In this article we take an in-depth look at some of our biggest predictions regarding digital marketing in Japan for 2020.
Table of Contents
- 1 Digital Spending Will Increase
- 2 Multiple Channels Needed to Succeed
- 3 Ecommerce Focus
- 4 Social Media Requiring More Spend and Greater Strategy
- 5 An Emphasis on Video
- 6 Search Engine Marketing Continues to Evolve
- 7 Personalization
- 8 Sponsored Content Revisited
- 9 Customer Experience as Differentiator
- 10 The 2020 Tokyo Olympics
- 11 Digital Marketing Predictions for Japan in 2020 Summary
Digital Spending Will Increase
In 2020 Japanese companies will continue to increase their digital spending and digital advertising budgets. In fact, according to Japan’s Ministry of Economy, Trade and Industry (METI), expenditures on internet advertising in Japan has increased an average of 10% YOY over the past 3-year period.
Not only has digital advertising developed into a roughly $14 billion (USD) industry in Japan, but 2018 marked the first year where spending on digital advertising was even greater than expenditures on PR and event planning activities in the Japanese market. Based on these numbers digital marketing is now second only to television in terms of total amount spent per year by Japanese brands.
[source: PR Times]
The rise of digital advertising spend is a trend that has been going on for over 8 years, but a few recent developments make this shift even more apparent than ever.
First off, the business models of many of the biggest SNS platforms have become so dependent on social media advertising that they can no longer pretend that they aren’t pay-to-play (more on this later in the article). This is forcing brands and businesses hoping to utilize these platforms to invest more advertising dollars in the digital space.
But it’s not just social media either. Search engines, led by Google, YouTube, as well as Amazon, all have sophisticated ad platforms that offer advertisers a variety of Japanese SEM options with which they can reach out to customers, albeit for a price.
Even with increasing digital advertising budgets though, with so many brands competing for limited space the competitiveness and price of the various ad platforms are increasing equally in turn.
What we are currently seeing happen here in Japan is that digital advertising is becoming far more prominent and featuring higher and higher in these platforms’ search results. This means that brands that are serious about achieving results in Japan cannot be overly frugal, and instead must be proactive in their digital spending if they hope to continue to reach customers.
Multiple Channels Needed to Succeed
With each passing year it becomes harder to focus on just one single channel for your digital marketing activities and digital advertising needs. This is why in 2020 we anticipate more brands in Japan branching out from their strongest channel to focus on other channels as well.
As mentioned in our first prediction for 2020, as more and more businesses (i.e. the competition) increase their digital advertising spending a gradual decline in your own brand’s ROI and ROAS may occur across those accounts. In other words if you are just focusing on paid channels, like Google Ads and PPC, then your advertising dollars won’t go as far as they did before.
This is where having a cohesive multi-channel, and multi-media, strategy comes into play.
Moving forward each channel will have to work together to provide marginal benefits for your brand, rather than there being a single big-winner among the various options. The most successful brands will have solid websites, SEO, and social media presence in addition to SEM and other digital advertising channels also working in their favor.
With multichannel marketing, comes greater complexity, but in an increasingly fragmented and competitive online environment, single-channel approaches will not yield results.
As traditional retailers, such as Japanese department stores, struggle to remain relevant—and profitable—in an increasingly digital future, ecommerce emerges as the big winner.
Retail is a difficult market in Japan, especially for foreign brands who are unfamiliar with the Japanese consumer and are unable to quickly adapt to the fast-changing nature of the Japanese market.
On the other hand, the Japanese ecommerce market has—and will continue to—increase in both size (as of 2018 its total size is nearly 170 billion USD) and sophistication.
While Amazon Japan is now the company to beat when it comes to Japanese ecommerce and online marketplaces, domestic rival Rakuten with its numerous other business activities—including the highly contested and growing Japanese mobile payments industry—is still very much in this thing as well.
And it’s not just the major platforms themselves that are doubling down on ecommerce, Japanese brands of all sizes are increasingly moving online, whether by selling directly to customers via their own website or through marketplaces like Amazon and Rakuten.
As more consumers look to ecommerce to meet their shopping needs, brands that have a solid digital strategy will likely have a strong edge over traditional brick and mortar retailers. However, this does not necessarily guarantee success, which is why having a strategy specifically for Japan and being able to execute on it are essential.
Social Media Requiring More Spend and Greater Strategy
As touched upon at the beginning of our list of digital marketing predictions for Japan in 2020, social media is now almost a purely pay-to-play kind of deal. The days of easy impressions and, more importantly, traffic to your website or ecommerce store are long gone. Nowadays, brands that want to enter the Japanese market have to invest in paid social media advertising, as well as allocate budget for Japanese content creation on the various SNS platforms, to really see any sort of return.
This begs the questions, which platforms should you invest in or where should you allocate your marketing and advertising budget?
For each brand this will depend on their respective goals and objectives.
In addition to creating localized, high-quality content, proper selection of the mediums, formats, and platforms that best convey your brand’s messaging need to be taken into account in order to provide the highest return on investment. In-depth research into your local, Japanese competition should also be included as part of any social media strategy development for your brand.
While social media continues to be the most popular channel for brands looking to market their product in Japan, the competitive environment demands higher levels of investment (i.e. ad spend) and strategy than ever before.
An Emphasis on Video
One of the predictions for digital marketing in Japan for 2020 that is almost guaranteed to come true is that video will come to dominate as the medium of choice for brands and creators. As a result, you should expect to see a lot more brands in Japan producing video content and spending on video advertising for social media platforms compared with last year.
The statistics supporting an increased focus on video are quite compelling. Consumers are 85% more likely to purchase a product after viewing a video about that product, and a whopping 95% of users watch a video explaining a given product to learn more about it. In other words, video can be used at any stage of your funnel—such as discovery and consideration—and it can deliver real results for your brand.
This shift towards more use of video is obvious across the wider internet as a whole as well.
While Instagram stories are still immensely popular, the hottest new social media platform in Japan among younger audiences is TikTok. Although TikTok advertising hasn’t necessarily translated directly into sales for brands using it as an advertising channel that can reliably measure ROI, it can still be useful for branding and awareness building for the right industries targeting the right demographics.
Search Engine Marketing Continues to Evolve
In late October 2019 Google announced a major update to their algorithm which allows for better natural language processing that can provide more relevant results for users. What this means for brands relying on Google in Japan is that they will need to adjust most aspects of their digital marketing strategy related to search—including their SEM, SEO, and content strategy—as chances are that many brands are now relying on outdated tactics that may soon result in a drop in rankings and traffic to their website.
Especially when it comes to ecommerce search engine marketing is still enormously important to your business’ success on two fronts: organic search results (i.e. content marketing) and paid search results.
Google Ads is the dominant player when it comes to search in Japan, but both YouTube and Amazon are also powerful search engines in their own rights. Tactics to help improve organic search include content marketing and SEO, while paid search activities focus primarily on optimizing performance of your Google Ads or other PPC accounts.
Personalization of marketing and advertising is one of the biggest trends for 2020, which is what earned its spot on this year’s list of digital marketing predictions for Japan.
The basic thinking behind personalization is that personalized advertising not only outperforms generic advertising but also is less annoying to consumers.
Pioneers in the use of personalization are Amazon and Netflix. Both companies have employed personalized recommendations to market products to users of their own platforms for years, and in doing so both have achieved tremendous growth both at home as well as internationally.
Now it seems as if every industry is hoping to emulate these companies use of personalization for marketing purposes and recreate that success for themselves.
Of course, the driving force behind personalization is user data. Therefore it seems likely that most companies will be looking for ways to learn more about individual customers as we move forward.
At the same time, however, growing demands for greater privacy controls may be at odds with this goal. With regulations such as the California Consumer Privacy Act (CCPA) and GDPR potentially impacting many larger brands, who benefit the most from personalization, this is an important related, sub-issue to watch for developments.
Sponsored Content Revisited
There is so much content being produced every single day that we’re constantly bombarded with that we’ve moved beyond being overwhelmed and most of us are now simply desensitized to the vast majority of it.
To put things in perspective consider the fact that 500 million stories and 95 million photos are shared and uploaded every day on Instagram alone–and that’s just one of the many SNS out there. With numerous other platforms in the social media space as well, such as YouTube and TikTok, it’s becoming increasingly difficult for brand’s to get their message out on any platform.
One way to cut through the noise, however, is through sponsored content.
Recently sponsored content has seen renewed interest from brands looking for ways to counteract content fatigue on social media platforms.
As a result, sponsored content is once again a topic of conversation among Japanese marketers. But this time around it is not limited to bigger sites or publishers of major online magazines.
Content creators, whether they be YouTubers or bloggers are doing a lot more sponsored content than ever before.
We aren’t talking about sponsoring Instagram influencers who post a picture and copy-paste a pre-written caption or YouTubers who simply make mention of a brand in the first few seconds of their video, we are talking about creators who write and/or produce in-depth pieces, such as hands-on-reviews, comparisons, and analyses, which all provide a ton of value for potential customers.
Besides the argument that these individuals feel more “real” and “authentic” than brands, there is also the fact that these creators have earned the trust of their audience and command high rates of engagement and loyalty within their niches.
While finding the right Japanese partner for collaboration is difficult to navigate, for the right industry this approach can be highly lucrative.
Customer Experience as Differentiator
Japan has always been a competitive market that confounds non-Japanese companies. But domestic competition among Japanese companies will be an even fiercer fight than ever before.
In October 2019 the nationwide consumption tax (VAT) in Japan was increased from 8% to 10%. As a natural result, overall consumption has dropped—as many had forecasted—and Japanese consumers have tightened their purse strings for the time being.
Of course, the economy has not ground to a screeching halt. The Japanese economy still remains the world’s third largest and Japanese consumers are still among the world’s most diverse and sophisticated.
What this does mean, however, is that competition even among domestic companies—who know the ins and outs of the market—will be incredibly fierce in 2020 and beyond. The fight for market share and growth may very well come down to things like customer experience, especially when customers are deciding between two, closely-matched alternatives.
What an exceptional customer experience might look like for your online business will depend a lot on your brand and industry, however, getting it right can be incredibly important. In fact, studies show that 89% of companies these days compete primarily on customer experience. If you only focus on your product, chances are you are leaving sales on the table.
Foreign brands who are already at a natural disadvantage due to cultural and language issues, will need even more help than ever in navigating the Japanese market and finding the right opportunities to develop a unique customer experience in Japan.
The 2020 Tokyo Olympics
Last but not least in our list of predictions for digital marketing in Japan we have the 2020 Tokyo Olympics.
On the whole, anticipation could not be higher for this year’s summer games in Japan.
Although usage of the Olympic logo and related imagery is limited to sponsors and other official partners, you should still expect brands to look for creative ways to incorporate and or make mention of the Olympics in their marketing and advertising in 2020, especially as we get closer to the games.
With so much attention on Japan, both foreign and domestic, Japanese brands especially will be taking advantage of this once in a lifetime opportunity to promote their products and services to an international audience.
In particular, we anticipate there to be plenty of opportunities for sports, fitness, and lifestyle brands in Japan this year, all hoping to ride on the Olympic wave.
Digital Marketing Predictions for Japan in 2020 Summary
The Japanese market continues to be a dynamic one, and 2020 is set to be an especially big year for the country.
Social media remains critically important both in terms of branding and awareness building activities in Japan. However, creating great content—including images, videos, and stories—is not enough; social media advertising must be included as part of any serious media strategy.
With the biggest brands all investing heavily in video marketing as of late, even medium-sized brands will have to step up their advertising efforts. Meanwhile, the bar for content creation keeps getting pushed higher and higher and the demand for high-quality content can be difficult for brands without the in-house resources to manage on their own.
At the end of the day a comprehensive marketing plan for Japan that takes into consideration multiple channels, the customer experience, and that is well-targeted for your audience will still go far in positioning your brand for success in the Japanese market.
While the above list of predictions for digital marketing in Japan for 2020 is by no means exhaustive, we believe these are some of the most important topics you should familiarize yourself with.
Are you ready to talk about your marketing plans for the Japanese market in 2020? Contact us for a free consultation.