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Dentsu embroiled in overcharging scandal in Japan

Big time media buying is the scandal that just keeps on giving and now Japanese giant Dentsu finds itself in the dock, accused of overcharging massive client Toyota for digital work over a five year period. Toyota says Dentsu has admitted “irregularities.”

be2Dentsu says it’s investigating the allegations, first aired in Aussie publication Adnews. The company involved is DA Search and Link (DASL) a digital specialist. Other media may also be involved.

Dentsu accounts for about a quarter of the Japanese ad expenditure and a bigger share of main media. Once this was a situation unique to Japan but now, with the concentration of media power a fact worldwide, other clients with other agencies in other markets are bound to be suspicious. There are already open hostilities in the US with the Association of National Advertisers accusing media agencies of trousering media rebates that, they believe, should go back to the advertiser.

Greg Paull, principal of marketing consultancy R3, says: “The challenge for marketers is that Dentsu and Hakuhodo (the biggest rival to Dentsu in Japan) not only buy media, but also own media and content, so have unparalleled leverage throughout the system.”

But the situation now isn’t so different in other big markets globally. WPP’s GroupM controls more than 40 per cent of main media expenditure in the UK for example.

Dentsu is now enmeshed in what are called “emergency talks” with its clients to try to resolve the issue. Such a resolution may prove expensive and won’t help the chances of its highly successful media operation Dentsu Aegis network, which owns Carat among others, pitching for accounts outside Japan.

Sooner or later one of these disputes is going to end up in court, which may be the only way of resolving whose money it is (agencies are the principals in most media deals) and what agencies are entitled to do with it. Overbilling, though, is a more straightforward affair, legally anyway.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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