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Agencies Agency Models International Expansion

Homegrown networks dominate Japan’s ad scene. Can an Aussie indie agency muscle in?

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By Sam Bradley | Senior Reporter

November 7, 2022 | 8 min read

Australian indie agency Do believes it has the recipe to compete in one of the world’s biggest – and toughest – advertising markets.

Megudo, Tokyo, in blossom

Do Agency’s new neighborhood, Meguro: can it effectively compete in Japan? / Unsplash

Japan’s economy is the third largest in the world, but agencies hoping to enter the market have to navigate around the dominance of the two titans, Dentsu and Hakohodo.

In the past, holding company footholds often took the forms of joint ventures, such as TBWA\Hakuhodo, or simply left local clients to incumbent agencies. Yet in recent years, domestic competition from indies and third-placed ADK (Asatsu-DK, owned by US firm Bain Capital) has increased, while international rivals have been more hawkish. Droga5 opened an office in Tokyo to some fanfare in 2021, making it the lynchpin of its Asia Pacific growth plans, for example.

Australian indie agency Do Group hopes it can do the same. It has just launched a Tokyo office in Meguro, not far from the bright lights of Shibuya.

Tokyo calling

After five years of building up the agency’s foundations in Sydney, it’s looking north to Tokyo for the next phase of its growth. “Japan is ready for a different proposition,” says Andrew Dowling, co-founder of the group. “They’re starting to be more open to more nimble, agile approaches to agencies – agencies that are not encumbered with significant staff sizes and established cultures, but where you get access to the most senior experienced people.”

The launch was provoked by the expansion of a key client, Arlo Technologies, into Japan, and worked on under the radar, while the country’s Covid lockdown shut out most foreign travelers. He says the office will pursue both domestic and international brands operating in the market.

“We believe we can set up a model led and run by Japanese leaders that has a worldly outlook. We don’t need to separate ourselves into local or global businesses – we believe we can have our cake and eat it too. And frankly, for the business to be successful, why would you cut off half the market?”

In particular, Do is targeting mid-sized businesses looking to break through. Back in Australia, current clients include MG Motor, McPhersons, Lindt and the New South Wales government. “Our agency style and approach doesn’t work as well with large entities that are looking for more traditional relationships with traditional networks – we like to fight. I hate using the word ‘challenger brands,’ but we’re for brands that want to make a mark in their market and do something different to make a change.”

Hiroaki Takezoe, managing director of Do Japan, says that “Japan is a very noisy market, so we don’t want to overcomplicate. Do Agency is all about bringing back the fundamentals of communication. We want to help our partners tell their stories and convey their values in an uncommon way, an approach people notice and remember.”

‘Micro-network’ model

Part of Do’s proposition to clients is a leaner structure and a direct approach to client relationships. Personal relationships with clients, he says, are a huge area of emphasis at Do. The agency has made efforts to hire key agency staff across the region to boost the confidence of prospective clients. In Japan, Two of Do’s local leaders, Toshihiro Yoshii and Takezoe, previously worked at TBWA\Hakuhodo.

“Relationships aren’t owned by companies – they’re owned by people. We like to bring on the most senior and talented of people because not only do they come with skillsets, experience and know-how, they come with significant relationships,” he says.

Its Sydney office is approaching at staff of 50 and doesn’t aim to expand further; although Do Japan will be led by three founding partners for the moment, it’s hiring to eventually create a team between 30 and 50 people strong.

Dowling argues that agency teams reach their peak effectiveness at around that size. “We don’t believe agencies should ever be that big – they operate best between 30 and 50 people. Clients are demanding access to the most senior experience talent in any business. They don’t want to be encumbered by the team – they want to be dealing with the people who are capable and able to make the best and most experienced decisions. We’re seeing it on a daily basis that they want to deal with people direct, with the senior people in the agency.

“Our senior leaders have direct relationships with the client, and they do what they do best. They don’t elevate themselves into executive positions where they all of a sudden have to invent a new career. They actually do what they were taught to do and they do it in conjunction with clients.”

This approach, he says, also allows them to keep costs (and therefore fees) lower. “While we don’t position ourselves as a value or cheap agency, we do believe that we can be very cost competitive against the big networks.”

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Instead of adding on staff, Dowling says Do plans to build a ‘micro-network’ of businesses across the globe, each with more autonomy than is normally afforded to subsidiaries. Expansion into south east Asia and, further down the line, Europe is on the cards. “Rather than growing in scale, we grow via geography and discipline. That’s the way we ensure culture, enthusiasm and entrepreneurialism are maintained.”

The leadership of each business will be made partners and shareholders too. “That’s a key tenet of our business plan. Do Group will have significant ownership but the local leadership will have a significant stake in the business, a vested interest.“

The model, Dowling hopes, will both help Do fight off local indies and networks for new recruits and a new clientele. He says: ”We believe we can position ourselves quite comfortably against both ends of the marketplace.”

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