Publicis Aspires to Become No. 4 in Japan

TOKYO–Behind a smokescreen of public statements that it wants to buy one of Japan’s smaller agencies, Publicis is setting its sights much higher.

Publicis’ goal is to acquire a significant equity share of Japan’s fourth-ranked Tokyu Agency, the country’s largest shop with no international linkages, sources said. Tokyu billed a reported $1.6 billion in 2000 and is part of the Tokyu Group, a retail-, transport- and leisure-industry conglomerate that provides much of the agency’s business.

“Except for [McCann-Erickson], no Western agency is strong in Japan,” said Maurice Levy, Publicis CEO. “We believe that to achieve this goal would give us tremendous strategic advantage. We are working within the customs of Japanese business culture to achieve this. We are talking to several agencies. Something might happen, something might not.”

Levy declined to name any of the agencies and would not say whether Tokyu, based here, was a candidate.

Publicis and Tokyu were in talks in 1999 over a joint venture that could have enabled Publicis to get minority equity in Tokyu. But talks broke down over disagreements about management control and timing, sources said.

To compete effectively in Japan, Tokyu needs an influx of new skills and talent that only a major Western agency can provide, such as upgrades in technology and research. Tokyu began looking for a partner in 1997 when it approached WPP. A deal that would have given WPP a significant minority share was ultimately aborted by agency parent Tokyu Railway Co., sources said. WPP went on to buy a stake in Asatsu-DK, Japan’s No. 3 shop, in 1998.

Publicis’ two shops in Japan, Saatchi & Saatchi Japan, and Publicis Japan, are ranked below 40th and do not have the critical mass needed to woo the Japanese advertisers that account for 95 percent of all agency billings in Japan.

“We have learned the lesson of patience,” said Levy.

Tokyu’s other accounts include Hitachi and Kirin Beverage Corp.