One of the first things you see when you enter the office of advertising agency McCann Worldgroup Japan is a pool table over in a waiting room. It seems to fit in naturally with the company that comes across to a visitor as being a center for creativity with a bit of fun. Times are tough in the advertising industry but innovative companies like McCann are managing to weather the economic crisis by evolving new strategies for a fast-changing market.
McCann Worldgroup, one of the world’s leading edge global integrated marketing communications groups, has multiple business units specializing in advertising, targeted marketing, media planning & buying, production, buzz creation, brand consultancy, brand activation, PR and healthcare communication. Among the company’s clients in Japan are L’Oreal, Seiyu, Johnson & Johnson, Nestle, MasterCard, Hitachi, Sunstar and Sony Pictures.
General manager for Japan is Dave McCaughan. The affable Australian has been with the company for 25 years, having worked in Sydney, Bangkok and Hong Kong, before coming to Japan at the end of 2003. He is also one of two directors of Truth Central – McCann’s global research department.
Japan Today editor Chris Betros visits McCaughan to hear more about the advertising business.
What sort of a year was 2012?
This year has seen slight growth and we had some new business wins, so it has been pretty good.
What are McCann’s strengths?
Well, first you would say that we have been here just over 50 years and we are the biggest of the foreign agencies. Over 50% of our clients are Japanese which is also different from most foreign agencies. We are very insights-driven based on a lot of research over all those years. That gives us a very strong foundation in terms of our knowledge of Japanese people’s behavior, culture and what makes them consumers. We are also the only foreign agency in Japan with a license to buy media space and we are the only agency that can guarantee 100% transparency in all business practices. That means, for example, that we automatically give clients all data on all financial transactions when we buy media space on their behalf.
What about your global network?
Our global network has and does help our Japanese clients as they expand overseas. Because we are very strong in Latin America, Africa, India, the Middle East, and those are areas where Japanese companies are really trying to get into that is where we have a real advantage.
How do you work with clients in developing ad campaigns?
A lot of clients come and say they want to run a promotion for a certain product, or they want to launch a new product. Another pathway is when a client wants to build a campaign over time and create a certain brand equity. We have a process that takes clients through four stages so that we can help transform their business. The first is to find out the real truth of what is going on in the marketplace and analyze it. From that, we look for what’s true about the people we should target in order to make them consumers. What do they basically believe about the product, the category and about life in general? That’s where and why we do a lot of research in terms of understanding different types of people—like mothers in Japan.
Once we figure out the goal we have to get to and potential target, we develop an idea, then do the creative work. The fourth stage is to develop a pathway to put people on – for example, to get you interested in buying a pair of jeans, where do you go, how you make the decision and what can we do to influence that decision, which media do we have to use. What is the right environment for the message, what competitors are doing and how to stand out from that and perhaps most importantly how can we encourage people to share the news and their own views about the brand – all these are important factors.
How has the media landscape changed in recent years?
Japan is interesting because among the traditional media like television, the decrease in advertising is much less here than in most developed markets. Television remains the heftiest part of anything we do. Similarly, while newspapers are declining, it is nowhere near as fast as in the West. That’s got a lot to do with the credibility factor and the heavy subscription versus off the shelf purchasing here. It’s hard for many people to cancel a subscription because it is a habit. After the March 11 disaster, we did the first national survey, asking people which news sources they trust the most. In most Western countries now, people would answer social media. Here it was newspapers and radio.
Are social media changing the advertising industry?
Interestingly, Japan is one of the most digitized countries in the world. We all walk around now with smartphones. Before the iPhone, Japan had semi-smartphones for about 10 years. Over the last 10-15 years, we have had a whole generation who have been using some kind of Internet-access phone. In other countries, that has only been the case for less than five years. So people in Japan take digital media for granted here.
What we see in our industry is that clients are looking for a combination – more traditional media to grab consumers’ attention based around some social media platform that they can get longevity and interaction with.
Are your international clients open to changing their global campaigns to allow for cultural factors in Japan?
Most clients are open to change for cultural differences. It varies by client. Some international clients do a separate campaign just for Japan. Others adapt their global campaign.
Do Western advertising concepts, such as the taste test, for example, work in Japan?
Generally basic concepts based on a strong understanding of human behavior work everywhere but you need to localize to meet the way people in Japan interpret things. So you don’t see a lot of taste test comparative advertising. When I first got here, I thought there must be some regulation that says we can’t do it. What I found out is there is not so much in the way of comparative advertising simply because of the nature of Japanese people. The common attitude is that there can’t be anything wrong with this brand or that brand because they wouldn’t put it on sale if there was something wrong with it, so you cannot directly say “ you are better,” as all products are good.
Think of the Seven-Eleven experience. In Australia, Seven-Eleven is a bit of a joke. In Japan, the No. 1 trusted brand is Seven-Eleven. There is no risk seen in anything you buy at Seven-Eleven. This is why generic store brands never went anywhere until Seven-Eleven started introducing them. People just feel they must be good quality.
What are some characteristics that you think are unique to the Japanese market?
The idea that the ad is about selling functionality doesn’t necessarily ring true here. It is more about establishing an emotional connection with the consumer. Look at some of the most famous campaigns today – think about the Softbank ads. I travel around the world and I show these typical Japanese commercials and try to explain that to foreigners. “What do you mean, the dog is the father?” they ask me. The Japanese people automatically get it. The nature of Japanese culture is about symbolism. That’s not to say that other cultures aren’t, but here it is a bigger factor in advertising.
In the West, we have moved to a functional basis so that we have to have things explained to us. In Japan, two things work in tandem—the brand is about symbolism, and the other is that the Japanese housewife is the most likely in the world to read the back of the pack. Japanese consumers are very detail-oriented and can see the difference between the symbol that the brand stands for and they will then look for the detail. So a good campaign has to provide both but often in different formats.
Another unique factor is that product cycles tend to be very short in Japan. A lot of people just want new stuff all the time and they are not willing to invest in a long-term campaign. There is a new drink in Seven-Eleven every second day on average. It’s driven by retailers and it is a habit. A 35-year-old Japanese office worker eats 12 meals a week from a convenience store. There are 300 different drinks in the store. So it’s hard to convince some clients that you can have new products but the same messaging based on a long-term platform.
Are foreign celebrities losing their appeal in ads in Japan?
The demand for foreign celebrities has decreased. I think that’s because the love affair with Western symbols has dissipated a bit. Nowadays, we see a lot more Japanese celebrities being used, along with more Korean celebrities. Certainly the role of celebrities is still very strong as they act as the short cut to understanding what a brand stands for. Japanese people certainly do not believe celebrities actually use the products but they do read into the nature of the celebrity the nature of the brand. It is a sort of visual short cut. That is why over 80% of all Japanese TV commercial feature Japanese celebs.
One of the reasons for using Western symbols was globalization. But it is very expensive. It could cost up to $4 million in fees for a big star and you need a point of view as to why you are using that celebrity. Of course, some campaigns are very successful – the BOSS campaign with Tommy Lee Jones. His face embodies something to Japanese consumers. He is truly believable as The Alien. So you’re buying not just his celebrity status. You’re buying the role he plays, the equity he brings.
How do you market your own company?
Our work is a good marketing method but a lot of people don’t know it’s our work. In this industry, you advertise by entering ads in various awards, going to events, shows. I do a lot of networking and public speaking so people can see some of our work and hear about the research we have done.
How many employees do you have in Japan?
We have about 700 in different companies. We get a couple of thousand applications for 10 new grad jobs each year, so it is popular with graduates. The industry looks fun from the outside and especially with the move toward digitalization, it seems to be something where people believe they can be creative.
What areas of the business are you hands on?
I focus on the marketing strategy that we put together for clients and I am very involved in new business issues and in our constant learning about people.
What is a typical day?
I usually get here about 7:30 a.m. That gives me time to catch up on emails, make calls to the States and write documents. Then it is pretty much meetings till 7 p.m. and then I usually get back to writing client presentations later at night.
How do you like to relax?
I like to run and play squash a bit. I watch a lot of television, not for work, but just because I enjoy it. I love watching Westerns and football, especially Tottenham.