Following a significant decline in 2020 due to the impact of the novel coronavirus disease (COVID-19), Japan's advertising market saw a major recovery in 2021.
Particularly noteworthy is that total internet advertising expenditure reached ¥2.7052 trillion, surpassing the combined advertising expenditure of the four major media outlets(*) for the first time since the survey began.
We invited guest speaker Tatsuya Kurosaka, who consults on management strategy and business development for the telecommunications and broadcasting sectors and has served on government committees including for the Ministry of Internal Affairs and Communications, to join Ritsuya Oku from Dentsu Inc. Media Innovation Lab. Together, they explored the future of advertising, including data utilization and media credibility.
In an era where everything is digitizing, the "social responsibility of advertising" is increasing
Oku: In Japan, internet advertising spending surpassed television media advertising spending in 2019. Then in 2021, internet advertising spending exceeded the combined total of the four major mass media advertising expenditures. How do you view the 2021 results, Mr. Kurosaka?
Kurosaka: Looking at total advertising spending, there were significant increases and decreases in 2019 and 2020 respectively. However, fundamentally, I see 2021 as an extension of the growth trend seen up until 2018.So, Japan's advertising industry is experiencing steady upward growth. However, when it comes to whether Japan's GDP (Gross Domestic Product) or economic growth rate aligns neatly with this advertising expenditure growth, I personally think it doesn't grow as much as advertising expenditure does.
Oku: While GDP and advertising spending have traditionally shown a high correlation, it's true that the recent surge in internet advertising spending has been strongly driving overall advertising expenditure.
Furthermore, considering how the pandemic accelerated digital transformation (DX) in Japanese society and how the internet will increasingly permeate all commercial flows going forward, the "share of advertising expenditure relative to GDP" may well expand further.
Kurosaka: Advertising has become a significant pillar supporting the fundamental activity of our daily lives: information circulation. However, amidst the vast flow of information, advertising risks inadvertently supporting fake news (misinformation and disinformation). This also signifies that the "social responsibility of advertising" is growing even more critical.
Oku: The issue of trust in information distribution is a major topic underlying the growth in advertising spending. Your point that increased advertising spending also means increased responsibility for advertising is very important. Next, let's look at advertising spending by medium. Internet advertising spending has finally surpassed the combined total of the four major media outlets. Is there anything notable in the breakdown of internet advertising spending?
Kurosaka: My attention is drawn to the fact that "performance-based advertising" continues to grow its share of internet advertising media costs, now reaching 85.2%. While the growth in numbers is positive, if this expansion includes issues like ad fraud or the "cheap but poor quality" aspects of internet advertising, we must closely monitor whether this significant growth is truly socially appropriate from the perspective of information distribution.
Oku: Programmatic advertising tends to be structured around pursuing better numbers because results are visible in metrics.
Kurosaka: Next, I want to focus on "Digital Advertising Spending Originating from the Four Mass Media" (*). I felt the figures for TV media digital are still relatively small. There's a major trend where the internet is shifting from "text-based" to "video-based," but is there really room for significant growth in that space? The potential of TV media is something I'm curious about.
Oku: While "Digital Advertising Spending Derived from the Four Mass Media" has shown high growth rates in recent years, it hasn't yet offset the overall decline in the four mass media. In that sense, I also feel it's something to look forward to in the future. On the other hand, traditional four mass media advertising spending has recovered significantly from the sharp drop in 2020 due to the COVID shock. What are your thoughts on this?
Kurosaka: I'm also particularly concerned about television media advertising spending. While it appears to have grown significantly in 2021 compared to the pandemic-hit 2020, if we consider 2020 an exception due to the shock, drawing a line from 2019 to 2021 shows a continuing downward trend.
Oku: While 2020 saw the impact of COVID-19, creating a sort of discontinuity in the data, if we exclude that year, we might see a gradual decline since 2016.
Kurosaka: Television still holds strong, accounting for 27.1% of Japan's total advertising expenditure.That's how the numbers appear, but it's not that simple. While this graph alone doesn't show it, comparing it with data from the National Association of Commercial Broadcasters reveals a widening gap in revenue ratios between Tokyo-based key stations and local stations. This disparity existed before, but as long as television as a whole continued significant growth, that pain was absorbed. If we're now seeing signs of gradual growth saturation, I feel television is finally reaching a major turning point.
E-commerce platforms with user data are becoming the new "media."
Oku: Today, I really wanted to hear from Mr. Kurosaka about data utilization in ad delivery. Due to the impact of COVID-19, people are spending more time online. The internet offers various convenient services and platforms. In exchange for free access, they collect diverse data from users, which is then utilized for ad delivery and marketing.
Amidst this, "third-party cookies," which have supported mechanisms like programmatic advertising, are facing a crossroads from a personal data protection perspective (※). Could you share your thoughts on the relationship between advertising and user data?
Kurosaka: I thought the increasing regulation of third-party cookies might have a greater impact on internet advertising spending, but the numbers show significant growth. This likely means internet advertising spending is growing so substantially that it's pushing back against the cookie issue.
That said, the trend toward data protection and consumer protection is irreversible. As platforms and ad delivery businesses become more conscious of data privacy challenges, the advantage of "first-party data" will only strengthen. This refers to user data obtained directly from a company's own services.
Within internet advertising spending, I want to highlight "advertising spending on e-commerce platforms selling physical goods." Its growth is exceptionally strong, and its scale as advertising expenditure is becoming increasingly significant. I think this represents one budding trend in the integration of internet advertising into people's lives.
Oku: The term "merchandise-based e-commerce platform advertising expenditure" requires some explanation. In "Japan's Advertising Expenditure," e-commerce platforms selling goods like home appliances, sundries, books, clothing, and office supplies are termed "merchandise-based e-commerce platforms." The advertising expenditure invested within these platforms by businesses "operating stores" on them is defined as "merchandise-based e-commerce platform advertising expenditure."
Kurosaka: What I'm thinking about is how these e-commerce platforms, along with lifestyle-focused sites and apps, are becoming "media." E-commerce platforms are no longer just "shopping venues"; they've transformed into media where people enjoy themselves daily, gain various information, and spend valuable time. By "media," I don't necessarily mean a place where news streams; I'm referring to the media function where "simply being present allows you to gain enjoyment or new information."
Oku: I see. Over the past few years, I've noticed this trend of platform companies becoming media entities, not just e-commerce platforms. Possessing user "purchase" data is a significant strength as an advertising medium. Amazon certainly started as an e-commerce site, but it entered the "media side" with entertainment services like Amazon Prime Video. Now, it operates as a massive media entity leveraging its first-party data on "what users are buying," offering various services.
Conversely, traditional mass media outlets—the four major media types—which were originally rooted in media, seem to be insufficiently capturing user behavior. I wonder if this area actually holds more potential.
Kurosaka: Regarding television media players entering the online media business, gaining user engagement, and utilizing user data as first-party entities—it's still a long way off, right? However, this is partly unavoidable because the traditional television business model is inherently very robust.Even amidst the wave of digitalization, they've managed to generate solid revenue. Precisely because it's so robust, they can still get by adequately, making swift business transformation difficult.
But when it comes to how they perceive their own business, a moment will inevitably come when they must resolve to see it not as broadcasting, but as a content-centric "video business." When trying to attract young talent capable of creating compelling video content as a video media company, the question is whether they can say something like, "(As a business, online video and TV) are about 90% the same."
In this era of overwhelming information, the value of mass media's "trustworthiness" is being tested.
Oku: The shift from broadcasting to video business is crucial. Production and editing are already IP-based, essentially communication. The remaining question is how to deliver it to users. The transmission route—whether it's "broadcasting" or "communication"—is changing now. Following NHK Plus, all five major commercial networks are finally launching real-time streaming.
Kurosaka: Since we're using telecommunications—an infrastructure that's inherently less stable than broadcasting—to deliver content, the discussion of "reliability" is essential. The quality of traditional TV and radio broadcasts was guaranteed because it was defined based on the "broadcasting" infrastructure, including its physical characteristics. Naturally, when the transmission method changes, different requirements become necessary.
For instance, if we use telecommunications—specifically the open internet—to deliver TV programs, viewers use a variety of providers and carriers. However, internet protocol technology is fundamentally "best effort," meaning it can only guarantee "we can provide speeds and quality up to this level at best." Furthermore, telecommunications also incur costs.Building dedicated infrastructure just because the open internet is unstable isn't realistic. Options like cable television or utilizing existing infrastructure must be considered.
In that regard, broadcast waves can deliver services with a certain degree of uniformity. They also represent highly reliable infrastructure – for instance, during disasters, radio can still be received and listened to. The inherent transmission efficiency of broadcast technology, in a physical sense, cannot be ignored.
But does that mean we should just stick with "broadcasting"? Modern television demands interactivity (two-way communication). Considering data transmission from homes to broadcasters—the "uplink"—inevitably requires combining it with "communication" networks. Given the complexity of such combinations, it becomes reasonable to argue for unifying everything under "communication," even if it means accepting variations in stability and speed per line.
Oku: This isn't a debate with a simple conclusion; we just have to examine each point step by step. Regarding reliability, this connects back to the earlier discussion about the role of local stations. There's talk about NHK and commercial broadcasters collaborating to use broadband as an alternative for delivering TV programs to areas where radio waves don't reach.
Kurosaka: Overall, I think it's about preserving as many "options" as possible, encompassing both broadcasting and communications. Each option should be properly evaluated, and individual operators should make their own decisions. It would also be ideal if users could make informed choices about where they want to live based on the available information environment.
Oku: You mentioned "reliability in transmission" earlier, but "reliability as content" is another crucial theme. While it's being discussed in the " Study Group on the Future of Broadcasting in the Digital Age," addressing biased information online, like fake news, remains a challenging and open-ended issue.
Kurosaka: Exactly. Trying to regulate this easily inevitably leads to restrictions on expression. Even within the fake news problem, there's a significant difference between misinformation and disinformation. These two must be strictly distinguished based on the presence or absence of malicious intent. Furthermore, to put it extremely, if it doesn't clearly infringe on someone's rights, the "right to lie" isn't entirely non-existent.
The biggest problem is that we, as information recipients, are extremely vulnerable. We're like infants, lacking the tools to judge whether information is true or false, beneficial or harmful to us.
This leaves us with two approaches. One is to say, "Everyone, improve your literacy." But this is difficult. If someone votes based on misinformation and makes a strange choice, is it solely their fault for believing the misinformation? Not necessarily. Yet, considering whether we can realistically provide incentives for people to study and improve their literacy, it seems impractical.
That leaves another approach: having the information providers themselves supply the "clues" and "evaluation tools" that recipients need to make judgments.For example, right now, there's a huge amount of uncertain information and rumors about Russia and Ukraine circulating online, isn't there? In response to this, news organizations could add something like meta-information to the content, effectively "visualizing its reliability." By formalizing this into a rule, we could gradually foster a culture online where people understand that "irresponsibly spreading information is unacceptable."
Oku: So it's about increasing the means to judge whether information is reliable. And we also need to verify "what motives the sender has for disseminating it," right? There are also many cases where it's difficult to label something as true or false – what's truth for one person might be fake news for another. When it comes to how the industry will tackle solving these issues, I think there are parts where progress is quite difficult.
Kurosaka: The reliability of information is indeed no simple matter. Before the internet, mass media largely handled this responsibility. But now, information flow is rapidly shifting online. How do we embed that traditional "trust" into this new internet infrastructure? I believe it requires a total war effort, combining every possible approach.
The demand for video content is actually increasing. What's needed is a redefinition of television's purpose.
Oku: Let me return to television media one last time. I believe television, as an information industry, must focus more on younger audiences to secure its future prospects. Mr. Kurosaka, how do you view the so-called "shift away from television," or rather, the "shift away from television devices"?
Kurosaka: First, there's the argument that since younger generations don't own TV sets, we should make content accessible on smartphones. I think there's some validity to that. However, I believe the younger generation isn't "turning away from TV" per se; rather, TV's role has simply changed. Why? Because video content is overwhelmingly popular online. Younger people aren't watching less video; their video-watching habits are actually increasing.
Oku: It's fair to say video is central to the internet today. Internet advertising spending also shows tremendous growth in video ads, finally surpassing 500 billion yen in 2021. While this is likely influenced by pandemic-driven stay-at-home demand, the habit of "watching videos online" seems to be expanding and taking root across all generations year by year.
Kurosaka: I'm in my late 40s, part of the TV-watching generation. Back when I was young, I think everyone sought interesting information or breaking news from TV. Just lying on the sofa watching TV and laughing was the best. But for today's young people, TV isn't that anymore. I wonder if TV has now become like newspapers were for our generation. In other words, what TV is being asked for now is also the "reliability" we've been discussing today.
Oku: When discussing "digital advertising spending originating from the four major mass media," reliability is a major keyword. For example, even when companies place ads online, the four major mass media have built up trust over many years. Including newspapers, magazines, and radio, I think that's the strength of these media as digital advertising platforms.
Kurosaka: This might actually be something the mass media folks would react to with, "Huh? Really?" (laughs). But I genuinely believe television professionals need to seriously confront this. The kind of content we sought – "interesting stuff," "content we felt glad we watched" – is changing for younger generations. It's not that television is being rejected; there might just be a disconnect where they're saying, "This isn't it; this isn't what we want to see."
If that's the case, TV stations need to redefine what's expected of them. Even long-established companies are now told it's crucial to redefine their reason for being, their purpose. I think it's vital for TV and mass media to redefine what's currently expected of them.
Oku: Given Japan's current demographic, older viewers make up a significant portion, and they watch a lot of television. That core fanbase is what supports the 27.1% figure we mentioned earlier. But looking ahead to when younger generations become the core of Japanese society, it's clear that mass media will face challenges unless they start thinking now about how to respond to younger audiences over the medium to long term.Today, Mr. Kurosaka's discussion has clarified several key challenges. Thank you very much.
※Mass Media Four Major Media =
Newspapers, magazines, radio, and television media (terrestrial TV + satellite media-related). Data prior to 2011 estimates the four major media as newspapers, magazines, radio, and terrestrial TV.
※Digital advertising expenditure originating from the four major media outlets =
Refers to advertising expenditures within internet advertising that are primarily provided by operators of the four major media outlets (newspapers, magazines, radio, and television media) through their internet media services. This is not included in "advertising expenditures for the four major media outlets."
Representative Director, Kuwadate Inc.; Specially Appointed Associate Professor, Graduate School of Media and Governance, Keio University. Completed Master's program at the Graduate School of Media and Governance, Keio University. After working at Mitsubishi Research Institute, Inc., established Kuwadate Inc. in 2008. Provides consulting on management strategy and business development for the telecommunications and broadcasting sectors. Also serves as a government committee member for the Ministry of Internal Affairs and Communications, the Ministry of Economy, Trade and Industry, and the OECD (Organization for Economic Cooperation and Development), supporting policy formulation. Concurrently serves as Specially Appointed Associate Professor at the Graduate School of Media and Governance, Keio University since 2016. Author of "How Will 5G Change Business?" (published by Nikkei BP), among other works.
Ritsuya Oku
Representative of Media Vision Lab
Honorary Fellow, DENTSU SOKEN INC. / Director, Video Research Ltd. Media Design Institute
Joined Dentsu Inc. in 1982. Served in Media Services / Radio,TV Division, Media Marketing Division, and later held positions as Fellow at DENTSU SOKEN INC. and Head of Dentsu Media Innovation Lab. Left Dentsu Inc. at the end of June 2024. Established Media Vision Lab, a personal consulting practice. Primarily provides consulting services to media-related companies in the information and communications sector, focusing on three perspectives: business, audience, and technology.
Publications include: "The Birth of Neo-Digital Natives: The Internet Generation Evolving Uniquely in Japan" (co-authored, Diamond Inc.), "An Explanatory Guide to 'The TV Theory That Has Come Full Circle' and the Outlook for Broadcasting Services" (co-authored, New Media), "Confirming the Acceptability of Simultaneous Online Streaming of Broadcasts" ("Nextcom" Vol. 2017 No. 32, KDDI Research Institute), "New Media Textbook 2020" (co-authored, Sendenkaigi), "70-Year History of Commercial Broadcasting" (co-authored, National Association of Commercial Broadcasters in Japan), "Broad and Universal Online Distribution / NHK and Commercial Broadcasters: From Competition to Cooperation" ("Journalism" December 2022 issue, Asahi Shimbun), and "Information Media White Paper 2024" (co-authored, Diamond Inc.). Member of the Ministry of Internal Affairs and Communications' "Study Group on the Future of Broadcasting Systems in the Digital Age." Member of the Publishing and Editorial Committee, NPO/Broadcasting Critics Conference.
Launched in October 2017, leveraging Dentsu Inc.'s longstanding media and audience research expertise. Conducts research and disseminates insights to capture shifts in people's diverse information behaviors and understand the broader media landscape. Provides proposals and consulting on the communication approaches companies need within this context.
Special Discussion: "Japan's Advertising Expenditures" [7]
