Office Locations of Major Advertising Agencies in Japan and Their Restructure

Abstract

    This study aims to discuss the development of office locations for major advertising agencies in the context of the advertising business and changes of media in Japan. Based on revenues in 1942, 1980, and 2010, Dentsu and Hakuhodo were the top two agencies, while third place changed from Mannensha in 1942, to Daiko in 1980, and then to Asatsu-DK in 2010. This paper focuses on these five advertising agencies and analyzes the changes in their office locations.
    Before the Second World War, the major advertising agencies, namely, Dentsu, Hakuhodo, and Mannensha, built their office networks differently. These were based on whether they run both the advertising and communications business, and the type of industry. When industrial readjustment was carried out during the war, Dentsu kept four office locations. On the other hand, advertising agencies that had their head offices in the Kansai region lost their offices in Tokyo.
    After the war, most advertising agencies expanded their offices and scaled up nationwide in order to get new accounts. This was largely driven by the opening of broadcast stations and changes in transaction practices in the advertising space in non-metropolitan areas. In the case of Daiko and Mannensha, some offices were established in relation with national newspapers. Asatsu and Dai-ichi Kikaku, the predecessors of AsatsuDK, started their advertising business in the 1950s and opened offices in major cities shortly after they were founded.
    After the 1973 oil crisis, some of the advertising agencies turued their attention to growth of regional advertising markets. Hakuhodo established regional subsidiary companies in the Tohoku region, where Dentsu had few offices. Dai-ichi Kikaku formed partnerships with local advertising agencies. However, as a result of the increasing importance of the advertising business in metropolitan areas, especially in Tokyo, major advertising agencies with a large number of office locations tried to make their regional operations more efficient and reinforce operations in Tokyo.
    After the collapse of the bubble economy in the early 1990s, Dentsu, Hakuhodo, and Daiko established regional subsidiary advertising agencies. One reason was to respond to regional advertising demand; another was to save on labor costs. In the 2000s, however, they merged some regional advertising agencies in order to save management costs by integrating management functions and to strengthen their management base by expanding the scale of operations.
    All the results mentioned above suggest the following: 1) the office locations of major advertising agencies are largely based on relationships with advertisers and media companies; 2) major advertising agencies tend to maintain their office locations because advertising agencies, advertisers, and media companies attach a great deal of importance on existing relationships in advertising transactions.