As the need for transparency and accountability grows in the Japanese market, so does the adoption of programmatic media buying. The process has evolved from search to display and now mobile and video, with a number of international providers active in the market.
Programmatic trading is becoming a topic of extreme interest as both publishers and advertisers realise it offers huge potential for scale and efficiency, which is just not as available through traditional advertising methods.
Nonetheless, marketer understanding of this technology in Japan remains patchy. An array of consultants ranging from specialist media agencies to companies like IBM, Deloitte and Accenture are jostling for position to help them get up to speed.
“Marketing budgets in Japan continue to be dominated by offline media,” explains Jason Jutla, Asia-Pacific programmatic lead for Essence. “Both marketers and agencies are focused on holistic campaign measurement rather than detailed single-channel measurement. Traditional measurement tactics that look at both online and offline channels, such as panel studies which include exposure, reach and frequency, are key to campaign success.”
The programmatic concept is still relatively new in Japan. However, the speed of its adoption is significant. IDC research predicts that by the end of 2016, real-time bidding (RTB) spend in Japan will reach US$1.1 billion, marking one of the highest growth rates in the world in terms of RTB spending. That’s up from spending of just $10 million in 2013.
“The market landscape and agency structure is unique to Japan, and is evolving in it’s own way,” says Yuki Imamura, managing director of Asia-Pacific and Japan at Kenshoo. “Traditional media still proves effectiveness for a certain type of campaign. But one thing we know is that programmatic buying of any form has reached to over 50 percent of the total digital ad spend, and the way the industry operates is changing.”
Along with changing the market, this is changing the way that some of Japan’s biggest agencies operate. The likes of Dentsu, Hakuhodo, and ADK still make the bulk of their money from TV. But they are starting to respond to a changing market, with increasing focus on building understanding around the value of audience data, driving efficiency, and identifying the right user for each message. Dentsu, for example, just launched Dentsu Digital to service these needs.
It might seem late in the day to launch a ‘digital’ agency, but as we have established, Japan is at a different stage to many markets of similar maturity. Indeed, for international agencies operating in Japan, these processes are already widely used in other markets.
“I think Japan will accelerate towards a model where media is much more accountable and measurable, and that will extend beyond the big international Japanese clients to the broader base over the next two to three to four years,” says Anthony Plant, CEO of IPG Mediabrands Japan. “They are on that journey but starting further behind.
“Because we are an international network, but also very local, we’ve been able to bring our digital expertise to the market very quickly, and implement it here. We’ve been able to go on a journey with our clients, in terms of introducing a greater focus on digital, and then looking at how you optimise that.”
In Japan, experts agree that the best application of programmatic is for gathering insights and data into your audience, and crossing this with location data and other market performance indicators.
Yusuke Yokota, Japan country manager at MediaMath, says, “Each marketer understands programmatic in a different way, but most of the time, they see programmatic as an opportunity to engage in RTB or use programmatic as a re-marketing tool.
“This means buying via a demand-side platform (DSP) is just a line of a marketer’s media plan. Programmatic is not only for executing digital advertising campaigns. It’s a real-time optimisation tool that uses insights from digital consumer behaviour. Not only does this allow marketers to reach the right audience at the right time, but also to get better ROI for their campaigns.”
But there are still common missteps: namely, thinking that programmatic will be the answer to all problems. And as with measuring data, there are many examples of markets with a more advanced programmatic adoption rate, which Japan can learn from. Many in Japan currently rely on pre-packaged solutions.
“Japanese marketers mostly depend on off-the-shelf solutions that are provided by platforms like Google, Yahoo, Criteo or other DSPs,” adds Yokota. “What we can learn from advanced markets is implementing customized solutions that best fit each marketer’s needs. In the US, top marketers bring their own algorithms to programmatic marketing.”
This trend is slowly catching on in Japan, as marketers appreciate that understanding customers’ behaviour is critical. Top marketers are looking for ways to converge various kinds of data such as first-party, offline or CRM, and to integrate cross-device data.
“The use of open auction for programmatic in Japan lends itself to both direct-response and branding,” says Jutla. “Reaching the right user at the right time can be brought to life using technology which exists in the market today. Getting the creative right depending on objectives will be the most important aspect of any campaign, programmatic or not.”
Programmatic offers special rewards in Japan
Masato Sato, head of digital, Mindshare Japan
A generally risk-averse culture in Japan, preferring stability, has kept the rigid structures of traditional placement and ad network buys in place, preventing programmatic from growing beyond the 15 percent of total display spend. However, this is far from being a bleak situation.
Some—but not enough marketers—recognize we’re actually at a unique turning point in Japan whereby trading programmatically would arguably reap greater rewards by being data driven.
Leading Japanese brands aggressively pursuing expansion outside of Japan are taking advantage of a more developed programmatic ecosystem (data, inventory, technology) to experience and learn firsthand what works or doesn't or feasibility of what is possible. For example, partnering and integrating their DMP with EC platforms to identify their audiences while tracking performance end to end has worked really well for certain clients outside of Japan. They are keen to import back these learnings to Japan which help accelerate development here. Brands who adapt now will be in a much stronger position when the inevitable happens here in Japan.
It’s far riskier to stay still.