Expanding Your E-Marketing Initiative to Japan

Japan’s growing e-commerce economy, estimated at over $27 billion, represents an excellent opportunity for companies looking to enter Asian markets. Japan is the leader in Asian Internet development and has the largest online advertising market in the region, predicted to grow from $234 million last year to an estimated $2 billion by 2004.

Yet companies are only beginning to understand the benefits of email as a marketing discipline and the potential of personalization and return-on-investment (ROI) reporting. Even though users are getting increasingly comfortable online, many of them are still relatively new to commercial messages by email. Consumer privacy, unsafe credit card payments, logistical problems, and cultural differences inevitably impact email marketing campaigns in Japan.

However, they have not hindered the impressive growth of these campaigns. The email market is developing rapidly, the result of increasingly severe competition for the wallets of Japanese consumers.

Before making a move into this market, e-marketers should ask themselves the following: What are the inherent differences between the U.S. and Japanese markets in terms of usage, privacy issues, consumer preferences, and demographics? What challenges do companies typically face? And what steps need to be taken for a successful campaign launch?

Understanding the Market

According to eMarketer’s eAsia Report, Japan has the highest number of active Internet users in all Asia. It is the second largest Internet population, following only the U.S., with an estimated 17.7 million active adults in 2000, accounting for over 16 percent of the adult population.

Roughly 50 million Japanese now have mobile phones, says Japan’s Ministry of Posts and Telecommunications (MPT). In April the number of mobile phone subscribers outnumbered fixed-line subscribers for the first time. By 2005 nearly 80 million Japanese will subscribe to some form of mobile service. Along with Hong Kong and Singapore, Japan has built one of the most sophisticated wireless user bases in the world and continues to show incredible growth since the introduction of NTT DoCoMo’s i-mode wireless data service in early 1999. The number of i-mode subscribers is now over 15 million, compared with the 21 million PC-based Japanese Internet users.

Email is by far the most popular service on wireless devices and can be accessed through services such as NetVillage and NEC.

The success of wireless data services is at the expense of the PC-based Internet market, which still faces consumer adoption issues due to relatively high PC prices, high cost of access, consumer commuting patterns, and the dependency on mobile productivity tools. As a result, the wireless phone has already surpassed the PC as a viable platform for digital sales to consumers. Digital content providers have won hundreds of thousands of paying subscribers and are collecting fees under a secure, solid, and cost-effective micropayment system.

Subscribers order over the phone by entering a four-digit PIN. Since the cellular provider already has access to personal and billing information, users don’t have to input such data each time they place an order. Given the mobile phone’s tiny display, online shopping should remain more convenient on PCs until the introduction next year of third-generation mobile phones, which will provide the high bandwidth necessary for video, color graphics, and faster download.

Email Marketing Players Finally Enter Japan

Japanese companies have limited direct marketing expertise, requiring email marketing firms to educate them in this new marketing discipline. The absence of reliable privacy and legal regulations makes Japanese clients even more reluctant to have their data transferred out of Japan, forcing email firms such as FloNetwork to set up local centers for data storage and deployment.

When asked what advice it would give to newcomers, FloNetwork recommended working with companies that can provide local offices in Japan for client and technical support, Japanese-character-enabled technology for outbound and inbound email, translated reporting and analysis for U.S. companies with Japanese offices, and a solid understanding of the wireless market.

“They [the Japanese” are still overly reliant on their IT departments to provide the technology and have not seen email marketing in the context of a comprehensive marketing program. Japanese clients approach email marketing from a systems integration point of view, not from a direct marketing perspective,” says Joe Nardi, vice president of international development for FloNetwork.

Ready to Launch Your Campaign? A Quick Checklist

Before launching your first e-marketing campaign in Japan, consider the following:

Evaluate list opportunities carefully. Partner with experienced list providers to avoid privacy issues that could damage your client relations and carefully investigate new lists as they become available.

“The Japanese permission-based email list market is in its infancy,” says Greg Swent, president of Marketry, a list management company. “There are a limited number of quality data sources available, making it difficult to reach specific markets. This situation should improve over time.”

Create respectful messaging and creative offers. Due to the proliferation of online giveaways, marketers need to be creative and rely on partners with local creative resources and a solid cultural understanding. Remember the American slogan for Salem cigarettes, “Salem — Feeling Free,” that got translated in the Japanese market into “When smoking Salem, you feel so refreshed that your mind seems to be free and empty”?

Metaphors and analogies work well. Cynicism doesn’t. A certain humble nonchalance, combined with some good-natured humor and surprise, is ideal, experts say.

Use low-bandwidth and wireless-enabled content. Japanese consumers are very conscious of the amount of time they spend online (since they’re paying per-minute telephone charges). If the message loads too slowly, it will annoy the viewer and lead to poor click-through performance.

Also, use small and easy-to-read text for wireless messaging delivery.

Test consistently for quality assurance and optimization. “Japanese partners and clients have significant expectations of quality. Testing, testing, and more testing is the name of the game,” says Nardi. Experience can be a brutal teacher in a market that doesn’t allow any room for mistakes and where credibility has a huge impact on brand preferences.

The Japanese market yields a huge potential for commercial wireless and email messaging. So what are you waiting for?