III. Essentials of Advanced Media Planning (cont,)
A survey in 2000 by the ANA (Association of National Advertisers) said that the media buying rate by independent media specialist agencies in the United States was 8%, while that for advertising agencies was 83%. However, this high 83% for advertising agencies comes from the fact that there are many media specialist companies belonging to advertising agencies. Therefore, in fact, media specialist companies handle a higher amount of media buying than advertising agencies. Chart #3 below shows a list of the major media specialist companies in the USA. The second largest media agency, Mindshare, which belongs to the WPP Group, has already been launched in Japan, mainly as a media planning agency. So, I believe media specialist agencies will establish themselves in important positions within the ad industry in Japan in the future.

We can think of two reasons why media specialist agencies' are gaining power. Firstly, advertisers are starting to try to get media space for as cheap as possible. Secondly, advertisers now need more knowledge and know-how about media than ever before. There are two reasons for this: 1) the market has become more complex with the appearance of many new media, and 2) consumers have become more segmented, which is causing difficulty reaching target consumers with communications. These changes are not only affecting the media industry, but also other fields within communications, including creative, are facing the same kinds of pressures. Therefore, specialist companies within the industry are gaining remarkable power. In other words, advertisers can not be satisfied with general, full-service ad agencies whose service offering is like that of a department store with having various things on the shelves from which to choose. In the past, full-service ad agencies could offer a complete range of communications services, including production of creative, media buying, sales promotion, surveys, etc. But now, they are having some difficulties doing this, just like real department stores are having. In the future, advertisers will likely do more direct business with specialist companies, such as media specialist agencies and creative planning companies (e.g. Tugboard). On the other side, huge advertising agency groups, the so-called mega-agencies, have a strategy in which they are trying to acquire these specialist companies.

My fourth point is regarding advertisers' need for more quantitative research. There has been more focus recently on accountability of ad investments. In the situation of an economic recession, many managers ask their communications section how much sales would be generated if the company increased spending on advertising by even just JPY1 million. Since it is said that 70-80% of all advertising expenditure in Japan goes to the cost of media, I have to admit that it is strange that not that much attention to media has been paid before.

My fifth and last point is regarding the shortage of media data. There was a big incident related to the TV viewing ratings of NTV at the end of 2003. And there were some issues that played a significant role in this incident. Firstly, Video Research provides the TV viewing ratings based on only 600 households in the Kanto area. Secondly, Video Research is the only company that offers TV viewing ratings in Japan. Nielsen Media used to also offer this service, but they stopped this service a few years ago. If Video Research had many more households to their sample, the results could not be heavily influenced by just a few households that have been influenced by people offering bribes or money or the like. Also, if there was at least one other source for this data this would make the situation a whole lot better. But if we look at this from a different perspective, we can not ignore the fact that media planning is analyzed only by these TV viewing ratings. Actually, an advanced level of media planning is required, as it makes it possible to choose the appropriate medium to achieve advertisers' goals even with low TV viewing ratings. For this, data from advanced types of media related surveys is really essential. Therefore, we hope that ad media data available in this market will only improve more and more in the future.

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