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News Corp moving into Japan’s online advertising market

According to Tuesday’s Nikkei, News Corp has plans to enter Japan’s lucrative online advertising market. Back in April 2007, we reported that Dentsu claimed Japan’s online advertising market would experience “growth into a 750 billion yen plus market by 2011.”

Was Dentsu lowballing those numbers? In 2007, the online advertising market in Japan totaled about 600 billion yen. This was about a 24% increase over 2006. Dentsu’s report projected the market at 453.4 billion yen in 2007, with a jump over 600 billion yen happening in 2009.

News Corp’s operations will differ significantly from those of Google or Yahoo primarily in that they will not involve search-based ads. Rather, News Corp is looking to set up networks of sites that target similar demographics, and sell ads on behalf of webmasters who happen not to have a sales force at their disposal.

News Corp is looking to draw 10 billion yen annually in ad revenue from Japan within five years time.

Disney and Softbank partner to offer cellular services

This isn’t exactly brand new, but we thought it might have been an April Fool’s gag in November: Disney, Softbank to Start Japan Mobile-Phone Service.

Bloomberg quotes an analyst from Nomura as saying that the challenge here would be in keeping down the prices of the handsets, but no figures are stuck to the article. Japan Marketing News has offered its thoughts on the plan in a post worth reading. A short bit:

Given the ever-present popularity of things cute in Japan, and the broad appreciation for all things Disney, the idea of Mickey Mouse and Donald Duck phones and services is certainly feasible, perhaps more so than in any other country. After all, it is not at all unusual to see Japanese adults carrying Disney-branded bank cards or office supplies, and many Japanese are already using Disney phone straps and downloading Disney mobile content to their existing DoCoMo and au phones.

I’m wondering if we’ll see Brad Pitt, Cameron Diaz, Aya Ueto, Hello Kitty, a bunch of Disney characters, the ni-chan guy, the white dog they call dad and the mom all together in a Softbank/Disney ad that might just vaporize viewers with its sheer incomprehensibility. As we know, Dentsu makes Softbank’s ads.

They also make DoCoMo and AU’s ads.

This really, seriously, better make money for all partners involved.

I’m also vaguely remembering that Disney and Apple are at odds. Still waiting for AU to announce that they’re bringing the iPhone to Japan…

The Dentsu Watch: Looking for big growth in overseas markets

With the Dentsu brothel incident still fresh in the media, it seems interesting that the company is choosing now to announce its plans for large-scale overseas expansion. Currently, Dentsu ears 9% of its revenue from operations outside Japan, but the firm aims to boost that figure to 30% - though no time frame is given to reach such a goal.

If this article from the International Herald Tribune is on target, it seems that Dentsu will take its Japan strategy overseas: expand market share by buying out the competition. Will this translate into the sort of local knowledge and expertise necessary to expand overseas?

The article quotes Nick Mustoe, a managing director at the London-based Mustoes agency, as saying, “It seems to me that culturally, when [Japanese ad firms] expand, they do it to service a specific client need…They don’t start with a vision.”

Expansion through acquisition just might provide that vision.

Dentsu’s President on Advertising, Internet Ads, and Google

While we’re on a Dentsu theme, I though I’d share some excerpts from a recent interview the Nikkei held with Dentsu President Tatsuyoshi Takashima.

On the sluggishness of the traditional market for advertising versus the growth of internet advertising:

Online advertising makes it possible to identify the frequency of ad viewing and the age of viewers, something that is not easy to do with paper media. And with corporate ad budgets facing severe cuts, use of media for which the effects of advertising cannot be determined easily is diminishing. Advertisers are growing selective, and the accountability of the media side is greater than ever today.

On the “Google Threat” (ie, Google moving into traditional advertising channels):

There are a large number of local newspapers and regional radio stations in the U.S., and unsold ad slots abound. Google has tapped this niche market, but I do not think it will spread to prime ad space and so do not feel threatened.

I take that to mean something along the lines of, “Google doesn’t stand a chance of tapping into our network in Japan.” It might be true.

On newspaper and news agency being available for free online:

Read more

Japan Times on Japan’s Ad Agencies

Hats off to the Japan Times for publishing an excellent article today on the topic of business practices at Japan’s advertising agencies by Jochen Legewie, the president of CNC Japan K.K. We’ve noted before that Dentsu, Japan’s largest advertising firm, handles advertising for NTT DoCoMo, KDDI’s au and Softbank. In effect, the nation’s three largest mobile phone services providers are represented by the same ad agency, and issues surrounding conflict of interest have simply not been discussed.

I will quote Legewie here, but I encourage you to head on over to the Japan Times’ website and read the full piece. Better yet, buy a copy of the paper today.

Legewie laments the lack of transparency involved in the operations of Japan’s advertising firms, stating that many of their practices would be either unacceptable or even illegal in Europe. As he puts it:

Japan’s ad agencies have no legal obligation to itemize fees they charge advertisers, for example, the cost of placing an ad on the inside cover of a glossy monthly magazine or airing a 30-second TV commercial. Moreover, the agencies buy these spaces and times long in advance and sell them off as they wish, without disclosing how much it actually cost them in the first place.

The agencies then present their clients with a bill that states a single sum — and then expect no questions to be asked.

In European countries, such a practice is either discouraged or flatly outlawed.

In France, “it is prohibited for agencies to purchase advertising anywhere without an express order to do so from a client.”

Will foreign firms in Japan question the system and demand transparency? Do they have that sort of leverage? Change in this area may take time, as the practice of buying up huge amounts of ad space and them selling them off to the chosen few seems unlikely to change anytime soon.

Cheers to Legewie for writing about and promoting awareness on this issue.

Get started in the yen carry trade!

An advert actually seen - on this very website, no less!

Yen Carry Trade in Japan
Learn how to put your yen to work! Get started in the yen carry trade.

Better get started today, before you fall behind the housewives!

The “Japan Brand”

Thanks to Adam Richards at the Mutant Frog Travelogue for bringing this to my attention. In a recent post at that site, Adam discussed the new “Japan Brand” concept that has been developed and launched by the Small and Medium Enterprise Agency.

The agency announced the project on its website on May 22 of the financial year 19, which hints at the domestic audience (dare we say focus?) for its initiative (2007 being Heisei 19 in Japan). According to the press release, “Japan Brand” advertising and a website will be arriving soon as well, in June of 19.

The slogan for this initiative is “Creating New Traditions.” Click the logo for a nice big version…

Consumer finance firms hurting

Japan’s consumer finance firms are in trouble. Last year, the government passed laws regulating collection tactics and practices such as taking out life insurance policies on their own customers (which could be collected on in the case of suicide). Many predicted that these firms would encounter financial difficulties, but the situation is worse than expected, as the International Herald Tribune tells us:

Aiful, the largest consumer lender in Japan by assets, and its three nearest rivals had a combined $14 billion loss last year as demands for interest refunds forced them to add more to provisions.

Over at Seeking Alpha, John Bethel has published a chart showing Takefuji’s share price over the past ten months.

With Takefuji and other consumer finance firms bleeding cash, downsizing and seeing their share prices fall, what will the effects be? For one, we’re seeing a decline in online advertising expenditures. There are also certainly far fewer ads for consumer finance companies on television. Remember the little chihuahua from the Aiful ads? He’s about due for a VH-1 “Where are they now?” special.

A Japan Economy News Widget!

Are you dying to put a Japan Economy News widget on your blog, desktop or MySpace page? We’ve gone ahead and made one up, there’s an example right below. By following this link, you can customize the height and width of the widget and feel free to use it anywhere…

Internet Advertising in Japan: The Dentsu Take on Things

A few weeks ago, Adam Richards at the Mutant Frog Travelogue wrote up an excellent piece on the state of Internet advertising in Japan. As he pointed out, although a surge in internet advertising in 2006 had been reported by advertising giant Dentsu, the outlook for 2007 was not nearly so rosy, as a decline in Internet ad revenue had taken hold. What happened? According to Adam’s translation of an article from Shukan Toyo Keizai:

The cause of this slowdown in Net ads, as everyone in the industry points out, is the drop in ad placements from major consumer credit firms. These companies were a major advertiser in all Internet media from banner ads to search-sensitive ads. But they took a turn for the worse business-wise when scandals led to a rise in maximum interest rates. The companies’ major scaling back of ad budgets has taken its toll.

With that as a backdrop, let’s look at a report concerning Internet advertising released by Dentsu Communication Institute on Monday that claims, “Assumed growth into a 750 billion yen plus market by 2011.”

If this were to happen, it would be a more than doubling of the 2006 figure of 363 billion yen.

The report is worth your time reading, and perhaps very worth your time if you’re busy coming up with some business plan that might incorporate this information. One of the key factors that Dentsu believes will drive the rise in Internet ad spending is the increasing use of social networking sites, which tend to generate more page views and longer usage sessions than other websites.

At the same time, one should take note of rumors flying around Tokyo that Dentsu is desperately trying to find Internet advertising solutions for its clients, who are apparently eager to spend but not sure how. Will this result in them snapping up a bunch of smaller Internet marketing firms? Keep your eyes open…

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