Japan may be famed for its innovations in consumer electronics and, more recently, telecommunications, but its next IT or broadband revolution is likely to be how these technologies merge with marketing. From B2C (business-to-customer) e-commerce to online and interactive advertising, marketers are reading the writing on the firewall.
In September, for example, advertising giant Dentsu Inc. acquired an equity stake in J:COM subsidiary Jupiter Visual Communications Co., Ltd. (J-VC) to jointly develop new media and techniques for advertising. Dentsu, which has already homed in on the content and e-solutions markets, aims to merge its marketing savvy and client base with J:COM's video communications expertise. While J:COM, which straddles the TV, cable, online and mobile service markets, is eager to expand its ad media business.
The move will create "new advertising business models" and "unleash new potential for the satellite-media advertising market," according to a Dentsu media release. Similarly, Cyber Communications (CCI), a Dentsu subsidiary, struck a deal with New York-based online advertiser CheckM8 in October to offer its interactive advertising management system, AdVantage, in Japan. Such moves are just the tip of the iceberg.
Advertising expenditures rose for the third consecutive year in 2006 to nearly 6 trillion yen (up 0.6 percent year-on-year), according to a February report by Dentsu. While television-ad spending - still the most lucrative ad medium - declined slightly along with radio, newspaper and magazine ads, satellite media advertising such as BS (broadcast satellite) and digital broadcasting rose 11.7 percent. Internet-ad spending, which surpassed that of newspapers in 2003, soared a whopping 29.3 percent year-on-year in 2006.
Market researcher eMarketer predicts online advertising expenditures will surge from 359 billion yen last year to 643 billion yen in 2010. Far outpacing other industries, IT accounted for 34 percent of Japan's 36.9 billion banner ads in fiscal 2006, according to Video Research Interactive. While a Japan Brand Strategy poll showing the nation's two most valued Web sites in terms of name recognition and sales contributions are worth 138.6 billion yen (Toyota Motor Corp.) and 106.1 billion yen (All Nippon Airways Co.) offers further insight into market potential. It's a potential that's magnified here, where potential patrons needn't be in front of a PC to be online.
High-speed broadband mobile data communications is on the rise, and this year Japan's mobile subscribers topped the 100 million mark. "Effectively this means that the country is fully penetrated with advanced wireless services," eMarketer notes on its Web site. It estimates 75 percent of the population (94 million) is connected to the Web - many via high-speed connections and most by way of their mobiles. It's opened a brand new frontier in the world's second largest advertising market and players are scrambling to stake their claims. Some are even cutting out the middlemen.
In the Asia-Pacific region B2C e-commerce sales are expected to jump from $51 billion (5.8 trillion yen) last year to 115 billion (13.1 trillion yen) in 2010. And it's not just in anticipation of the market's stable annual average growth in Japan (17 percent) and South Korea. eMarketer predicts B2C e-commerce will grow by an annual average of 64 percent in China where, like India, the middle class and infrastructure are growing at breakneck speeds.
In Japan, a 2005 eMarketer poll showed 95 percent of urban Japanese households have mobiles, making it "a leading mobile society" that is setting a global precedent for online payments via Osaifu-Keitai (wallet phones). According to a summary of the poll: "Now, as cash and credit cards also move onto users' phones, these "mobile wallets," combined with GPS and location-based targeting, are providing unique new marketing possibilities - and instant feedback on their success."
The firm estimates Japan spent 4.3 trillion yen for retail via e-commerce and other online spending, excluding trading, banking and digital content last year, and that figure will reach 6.8 trillion yen by 2010. When combined with the burgeoning advertising industry and the nation's penchant for using as well as creating new communications and data technologies, other markets might also look to satellite media and cyberspace for a boost.
