Analysis of "2014 Japan Advertising Expenditures"―Revitalizing the Domestic Market, Coexistence of Print and Web, and Regional Revitalization―

The "2014 Japan Advertising Expenditure" figures, said to correlate highly with nominal GDP and potentially serve as an indicator of future social trends, have been released. What media are being used? Which industries are thriving? Toshiyuki Kitahara of DENTSU SOKEN INC. explains the present and near future as seen through the advertising market.

Total Advertising Expenditures Exceed 6 Trillion Yen for the First Time in 6 Years

Japan's total advertising expenditure for 2014 (January to December) reached 6.1522 trillion yen, a 2.9% increase year-on-year. This marks the first time total advertising spending has exceeded 6 trillion yen since 2008, when the Lehman Shock began. Considering this represents the third consecutive year of growth, it can be said that the advertising market has recovered to a growth trajectory, albeit a gradual one (Table 1). Another major highlight is that the internet advertising market surpassed 1 trillion yen for the first time.

Advertising expenditure trends are said to correlate strongly with nominal GDP. Regarding nominal GDP, the latter half of 2014 saw a decline exceeding most economists' forecasts. Simply put, if the economy isn't improving, advertising spending should be restrained. However, advertising expenditure remained above 100% for the entire year without showing any significant downturn. This data seems to reflect the strong desire of many companies to revitalize the domestic Japanese market. In this way, advertising expenditure trends can be seen as one indicator reflecting people's lives and consciousness.

The tide is turning in the advertising market toward revitalizing the domestic market

While many Japanese companies previously shifted production bases overseas, a notable movement toward domestic repatriation is now emerging. Behind this trend lies a palpable corporate resolve to re-evaluate the Japanese market and seriously tackle domestic consumption revitalization. The "2014 Japanese Advertising Expenditures," showing steady growth orientation even in a challenging environment , convey a message that the tide is turning in the advertising market.

Regarding the future outlook for advertising expenditure, the key point, considering its correlation with nominal GDP, is how the economy will evolve. While we may not see the substantial growth of the past, if domestic consumption gradually improves, advertising expenditure is expected to maintain steady growth.

Who is leading the evolution of advertising today?

■The Evolution of Advertising Led by the Internet
Among internet advertising expenditures, programmatic advertising stood out, growing significantly to ¥510.6 billion, a 123.9% increase year-on-year. The proliferation of the internet and mobile devices has created an environment where consumers can shop anytime, anywhere, and whenever they choose. Recently, the "omnichannel strategy," which enables product purchases through any channel, has gained significant attention. Omni-channel requires integrating all contact points—including mass media, online, catalogs, direct mail, physical stores, and online malls. Additionally, systems are emerging that analyze so-called big data in real time to understand website user characteristics and deliver ads optimally.

In step with technological innovation on the internet, performance-based advertising is also becoming increasingly sophisticated, contributing to the rise in advertising spending.

2015: Keywords for the Advertising Market?

■Changes in Japan's advertising expenditure reflect GDP and economic conditions
Here are other notable points from "2014 Japan Advertising Expenditures." Looking at advertising spending by medium, the four mass media channels saw a 101.6% year-on-year increase, internet advertising rose to 112.1%, and promotional media reached 100.8% – all major categories showed growth. As mentioned earlier, changes in Japan's advertising expenditure reflect the impact of GDP and economic conditions. This data also shows the trend of economic recovery (Table 3).

Previously, advertising expenditures for television media and satellite media-related advertising within the four mass media categories were reported separately. However, due to environmental changes such as the proliferation of TVs with built-in BS/CS tuners, terrestrial TV and satellite media-related advertising are now reported collectively. As a result, combined advertising expenditure for terrestrial TV and satellite media reached ¥1,956.4 billion, achieving 102.8% of the previous year. Within satellite media, BS broadcasting continued its strong performance, growing significantly by 112.8% year-on-year in 2014. Alongside increased media recognition, advertising placements from outside the Tokyo metropolitan area have also risen, bringing sales to a level comparable to radio.

In promotional media advertising spending, outdoor and transit advertising showed steady growth, while display advertising at newly opened commercial facilities also increased. Direct mail, free papers/magazines, and point-of-purchase (POP) advertising also performed well. Although a decline in print demand is often cited, we are seeing a shift away from the previous "web-only is sufficient" mindset. There is now a tendency to differentiate between or combine both channels, recognizing that "the web has its strengths, and print has its strengths."

■Is "Regional Areas" the Keyword for 2015!?
Another noteworthy trend in promotional media is the focus on "regional areas." As seen with the buzz surrounding Hiroshima Prefecture's official free magazine "Tear-jerking! Hiroshima Prefecture: The Ultimate Guidebook," regional areas are seeing increased advertising volume, particularly in synergies between free magazines and web content, alongside rising demand for outdoor billboards.

With "regional revitalization" now a key government priority, local governments will implement tailored measures suited to their specific circumstances. For instance, attracting foreign tourists requires multilingual support, and establishing free Wi-Fi spots necessitates content provision. Consequently, advertising demand in regional areas is expected to expand.

Detailed data on "2014 Japan Advertising Expenditures" is available here (Dentsu Inc. Press Release): http://www.dentsu.co.jp/news/release/2015/0224-003977.html

 

Table 1: Japan's Economic Growth and "Japan's Advertising Expenditures" (1985–2014)

 

Table 2: Advertising Expenditures by Media

 

Table 3: Advertising Expenditures by Medium (2005–2014)