Why I Shuttered my Marketing Agency for Tourism

I had started a new business venture about two years ago. It was a section of my company that was dedicated to tourism and travel and it was a very profitable business actually. Because of my background in the mass media and operating on the receiving end of marketing and advertising companies, I saw how clients were, well, getting ripped off. I knew I do do a hundred times better for clients. I set targets and goals and I saved the clients big money too!


I knew that I could make decent money by arranging huge promotions between client companies for 1/50th the cost of what a major Japanese marketing company like Dentsu or Hakuhodo or even the smaller agencies could do. 


I did arrange many of these campaigns for little cost to my clients. Many were nationwide internet and TV campaigns. Some were huge multi-media tie up with networks, major magazines and non-traditional media. My concept was to find clients that had needs that could be met with a sort of mutual promotional campaign. Everything had to make sense and be organic. Then I spread the costs evenly around to each client. Instead of charging them separately.


So, instead of spending, say $400,000 ~$500,000 (USD) on a campaign (if a sponsor bought it through, say, Dentsu) I could arrange it for $12,000 total or so. I did it too, many times.


Here's a good example:


Domino Pizza Japan wants to get more people ordering online in order to more efficient promote its product and cut down on expenses (telephone ordering is not cost effect nor efficient).


A airlines or foreign tourist board wants Japanese to go to visit their country.


A wine company wants to get the word out on their services.


What should I do? I thought about it and got them together and created a cost effective, mutually beneficial campaign that cost each of these parties next to nothing. 


In this example, I arranged for a vacation to a foreign country for anyone who would join and become a member of the Domino pizza online ordering system. The top winner would get a vacation for two, business class, to a foreign country and hotel. The airline & hotel prize supporting companies would get the massive promotion that goes along with the campaign. The wine company provided all the second place awards: 100 people win a set of quality red & white wine.


The campaign runs for two months!


Domino Pizza prints (get this):
7.8 million newspaper inserts
2 million menus
1.6 million direct email magazine to subscribers
250,000 pizza box top ads
750,000 regular direct mail


Airlines provides 2 business class tickets and 5-star hotel for 4 nights.


Wine company (iwine.jp) provides 200 bottles of quality Coppola wine. 


Cost to Domino if using Dentsu? Approximately $200,000
Cost to airlines if using Dentsu? (considering the reach of ad materials): Approximately $400,000 
Cost to wine company if using Dentsu? Approximately $100,000


My company total charge: $25,000 that's inclusive to all three clients!


You can see the results of this campaign here: http://modernmarketingjapan.blogspot.com/2011/09/two-people-win-vacation-business-class.html


(By the way, the campaign ends on 10/31 so you still have time to join the campaign and win the trip to New York!)


Why did I make these types of campaigns? A two reasons: First, I liked the clients. Second, I think Japanese advertising agency business is way too over priced. If I can help to lower advertising costs, then prices might go down and that makes life better for everyone, no?


But I am thinking about closing this business. 

All vacations come complete with helmet and baton!

Why would anyone close a profitable business, you ask? Well, since it was tied to tourism and travel every time I organize a campaign, something bad would happen:


Here's a list of those bad things:


1) Airlines goes bankrupt
2) Riots in destination cities
3) Huge earthquakes, tsunami and nuke disasters
4) Riots in destination cities


and, finally, 


5) Riots in destination cities, bankruptcies, etc., etc., etc., 


You might think I am just unlucky or have bad timing... But I don't. I am very lucky and have great timing that's why I am out of the tourism and travel advertising business...


Things tied up with tourism don't seem like good ideas in this day and age. The world economy is collapsing and things are getting nasty. As Gerald Celente says, "When people lose everything, they lose it." People are losing it all over the world. Read this from my friend, Mish Shedlock: http://globaleconomicanalysis.blogspot.com/2011/10/occupy-wall-street-protests-go-global.html


... I was about to line up an Italian campaign.... But, after watching that video on Mish's page... I think not!

The Advertising Scam in Japan

This is a letter I wrote to a business associate....

Don't Waste Money Going Through Old Ad Agencies

Before your company goes and spends a bunch of money on old media through the old channels, please read this.

We specialize in repairing client websites in upgrading to web 2.0 (most are still web 1.0 - so they are 6 years behind). This involves getting bloggers aboard, SEO and daily updates to build community. You can see by the bio that my partners are experts in this field.

Once we do fix the web problems, then we integrate an intelligent Mortar and Click plan that drives old media users to the new media. It is extremely cheap and cost effective under our method.

You can use this info or think of using it in one of two ways: Firstly, we don't mind if you middle-man in the deals, so, say, a TV ad campaign that we charge ¥2.2 million for, you can charge your client's, say, ¥3.2 million for and pocket the ¥1 million (up to you on margins, but I recommend keeping them low, that way word spreads fast). Or, two; using us to represent your projects.

Now, we only focus on travel and airlines (we will expand into fashion later this year).... So that may or may not be your business focus. That's OK. We only work with people we like and trust, so if you are interested, then that's great.

An important point about all of this is that we have to keep it under our hat the prices that we can buy this media for or our connections might get into hot water at the TV stations or magazines. We do not involve the station of magazine/newspaper sales departments in our negotiations; we go directly to hensei (programming department). Since we are media insiders, we know exactly who to talk to, how it works, and when to get the dirt cheap campaigns. Like I mentioned, say, twenty-five 15 second commercials a week on TBS or TV Tokyo, 6 am - 11 pm, normally about ¥16,500,000.... We can do that (and already have many times) for ¥2.2 million.

Anyhow, that's basically it. If you are interested in hearing more, just let me know.

About keeping our deals hush hush; let me explain. The reasons for doing so might surprise you...

For many years Dentsu & crowd have dominated the ad agency market, as you know. They have totally corrupted the process so that there is no transparency between client and agency at all. The bizarre part is that new ad agencies follow this model.

For example, you go to Dentsu to buy a TV commercial. They tell you it costs ¥50,000,000. Then they also tell you it is a 40% margin. You pay ¥70,000,000. The commercial airs. When it is over, you never see the bill from the TV station. You never really do know what the ads cost. 

One thing about this ad business deal that you probably do not know is that the TV, radio, print, etc. they all hate Dentsu also. Why? Because we know what they are doing when they sell the commercials. From the station perspective, they  WANT to discount. But Dentsu has had such a hold for so long that they have frightened the Japanese companies into submission.... This is the big reason we work only with foreign companies. Foreign companies, generally speaking, don't care about Dentsu. There are people inside the broadcasting and print industry who want to take down this Dentsu system and we work with them...So we must stick with foreign companies for now. 10 years from now? Expand into Japanese companies. (Currently, even if a Japanese company wanted to work with us, some old fashioned thinker in marketing would quash it. Why? The Dentsu system has been around for 100 years. Us? 1 year. The old guys are worried that, if they piss of Dentsu, then Dentsu will not help them anymore - not that Dentsu is doing anything for them now!) 

We hope to provide the solution. Koji Kamibayashi and I are industry insiders. Koji and Tim are internet experts. We see an opportunity. We will only deal with foreign companies who are trying to do business in Japan (I mean foreign companies who are trying to sell to the Japanese).

Also, I arranged many barter deals for clients through another new system we developed whereby we have created a sort of "inkai" among our clients and satellite partners.... This was about ¥20,000,000 ~ ¥30,000,000 worth of promotion that I arranged for retainer fee only (¥1,900,000). There was no money passed between our client's and stations for this stuff.

Japan is astronomically high. Dentsu wants to keep it that way....

Dentsu has had such a tight hold on this business for so long that they have frightened the Japanese companies into submission.... Even if Denstu is selling no commercials at all for a TV station, old habits die hard, and the people-in-charge at the stations are afraid that, if they go outside the customary way things have always been done, then Dentsu might get mad at them. 

The key to the future and breaking down the old-guard are the foreign companies in Japan. Foreign companies, generally speaking, don't care about Dentsu. There are people inside the broadcasting and print industry who want to take down this "Dentsu system." 

These are the companies that I like to work with. 

10 years from now? Expand into Japanese companies. (Currently, even if a Japanese company wanted to work with us, some old fashioned thinker in marketing would quash it. Why? The Dentsu system has been around for 100 years. Us? 1 year. The old guys are worried that, if they piss of Dentsu, then Dentsu will not help them anymore - not that Dentsu is doing anything for them now!) 

We hope to provide the solution. Koji Kamibayashi and I are industry insiders. Koji and Tim are internet experts. We see an opportunity. We will only deal with foreign companies who are trying to do business in Japan (I mean foreign companies who are trying to sell to the Japanese - not companies that deal in the Metropolis magazine crowd - no offense intended).

I arranged dozens of barter deals for clients through another new system we developed whereby we have created a sort of "inkai" (business association) among our clients and satellite partners.... This was about ¥20,000,000 ~ ¥30,000,000 worth of promotion that I arranged for retainer fee only (¥1,900,000). There was no money passed between our client's and stations for this stuff (there's lots more, but this is a sample).

Anyhow, like I said, if you need more details, I can come see you. Maybe we'd be good, mutually beneficial partners.


See you,


Mike


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Ad agencies, Dentsu, inkai, broadcasting, bloggers, SEO, travel, airlines, TBS, TV Tokyo