Sophocles, the ancient Greek playwright was quoted once as saying, “A man growing old becomes a child again.” I feel this proverb applies to how we see the current state of Japan playing out, particularly in the media space right now.
Traditionally, Japan has been very mass market, heavily skewed toward TV, print, and outdoor. A couple reasons for this. First, the big three in Japan – Dentsu, Hakuhoko, and ADK are reluctant to push anything outside of TV, because that’s where they make the most profit. Second, advertisers are reluctant to change their mix if the big three aren’t pushing it. This creates a cyclical event that does not accurately reflect the current media consumption patterns and does not support innovation in media.
However, when we actually look at the data, especially in what we’ve seen in 2012, there should be little question as to what is happening here. Simply put, digital, in all its forms, is taking over and becoming the central channel for creating meaningful relationships with consumers.
Let’s take a look below at some of the key numbers coming out of Japan this year:
- 70+ million (number of line subscribers vs. 4 million last year)
- 14+ million (average number of monthly searches vs. 11 billion last year)
- 17 million (number of Facebook accounts vs. 8 billion last year)
- 24 percent (percentage of smartphone penetration vs. 14 percent last year)
- -15 percent (YOY percentage decline in average minutes by visit within Yahoo Japan)
- 1/5th (percentage of online ad spend dedicated to handheld devices)
- -17.4 percent (YOY percentage decline in unique visits within Mixi)
- 42 (average number of apps downloaded among Japanese)
- 53 percent (percentage of Japanese who watch TV on their smartphones)
- 80 percent (percentage of Japanese who use smartphones while watching TV)
- 24 percent (percentage shift from premium display to programmatic buying)
This data paints a few themes on what’s been happening this year. Japan has been an oligarchy society when it comes to media, where power effectively rests with a small number of players. On the agency front it’s been Dentsu and the big three. On the media front, it’s mainly been Yahoo Japan. On the social side, its Mixi, and so forth. This year, we have seen the power shifting and spreading out. No longer is Mixi king of social. In fact, YOY uniques are declining 17.4 percent, while during the same period Facebook is doubling its user base, Twitter is reaching new highs, Google+ is gaining traction, and we are seeing the launch of newer, more niche social platforms. Not to mention the superman-like growth of LINE that has seen over 70 million downloads worldwide (64 million this year alone!). The LINE phenomenon also represents another theme, where Japan is now exporting social technology to the world. Typically Japan is on the receiving end of social technologies and of the ones they do create locally (i.e., Mixi), it never really leaves these borders, because it is overly Japanized.
Another theme we are seeing is the diversification and advancement of display media buying. No longer does Yahoo give you the reach you need. In fact, this year, we are seeing a 15 percent decrease in time spent by visit in Yahoo. People are going elsewhere. Advertisers are shifting their focus (and spend) to buying audiences rather than buying pages. Across our clients, we have seen a dramatic change in course this year to more programmatic buying in real time. To capture this dynamic, we’ve seen a lot of new companies entering the market this year, along the lines of Turn, TubeMogul, MediaMath, Criteo, and others. Clearly, they see something.
Japan is also getting smarter. The penetration of smartphones right now is about a quarter of the population, up from 15 percent last year. And people are using them in more complicated ways. According to Google Japan, 77 percent of smartphone users access the Internet daily and most never leave home without it. Smartphone users are multi-tasking, with 80 percent using their phone while doing other things like watching TV (53 percent). We call this “second screening,” and the marketing implications in integrating campaigns across media are vast. In fact, in a Google survey, 36 percent of the respondents said they would rather give up their TV than their smartphone. This year we also see people buying more with their smartphones, with around 39 percent having made a purchase.
We also see video finally emerging this year. As I wrote in my last article, The Video Opportunity in Japan, 66 percent of advertisers in 2012 planned to shift a portion of their budgets from TV to online video. In such a saturated TV market, this represents a huge opportunity for online video to take off. And user consumption of video is just getting bigger. Above, I stated that the time on site for Yahoo is down this year by 15 percent. This is aggregating all Yahoo categories, however, when we hone in on just Yahoo video as an example, we actually see a 22 percent lift in unique visitors and a 32.9 percent lift in minutes per visit. YouTube is extending its reach where it currently touches around 58.2 percent of the market, and new players to the market this year such as ePlayer and Hulu are showing opportunity for the ready advertiser.
Other areas this year saw some milestones worth noting. More brands launched e-commerce sites than we typically see. Established brands like Ralph Lauren and Japanese cosmetics giant Shiseido both launched online stores in an effort to go direct. The tablet market also saw some changes. Apple extended its footprint of its famed iPad, Amazon finally entered the market with its Kindle, and Rakuten released its own tablet called Kobo.
We saw a big year of change and increased explosive growth in digital. Japan is starting to redefine itself from this old school, traditional, and slow to move marketplace, to something much, much more. I would make big bets on all these areas, particularly video, mobile, and social to continue to show robust growth in the next few years. Again, Japan is the second largest ad market globally. And with so much currently invested in TV, we will see the market dramatically changing as this shifts more into the digital space. Everything will become faster, more transparent, more focused on data, and more creative as we think about how we link these cross-media activities. And when all of this happens, it will change society and culture and Japan will start feeling like a “child again,” as Sophocles would put it.
Young biz man image on home page via Shutterstock.