Rapp Collins Joint Venture Prepares for "Big Rumble"
"Credit Saison is an ideal match for us," Simon Dalby, President of the new venture, said, "because they are a large local - and quite sophisticated - database marketer.
"They have a relational consumer cardholder database of 15.7 million names and the widest contacts within Japan. They own Seibu, a department store, Seiyu, a grocery store chain, insurance, travel, hotels and other businesses."
Omnicon, Rapp Collins' parent company, will hold roughly 80 percent of the shares in the new venture with Credit Saison taking the other 20 percent.
The agency did not move into Japan - to replace a Rapp Collins offshoot of a Japanese agency that closed in 1996 - because of the "big bang" financial deregulation, but because "as the largest DM agency in the world we have to be in Japan, the world's second largest market."
But Dalby conceded that the big bang taking place just as his agency becomes established on the market "will give us an opportunity to do business with financial services."
He noted, however, that "over here things don't happen with a big bang, but rather with a long rumble. A lot of changes - and changes in the laws - are taking place but I think it will take several years before the full impact will be felt here.
"Things just don't happen overnight. Deregulation won't take place as the big bang did in London in the mid-eighties but will be a long process. But the time is ripe for making new financial products available."
The Japanese allegedly have what Dalby calls "a mythical figure" - perhaps as high as $9.6 trillion-- invested in personal financial instruments that pay 0.5 percent interest, not much incentive for long-term savings.
As regulations and other barriers fall new products are coming on the market. Citibank is offering foreign currency accounts that pay 4-6 percent. Mutual funds are coming on the market. "There is definitely movement."
The market, Dalby added "is ripe for new entrants to come in and offer products which gives us new opportunity for working with banks and insurers."
He's found them receptive to change and thinking seriously about "how to leverage the customer data they have and make it work harder for them. There aren't very many true database relationship marketing agencies here.
"Our impression is that there a lot more client demand than suppliers to supply it so we can help companies change the way they market and to understand their customers better.
"What you see in the retail market is that most department stores have their own loyalty programs, usually copied from Saks or Sears. But I don't think they are making the most of the data generated and we can help."
Restrictions on direct marketing remain, of course, he said. Consumer privacy is guarded jealously. Very little public data exists that can be used. Japan doesn't have lifestyle databases. Postage costs are high.
Nevertheless, Dalby believes changes are coming here too as Japan prepares for the interactive age. Nor does he think that Japan has been hit that hard by the Asia meltdown.
"Our business has so much potential here precisely because the economy has slowed and consumers aren't spending as much so that our clients have to develop skills in database and relationship marketing."
Dalby does not plan to limit the joint venture to financial services. "We hope to build up a broad portfolio of Japanese and international clients. We'll look at telecom, retailing, automotive and some BTB applications."