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Daiko advertising

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Daiko is one of three Japanese agency brands operating under the umbrella of Hakuhodu DY, the country's #2 advertising group after Dentsu. Daiko has long been one of Japan's most Western-leaning agencies. In 1963 it was among the first to welcome a US agency to the country, forming a joint venture with Grey advertising. In 2000, it ended its long-standing relationship with Grey to form a new liaison with Lowe Worldwide. It was absorbed into the Hakuhodo DY group in 2003, along with smaller agency Yomiko.

Competitors

See ranking of Japan's Leading Agencies

Brand & Activities

The merger of Daiko with Hakuhodo and Yomiko was announced in December 2002, and new holding company Hakuhodo DY was created a year later, along similar lines to Western groups such as Omnicom and WPP. The three component agencies continue to operate as separate entities under the new arrangement, but share back office functions as well as media planning and buying through Hakuhodo DY Media Partners.

Although it still offers a full range of services, Daiko is being increasingly positioned as a specialist in direct marketing and CRM. Daiko has the exclusive franchise to sell local advertising for Asahi Shimbun media group in western Japan. Within Japan Daiko has 31 branches or associated companies in 19 cities, and also owns a number of subsidiary businesses which provide general marketing services including sales promotion (Daiko Media X) and relationship marketing (D-Create). D&I Partners is a joint venture with Hakuhodo and Yomiko to offer direct and interactive marketing services in Japan.

Until recently, the agency has had only a limited presence outside Japan. One of its oldest international markets is China, with a presence in Hong Kong and several offices in mainland China including Shanghai Daiko Maocu advertising. In 2006, a new office was established in China as a joint venture with Yomiko advertising. In a burst of new activity, outposts were launched in Taiwan, India and Indonesia during 2014. However, there is little or no presence in Western markets. In other markets, Daiko relies on the Lowe network, or affiliates within parent group Hakuhodo DY.

Daiko reported billings for the year to March 2016 of Y155bn ($1.3bn). The agency reported a substantial net loss in ye 2013, but was back in profit the following year. For ye 2016, net income tripled to Y3.4bn ($28m). Advertising Age estimated revenues of $186m in 2015.

According to figures from Dentsu, Daiko had 2.2% overall share of the total Japanese advertising market in calendar 2011, but a slightly higher proportion of the TV sector (3.5%).

Background

Daiko was formed in 1944 out of the merger of 14 different advertising agencies, all in danger of collapse as a result of the virtual shutdown of Japanese consumer industries during World War II. The two biggest agencies in the group were Keikasha and Kinsuido, both founded in the closing years of the 19th century. The new group was initially named Kinki advertising Co., and it earned a satisfactory living for itself during the post-war reconstruction of the late 1940s and 1950s. The group became Daiko in 1960, backed by two major shareholders, Kintetsu Railway Company and the country's leading newspaper Asahi Shimbun.

The first international office was opened in 1985 in China, and the agency set up a number of representative offices around Asia over the following few years as Daiko Communications Asia. By 1999, Daiko's share in the Grey Daiko joint venture had reduced to 41%, and that year the American agency bought out its local partner, although the business continued to use the Daiko name.

In early 2000 Kinki Nippon Tetsudo, by then the parent company of Kintetsu Railway Company, announced plans to sell off most of its shares in order to pay off its own sizeable debts. Interpublic took the opportunity to acquire most of these, taking an 18% stake in Daiko, which became the Japanese affiliate of the Lowe & Partners Worldwide network. In return, Daiko gets access to Lowe's network for its own clients. Daiko also took on media buying in Japan on behalf of the FCB Worldwide network. Asahi Shimbun newspaper initially retained a 30% stake in the business. Kinki also still has a small shareholding.

In 2001, the agency agreed a strategic alliance with rivals Hakuhodo and Yomiko to pool their media-buying interests in a bid to combat the power of giant Dentsu. A formal merger of the three companies followed in 2003.

Last full revision 6th March 2016

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