2016 Japan Advertising Expenditures

The text of the Dentsu Inc. news release distributed on February 23 is as follows.

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February 23, 2017

2016 Japan Advertising Expenditures

 

・Japan's advertising expenditure shows positive growth for the fifth consecutive year

・Total advertising expenditure reached ¥6.288 trillion, a 101.9% increase year-on-year

・Internet advertising media costs (excluding production costs) exceeded ¥1 trillion for the first time

 

Dentsu Inc. (Headquarters: Minato-ku, Tokyo; President: Toshihiro Yamamoto) announced "2016 (Heisei 28) Japan Advertising Expenditures" on February 23, estimating Japan's total advertising expenditure and advertising expenditure by medium and industry.

Japan's total advertising expenditure for 2016 (January to December) increased alongside moderate economic expansion, reaching ¥6.288 trillion, a 101.9% increase year-on-year. This marks the fifth consecutive year of year-on-year growth.

1. Trends in Total Advertising Expenditures

Total advertising expenditure in 2016 reached ¥6.288 trillion, a 101.9% increase compared to the previous year, marking the fifth consecutive year of positive growth.

2. Overview of Advertising Expenditures by Medium

Advertising expenditure for the "Four Major Media" (including satellite media-related) totaled ¥2.8596 trillion, a 99.6% year-on-year change.
Of this, "TV Media Advertising Expenditures" (terrestrial TV + satellite media-related) reached 101.7% year-on-year.

Internet advertising expenditure was ¥1.31 trillion, up 113.0% year-on-year. Internet advertising media expenditure within this was ¥1.0378 trillion, up 112.9% year-on-year, exceeding ¥1 trillion for the first time.

Promotional media advertising expenditure was ¥2.1184 trillion, down 1.1% year-on-year.

Looking at "advertising expenditures for the four major media outlets" (including satellite media) by quarter, the January-March quarter was 100.9% of the previous year, but each quarter from April onward was slightly below the previous year.

Newspaper advertising expenditure: ¥543.1 billion (95.6% of the previous year)

Continued its downward trend throughout the year, following the previous year.

Although spending increased due to improved corporate earnings, the House of Councillors election, and the Rio de Janeiro Olympic and Paralympic Games, it declined overall. This was influenced by the long-term decrease in newspaper circulation, unfavorable summer weather, and the postponement of demand due to the delayed consumption tax hike.

By industry, "Government Agencies/Organizations," "Distribution/Retail," and "Food" saw increases. Conversely, "Precision Equipment/Office Supplies," "Information/Communications," "Information Services/Other," "Automobiles/Related Products," and "Finance/Insurance" declined. Mail-order products like supplements, health foods, and cosmetics continued to perform well.

Advertising demand emerged from industries that had not previously utilized newspaper advertising, such as internet TV and game manufacturers.

Magazine Advertising Expenditures: ¥222.3 billion (91.0% of previous year)

The magazine industry continues to face a challenging environment, with estimated sales declining for the 12th consecutive year (96.6% YoY*). Meanwhile, the e-magazine market (127.1% YoY*), including subscription-based unlimited reading services, expanded. Changes are occurring in "how magazines are read."
※Source: Publishing Monthly Report, January 2017 issue

By genre, advertising in "lifestyle magazines targeting middle-aged and older men" grew. Conversely, "women's magazines" and "young women's magazines," which hold high sales shares, saw declines.
By industry, "Real Estate & Home Furnishings," "Distribution & Retail," and "Government Agencies & Organizations" saw growth. Conversely, "Fashion & Accessories" and "Cosmetics & Toiletries" – core magazine categories – experienced significant declines due to factors like sluggish domestic apparel sales and slowing inbound demand.

Publishers launched new digital media platforms and revived flagship titles through digital editions, marking a series of launches unconstrained by traditional "paper" formats. Furthermore, the integration of publishing content and digital media accelerated, with publishers' digital media advertising revenue achieving double-digit growth.

Radio Advertising Expenditures: ¥128.5 billion (102.5% year-on-year)

Performed well throughout the year.

By industry, the high-share "Food Service & Various Services" category grew at 110.5% (year-on-year), marking its 11th consecutive year of increase. Other categories like "Real Estate & Home Furnishings" and "Automobiles & Related Products" also increased.

"radiko.jp" continued its steady growth in both monthly unique users and premium members compared to the previous year. Furthermore, the launch of its time-free service (October 2016), which allows listening to radio programs outside of real-time broadcasts, promoted its usage.

Television Media Advertising Expenditures (Terrestrial TV + Satellite Media Related): ¥1,965.7 billion (101.7% YoY)

◇Terrestrial TV: ¥1,837.4 billion (101.6% YoY)
Overall terrestrial TV advertising spending remained positive throughout the year.

Program (time) advertising (99.8% YoY) saw sports programs like the "2016 AFC U-23 Championship (Qatar)," "2016 World Table Tennis Championships (Malaysia)," "Rio de Janeiro Olympic Volleyball World Final Qualification Tournament," and "2016 Kirin Cup Soccer," but the first half (Jan-Jun) was slightly below the previous year. Conversely, the second half (July-December) exceeded the previous year, driven by events like the Rio de Janeiro Olympic and Paralympic Games and the 2018 FIFA World Cup Russia Asian Final Qualifiers. By region, Fukuoka, Hokkaido, Sendai, and Hiroshima exceeded the previous year's figures among the eight core regions for the full year.

Spot advertising (102.8% year-on-year) grew significantly, particularly in the first half. The January-March period saw especially strong growth, supported by robust corporate earnings. In the second half, while July-September saw increased advertising for budget smartphones and game apps, overall spending declined due to a restrained mood caused by the strong yen and the impact of Rio de Janeiro Olympic program (time) sponsorship. However, October-December performed well, driven by increased advertising for cosmetics and smartphone devices. By region, 25 out of 32 regions exceeded the previous year's results for the full year.

By industry, "Information & Communications," "Cosmetics & Toiletries," "Food," "Energy, Materials & Machinery," "Home Appliances & AV Equipment," and "Real Estate & Housing Equipment" saw increases. Conversely, "Precision Instruments & Office Supplies," "Distribution & Retail," "Fashion & Accessories," and "Automobiles & Related Products" declined.

◇Satellite Media-Related: ¥128.3 billion (103.9% YoY)
For the first time in two years, BS, CS, and CATV all exceeded the previous year's figures.

BS: ¥89.93 billion (104.0%), CS: ¥20.50 billion (103.7%), CATV: ¥17.88 billion (103.4%).

Direct-to-consumer sales of health foods and basic cosmetics grew significantly on BS in January-March, and on CS and CATV from April onward.

From April onward, with the Rio de Janeiro Olympics and Paralympics approaching, sports-related documentaries and information programs increased. This appears to be in anticipation of the 2020 Tokyo Olympics and Paralympics.

By industry, besides direct-to-consumer advertising, which grew across BS, CS, and CATV, BS saw increases in finance, office equipment, and music-related advertising. On CS, advertisers in IT, beverages, and pharmaceuticals notably expanded their advertising placements on music programs and sports content targeting younger audiences.

CATV saw increased demand for direct-to-consumer health food and cosmetic ads due to growth in the number of subscribing households.

In 2015, CS and CATV saw a tendency to hold back on advertising due to a wait-and-see attitude toward the revised Functional Food Labeling Guidelines. However, with the stabilization of creative expressions, 2016 saw a rebound increase.

◇Mass Media Advertising Production Costs: ¥306.1 billion (99.8% of previous year) *Excludes satellite media-related costs
(Note) Advertising production costs are included in the advertising expenses for newspapers, magazines, radio, and terrestrial TV.

Of this, terrestrial TV commercial production costs totaled ¥218.8 billion (102.0% YoY).

While the first half showed strong performance, the second half slowed, resulting in a slight decrease for the full year.

By industry, sectors showing increases included "Hobbies/Sports Goods," "Home Appliances/AV Equipment," "Information/Communications," "Pharmaceuticals/Medical Supplies," "Food," "Cosmetics/Toiletries," and "Government Agencies/Organizations." Conversely, sectors showing decreases included "Automobiles/Related Products" and "Education/Medical Services/Religion."

Internet Advertising Expenditures (Media Fees + Advertising Production Costs): ¥1.31 trillion (113.0% YoY)

◇Internet Advertising Media Fees: ¥1.0378 trillion (112.9% YoY)
The shift toward internet media continued, with media fees exceeding ¥1 trillion for the first time※1.

Within this, performance-based advertising spending reached ¥738.3 billion (118.6% YoY). Key factors behind the strong performance of performance-based advertising*2 (hereafter "performance-based") include: an increase in advertisers prioritizing data/technology, heightened focus on data-integrated performance-based advertising, and its growing ability to fulfill roles like reach and branding through enhanced functionality.

Across the entire market, demand for video continued to expand. Within social networking services (SNS), which lead the trend of expanding video areas, programmatic advertising is now the mainstay. Compared to traditional search-linked advertising, the increasing weight of display advertising has made video, particularly smartphone in-feed ads※3, a new growth area, intensifying competition in programmatic display advertising.

By device, smartphones continued to grow, and the mobile shift led to a decline in PC portal-based and ad network-based advertising. As the drivers of market growth shifted from PC-centric media to mobile-centric media, publishers that had previously monetized primarily through PC channels began a full-scale shift towards programmatic. Publishers actively adopted programmatic advertising using ad serving platforms.

Private Marketplaces (PMPs) accelerated their penetration into the domestic market. Advertising agencies and media reps successively released new PMP services and expanded their advertising offerings. Furthermore, leveraging systems provided by platform operators, multiple publishers are beginning to collaborate horizontally, utilizing first-party data to conduct their own PMP sales.

A new focus is the growing demand for media planning that combines "TV spots with programmatic video." Furthermore, planning projects based not only on location data but also on historical visit history are increasing. This includes enhanced geo-targeting (targeting based on user location or regional information) by various Demand-Side Platform (DSP※6) vendors, and further strengthening of location-based marketing by advertising agencies and media reps.

Alongside the rising demand from advertisers for Data Management Platforms (DMPs), programmatic advertising is evolving as a method to meet this demand, driving the entire online advertising market.

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*1 Total spending (including production costs) exceeded ¥1 trillion in 2014.

*2: Paid placements, sponsored content, and affiliate advertising are not included in programmatic advertising.

※3 Refers to ads displayed in a format between content and

※4 In the programmatic advertising space, a format where the ad is displayed between content and

※4 In the programmatic advertising space, this refers to a trading format where limited sellers and buyers participate in automated ad trading, as opposed to traditional open auctions (automated ad trading markets) with unrestricted buyers and sellers.

automated ad trading market), but rather a trading format where limited sellers and buyers participate in automated ad trading.

However, the definition of PMP remains fluid both domestically and internationally, as well as within the industry.

※5 Refers to data such as access data, purchase history, and member attributes held independently by advertisers or publishers themselves on their own sites.

.

※6 An ad delivery system that supports maximizing advertising effectiveness from the advertiser's perspective.

※7 A data management and delivery system that collaborates with log data held by advertisers on their own sites and external audience data held by publishers, etc., to achieve optimized ad delivery.

to optimize ad delivery.

◇Internet advertising production costs: ¥272.2 billion (113.4% year-on-year)

Continued steady growth from the previous year. Production linked to corporate marketing and promotional activities increased, including sites and content production that integrates with non-internet initiatives rather than being self-contained within a company's owned media, as well as production related to site operation based on data analysis.

By category, video ad production saw significant growth, establishing itself as a key pillar. While video ads have been increasing for several years, their adoption is expanding beyond national clients to include small and medium-sized clients outside urban areas.

By production type, mobile production is showing a shrinking trend. Due to smartphone proliferation, more companies are creating mobile sites in parallel with PC sites.

 

Promotional Media Advertising Expenditures: ¥2.1184 trillion (98.9% of previous year)

◇Outdoor Advertising: ¥319.4 billion (100.2% YoY)
While advertising boards were stimulated by steady economic growth, overall spending remained flat. Industry trends have stabilized over recent years, with significant spending seen in information and communications, beverages, imported vehicles, music, program promotions, and movie promotions. Communication devices also stood out.

Neon/LED: Many conversions from neon to LED occurred, with LED spending increasing for the second consecutive year. Work related to sign management and maintenance increased.

Outdoor Vision: Regular advertisers like music and apparel brands remained steady. New advertisers, such as smartphone apps and entertainment sponsors, also performed well.

Stadium Signage: Annual contract advertisers largely continued, remaining flat compared to the previous year.

Commercial Facility Media: Commercial facilities saw increased sponsorships and collaborations throughout the year for various events and promotions, resulting in a lively market.

◇Transportation Advertising: ¥200.3 billion (98.0% of previous year)
Digital signage inside trains and stations continued its steady growth, supported by new installations in the Kansai and Chubu regions. In-train digital displays also saw increased activity as the number of equipped vehicles rose. Conversely, paper-based media such as hanging posters, window-top posters, door-side posters, and station wall posters declined.

Airport-related advertising, which had surged in recent years due to increased inbound tourists, saw only slight growth this year, partly due to limited available advertising space.

By industry, beverages and alcoholic drinks decreased due to a reaction to the previous year's strong performance. Conversely, home appliances and human resources-related sectors increased.

◇ Insert Advertising: ¥445 billion (94.9% of the previous year)
Continuing the previous year's trend, this segment declined due to falling newspaper circulation, along with reductions in the number of inserts and paper sizes.

Only April saw a year-on-year increase, with the overall trend remaining negative throughout the year. The largest year-on-year decline occurred in May, likely due to cancellations and postponements caused by the Kumamoto earthquake in April, as well as restrictions on gaming establishments during the Ise-Shima Summit. A slight recovery was seen in June, but it was insufficient to halt the overall gradual decline.

Regionally, all areas except Shikoku and Okinawa saw declines compared to the previous year.

By industry, sectors with frequent daily use like small supermarkets and drugstores, along with mail order, remained steady compared to the previous year. Conversely, general supermarkets, large discount stores, real estate-related businesses, education-related businesses, amusement facilities, and clothing retailers saw declines.

◇Direct Mail: ¥380.4 billion (99.3% of previous year)
Against the backdrop of the expanding e-commerce market, DM is increasingly recognized as a medium that effectively influences purchasing behavior by leveraging customer data. This year saw a continued reassessment of its media value.

By industry, mail order (where sampling DM is popular) in information/communications and health foods, as well as finance/insurance, saw increases.

The unaddressed DM market continued to expand from the previous year. Area marketing campaigns focusing on specific points became more active, expanding their use from the Tokyo metropolitan area to nationwide.

Postcard-type DM with lotteries or coupons attached grew as a store attraction strategy.

Cases were also seen where companies utilized membership information held by other firms to develop new customers.

◇Free Papers/Free Magazines: ¥226.7 billion (98.4% of previous year)
Overall, the sector showed a declining trend, with both placement-based and delivery-based models facing a challenging year. However, regional variations emerged, with increases observed in some areas.

◌Free Papers: ¥72.1 billion (98.8% of previous year)
Despite advertising demand increases driven by telecom companies' new pricing plans and service promotions, various service announcements from power and gas companies following April's electricity liberalization, the July House of Councillors election (targeting women, a demographic difficult to reach via general newspapers), and strong corporate earnings in March and December, the overall downward trend continued throughout the year.

Although local governments increased their regional revitalization initiatives, overall performance outside the Tokyo metropolitan area was somewhat sluggish.

◌Free Magazines: ¥154.6 billion (98.3% of previous year)
While urban areas continued to decline, some regions nationwide saw increased circulation. Magazines targeting specific demographics (e.g., affluent individuals), specific regions (e.g., area-specific local information magazines), or specific hobbies and interests remained strong, continuing the previous year's trend. However, coupon-based magazines saw declining circulation as they shifted online.
Amidst numerous suspensions and discontinuations throughout the year, publishers launched free magazines targeting affluent men and distributed them through unique channels.
By industry, advertisements from cram schools and mail-order businesses were particularly prominent.

◇POP: ¥195.1 billion (99.0% of previous year)
POP sales declined, impacted by reduced profits in the retail sector, particularly general merchandise stores (GMS) and electronics retailers. A contributing factor was the shift of sales promotion budgets toward customer-attracting media.

Conversely, explanatory POP increased, particularly digital signage designed to make products more appealing. POP for "experiential sales floors" aimed at differentiating from the e-commerce market also grew.

There was a growing preference for area-specific and store-specific promotions over a centralized headquarters approach.

Products popular in mail-order sales, particularly health foods and makeup items, began appearing in drugstores, leading to an increase in "non-standard POP" such as stand fixtures. In supermarkets and GMS, POP designed to enhance the visual appeal of existing events increased.

Continuing from the previous year, a polarization trend was observed: high-cost POP using digital equipment versus low-cost POP created through innovative use of materials like paper.

◇Telephone Directory Advertising: ¥32 billion (95.8% of previous year)
Media value improved through cover designs and content editing highlighting regional characteristics, delivery to all households and businesses, and expanded distribution areas for supplementary disaster information booklets. This led to more regions exceeding the previous year's circulation, improving the overall decline rate.

Overall capabilities improved through enhancements like a web version enabling location-based searches and adding value to listed information.

◇Exhibitions, Video, and Other: ¥319.5 billion (104.3% YoY)
Performance remained strong due to initiatives for a tourism-oriented nation, regional revitalization, increased inbound tourists, and facility renovations accompanying infrastructure development. Additionally, growth was driven by the opening of the Hokkaido Shinkansen, the selection of the Tokyo 2020 Olympic and Paralympic Games emblem, the Ise-Shima Summit, the first national election (House of Councillors election) with the voting age lowered to 18, and the Rio de Janeiro Olympic and Paralympic Games.

Display-related demand remained strong, driven by: - Openings of bus terminals directly connected to stations - Infrastructure projects like airport facilities - Environmental design for imported brand shops - Renovation of large-scale commercial complexes near station terminals in major cities - Hotel and amusement facility renovations - Historical museums - Promotional investment demand for corporate private shows and showrooms Video-related demand increased, particularly for tourism promotions utilizing videos and imagery to convey regional appeal from a local brand strategy perspective.

By region, the Nagoya area is performing well not only in automotive but also in IT-related sectors. Furthermore, ahead of the Linear Central Shinkansen opening, new commercial facilities and spatial design projects driven by redevelopment around JR Nagoya Station are performing well. In Hiroshima, President Obama's visit and the parade celebrating the Hiroshima Carp's first league championship in 25 years boosted activity. Fukuoka sees high inbound demand, with tourism and the MICE (Meetings, Incentive Tours, Conventions/Conferences, Exhibitions) industry thriving, particularly from Asia. Even in Kumamoto, affected by earthquakes, store displays showed growth.

By industry, public works projects are increasing for "Government Agencies & Organizations." Character events linked to regional assets like local castles, along with marathon races and art events, maintained flat growth through continued implementation.

With many anticipated films throughout the year, cinema attendance surpassed 180 million for the first time in 42 years. Annual box office revenue reached the highest amount in domestic film history, driving growth in cinema advertising. By industry, advertising increased for beverages, automobiles, communication devices, and telecommunications services. Family-oriented advertising in multiplexes grew. As screens offering effects beyond 2D, such as 4DX and IMAX, become more prevalent, advertising demand utilizing these formats is expected to grow.

3. Overview of Advertising Expenditures by Industry (21 Industries, Mass Media Only [Excluding Satellite Media-Related])

In 2016, advertising expenditure increased in 9 out of 21 industries and decreased in 12 (in 2015, it increased in 6 industries and decreased in 15).

■ Industries with Increased Spending (9 industries)
"Energy, Materials, Machinery" (141.0% YoY, electricity liberalization-related), "Home Appliances & AV Equipment" (109.7% YoY, electric hair/beauty appliances, electric refrigerators, 4K TVs), "Real Estate & Home Equipment" (106.7%, general housing, kitchen units), "Pharmaceuticals & Medical Supplies" (104.2%, general health medicines, contact lenses, general gastrointestinal medicines), "Food" (103.5%, mail-order supplements/health foods, chocolate), "Information & Communications" (103.5%, web content, mobile communication services), "Cosmetics & Toiletries" (101.5%, fabric softeners, beauty serums, laundry detergents), "Government Agencies & Organizations" (100.9%, local governments, political parties/groups), "Hobbies & Sports Goods" (100.2%, cat food, fitness equipment).

■Declining Industries (12 Industries)
"Precision Instruments & Office Supplies" (86.2%, watches, digital cameras), "Fashion & Accessories" (90.0%, women's clothing, casual wear), "Automobiles & Related Products" (94.0%, mini cars, imported 2-box cars, wagons), "Education, Medical Services & Religion" (94.5%, correspondence courses, schools), "Beverages & Luxury Goods" (94.7%, third-category beer, beer-flavored drinks, low-malt beer), "Publishing" (95.2%, general newspapers, hobby/specialty magazines), "Distribution/Retail" (95.5%, general supermarkets, large discount stores), "Transportation/Leisure" (96.1%, membership sports clubs, railways, overseas airlines), "Household Goods" (96.2%, household measuring devices, deodorizers), "Information/Other" (96.4%, various information services), "Food Service/Various Services" (98.3%, aesthetic salons, men's wigs, other services), and "Finance/Insurance" (98.7%, mail-order medical/cancer insurance, lottery tickets).

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Dentsu Inc. News Release
http://www.dentsu.co.jp/news/release/2017/0223-009179.html