The microsite debate:

• 3 reasons to ditch your microsites (from iMedia Connection)
• Usability Study of Web 2.0 Microsites (from Keynote Systems)
• In defense of microsites (from iMedia Connection)

In part 1, I listed the major interactive agencies in Japan and noted which ones are part of a global network. Now I want to look at the market the other way around—that is, list out all the major global agency holding companies and interactive agency networks and show how each of them covers the Japan market. This will give some indication as to which of the global players is especially strong or weak in Japan. And, for the firms who have no Japan presence at all, it might also hint at which foreign interactive agencies—if any—are most likely to be thinking of entering the Japan market.

Sections below:

World’s top 10 marketing organizations
Top 10 U.S. interactive agencies
Top 10 U.K. interactive agencies
What conclusions can be drawn?

The world’s top 10 marketing organizations… and their interactive presence in Japan

(“World’s Top 50 Marketing Organizations” ranking copied from AdvertisingAge’s Agency Rankings, published April 25, 2007)

1 Omnicom Group (New York)
Interactive presence in Japan: Tribal DDB Tokyo, Tequila Japan

2 WPP Group (London)
Interactive presence in Japan: Ogilvy Japan, Wunderman Dentsu, JWT Japan, Grey Group Japan

3 Interpublic Group (New York)
Interactive presence in Japan: MRM Worldwide Japan, DraftFCB Japan

4 Publicis Groupe (Paris)
Interactive presence in Japan: Beacon Communications, Business Interactif Japan (Acquired by Digitas, June 2007)

5 Dentsu (Tokyo)
Interactive presence in Japan: Dentsu TEC, Beacon Communications, Wunderman Dentsu, Dentsu | Avenue A | Razorfish

6 Havas (Suresnes, France)
Interactive presence in Japan: EuroRSCG Tokyo

7 Aegis Group (London)
Interactive presence in Japan: (none)

8 Hakuhodo DY Holdings (Tokyo)
Interactive presence in Japan: Hakuhodo i-Studio

9 aQuantive (Seattle)
Interactive presence in Japan: Dentsu | Avenue A | Razorfish

10 Asatsu-DK (Tokyo)
Interactive presence in Japan: ADK International

The top 10 U.S. interactive agencies… and their interactive presence in Japan

(“Top Interactive Agencies” ranking copied from AdvertisingAge’s Agency Rankings, published April 25, 2007)

1 Avenue A/Razorfish [aQuantive]
Japan office: Dentsu | Avenue A | Razorfish

2 Sapient [Sapient Corp.]
Japan office: (none)

3 Digitas [Publicis]
Japan office: Business Interactif Japan (Acquired by Digitas, June 2007)

4 Wunderman [WPP]
Japan office: Wunderman Dentsu

5 Rapp Collins Worldwide [Omnicom]
Japan office: (none)

6 OgilvyInteractive [WPP]
Japan office: Ogilvy Japan

7 Organic [Omnicom]
Japan office: (none)

8 AKQA (independent)
Japan office: (none)

9 DraftFCB [Interpublic]
Japan office: DraftFCB Japan

10 IMC2 (independent)
Japan office: (none)

The top 10 U.K. interactive agencies… and their interactive presence in Japan

(“Top 100 Interactive Agencies” ranking copied from NMA’s Top 100, published September, 2007)

1 Sapient [Sapient Corp.]
Japan office: (none)

2 LBi [LBi International]
Japan office: (none)

3 Conchango (independent)
Japan office: (none)

4 AKQA (independent)
Japan office: (none)

5 Netstore (independent)
Japan office: (none)

6 Avenue A/Razorfish [aQuantive]
Japan office: Dentsu | Avenue A | Razorfish

7 Detica (independent)
Japan office: (none)

8 MRM Worldwide UK [Interpublic]
Japan office: MRM Worldwide Japan

9 TBG London (independent)
Japan office: (none)

10 WTG-Web Technology Group
Japan office: (none)

What conclusions can be drawn?

A. Foreign interactive agencies hold a weak position in Japan

Of the global agencies, Dentsu is the leader in Japan’s interactive market. No surprise here. Dentsu has its hands in several pots, taking part in multiple interactive joint ventures and child companies.

Although Dentsu is the leader, a very large share of interactive agency work in Japan is being done by domestic independent shops that are not part of any global network. This is a non-obvious conclusion because it can’t be seen by looking only at the global players. But if you read part 1, you will see that some of the largest interactive agencies in Japan are independent domestic shops with no formal relationship to any global network: IMJ, Septeni, Mitsue-Links, Members, Netyear, Kinotrope, etc.

Of the top 10 U.S. and U.K. interactive agencies combined (17 agencies total), only 6 of them have offices in Japan: Avenue A/Razorfish, Digitas, Wunderman, Ogilvy, MRM Worldwide, and DraftFCB.

The number one marketing organization in the world, Omnicom, has a relatively weak presence in the Japan interactive market. Of the foreign holding companies, WPP appears to be the strongest with 4 well-established agencies that provide digital services in Tokyo.

The largest interactive agencies in Japan with foreign ownership are joint ventures. Judging purely by office headcount as compiled in part 1, the joint ventures are all relatively large: Beacon with over 300 staff, Dentsu | Avenue A | Razorfish with almost 200, and Wunderman Dentsu almost 100. (To be fair I should note that these ventures may possibly be unprofitably overstaffed, since in the absence of financial data it’s impossible to know.) But of the foreign affiliated interactive agencies, only MRM even dares to declare their staff headcount (they declare a staff of 60). The rest do not publicly disclose their number of staff. I tend to believe they keep it secret because the truth is their operations remain relatively small.

All of the above points to this well-known fact: Although Japan has the 2nd largest economy in the world, it is a notoriously difficult market for foreign companies to enter successfully due to language and cultural barriers. This is doubly true for the advertising and communications industries, where the product itself is highly dependent on, well, language and culture.

B. Which foreign interactive agencies—if any—are most likely to be thinking of entering the Japan market?

Aegis. As far as I can tell from their own publicly available documents, Aegis currently has no interactive agency in Japan. In Asia their Isobar network owns wwwins Consulting which has outposts in China, Taiwan, and Hong Kong; and Ion Global in Korea (Ion Global’s former Tokyo office was dissolved in a management buyout in 2003).

Sapient. According to AdvertisingAge, Sapient is the 12th largest marketing organization in the world—digital or otherwise. Sapient closed its former Tokyo office in 2002 following the dotcom crash.

LBi. Europe’s largest digital agency, LBi has offices in the US and India, in addition to 20 locations in Europe. LBi announced a new strategic roadmap in March 2008 which states their objective “to be the first company able to look after the entire spectrum of digital needs in the Asian market.”

AKQA. This major independent digital interactive agency has expansion plans for 2008, according to NMA, and has already entered Asia with an office in Shanghai.

Omnicom. Omnicom may conceivably try to beef up its coverage of Japan by introducing Agency.com or Organic. If so, Agency.com seems the more likely candidate because it already functions in Asia (Shanghai) and Europe, while Organic’s current operations are limited to North America.

However, there are two factors that greatly reduce the likelihood of any foreign interactive agency attempting a Japan market entry in the near future:

• Current economic climate: recession fears in the US and a sluggish Japanese economy.
• Concerns that Japan is hostile to foreign capital due to recent rulings against foreign takeover attempts (here and here).

(Please note: This discussion is limited by the fact that there are no publicly-available financial statements for the Japan operations of most of the firms mentioned. I don’t claim to be a professional source of audited market data—this is the best I could do given the general lack of 3rd party information on the market. If you know of a better source for this information, please by all means tell me about it by leaving a comment.)

Posted by David Zienowicz

So, if a designer is trying to develop a task analysis exercise, she can now draw on real analytics data to determine which are actually users’ most frequent tasks, or which tasks are most likely to fail and therefore benefit from qualitative testing.

And:

Designers can look at failures—roadblocks in the finding process—and, if possible, see how users pivot at those failure points. For example, which pages cause users to fail at browsing most often? It might be the pages—aside from the main page—from which new searches are most commonly executed. In other words, pages where users have given up on browsing and have pivoted to an alternative—searching. Conversely, where do users navigate when searching has failed them? Study the clickstreams that most commonly begin after users retrieve a zero hits search results page (in other words, where search has failed).

Lou’s article is one of the inspirations for this blog that you are reading now, and I aim to advance this idea that user experience and web analytics are becoming one and the same practice.

Posted by David Zienowicz

Peterme wrote a thoughtful piece a while back on “why Apple is bad for design” because they make it look so easy and they are so secretive about how they do it. Well, one of Apple’s engineering managers, Michael Lopp, allowed a rare glimpse into the Apple design process at the SXSW conference last month. His points are summarized in this BusinessWeek article.

Tastiest bits? Apparently the teams at Apple put lots of time and effort into making pixel perfect mockups “to remove all ambiguity.” And then they have the “10 to 3 to 1″ rule:

Apple designers come up with 10 entirely different mock ups of any new feature. Not, Lopp said, “seven in order to make three look good”, which seems to be a fairly standard practice elsewhere. They’ll take ten, and give themselves room to design without restriction. Later they whittle that number to three, spend more months on those three and then finally end up with one strong decision.

10 entirely different mockups for any new feature? Proof that God truly is in the details.

Posted by David Zienowicz

There’s not much information available in English about Japan’s web design industry. And, there is no public ranking I know of—even in Japanese—that ranks the interactive agencies similar to Advertising Age’s Datacenter or NMA’s Top 100 (the only thing even close are books like Web Designing Year Book, Web Seisakugaisha Soron and Web Design Annual ). So I decided to put one together myself and post it in English.

Who is this for?

This list is meant to be helpful to the following kinds of people:

• Clients: English-speaking business managers who are looking for a vendor of online services in the Japan market.
• Partners: Foreign agencies who are looking for a partner company or merger/acquisition target to help them cover the Japan market.
• Job seekers: English-speaking foreigners looking for a job at an interactive agency in Japan.

Four categories of players

Interactive agencies in Japan can be broadly categorized by ownership into four groups:

1. Joint ventures
2. Domestic affiliates
3. Foreign affiliates
4. Domestic independents

The information below for the first three categories is complete to the best of my knowledge (there are probably a few players missing but I hope readers will comment to help fill in any gaps). But the fourth category, the domestic independents, makes up by far the largest number of companies. For now, in order to cover the major independent shops in the market, I included only those independent firms that have 50 or more staff (publicly disclosed on their own website). However, below this point there are dozens, maybe hundreds, of smaller interactive firms. Many of them are doing some very interesting work, so I may devote a later blog entry to some of the more active smaller firms out there.

In the interest of full disclosure I want to make it clear that I am an employee of Business Architects, which is one of the companies listed below.

** Notes and caveats regarding this data **

Please send additions or corrections

Please post a comment if you know of a company that should be added or if you find anything incorrect. I welcome your feedback.

1. JOINT VENTURES

Beacon Communications http://www.beaconcom.co.jp
Staff: 340 | Established: 2001 | Parent network: Publicis, Dentsu
English website: http://www.beaconcom.co.jp/en

Dentsu | Avenue A | Razorfish http://www.dentsu-aarf.com
Staff: 191 | Established: 2001 | Parent network: Dentsu, aQuantive
English website: http://www.dentsu-aarf.com/en

Wunderman Dentsu http://www.wunderman-d.com
Staff: 92 | Established: (undisclosed) | Parent network: WPP, Dentsu
English website: (none)

2. DOMESTIC AFFILIATES

Dentsu TEC http://www.dentsutec.co.jp
Staff: 1,290 | Established: 1996 | Parent network: Dentsu
English website: http://www.dentsutec.co.jp/techp/eng

Hakuhodo i-Studio http://www.i-studio.co.jp
Staff: 190 | Established: 2000 | Parent network: Hakuhodo
English website: (none)

ADK International http://www.adk-intl.jp
Staff: 68 | Established: 1980 | Parent network: Asatsu-DK
English website: http://www.adk-intl.jp

3. FOREIGN AFFILIATES

MRM Worldwide Japan http://www.mrmjapan.co.jp
Staff: 60 | Established: (undisclosed) | Parent network: Interpublic
English website: (none)

JWT Japan http://www.jwt.co.jp
Staff: (undisclosed) | Established: 1956 | Parent network: WPP
English website: http://www.jwt.co.jp

Grey Group Japan http://www.greyjp.com
Staff: (undisclosed) | Established: 1963 | Parent network: WPP
English website: http://www.greyjp.com

Ogilvy & Mather Japan http://www.ogilvy.co.jp
Staff: (undisclosed) | Established: 1995 | Parent network: WPP
English website: http://www.ogilvy.co.jp/english

Business Interactif Japan http://www.businessinteractif.com/jp
(Acquired by Digitas, June 2007)
Staff: (undisclosed) | Established: 2000 | Parent network: Publicis
English website: http://www.businessinteractif.com/en

Tribal DDB Tokyo http://tribalddb.com
Staff: (undisclosed) | Established: (undisclosed) | Parent network: Omnicom
English website: http://tribalddb.com

Tequila Japan http://www.tequila.jp
Staff: (undisclosed) | Established: (undisclosed) | Parent network: Omnicom
English website: http://www.tequila.jp

4. DOMESTIC INDEPENDENTS

IMJ http://www.imjp.co.jp
Staff: 872 | Established: 1996 | Parent network: (none)
English website: (none)

Septeni http://www.septeni.co.jp
Staff: 375 | Established: 1990 | Parent network: (none)
English website: (none)

Mitsue-Links http://www.mitsue.co.jp
Staff: 270 | Established: 1990 | Parent network: (none)
English website: http://www.mitsue.co.jp/english

Members http://www.members.co.jp
Staff: 214 | Established: 1995 | Parent network: (none)
English website: (none)

Netyear http://www.netyear.net
Staff: 140 | Established: 1999 | Parent network: (none)
English website: (none)

Kinotrope http://www.kinotrope.co.jp
Staff: 100 | Established: 1993 | Parent network: (none)
English website: (none)

Business Architects http://www.b-architects.com
Staff: 85 | Established: 1999 | Parent network: (none)
English website: http://www.b-architects.com

Scient Japan http://www.scient.co.jp
Staff: 78 | Established: 2000 | Parent network: (none)
English website: http://www.scient.co.jp/english

DOE http://www.doe.jp
Staff: 60 | Established: 2001 | Parent network: (none)
English website: http://www.doe.jp/en

Notes and caveats regarding this data:

For the purpose of this list, I define “interactive agency” as a company that serves client firms by providing planning, design, and production of online communications.

The data for number of staff, year of establishment, and parent network was copied from each company’s public website as of the date that this blog entry was published. Within each category, the list of companies is ordered 1st by number of staff, 2nd by date of establishment, and 3rd by alphabetical name.

Ideally there would be financial data to compare the companies by last year’s billings, but unfortunately that information is not publicly available for most of these firms. For that reason I have ranked them by number of staff. However, please be aware that it can be misleading to compare these companies by size because some of them also provide other services, such as print and tv advertising production, while others focus only on interactive.

Also, in the interest of full disclosure I want to make it clear that I am employed at one of the companies listed above.

Posted by David Zienowicz