US online ad revenue down 5.4% in third quarter

November 26, 2009

The ongoing financial slump has claimed a once thought impervious victim: Online Advertising. Latest data shows online ad revenue is the US is down 5.4% in the third quarter with spending totaling $5.5 billion, down from $5.84 billion a year ago and a substantial decline from the peak of $6.1 billion in the fourth quarter of 2008. I don’t have the latest numbers, but in 2008, Japan saw a 12% increase in Web ad revenue and a 60% jump in mobile ad pending, all the while traditional media channels saw their spending drop 35%. Mobile advertising continues to dominate the Japanese media landscape in terms of growth, but total spending still represents less than 2% of all ad spend in Japan. I suspect mobile ads spend will hit the 10% mark within the next 5 years.


Happenings…

June 10, 2009

Almost three months since my last post. A lot has and hasn’t happened in the Japanese market. I’ll return next week with a post on what Docomo is up to and how they plan to leverage their technology to reach traditional TV shopping customers. That and more to follow.


Good news for digital sales

March 23, 2009

Tokyo-based Fuji Chimera Research Institute in a recent report predicts that sales of online digital content such as video and music products, will continue on an upward trend reaching 630.5 billion YEN by 2012. This represents a 29% increase from last year. One interesting item in the report stated that e-learning products used by companies for in-house training will will also see a marked increase in sales over the next few years. I found this to be interesting in light of the fact that many Japanese corporations are cutting-back in hiring and downsizing. Digital e-learning products might be the answer to the hurt many domestic staffing businesses are experiencing. Temp agencies, head-hunters and other businesses currently affected by the economic downturn might want to consider expanding their service line to include e-training products and services to help businesses make the most of their staffing.


Advertising spending drops for first time in 5 years – The Mainichi Daily News

February 25, 2009

The Mainichi Daily News reports that Ad spending in Japan has dropped for the first time in 5 years.

Advertising spending was down 4.7 percent in 2008 from the year earlier, the first drop in five years, according to estimates released by advertising giant Dentsu.

Print media showed the biggest decrease since the figures first came out in 1947, with TV, radio, newspapers and magazines taking less than half the market share with 49.3 percent for the first time. Other media, including newspaper pullouts and billboards, also showed a decrease.”

As I’ve reported in a past blog entry, we’re seeing a drastic drop in ad spending in traditional ad channels, due mostly to the economic downturn. But what about online ad spending?

“However, Internet advertising proved still healthy, taking more than a 10 percent share for the first time (10.4 percent).”

Newspapers showed the biggest drop, decreasing 12.5 percent to 827.6 billion yen. Magazine advertising spending was down 11.1 percent to 407.8 billion yen, radio down 7.3 percent to 154.9 billion yen and TV dropping 4.4 percent to 1.9 trillion yen. The ad spending cutbacks will prove to be a bonanza for many online media channels. I suspect mobile portals stand to benefit the most due partly to the pervasiveness of mobile devices in Japan and the increasing popularity of mobile based SNS.


Is there a downturn in the Search Ad market?

February 16, 2009

I was sadden to read last week that the Tokyo based SEO firm Sozon announced it would be closing down. I have a professional relationship with Sozon that goes back several years with the original founder of the company Amir Ayalon. In 2005, Sozon was acquired by affiliate marketing giant ValueCommerce as a way to add search engine optimization to its list of special services. Over the last two years, Sozon’s focus shifted from organic search results to paid results. The move proved lucrative as Sozon was able to tap into ValueCommerce’s fat client list to sell it’s services. The details behind Sozon’s demise are not clear to me, finance could have been part of the reason, or perhaps it was a strategic move on the part of ValueCommerce and its major shareholder YahooJapan.  One thing I am sure of is that the company’s closing is not indicative of the state of SEM in Japan. Japan is the biggest slice of the search market ad pie in all of Asia. Search ad spend is projected to be about $1.7 billion this year alone. And the future of paid search looks brighter than ever from where I’m standing here in Japan. Traditional advertisers are beginning to understand the importance of search in brand building and maintenance. Japan is still in the middle of a huge shift in terms of ad spend and retailing from brick and mortar to web & mobile. The market is still growing, thus the need for SEM services will continue to grow. How much will search ad spend grow over the next fews years in Japan? By 2011 search will represent 36% of all web based on-line ad spending and 40% of all mobile ad spending.  The Japanese market is huge. There are over 88.9 million Internet users and 90 million mobile users in Japan. 92% of Internet users use search engines to find information on-line. In fact, search ads influence 20 -30% of all purchases made at retail locations! Does this sound like an industry on the downturn? The measurable effectiveness of search marketing will play a big role over the next few years as offline advertisers  move their spending away from print and TV and demand higher ROI for their ad dollars. It’s sad to see Sozon close its doors, but judging from the relative health of the search market, I predict that the smart people at Sozon will continue to have a future in search ad industry.


New Trend in Online Revenue

February 9, 2009

Popular mobile game site GREE is bucking the recent trend in decreasing revenue for online businesses. Last month GREE announced that their net profit will probably hit JPY3.5bn on sales of JPY11.2bn for the financial year ending June 30th. These numbers are nothing to sneeze at. At a time when corporate ad budgets are being squeezed in Japan, it is impressive to see a fairly new company report earnings as high as GREE.  Most online businesses continue to rely on ad dollars to fire their growth engines. And though over the years we have witnessed a redistribution in ad spending from traditional print and TV to online media, the last few quarters have revealed to us that even web and mobile players are not immune to ad spending cutbacks. Unlike most SNS and content sites that rely on corporate ad revenue, GREE generates most of its cash flow directly from its users.  More than 70% of GREE’s income is derived from selling enhancements and avatar accessories to users of its free mobile games. The comparatively low cost of selling digital content will help make companies like GREE, Yahoo Auctions and other similar entities the dominant business models for the digital age.


Better Shores: Why you need to come to Japan

January 15, 2009

As a Japan-based on-line marketing consultant, I’m the first to admit that the recent economic downturn worried me more than just a little. Most of my clients are overseas businesses looking to expand their on-line sales in the Japanese market. Marketing and advertising are usually the first victims in any recession and so I fully expected to see a marked decrease in the number of inquiries in my email in-box.  Yet strangely enough, I have witnessed just the opposite. Why the surge in interest in Japan? It doesn’t take a genius to see that companies are desperate for sales. And even though Japan is not immune to the problems facing America, there is one notable difference between there and here; The Japanese still have cash. Plenty of it. While Americans gorged themselves on endless credit and sub-prime buffets, the Japanese quietly continued to sock away cash in zero percent interest bank accounts. This means that even though unemployment is on the rise and factories are closing, the Japanese have more spending capital available to them then their American counterparts.  The world economy has changed. America may have lost it dominance in matters of growth and commerce and now many are looking to the East (China, Japan, Korea, etc) as ground zero for the next era of economic bloom. If you have an on-line business, you need to start planning your entry into the Japanese market now. That means making the necessary connections locally to assist in brand-building, site and product localization, customer service and building an affiliate sales based. Over the next few weeks I will be writing more about what you need to do to start your entry into Japan. Don’t let the economy get you down, make Japan part of your long-term sales strategy.


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