The Japanese Mobile Dichotomy

I love Japan.

Well, more specifically, what really endears me to it is how everything just works. Always.

From the moment you step out of the terminal at Narita, you are in a world where 99 percent up-time is just not acceptable. Whether for personal or business use, consumers want and expect efficient and easy-to-access services – and the mobile phone plays a very large part in providing these services. From sending ‘mobile emails’, to  checking a bank balance, making a fund transfer to paying a bill, watching terrestrial TV or collecting reward points on one of the many loyalty card chips stored on your handheld device, the traditional clam-shell Sharp and Fujitsu mobile phones in Japan can do it all.

For many in the global market place, Japan has long been the country to look up to when searching for the latest in mobile innovation – long before the term smartphone was coined to describe the latest offerings from the likes of Palm and Apple or Android, the Japanese consumer had access to hardware that seemed light years away. And as such, according to the Ministry of Internal Affairs and Communications, Japan’s mobile Web market (defined as mobile content, services, and advertising) continues its break-neck growth rates and was worth some $17 billion in 2009.

But what exactly is it that is worth $17 billion and how innovative is it? A closer look at the numbers behind the hype, and a few well-placed conversations with senior industry executives in some of Japan’s largest digital agencies and trading houses and it all becomes clear. Sort of.

An Epsilon survey conducted in 2008 on global consumer attitudes to email, some 27 percent of Japanese said they accessed their email on a mobile device. However in 2009, this dropped to 11 percent as the definition of what Japanese consumers considered a smartphonechanged with the introduction of the iPhone. And now only 5.8 percent of mobile users consider their phone ‘smart’ according to a June 2010 study by Nielsen, but still some 56 percent of consumers say they access the mobile Web.

However, marketers have yet to really embrace the opportunities mobile as a medium has to offer beyond simple banners and mobile search which make up about $1 billion out of the total Japanese online ad market of $7 billion – but both of these, it can be argued, are simply an extension of ‘traditional’ interactive media being interacted with on another screen.

A recent survey on customer experience marketing conducted by ROI Research and Epsilon also showed that mobile devices currently carry very little influence on purchase decisions made by Japanese consumers in travel (1 percent), insurance (2 percent), or consumer packaged goods (3 percent) and is clearly not a preferred channel of communication post-purchase with only 6 to 7 percent citing mobile phone and no more than 4 percent identifying SMS/text as their channel of choice, far below that of consumers in India and China. These figures are in sharp contrast to the acceptance of postal mail (34 percent) and email (50 percent), and show a juxtaposition between the expectations of consumers and the aspirations of marketers in Japan, who clearly see mobile as the big frontier.

So what are Japanese marketers doing to address innovation and what should those of us on the outside be looking at for ideas? An interesting question and one that I was looking for answers to at Adtech Tokyo that took place at the end of October.

To my surprise, all of the sessions on mobile innovation referenced case studies from the U.S. and Europe and not one presenter finished their session without talking about the iPhone or iPad – devices that those supposedly in-the-know in Japan also clearly see as game-changers when it comes to how consumers can interact with mobile advertising and marketing communications in Japan.

Yet as you looked around the meeting rooms and exhibition halls, while iPhones were definitely the order of the day, you could see that Japan is without a doubt becoming a multiple-device world, as trusty multi-function clam-shell phones hung around necks ready to buy the next coffee, or earn the next loyalty rewards and deliver on the needs of the Japanese consumers’ mobile commerce lifestyles. So while the i-devices most definitely meet a media and personal communications-driven need for Japan, as yet they lack a relevance to the consumers’ way of life that makes them as integrated and indispensable as the ‘traditional’ Japanese smartphones that have such tremendous penetration levels. But with just mobile search and display ads driving the $1 billion dollar mobile advertising market, marketers in Japan are most definitely struggling to deliver engaging communications that drive customer relationships that truly work in the local mobile world and live up to the expectations of the mobile consumer. In fact, this is no different to the challenge that the rest of the advertising world is facing.

As media consumption habits and mobile hardware innovation mature globally hand-in-hand, we must as an advertising and marketing industry ensure that relevance – both to consumers’ way of life and their communication preferences –  drives mobile marketing and communications innovation, and we are not simply delivering mobile for mobile’s sake.

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A photograph of Mike Millar giving his presentation on digital business in Asia, to a room of attendees at Shift London.
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