Having lived in Japan for eight years starting back in 2006, I have seen a slew of developments and changes that have impacted its media environment, general consumer behaviour, digital trends and even largely, its culture.
Back then, Yahoo! Japan was king of Search and Google was little known, occupying only around 18 per cent of the market share. In the worlds of social, Facebook and Twitter were basically nonexistent while local player Mixi had the market cornered. Smartphones were not used at all among Japanese who were instead, in favour of their own locally developed mobile devices. And finally, traditional media ruled. TV and Print accounted for the vast majority of advertiser spend as these were the most effective channels at the time to reach their intended audience.
The world today is very different. Google is now king with 58 per cent share. Japan is one of Twitter’s largest markets worldwide. Smartphone growth has skyrocketed within the last five years. And the internet advertising market has taken over, seeing a 12.1 per cent YOY growth in 2014 versus traditional media which just saw a meager 1.6 per cent growth.
The next area that is taking Japan by storm is online video. This is being surfaced due to the huge influx of smartphone and tablet usage. According to comScore, 30.5 per cent of all Internet traffic in Japan is through mobile devices and is growing fast. This is important as most of the online video consumption is taking place through these devices. Also, the average videos viewed per viewer in Japan is much higher than the global average, sitting at 238.5 versus 204.3, which points to the Japanese appetite for watching videos.
In terms of performance, we are seeing average click-through rates in Japan hovering at 8 per cent compared to the global average of 3.6 per cent, according to Unruly. This points to the general interest in video among Japanese and potentially the relevancy of the content they are being served. However, advertisers be wary. Another Unruly report says that nearly 80 per cent of Japanese viewers say they are very likely to loose trust in a brand when an ad feels fake.
In terms of potential, the market for online video advertising is slated to grow to USD 820 million by 2017, up from USD 290 in 2014. That’s a whopping 300 per cent, according to a report by CyberAgent, a Tokyo-based internet conglomerate.
And within this year, we have already seen a variety of examples of companies taking bold steps in response to the burgeoning online video movement:
Buzzfeed’s JV with Yahoo! Japan
In April, a joint venture was formed between Yahoo! Japan and Buzzfeed, a US-based internet media company. Part of the reason for this partnership was around Yahoo’s desire to increase its short-form online video capability. By tapping into Buzzfeed’s platform, Yahoo will be in a better place to serve smart, well-produced ‘snackable’ video content tailor-made for mobile consumption, another area Yahoo wants to desperately grow.
Videology to power all online video in Yahoo! Japan
Yahoo! Japan is the largest internet property in Japan. And to date, they have always been a bit slow to evolve and modernise their platform. However, in October they finally struck a deal with Videology, a leading video advertising platform where their technology will now power all of Yahoo’s video ad capabilities. This will enable Yahoo to offer the Japanese digital ad market guaranteed reservation buying in the form of upfronts, robust forecasting and the introduction of AdPods, which is a first for Yahoo.
Japan TV Networks join forces to launch video platform
In July, five of the top TV networks based in Tokyo had come together to launch a new service called TVer, which aims to stream all their new shows on the Internet. The service will be free, with revenues being generated through online video ads. Part of the aim of this service is to attract younger viewers who have been deserting traditional TV in favour of digital content mostly viewed via their smartphone based devices.
Netflix finally enters Japan
In September, Netflix made the much-anticipated move to launch in Japan. According to Netflix, Japan was a natural fit for its global strategy, as internet speeds are among the highest globally, and ‘the ubiquity of connected devices provide consumers with the anytime, anywhere ability to enjoy their favourite TV show and movies’. The high profile nature of a launch like this will most certainly disrupt the tradition TV network industry and help to fuel the growing usage and viewership of online video.
Unruly launches in Japan
Just last month, the video ad technology company Unruly, opened up its first office in Japan to serve the growing video needs of its clients the likes of Toyota, Panasonic, Adidas and others. Unruly will launch its programmatic video platform Unruly Activate, which delivers native video advertising solutions and its famed ShareRank tool that aims to predict the social impact of video content before it launches.
And then you have collaborations like the one earlier this month between SK-II and Google titled ‘Beauty Bound Asia’, where they held a contest in Tokyo to identify the region’s top YouTube creator within the beauty segment. For over four months, Beauty Bound saw creators across Asia take part in various online video challenges which finally got narrowed down to 22 finalists. This is an example of publisher (Google) and brand (P&G) coming together to help stimulate the online video market through innovative approaches to content, leveraging talented and influential youth stars.
All this is bad news for traditional Japanese ad agencies as a decrease in TV spend will directly eat away at their business models as they still heavily rely on TV buying for the bulk of their revenues. This in part has contributed to online video being embraced at a slower pace than other markets. Japanese agencies want to protect the traditional TV model until they can fully understand where video advertising truly fits within their operational structures and how they can in turn profit from it.
However, we have moved beyond that now and the channel is growing too fast for them to ignore it and it is fully poised to continue to make big headways moving forward. With new players entering the market like Videology, Unruly and TubeMogul and with disruptive changes happening from the old guard like Yahoo! Japan, the online video market may at one point totally take over traditional TV. Regardless, expect to see big things happening within the channel.