Half-Year Progress Report: Search in Japan

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Time flies. We are at our half year point now and so much has already happened this year to help shape the mood of Japan. We saw the devastating Tohoku earthquake on March 11 coupled with the tsunami and nuclear fears which still loom, the launch of the iPad 2 in May, the Sony data breach, the overall decline of mass media spending contrasted with the uptake in digital spend, and the soon to come resignation of yet another prime minister.

All these events obviously have a profound effect on the economy, business, and overall consumer sentiment. These impacts also bleed into the search industry and can affect online behaviours, client spend patterns, market entries, and more.

Below is a sort of six-month wrap up of what we are seeing in Japan across three key areas: search habits, client attitudes, and technology movements, all in relation to the search industry.

Search Habits

• We saw overall search volume increase, going from around 8.7 billion monthly searches in the last four months of 2010 to just north of that at 8.9 billion monthly searches the first four months of this year. During the earthquake month of March, we saw over 9.3 billion searches alone.
• The number of searches per searcher also increased, moving from 114/month during the last four months of 2010 to 115/month for the first four months of this year. It appears people are actively searching more this year than they did last year.
• From a search engine perspective, Google is clearly dominating this year with around 52 percent share of search compared to Yahoo, which currently hovers around 39 percent and slightly declining. MSN is holding onto a 3-4 percent share of the market, with the rest split among the purely local engines.

Client Attitudes

• As we left 2010, we had already started to see search spending pick up in double-digit form compared to the previous year, and this has continued, and in fact, increased all through the first six months of 2011, across all types of verticals.
• Within search, we've seeing stronger growth in organic search (SEO), as clients felt that more critical work was needed in this area. However, in paid search there has been a strong shift moving from campaign-based search to an always-on strategy.
• Within the paid, owned, earned model, we are seeing greater importance on the owned and earned parts with brands making a concerted effort to create unique 'owned' media living outside their brand sites, and to drive traffic via search.
• We've also seen a strong display of integration - finally bringing search to the table with the digital and offline guys. Brands are seeing the need to integrate, creating greater efficiencies and effectiveness compared to just a segregated approach.

Technology Movements

• Last December, Yahoo Japan began using Google's backend technology for its organic search listings. From then, SEO rankings were identical on both engines. However, two weeks ago Yahoo updated its algorithm to once again differentiate its listings.
• The past six months, we've started to see more aggressive plays in the bid management and optimisation space, with the rebranding of Decide DNA to ZapSearch, and more aggressive movements from both Marin and Kenshoo in Japan.
• So far it seems like it's going to be the year of the DSP (demand-side platform). We've started to see a major push among agencies, local publishers, and boutique technology firms to launch their own DSPs. Just in the past two months, four major agencies/media reps have rolled out their DSP and real-time bidding platforms. We're most likely going to see a lot more of this in months to come.

Overall, the market this year is looking good. Very good in fact. We see a continued focus on search as a formidable marketing channel, increased spending across the board, client sentiment becoming more positive, and technology firms continuing to enter the market full-steam ahead. All this in contrast to one of the country's most difficult and challenging times in decades.