Dentsu Inc.

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Founded by Hoshiro Mitsunaga in Tokyo, Japan, 1901; served the dual functions of advertising and news service initially but became a specialized advertising agency, 1936; became the world's largest advertising company in terms of billings as a single agency brand, 1973; remains the world's largest ad company.

Hoshiro Mitsunaga, a former reporter, established the company that would become Dentsu in 1901 in Tokyo. Mr. Mitsunaga wanted create a company that would function both as a news service and an advertising agency, believing that such a company would be able to cover wire service fees with revenues.

In 1907, Mr. Mitsunaga merged his news organization and a second company, an advertising agency, to form Nippon Dempo Tsushin Sha (Japan Telegraphic Communication Co. Ltd.) and began reporting news and producing advertising. (The present name, Dentsu, is derived from elements of the original name, combining "Dem" and "Tsu." )

In 1931, a government plan for a "national news agency" called for a merger of all Japanese news service companies into a single government-owned news organization, Domei Tsushinsha (Domei News Agency). Dentsu's wire service operation was absorbed into Domei Tsushinsha in 1936, and in exchange, the advertising arm of Domei Tsushinsha was merged into Dentsu. The new resources allowed the company to relaunch itself as a specialized advertising agency.

The remade Dentsu set up marketing research and creative departments that enabled the shop to consolidate its leadership within the Japanese market. Dentsu in 1944 also worked with the government and newspaper publishers to standardize newspaper advertising fees and the agency tariff. But the advent of World War II slowed the development of business.

The Yoshida years

In 1947, two years after the war ended, Hideo Yoshida became president of Dentsu. Mr. Yoshida laid the foundation for postwar Japanese advertising, helping it grow into a modern industry during his 16-year tenure. Mr. Yoshida called for an advertising strategy backed by modern theories and placed special emphasis on public relations and market research.

When commercial radio was launched in Japan in 1951, Mr. Yoshida argued that the growth of private-sector broadcasting was vital not only for Dentsu but for the advertising industry as a whole. He worked to help the broadcasting industry grow, providing capital to establish private broadcasting companies and dispatching agency personnel to help out at these companies. Dentsu also created the first Japanese TV commercial, which featured a Seiko time announcement, and conducted the country's first audience rating research.

In 1950, Mr. Yoshida led a movement to establish disclosure of publication circulation figures and to promote fixed pricing for advertising. In 1952, Dentsu hosted the inaugural meeting of the Japan Audit Bureau of Circulation Association at its headquarters. Dentsu also was active in the establishment of the Japan Newspaper Advertising Agency Association (1950), predecessor of the Japan Advertising Agency Association, and the Japan Marketing Association (1957).

Among Mr. Yoshida's most lasting contributions to advertising in Japan was the Dentsu Advertising Awards. These awards, begun in 1947, had their origin in earlier Dentsu awards, and although they bear Dentsu's name, the judging of ads from any marketer or agency is carried out by about 500 independent judges.

In 1958, Dentsu adopted a modified version of the American account executive system. Before then, employees who bought media had doubled as client service representatives. Under the new system, an account exec handled agency activities, communicating with internal departments and mobilizing external resources. The creative department at Dentsu differs from those found in U.S. and European agencies. At Dentsu, about 120 creative directors oversee all creative work for the agency's several thousand clients.

Going global

Dentsu's overseas activities date to 1959, when the company set up an office in New York. Dentsu and Young & Rubicam began an informal affiliation in the 1960s. Ed Ney, then CEO of Y&R, worked to build the relationship through the 1970s. In 1981,the two formed Dentsu Young & Rubicam, which became a force throughout Asia.

In 1978, the agency changed it name to Dentsu Inc. to reflect a shift in focus from the four major mass media—newspapers, magazines, TV and radio—to a broader range of communications objectives.

In January 1999, the company implemented an organizational makeover to establish a comprehensive, integrated planning capability. Marketing, promotion planning and corporate communications were merged into a single division called Integrated Communications Planning.

Each client now works with an account service group, a creative group and an integrated communications planning group.

By the beginning of the 21st century, Dentsu handled advertising for most of Japan's major corporations and counted nearly 3,000 companies among its clients. (Unlike ad agencies in Western countries, Japanese agencies often handle the business of several competitors within a given industry.) Its in-house planning organization included strategic, research, promotion and corporate communications planning. Implementation, however, was often handled by affiliated specialty shops or outside organizations.

Dentsu affiliates included Dentsu TEC, which produces advertising and promotional materials and executes events; Dentsu Public Relations; Dentsu Research; Dentsu Impiric, a direct marketing joint venture with U.S.-based Wunderman Cato Johnson; and Dentsu Sudler & Hennessy, a healthcare marketing joint venture. All told, Dentsu had about 70 affiliated companies at the turn of the 21st century. In March 2000, Dentsu formed an alliance with Bcom3 Group.

The company's overseas presence outside of Asia remains small, and the majority of its overseas clients are Japanese. Landing accounts with multinational and local corporations was therefore high on the agenda at the start of the 21st century. In March 2002, as part of Publicis Groupe's deal to buy Bcom3, Dentsu agreed to pay $500 million to increase its 22% stake in Bcom3 to 40%, giving it 15% of the merged venture and two seats on the supervisory board.

The Asian market stood as an area of strategic focus for Dentsu and remained one where the company's influence is strong. With the aim of increasing its planning capability in Asia, Dentsu was building marketing databases that incorporated findings from consumer research the company routinely conducted in more than 27 Asian cities outside of Japan.

Dentsu had been a privately owned company since its creation. It listed its stock on the Tokyo Stock Exchange in November 2001, when the company celebrated its 100th anniversary.

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