Dentsu cautious about Japanese ad market

15 February 2010

TOKYO: The future prospects of the Japanese advertising industry remain "uncertain" at present, according to Dentsu, the agency holding company.

For the nine months ending on December 31 last year, the Tokyo-based firm posted net sales of ¥1.2 trillion ($13.3bn; €9.8bn; £8.5bn), down by 15.1% on an annual basis.

Within this, revenues fell by 13.6% in its home country, to ¥1.1trn, with international totals also tumbling by 32.9%, to ¥91.8bn.

"The Japanese economy has been on the course of gradual recovery from the recession  ... thanks to the increase in exports and the effect of economic stimulus policies," the owner of Mcgarrybowen and Attik said in a statement.

However, it added that "uncertainty remained" in both the ad market and the broader economy, as a result of the "stagnant" employment situation, currency appreciation and price deflation.

By discipline, Dentsu's creative arm registered a contraction of 10.6%, as did its marketing and promotions unit, by 5.7%, and its content services division, by 6.4%.

Newspaper sales also slipped by 22% year-on-year, with magazines off by 30.7%, outdoor by 12.6%, radio by 12.2%, and television by 12.1%.

Interactive media, on the other hand, delivered an uptick of 19.3%, the only bright spot over the nine month period under assessment.

One of the main contributors to the overall drop off was the automotive sector, which slashed its outlay by 31%, with companies in the financial sector similarly cutting their budgets by 23.5%.

The information and communications segment also reined in its expenditure by 11.9%, with beverage and cigarettes sliding by 7.3%, and cosmetics and toiletries by 7.0%.

As previously reported, the Nikkei Advertising Research Institute has predicted that Japanese adspend will plummet by 14.3% for the financial year starting in April 2009, a rate of contraction that will moderate to 4% over the following 12 months.

Last year, Dentsu outlined its objectives to boost its international presence, and to further develop its digital and consumer insight capabilities.

Data sourced froM Dentsu; additional content by Warc staff