The state of online marketing in Japan

Photo: Simon le nippon on Flickr

For western companies, entering the Asian market is no easy task. There is the inevitable language barrier, not to mention the cultural differences. We had a chance to talk to Anji Ismail, the CEO of online marketing platform DOZ, in order to hear his thoughts on what makes the Japanese market especially different.

For starters, online marketing in Japan is very well-developed. According to a study by Dentsu published in March of this year, online marketing budgets in Japan grew by 107.7% compared to the previous year. Anji adds:

Japan is actually the second biggest market with over $8.1 billion in total spending in 2012, and it might reach $11 billion in 2015. Mobile is really hot in Japan, with $1.8 billion spent in 2012, ranking as the second biggest market for mobile advertising expenditures, just behind the US.

Although Japanese people are known to open their wallets for digital contents such as mobile apps, games, and newsletters, it turns out that they are not especially keen to click on ads.

On the web, it’s interesting to note that almost 40% of Japanese never click on sponsored ads on search engines, and only 6% of those who do have bought something after clicking. Actually, Japan has one of the lowest click-through rates, with only a 1.4% click rate on web ads. However, budgets are growing for search engine and social media optimization.

While Japanese people do click on ads, the CTR remains low. A relevant survey by Goo Research shows that almost 63% of respondents have clicked on ads shown on search results, while 24% have not. When asked what type of ads they are more likely to click, the most popular response was banner, images, or Flash at roughly 46%, and text ads on search results ranked second at about 28%. Links within newsletters, affiliate links within contents, and links within blog posts (content-match advertising) followed at around 25%.

Of course, entering the Japanese market cannot and should not be just restricted to online marketing. It’s a mixture of offline and online tactics, and some US companies have done it very well. Evernote is one good example. The company marked its third year anniversary in Japan back in March. There are over five million users in Japan and it’s the second most active market after US in terms of active users, with 30% of its revenue coming from the country.

Evernote was a typical case of what is called ‘blogger marketing’ in Japan. They reached out to tech savvy and influential people online, people who acted as ambassadors for the service. Lots of meetups were held, and these ambassadors also helped Evernote with promotion in book and other publications. Searching for ‘Evernote’ on Amazon Japan now yields over 500 results.

Google is another company that many Japanese people find appealing. In a survey about popular online brands, Google ranked third after Rakuten and Yahoo. That score is calculated from important factors such as usability, number of visits, and website loyalty. But the company’s unique promotions have likely been a factor in its popularity. For Google+, the company collaborated with the all-girl idol group AKB 48 and fashionista/pop star Kyary Pamyu Pamyu. To promote its Chrome web browser, the company aired a TV commercial featuring the popular virtual diva Hatsune Miku.

Of course these are just a few cases, and there are many others. And given the money to be made in this lucrative market (especially on mobile), marketing to Japanese consumers will continue to be a challenge — but one with a big payoff for those who do it right.