The Invisible Hand Behind the Tokyo Olympics

TOKYO — It’s not an official sponsor of the Olympics. It will stay invisible to the thousands and thousands of viewers who start tuning on this week. But with out it, the Tokyo Games couldn’t have occurred.

The pressure behind the Olympic curtain is Dentsu, an promoting goliath with close to legendary ranges of energy and affect in Japan.

As a gatekeeper to the world’s third-largest financial system, it has turn out to be a significant determine in worldwide sports activities. It performed a outstanding position in Tokyo’s Olympic bid, then was named the Games’ unique promoting accomplice, bringing in a record-shattering $three.6 billion from Japanese sponsors.

With its almost full management over the Olympic advertising bonanza, Dentsu stood to be Japan’s largest winner of this yr’s Games. But as the pandemic has performed havoc with the occasion, an organization accustomed to all the time popping out on high finds itself in an unfamiliar place.

Its expectation of an infinite windfall has dwindled. The promoting campaigns and promotional occasions that sponsors often mount in the months earlier than the Olympics have been canceled or pared down, depriving Dentsu of what analysts say is one in all the most profitable components of the sporting pageant.

And with the Olympics about to start, a few of Dentsu’s largest purchasers have begun pulling again. Toyota, a high sponsor, mentioned on Monday that it might not run Olympics-themed tv adverts in Japan throughout the Games, reflecting issues a couple of attainable public backlash towards corporations underwriting the occasion.

For the purchasers that proceed their Olympic promoting campaigns, Dentsu faces a critical check of its message management. Polls present that about 80 p.c of the Japanese public opposes holding the Olympics, which had been postponed by a yr and can now be held amid a state of emergency in Tokyo.

Dentsu’s headquarters, a smooth glass wedge in central Tokyo, was supposedly designed with additional elevators to maintain individuals on competing groups from crossing paths.Credit…Eugene Hoshiko/Associated Press

“What kind of message do you send right now? It’s a really difficult question, and sponsors are definitely troubled by it,” mentioned Osamu Ebizuka, a veteran of Dentsu’s sports activities advertising division who’s now a visiting professor of enterprise administration at J.F. Oberlin University in Tokyo.

Dentsu, requested how it might form its purchasers’ strategy towards the Olympics, mentioned that it was “not a sponsor,” so it was “not in a position to comment.”

Even with its challenges, Dentsu stays an unparalleled pressure in Japan. It is by far the nation’s largest advertising agency, with a grip on almost 28 p.c of the nation’s huge promoting finances.

Dentsu began life in 1901 as a information company earlier than realizing it was extra worthwhile to package deal its content material with commercials. In the lead-up to World War II, it was merged right into a state-run information service that pumped out propaganda for Japan’s Imperial Army.

Under U.S. occupation, the group cut up into three components: the advert company Dentsu and Japan’s two largest information companies, Kyodo and Jiji Press.

In the years since, Dentsu has turn out to be hard-wired into almost each main establishment in Japan. In addition to its many company and media connections, it has served as the unofficial communications division of the governing Liberal Democratic Party over its greater than 75 years in almost steady energy.

The conspiratorially minded generally seek advice from the firm as Japan’s C.I.A., a puppet grasp utilizing its huge community to assemble info and form the nation’s destiny.

The comparability is fanciful, mentioned Ryu Honma, an writer who started writing about the firm after working at its rival Hakuhodo. But the firm has unquestionably made itself indispensable to Japan Inc.

Dentsu is the nation’s fixer, with a fame for getting issues performed, regardless of how tough. For years, it was recognized for a ruthless work ethic expressed in a credo known as the Devil’s Ten Commandments, instructing workers to “never let go of a job, even if it kills you.”

Its purchasers are a who’s who of company Japan — a part of a roster, Dentsu likes to say, that features 95 of the world’s 100 high advertisers. It recruits from the ranks of Tokyo’s high universities and is claimed to point out a choice for the youngsters of politicians, celebrities and titans of trade.

Toyota’s president, Akio Toyoda, runs with the Olympic flame in April. But Dentsu’s largest purchasers have begun pulling again. Toyota mentioned on Monday it might not run Olympics-themed tv adverts throughout the Games. Credit…Yuichi Yamazaki/Getty Images

Whereas most advert corporations exterior Japan keep away from conflicts of curiosity by representing just one firm in any given trade, Japanese corporations are sometimes much less unique. Dentsu ceaselessly works for competing corporations in the identical sector, one in all the keys to its ubiquity.

Dentsu affords just about each form of service associated to communications. Dentsu advert executives promote commercials directed by Dentsu, starring actors represented by Dentsu, to TV stations the place Dentsu manages advert gross sales.

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The firm buys up complete blocks of airtime earlier than it has bought adverts to fill them. Its maintain on tv promoting is so tight that Japan’s competitors regulator has twice issued it warnings.

It exerts appreciable affect on conventional media, each broadcast and print, that are loath to offend the firm and its purchasers for worry of dropping advert dollars.

Dentsu’s TV dominance has made it an indispensable accomplice to Japan’s political class. It was Dentsu that persuaded Prime Minister Shinzo Abe to seem at the closing ceremony of the 2016 Olympics in Rio de Janeiro dressed as the character Mario from the online game sequence by Nintendo — additionally a Dentsu consumer.

Dentsu persuaded Prime Minister Shinzo Abe to seem at the 2016 Olympics’ closing ceremony in Rio de Janeiro dressed as the character Mario from the online game sequence by Nintendo.Credit…Yu Nakajima/Kyodo News, by way of Associated Press

Sports has lengthy been a vital piece of the firm’s enterprise. Dentsu was one in all the first advert businesses to acknowledge how worldwide sporting occasions may increase purchasers’ profiles overseas and assist them break into new markets, mentioned Michael Payne, who for years led the advertising division of the International Olympic Committee.

Dentsu has leveraged its position as a conduit to Japanese advert dollars to turn out to be integral to the funds of world monitor and area and swimming, whereas additionally creating sturdy relationships with FIFA, the governing physique of soccer, and Major League Baseball, amongst others.

The firm’s ties to the Olympics date again to the 1964 Tokyo Games, when Dentsu was answerable for public relations. The Games had not but been commercialized, and Dentsu’s position was extra an indication of its stature and political sway.

But in 1984, when the Los Angeles Olympics grew to become the first to rely completely on non-public funding, Dentsu rushed to place its company purchasers in the combine.

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Dentsu took the lead in the bid course of when Japan hosted its second Olympics, the 1998 Winter Games in Nagano. And when Tokyo determined to vie for the 2016 Summer Olympics, the firm was the apparent selection.

Tokyo misplaced out to Rio de Janeiro after a Dentsu-led bid that was extensively criticized for being ham-handed and exorbitantly over finances. Regardless, Dentsu got here out forward, pocketing nearly 87 p.c of the Tokyo committee’s expenditures, in keeping with a authorities listening to at the time.

Concerns about the firm’s 2016 efficiency didn’t stop it from enjoying a big position in the 2020 bid, mentioned Nick Varley, a guide who was introduced on to shepherd the displays.

The bid committee assured him that Dentsu wouldn’t be concerned, he mentioned. But when he acquired his contract, he was stunned to seek out it was an settlement with Dentsu.

On the floor, a minimum of, Dentsu largely offered logistical help and dealt with the home aspect of the marketing campaign, Mr. Varley mentioned.

But behind the scenes, the scenario seems to have been murkier.

The French authorities have spent years investigating allegations of corruption surrounding the Tokyo 2020 bid course of. Among the questions is the position that a highly effective former Dentsu worker performed in lobbying individuals with longstanding connections to the firm in an effort to sway the end result.

The scandal led to the resignation of the head of the Tokyo Olympic committee. Dentsu has mentioned it had no involvement in the matter.

Regardless of how the Games had been received, the firm stood to make an infinite revenue. Within a yr, the Tokyo Olympic committee had named Dentsu its advertising accomplice, after a bidding course of that rivals described as a foregone conclusion.

The very first thing Dentsu did was to eradicate the customized of getting just one firm signify every product class. Whereas previous Games had been sponsored by just one financial institution or one airline, for instance, Tokyo 2020 is sponsored by two of every. That allowed Dentsu to make use of its connections to steer nearly 70 home corporations to pay over $three billion to help the Games.

“The Tokyo Games were kind of obliquely called amongst those of us in the business — this is not pejorative in any sense — the Dentsu Games,” mentioned Terrence Burns, a sports activities guide and former International Olympic Committee govt.

“If you’re going to do sports marketing business in Japan, they’re kind of your first and last stop, to be honest. They hold a lot of the cards,” he added.

Dentsu was in want of a win. It has struggled to regulate to the rise of digital media. It was broken by a large overcharging scandal and a high-profile suicide linked to the firm’s intense work tradition. And, even earlier than the coronavirus, the agency had begun posting losses.

But when the pandemic hit, Dentsu’s Olympic guess went bitter. While the precise monetary influence on Dentsu stays unclear, mentioned Mr. Ebizuka, the former firm govt, there isn’t a doubt that it’s “suffering.”

For now, all Dentsu can do is hope for the finest because it tries to assist its purchasers navigate the unsure scenario, Mr. Ebizuka mentioned.

They don’t have any selection however to ship a “subtle message,” he mentioned: “Let’s look toward the future and just get through the pandemic together.”