Lately, when speaking with clients and fellow marketers here in Japan a number of topics always seem to come up at some point in the conversation. These exchanges inspired us to put together the following list of marketing keywords that we believe will be most relevant to the Japanese market in 2019.
While digital transformation efforts in Japan have been ongoing for a few years now, we expect that digital transformation will be one of the major imperatives in 2019 for many companies, especially those in more traditional industries that have finally come to terms with the need for digitization.
One thing to keep in mind, however, is that digital transformation efforts are major undertakings, which can be difficult for many Japanese organizations, regardless of industry, due to rigid hierarchical structures and a lack of understanding among older management and senior executives. Therefore, it is important to note that implementation of digital into existing business models may require significant investments of time as well as resources to go towards education. In some cases, the requisite knowledge to successfully implement a digital transformation strategy may not exist internally within an organization and external partners who can provide guidance may be needed.
As more Japanese organizations look to incorporate things like digital marketing and ecommerce into their businesses, we can expect that digital transformation will continue to be a major topic in 2019.
Ecommerce is not new, but the Japanese market has finally reached a point where buying things online is more or less as commonplace as it has been in the west for a number of years. As almost 75% of Japanese have warmed to the idea of online shopping what we are now seeing is even the most reluctant or indifferent of organizations trying to get in on the lucrative Japanese ecommerce market, which has more than doubled in size in the past 7 years.
In a move that mirrors the US market, many companies are looking to not only integrate ecommerce into their operations, but to also get more profit from those online sales. The success of D2C (direct to consumer) brands, especially abroad, has undoubtedly influenced such companies and encouraged a growing number of them to build their own online stores, in addition to selling through their brick and mortar shops, traditional retailers or on marketplaces such as Amazon and Rakuten. Of course, the logistics of operating an ecommerce business come with its own difficulties and responsibilities, which must be considered by any brand looking to get started selling online. However, the intention and motivation are clearly there based on the evidence we are seeing.
At the same time, Japanese companies are not just looking at the domestic market, a growing number of brands have also stated an interest in entering new markets and growing their overseas business as well. This represents somewhat of a sea change among Japanese companies, who for the most part tend to solely focus on the Japanese market.
For starters, Japan’s changing demographics, notably the sharp increase in the number of elderly and a decrease in young people, has played a major role in influencing businesses to truly consider global expansion. The fact of the matter is that Japanese companies face a smaller domestic market and growth opportunities have become scarce in many industries. Fighting for a piece of an ever-shrinking pie is tough and so rather than pursue market share in Japan more companies are looking to overseas markets.
However, cross-border ecommerce remains a difficult task for many Japanese organizations. The language barrier goes both ways, and for Japanese brands communicating with non-Japanese will continue to be an issue moving forward. Furthermore, many Japanese are not familiar with the cultural differences, preferences, and expectations of non-Japanese clients, which can also become major obstacles to success when trying to establish a business outside of Japan.
Customer Experience (CX)
A somewhat recent development in the marketing industry has been the idea of customer experience.
Customer experience has, in part, come about due to the increased emphasis placed on UI/UX for websites and apps. However, looking at how trends have progressed over time, you’d find yourself at a place, a number of years back, when the customer journey was revisited and updated by McKinsey as the real starting point for this trend. The visualization of the reimagined customer journey that McKinsey proposed, has contributed a great deal to the approach that many businesses today are taking with regard to customer experience.
If you’ll remember even further back, everything was all about integration as the next big thing, until the focus shifted to data. While both the idea of integration and the utilization of data to inform decisions are still very important to modern day marketing, they are now thought of more as pieces or components that help contribute to improving customer experience.
Regardless of how it has come about though, customer experience, sometimes abbreviated as CX, is now firmly considered by many practitioners to be one of the major functions of marketing. In other words, CMOs, marketing departments, and marketers must now take responsibility and control of the entire customer experience.
This new responsibility requires both greater communication and collaboration between various departments within an organization as the various functions must work more closely together than ever before. In the coming year, expect to see more organizations emphasizing CX to cover various brand touchpoints, including website and mobile, in order to ensure a consistent experience, no matter what platform or device a user is on, as part of the overall experience people have with that particular brand.
2020 Tokyo Olympics
It should come as absolutely no surprise that as we get closer to the 2020 Olympics the more we hear about it. Not just Tokyo, but Japan as a whole has placed a lot of emphasis on these games. Prefectures around the country have been stepping up their promotional efforts to appeal to foreign tourists as the number of yearly visitors to Japan continues to increase at a pace that is on track to achieve the ambitious goal of 40 million per year by 2020.
While it is impossible to say the lasting effect the Tokyo Olympics will have, what is for certain is that there will be a two-week period in the summer of 2020 when the entire world is focused on what is going on in Japan. Japanese companies, especially those in industries who are trying to reclaim lost glory (i.e. relevance) on the global stage will all be trying to make the most of this once-in-a-lifetime opportunity. However, expectations are always high surrounding the summer Olympics; this is nothing new. What remains to be seen for Japan is how successful they will be at utilizing the games for promotion, given the mixed track-record of the majority of Japanese companies outside of Japan, with the exception of a few big players in a select few industries.
Small and medium-sized companies will groan to hear this, but their budgets are going to need another line item in 2019 and beyond as bigger organizations have slowly, but surely been replacing static, single image ads with video ads on a number of social media platforms.
Let’s be honest, social media channels are by and large pay-for-play these days. Organic impressions are down, and brands are seeing less engagement overall as the space becomes overcrowded and content is uploaded at a pace too fast for people to consume. Now more than ever staying ahead of the curve and standing out from the crowd is needed. This is why many brands are currently moving to video ads on social media platforms.
While a mediocre video ad will not beat an image ad that has on-point messaging and targeting, all other things equal, video ads see a higher click through rate (CTR) on average when compared with static images, and this can be a very important metric for some brands. As new formats and options continue to be added to various advertising platforms, insight from digital marketing professionals will prove invaluable in the proper allocation of growing digital ad budgets towards achieving specific business objectives.
Search engine marketing has long been looking for something truly new. Of course, different offerings and improvements to search engines’ advertising solutions have come out yearly, however, these tend to be gradual additions or slight improvements. Voice search, on the other hand, has the potential to drastically change our approach to search engine marketing.
With a projected 50% of all searches to be conducted by voice by 2020, marketers are already looking for ways to get in on the action. While smartphones and other smart devices will be the main players for voice search it doesn’t stop there. With the rise in popularity of smart speakers – such as Amazon and Google Home – in western countries, the trend is clear and opportunities to incorporate voice search are definitely on the horizon.
Although in Japan, the number of households with smart speakers is currently only around 5%, awareness is around 60%. This pattern has shown up time and time again in Japan, with smartphones, social media, etc., and even though Japan may currently lag behind western countries when it comes to smart speakers, it will more than likely begin to show exponential growth and adoption rates in the very near future.
Mobile payments were a hot topic towards the end of last year, but 2019 is poised to be the year that they truly take off among mainstream users.
The widespread adoption of smartphones has already significantly changed our lifestyles. Uploading images or videos instantaneously to social media platforms, ride sharing, it’s easy to find examples of how improvements in mobile technology and smart devices themselves have become integrated into our day-to-day activities.
Personal finance apps, which aim to help people better manage their money, have been popular for a while, but nowadays it’s all about getting people to spend that money with mobile wallets and apps. Here in Tokyo, you’ll see advertisements for new apps or payment processing terminals practically everywhere, out on the street, on the trains, and of course, as mobile ads when browsing on your smartphone.
With numerous options to go cashless now available throughout Japan – mobile wallets, QR payments, prepaid transit cards – and more and more retailers accepting various forms of payments besides cash, the Japanese government’s push for a cashless society seems far more possible than many would have expected just a few years back.
The Japanese market is seeing a number of exciting developments that are quickly making the world’s third largest consumer market even more dynamic. As we wrap up the first month of 2019 it is clear that staying on top of these various trends will be critical for organizations looking to make informed decisions in this ever-changing landscape.
Have questions about what’s trending in Japan? Looking to enter the Japanese market? Contact us to find out how we can provide on-the-ground support for your organization here in Tokyo.