It would be a stretch to claim that 2012 has brought a revolutionary change to Japan's digital and social marketing landscape. What we've seen instead is a convergence of things that kicked off in 2010/11 taking root, while in 2013, these underlying trends seem poised to go mainstream, which should give the whole digital marketing landscape in Japan a look quite different than what it was just a few years ago. If you're making some bets on where to cast your die in 2013, here are some good places to start:
Smartphones set to become the standard bearer for mobile marketing
For years, rapid advances in technology made Japan a high-end Galapagos when it came to digital and mobile marketing. It had in place technology that other countries could only dream of, and a model of marketing to and reaching consumers that was unique. Practically everything was different about how Japanese interacted with the Internet - consumers first interaction with the Internet was typically through advanced mobile Internet services such as i-mode and what people expected from "interactive" experiences and marketing were largely based on these initial interactions - the "PC" Internet, the standard bearer for the Internet in the rest of the world, was relatively slow to catch on comparatively for these reasons.
Over the past three years, however, this old paradigm has changed. While Japanese "feature phones" are still relatively advanced to their counterparts in the rest of the world and still very prominent in Japan, consumers and marketers alike are focusing on the 24 million people who now use smartphones in Japan. And given that this number is only expected to grow (in 2016 eMarketer forecasts smartphone users to make up 83 percent of all mobile phones here), it is expected that we'll see the continued mainstreaming of these users and their habits.
These habits indicate big changes in how Japanese interact and what they demand from their online experiences - users moving toward smartphones has more to do with getting a "PC Internet" type of experience through their mobile. Japanese smartphone users engage with social networks (55 percent vs. 25 percent for feature phones) and view and consume video content - marking a shift in habit that, to be honest, looks like any other market in the world. Counting out cultural dynamics and taste, the biggest part of the smartphone revolution is that it seems to be aligning the Japanese market to what's happening elsewhere more than ever.
Facebook and social as a gateway to greater investment in social content
The story of Facebook Japan's relatively long rise to prominence is well known. Essentially an unknown commodity, the service broke the Japanese conventions of the anonymity driven SNS paradigm and took off in 2011 - now boasting over 16 million users, Facebook is also one of the most highly accessed sites in Japan. The most interesting backstory for this, however, is less about users and more about notoriously conservative Japanese brands - in 2011 and 2012 one of the big trends in corporate Japan has been the number of brands giving social media a spin for the first time through the creation of brand pages.
Cost is one of the factors why brands would do this - brand pages have relatively low start-up costs. But the bigger motivation seems to be Japanese brands and managers eager to get their feet wet with some relatively low risk social media interaction. This "testing the waters" approach is evident in both the budgets allocated to social media activities, but in 2013 it wouldn't be a stretch to see more successful companies in this space take money out of their local marketing budgets, typically focused on paid media and reach, and diverting some of them producing content and other activities that are more clearly focused on non-paid, non-reached focused activities such as branded entertainment and content development. The social CRM business in Japan is also still very nascent, and it wouldn't be a stretch to see that industry begin to take baby steps forward in 2013.
Niche and interest-driven social networks face new pressure
The interest graph - whether it be games or Cookpad - has long been an entry way into social media for Japanese. Complex communities built around interests, with a mix of editorial, user-submitted, and advertorial type content. As Japan moves to a more "socially" attuned framework for online communication, it wouldn't be a stretch to see these communities begin to evolve in this manner.
Expect these companies to do what other media companies have started to do, begin to move functionality to where the users are spending their time (Twitter, Facebook) or find that competitors will move in to fill a similar kind of service void for those platforms. Either way, my bet would be on a flattening of the traffic and registrations directly to these sites in 2013.
Digital budgets start to creep in on TV's reach-driven spend*
TV is still the largest portion of advertising spend in Japan - alone it makes up just over 30 percent of the total ad spend. In 2011, this number (affected by the 3.11 earthquake and tsunami) was only down slightly at ¥1.72 trillion yen in 2011. Compared to the ¥806 billion taken in by the Internet ad industry as a whole, it will be some time before it catches up. Where the growth numbers are most startling, however, is in the production monies. While TV production revenues remain flat, there was a big jump in "Internet"-based production - over 12 percent in a single year. While a lot of this is in technical implementation, the driver of this increase seems to be in two or three areas - production of social content, production of mobile content (inclusive of the burgeoning buzz around responsive design), and development of deeper CRM tools. This directly points away from monies being allocated strictly to "reach"-based activities, into a mix of activities that include both reach and engagement.
*All numbers in this paragraph from Dentsu's 2011 Advertising Expenditures in Japan report
The thread running through these predictions is that 2013 seems destined to be the year Japan shakes off the Galapagos market tag. What that means for digital marketers is that while they still have to be aware of local customs, tastes, and culture, referencing trends on a more global level will have a relevance in Japan that hasn't existed before.
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Jeff is the Digital Strategy Director for Havas Worldwide Digital Tokyo. His professional experience spans integrated communication planning, social media, branding, web strategy/online business development, and e-marketing in Japan and North America. A bicultural Canadian who is fluent in English and Japanese, he is a frequent speaker and blogger on the challenges of cross cultural communications and advertising Japan, where he consults local and global clients alike on the finer nuances of the market.
March 19, 2014