Japanese government contracts out for pitch in fallout from bid-rigging scandal
RFPs are flooding the market in Japan as the fallout from the Tokyo Olympic bid-rigging scandal sees government advertising contracts out for pitch.
Japanese government contracts are up for grabs with Dentsu and Hakuhodo barred from pitching
Agency executives have confirmed to The Drum that there is currently a flurry of pitches and tender activity – with one executive stating the agency was receiving one RFP per day.
The activity is the result of the Tokyo Olympic bid-rigging scandal, which has seen Japan’s two largest advertising agencies, Dentsu and Hakuhodo, along with several other firms, indicted on criminal charges for the alleged violation of the Antimonopoly Act.
The charges, along with a number of arrests of agency staff from Dentsu, Hakuhodo, Tokyu Agency, Fuji Creative Corporation, Cerespo and Same Two, also resulted in widespread suspensions, barring the agencies from bidding on government business for at least 12 months.
The Drum understands the bans do not apply to existing signed government contracts.
The agencies are banned from bidding for contacts for organisations, including Tokyo Metropolitan Government, Osaka Prefecture and, significantly, The Japan Association for the 2025 World Exposition, which manages the Osaka Expo.
The Osaka Expo 2025, which will run between April and October, is expected to feature 150 countries and help attract 28.2 million visitors – including 3.5 million overseas visitors. The suspensions of Dentsu and Hakuhodo mean many of these lucrative contracts are now up for grabs across the wider industry.
One agency head told The Drum the suspensions were helping to “level the playing field which has been dominated by Dentsu”. However, another agency executive predicts the changes will be short-lived, with things expected to return to normal once the suspensions are lifted.
While the industry is experiencing a flurry of activity around the government contracts, there are yet to be any changes in management for other accounts held by Dentsu and Hakuhodo.
“If this had happened in any other market, you would see clients leaving the agencies in droves. They [Dentsu & Hakuhodo] have not lost a single client,” one source told The Drum.
The suspension of Japan's biggest ad agencies has provided other agencies, including smaller independent firms, with new business opportunities that are predominantly not accessible to smaller agencies.
As Japan’s biggest agency, Dentsu alone accounts for 28% of national advertising spend. Last year, the agency reported a turnover of ¥1.1tr last year.
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Japan's advertising industry has been under scrutiny since last year when Tokyo District Public Prosecutor's Office and the Japan Fair Trade Commission launched investigations into alleged collusion in connection to the bidding process for contracts for the Tokyo Olympic and Paralympic Games.
The agencies were suspected of colluding to award contracts to host test events for official venues ahead of the Games. The contracts are estimated to have been worth $320 million.
The investigations included raids on the agencies and the arrests and indictments of a number of former employees of the advertising and events companies involved, including Dentsu and ADK.
The scandal is also believed to have ruined Japan's bid to host the 2030 Winter Olympic and Paralympic Games in Sapporo.
The city, which was believed to be the favourite to win the Games, was forced to put its bid on hold in December as the extent of the scandal became apparent.