In this article we have compiled our picks for the top digital marketing trends in Japan for 2023 that will have the biggest impact on businesses marketing to Japanese consumers.
Table of Contents
Table of Contents
The biggest trend for digital marketing in Japan for 2023 is AI, more specifically generative AI, which is best represented by ChatGPT.
ChatGPT has taken the world by storm since it was launched by the company OpenAI on November 30th of last year.
In just two months there were over 100 million users. And there is little debate about how transformative the technology powering this AI chatbot is.
Now that this kind of AI technology has entered the mainstream consciousness, businesses in all manner of industries are already looking at how they might utilize ChatGPT, or any one of the similar services and products that are popping up every day.
In particular, for digital marketers and ecommerce specialists, the ability of ChatGPT to produce text, copy, and content is of particular interest. In the English language at least, what ChatGPT can deliver is leaps and bounds above what many of us had experienced with chatbots up until this point, and users are exploring and discovering real-world applications at a blistering pace.
Microsoft, one of the main backers of ChatGPT, has already taken steps to incorporate ChatGPT into its Bing search engine. In response, the market leader in search, Google, has announced its own conversational AI, known as Bard, will be launched sometime in March 2023.
While it is still early days, the introduction of ChatGPT is being heralded as a turning point for AI, which we agree is definitely the case.
Just last year we wrote about a related topic, which was the move towards more automation by the major digital ad platforms. The ChatGPT language model is a part of this same movement, but at the same time is in a league of its own when it comes to the impact it will surely have on, well, just about everything.
As a result, ChatGPT is making all sorts of headlines–some not so good–which we will touch on at a later date.
For right now, expect a great deal of changes to digital marketing in 2023 being driven by AI and the conversations surrounding this disruptive technology.
The Economy and A Highly Competitive Consumer Market
Let’s take a moment to address the elephant in the room. The economy. Inflation. Price hikes the likes we haven’t seen in Japan for decades paired with a 40-year high exchange rate between the US Dollar and Japanese Yen.
As Japan imports most of its raw materials, as well as much of its food and fuel, these external economic pressures have forced companies to pass costs along to Japanese consumers resulting in prices rising at an unheard of rate.
Recently it was announced that over 10,000 products ranging from household necessities to packaged foods would see a price increase in the coming months. These increases come on the tail of previous price hikes which occurred just right after the New Year. And those price increases were preceded by a number of price increases that took place in the past year due to the rising cost of shipping and raw materials stemming from the war in Ukraine.
All of the above, plus stagnant wages, have combined to hit the average Japanese consumer’s wallet in a major way, and this has led to people in Japan curbing spending on discretionary items. So, the question on many marketers’ minds is how best to compete for Japanese customer’s hard earned yen?
There’s no easy answer, unfortunately. The most prudent course of action, however, is to recognize the fact that we are currently faced with a very difficult market and develop strategies that best utilize the available resources and strengths for your brand or business in order to reach Japanese consumers. The reality in Japan, like much of the world right now, is that macroeconomic factors are a key trend that digital marketers should be keeping an eye on in 2023.
Mature Ecommerce Landscape
As recently as 3 years ago, ecommerce in Japan was lagging pretty far behind most western countries on a number of fronts. Then the pandemic came, which spurred major changes to Japanese consumer behavior, among which included the rise of cashless payments in Japan and a greater shift to ecommerce.
In fact, up until very recently (i.e. right before the pandemic hit) it could be argued that a non-Japanese company with experience in ecommerce and offering a streamlined shopping experience could potentially challenge domestic, Japanese companies for a share of Japanese consumer’s spending with a moderate amount of effort. That is no longer the case.
The Japanese ecommerce landscape has made a number of strides, to the point where all the relevant players in most B2C industries and verticals have stopped dragging their feet on ecommerce and gotten their act together. In other words, Japan has a mature ecommerce landscape and just doing ecommerce is not enough to succeed in the Japanese market, it’s table stakes. Which leads us to our next trend for digital marketing in Japan in 2023.
Greater Focus on Strategy
In 2023 brands and businesses alike will need to reassess their strategies to contend with the new reality of doing business in Japan and selling to Japanese consumers.
For a number of years strategy has fallen to the wayside for many businesses in Japan as their marketing activities seemed to deliver acceptable results through tactics alone. Recent changes in digital marketing, and digital advertising in particular, have made it clear that this kind of business-as-usual approach to marketing in Japan is no longer feasible. Brands of all sizes, and regardless of industry or vertical, must employ more comprehensive and integrated marketing practices if they hope to achieve revenue objectives and build their business in Japan.
Unfortunately, there has never been one best strategy for Japan that will work for all businesses, as it’s very subjective to each company or brand’s situation. For this reason, for non-Japanese companies trying to sell in Japan we highly recommend drawing on the expertise of those who specialize in the Japanese market.
Lack of experience in Japan and subsequent lack of insight into Japanese consumers is a major disadvantage when planning a successful marketing strategy for Japan, yet year in and year out many brands new to Japan continue to attempt to go it alone.
Working with experienced marketing professionals can help you better compete with Japanese domestic brands as well as ensure your marketing activities are focused on things that actually deliver meaningful results for your business.
At the end of the day, it’s clear that B2C and D2C ecommerce companies who wish to reach Japanese consumers will need to undertake and invest in a significant amount of marketing activities to yield positive results in 2023.
Uncertainty in the Social Media Landscape
For those of us in the digital marketing and advertising space, Twitter is the most-watched social media platform at the moment. Elon Musk’s acquisition of the company late last year has been full of surprises and we fully expect continued uncertainty surrounding Twitter for much of 2023.
For starters, laying off 50% of the workforce, with recent, additional firings bringing that number to a reduction of around 70% of pre-Musk Twitter employees, has made Silicon Valley’s other major tech companies and their mass layoffs look modest by comparison.
Others will point to how Musk has seemingly made controversial decision after controversial decision since taking over the reins of Twitter, as a reason to watch Twitter in 2023. But as of now, Twitter is still standing. The sky has not fallen. And we are very interested to see what’s in store for the platform over the coming months.
The thing to keep in mind is, Twitter has a unique value proposition and a unique position within the greater social media landscape. Furthermore, in the context of the Japanese market, it is one of the top social media platforms in Japan, and it has one of the largest user bases in the world, trailing only the US in total number of users.
If Twitter finds its footing, and profitability, under Musk then there may still be untapped potential for brands on the platform.
A close second, in terms of social media we will be closely watching in 2023 is, of course, TikTok.
The banning of TikTok US federal devices is a much bigger blow to the app than TikTok’s owner ByteDance, chooses to publicly recognize in its statements. This is because the banning of TikTok on US federal government devices paves the way for an outright ban in the US, with proposed bills receiving rare bipartisan support in the United States Congress.
The question that does in fact need to be asked, especially given the increasing interest of advertisers in the app is, would the US outright ban TikTok and if that happens would allied countries such as Japan take similar measures?
This is not outside of the realm of possibility given the current geopolitical environment.
Let’s not forget that TikTok is completely banned in India. That’s 1.4 billion people.
Canada recently followed the US and has announced a ban of TikTok on Canadian government devices.
TikTok continues to be one to watch in 2023, but not necessarily so as to get the jump on the next viral craze or trending sound.
Google Analytics: End of Universal Analytics and Introduction of GA4
While the scheduled sunsetting of Google’s Universal Analytics in favor of GA4 in July 2023 might not seem like such a big thing for those not directly dealing with analytics data, make no mistake this is a very major change.
Not only is it huge when it comes to the important issue of reporting and attribution but the elimination of previous metrics and totally changing how other metrics are defined and categorized is a change that should not be understated.
These changes impact your ability to interpret, report, and share data with team members, stakeholders, and decision makers within your organization as well as impact your ability to develop appropriate strategies based on this data.
Again, while this change might not bother those who do not rely on Google Analytics, but instead opt for other analytics solutions, for the tens of millions of people who do use Google Analytics on a daily basis, this is still a major change, even if it’s been a long-time coming.
While we all received a heads-up from Google–we’ve had more than a year’s warning–businesses and brands who’ve been using Google Analytics for years within their organizations will undoubtedly have to get used to new reporting and potential limitations in the data they were used to working with, while also getting accustomed to new metrics and ways of interpreting marketing analytics data.
Resurgent Brick and Mortar Retail
The last key marketing trend for Japan in 2023 that digital marketers should keep an eye on is the resurgence of brick and mortar retail.
Now, by “resurgence” we do not mean a return to the level of Japan’s Bubble Economy era, but a return to the level where it’s clear to those of us active in the Japanese market that brick and mortar retail is still very relevant and isn’t going anywhere anytime soon.
People in Japan have been trickling back to stores in numbers since this past year, but beginning this month when the decision to unmask becomes totally left up to the individual and then in May, when COVID-19 is expected to be redesignated (i.e. downgraded) as a less severe category of illness here in Japan, brick and mortar shops and the in-store experience should start to more closely resemble the pre-pandemic experience. This will likely lead to an uptick in in-store spending, despite all the economic headwinds.
For digital marketers working with a business utilizing omnichannel retail, it’s a welcome change, but for purely online D2C ecommerce brands the resurgence of brick and mortar retail is something to watch.
It’s now evident that many D2C brands were perhaps a little too optimistic with regard to their revenue projections, and now many D2C and online-only brands in Japan face even more competition for consumer spending from a resurgent retail sector.
Bottom Line: Digital Marketing Trends in Japan 2023
Japan continues to be a lucrative market for many brands, however the elements necessary to succeed in this dynamic market are constantly changing.
Japan’s domestic brands will continue to leverage the home-field advantage and experience dealing with Japanese consumers, meaning that without a local partner most brands will face tremendous difficulties in penetrating the market.
In particular, B2C ecommerce brands must contend with a more mature ecommerce landscape in Japan where Japanese consumers have an abundance of native online stores and sites to choose from when making a purchase.
Challenging economic conditions will require deep insights and experience dealing with Japanese customers and those that can leverage this knowledge and skill set will come out ahead.
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If you find yourself not achieving the results you had hoped for with your business in Japan then contact us to schedule a call to see how we might be able to help.