into the auditorium at the Maison de la Chimie – an 18th-century mansion on the Left Bank – there was a sense of anticipation rarely present at such dry gatherings.

Taking the stage, Bolloré assured shareholders that he was not ‘Darth Vader' and that this was not a corporate raid: he had plans for the future of Havas. ‘I have invested in [the company] in order to develop it and I intend to remain for the long term. I'm committing myself here, before you… My only wish is to regain some of the ground that it has lost over the last two years.'

When the votes came in, Bolloré won his seats on the board. Two weeks later, Alain de Pouzilhac resigned as CEO. In July 2005, Vincent Bolloré was appointed chairman of Havas. When the dust settled, Havas remained the world's sixth largest marketing communications group.

So now you're asking yourself: ‘The sixth? What happened to the fifth?'

Well, the fifth has certain idiosyncrasies that set it apart from the other organizations in the top tier, so it deserves special treatment.

It's called Dentsu.

12

Japanese giants

‘Fifteen seconds and counting'

T
he 47-storey Dentsu building slices through the Tokyo skyline like a shark's fin swathed in glass. Every day, around 6,000 people come to work here for the world's fifth largest advertising organization, whose net income of more than 40 billion yen (US $453 million) is largely generated in Japan. Entering the building – which was designed by the French architect Jean Nouvel – is like stepping into the first-class lounge of a spaceport. The lobby is an infinite ballroom lined in marble and steel. The round reception desk seems to hover silently, cradled by softly glowing panels. Glossy-haired receptionists in silver-grey uniforms beam immaculate Shiseido smiles. An exposed glass elevator threads through a mesh of steel as your stomach plunges into the receding city.

I spent almost a week visiting Dentsu and I never got a handle on the geography. Perspectives seemed to warp and elide. There were entire floors of restaurants. The executive floor looked more like a museum, with priceless works of art on the walls. On other floors, rows of desks tapered into the middle distance. To get an idea of the organization's bustle and hum, I was encouraged to visit its website, where vertical multicoloured columns tracked the elevator movements in real time.

I was an honoured guest of Dentsu, which was an extremely useful position to be in. The Japanese know how to take care of visitors. There was no way I'd be allowed to leave before I knew everything there was to know about the company. But first, I was given a little background.

A short history of Dentsu

It's easy to find out about the history of Japanese advertising while you're visiting Dentsu, because the Advertising Museum of Tokyo is
located right next door to the agency's headquarters in Shiodome. The museum was established in 2002 to commemorate the centennial of the birth of Dentsu's fourth president, Hideo Yoshida, who is widely regarded as the father of modern Japanese advertising. We'll get to him shortly.

Although the company that became Dentsu was founded in 1901 – and its rival, Hakuhodo, in 1895 – forms of advertising existed in Japan long before then. From the earliest days of the Edo period (starting in 1603) advertising flyers were posted on the pillars of Shinto shrines and Buddhist temples, as well as on fences and gateposts. Japanese newspapers had yet to appear, so ads were often inserted into books. Owing to the shogun rulers' policy of
sakoku
or ‘isolation' – under which no Japanese was allowed out of the country and foreign entry was strictly controlled – news of the outside world came in the form of Dutch newspapers, the Dutch East India Company being the only overseas organization permitted to trade with the country.

During the
Meiji
period (1868–1912) under the Emperor Meiji (meaning ‘enlightened ruler' – his given name was Mutsuhito), the country opened up to foreign influence. Along with other trappings of Western-style civilization – from the telegraph and the railway to certain styles of dress – newspapers and magazines finally arrived. Modernization further accelerated after the end of the Sino-Japanese War in 1895. As the press became increasingly dependent on advertising for revenue, the first advertising agencies were founded to trade in media space.

In 1901 a journalist named Hoshiro Mitsunaga laid the foundations of Dentsu by creating the news agency Telegraph Service Co. to cover the stormy political events of the day. In a barter-style arrangement, many newspapers paid for his stories by donating advertising space, which he sold on through a subsidiary company, Japan Advertising. In 1907 these two units were merged under the name Nippon Denpo-Tsushin Sha, eventually shortened to Dentsu. The company won exclusive rights to distribute the United Press wire service in Japan – and it used this monopoly to negotiate even cheaper rates for advertising space. Advertising itself was becoming increasingly prominent, with the emergence of full-page spreads and a significant rise in the number of women's magazines. In the run-up to the First World War, Dentsu was already a force to be reckoned with, operating out of offices in the Ginza district.

Advertising spend slowed during the harsh inter-war years. In 1936 Dentsu's news service was nationalized and the company now concentrated
exclusively on advertising. Although the industry assumed its inevitable wartime role as a diffuser of propaganda, its income was severely restricted. At the end of what must have been the most sombre period for the company, Dentsu founder Hoshiro Mitsunaga died in 1945.

The arrival of Hideo Yoshida as the company's fourth president in 1947 was a turning point for Dentsu. It coincided with the rise of the Japanese middle class and the emergence of mass consumption, eagerly supported by advertising. Yoshida became known as ‘the big demon' and his hardworking staff as ‘little demons'. He took advantage of the post-war period by recruiting former army officers and bureaucrats with useful government connections. Senior executives were expected to report for duty an hour earlier than the rest of the staff – and to provide daily reports on the progress of their departments. The annual teambuilding trip was a bracing climb up Mount Fuji.

Seeing the future and liking the look of it, in the 1950s Yoshida became Japan's greatest advocate for the launch of commercial broadcasting. After investing in radio, Dentsu practically underwrote the introduction of television, as well as guaranteeing advertising support. The very first TV spot broadcast in Japan was a time check sponsored by Seiko watches. It was, naturally, a Dentsu creation. The agency's symbiotic relationship with the media meant it was soon able to grab the lion's share of television advertising space – up to 60 per cent of primetime – making it impossible to ignore for the country's largest advertisers. Dentsu had also invested heavily in the press and forged agreements to buy newspaper space in bulk. By the 1960s Dentsu pretty much had the lock on media in Japan. In 1974 it was named the largest advertising agency in the world by
Advertising Age
.

Although the Japanese economy experienced severe dips in the seventies – the fallout of the Vietnam War and two oil crises – advertising expenditure continued to rise. A trade imbalance caused by the growth of exports to the United States caused further economic instability in the early 1980s. By the middle of the decade, however, driven by the development of satellite TV, advertising spend was climbing again. During a 10-year period from 1981, total expenditure more than doubled.

Dentsu has remained reliant on Japanese billings for much of its history, but it has also acknowledged that this is a potential weakness and has fought insularity. In 1981 it established a joint venture with Young & Rubicam called DYR. This allowed the US agency to enter the Japanese market while giving Dentsu access to the United States and Europe.
Dentsu also showed considerable foresight by opening a branch in Shanghai that same year. It has since become one of the most prominent overseas agencies in China. It has a strong network of subsidiaries throughout Asia, with a more muted presence in Europe and North America. It acquired the UK's Collett Dickenson Pearce in 1990.

The collapse of Japan's ‘bubble economy' in 1991 and the subsequent lapse in consumer spending heralded a change in the way that Japanese agencies did business. At that point they were essentially media brokers. Although they developed creative product, the spots were compressed to 15 seconds in order to cram as many as possible into a break. But Japan's newly cash-strapped consumers now required a bit more persuasion before they reached for their wallets. In order to convince them, advertisers would have to build attractive brands, which meant paying more attention to creativity – an area in which the agencies were weak. Their evolution from commodity providers to creative resources is still ongoing. In addition, the arrival of satellite TV and the internet threatened Dentsu's dominance of the media market and offered new avenues for advertisers – as well as a way for smaller, nimbler agencies to break through the blockade.

Dentsu established partnerships to accelerate its advance into overseas markets. In 2000 it invested in the Bcom3 group of agencies, which included Leo Burnett. The following year it went public, with a listing on the Tokyo Stock Exchange. The acquisition of Bcom3 by Publicis gave Dentsu a 15 per cent stake in the French advertising group. That relationship ended in 2012 – when Publicis bought back its stake – and Dentsu shocked the industry by then announcing a £3.2 billion cash deal to buy UK-based group Aegis, owner of media buying and planning entity Carat, along with several other operations. This consolidated Dentsu's status as a member of the Big Five and put it more squarely in competition with Omnicom, WPP and Interpublic.

Dentsu is the world's largest single advertising agency, with more than 20,000 employees worldwide. Far larger than its closest rivals in Japan, it dominates advertising spend in the country, particularly on television where it is responsible for almost a third of all spending.

Advertising haiku-style

Slashed to only a few seconds, Japanese ads blurt from the screen like noisy, incandescent fireworks. But while Western creatives reared on
‘mini movie' commercials might sneer at this pared-down format, it slots perfectly into Japanese culture.

Dentsu chief creative officer Kunihiko Tainaka says, ‘TV commercials in Japan try to place an emphasis on fast, emotional impact. You'll often find simple words and phrases, songs, jingles and highly memorable characters. The aim is to stand out from the other commercials. We have the feeling that Western advertising is very rational: it's marketing oriented and strategic. Our advertising is media oriented and instinctive.'

The compressed format springs partly from tradition. In the early days, running a TV ad conveyed such high status on a brand that 15 seconds sufficed to make the point. But it transpired that viewers were predisposed to swallow these bite-sized spots. Tainaka explains that Japanese advertising has clear links with another, much older aspect of the country's culture:
haiku
, the beautiful one-line poetry whose best-known proponent among Westerners is probably Bashō. ‘This is an art form entirely based on symbolism. The Japanese are skilled at reading between the lines so the audience can extrapolate from a single image.'

The ability to appreciate a self-contained world without insisting on narrative may explain Japan's pre-eminence in the field of video games. Even its famous Manga comics demonstrate a non-linear approach to storytelling. Executive creative director Akira Kagami says, ‘Outside Japan, comic books are generally story oriented. Manga tend to be situation oriented. Once again, the approach is more abstract. You can see Manga strips with just four panels. Even two is occasionally enough.'

He points out that accusations of lack of creativity based on the brevity of Japanese commercials is unfair. Selling a product in 15 seconds is a skill in itself – and when you have only a few words to play with, precision is everything.

‘Strangely enough,' he adds, ‘as digital media take hold and attention spans become shorter, I have the feeling that advertising in other markets is becoming more like our own. In the seventies and eighties, there was a much bigger gap in comprehension between Western and Asian audiences, which was reflected in our performance at international creative competitions. But since the 1990s, Asian creativity has been welcomed and admired.'

In any case, Japanese advertising cannot be approached in a simplistic, catch-all fashion. There are regional styles. Advertising for a metropolitan, Tokyoite audience – the heartland of the Kantō region – is glossy and modern. But there's also work aimed at the south-central Kansai region, whose capital is Osaka. The region is considered more cultural
and idiosyncratic than businesslike Tokyo. The advertising crafted for its citizens is more cynical – and often does better at Cannes.

The need to make an instant impact explains another well-known aspect of Japanese advertising: the use of Hollywood stars to sell beer, whisky, soft drinks and cars. But Kagami suggests this kind of advertising might be evolving. ‘Japanese audiences are becoming far more sophisticated and well travelled – and Western stars don't have the exotic appeal they once did. In fact, I'd say there's a swing towards Japanese icons. When you only have 15 seconds to play with, celebrities make an instant connection. Their background is established. You don't have to develop the character.'

Not surprisingly, given its past, Dentsu has never given a moment's thought to separating media from creative. Indeed, the media drives the creative, not the other way around. The agency says this has made it easier to devise ‘through the line' campaigns, with a single idea developed for several different media, especially the internet and mobile phones. ‘The line has vanished. We believe that you may have made a big mistake by unbundling media from creative in the West,' says Kagami. ‘Our creatives can consider different media choices right from the start of the process.'

A unique employee within Dentsu is the TVC planner, also known as the ‘TV specialist'. This discipline is not analogous with media planning. The TV specialist's role involves coming up with the original idea for a TV commercial and overseeing the entire production process.

At Dentsu it doesn't matter where a creative comes from. People from a wide variety of backgrounds are recruited because the agency has a sophisticated internal education system to support their development.

So what's it like to be a creative at a Japanese giant?

Soccer and Shiseido

As well as being one of Japan's creative stars, Masako Okamura was one of the first female creative directors at Dentsu. ‘Maybe that's why people sometimes mistook me for a boy,' jokes this willowy, gamine woman. It could also have something to do with the fact that she is a devoted soccer fan, and is often clad in Chelsea or Real Madrid team shirts. (She even admits to watching tapes of spectacular soccer goals to ease stress.) ‘When I have an important meeting I change into a Prada dress and people say, “Oh, she's a girl after all!”'