Digital one of few bright points in Japanese adspend: Dentsu

The report puts expenditure last year at 5,706.6 billion yen (approximately US$70 billion), 2.3 per cent less than in 2010. Spending has dropped consistently since 2009, when it shrank by 11.5 per cent. Dentsu has attributed the most recent fall largely to the impact of last year’s earthquake and tsunami.

Nicolas Menat, president and representative director of Beacon Communications in Tokyo, said the year-on-year drop of 2.3 per cent was "not as bad as expected". However, he noted that the overall decline of close to 20 per cent since 2007 was particularly troubling for Japan. He predicted an improvement in 2012, but said a return to anything close to 2007 levels was unrealistic.

Additional factors Dentsu cited for the overall decline include the European financial crisis, a sharp rise in the value of the yen and the recent flooding in Thailand. The report points to an upturn in the second half of the year, with spend on traditional media higher than during the same period in 2010.

However, overall spending on traditional media declined by 2.6 per cent. TV expenditures were the most robust, down by just 0.5 per cent, while magazines recorded the biggest drop — 7 per cent.

More positive was spend on online media, which grew by 4.1 per cent, and ‘satellite media-related spending’, up 13.6 per cent. In terms of sectors, expenditure rose in apparel and accessories, driven by placements for women’s clothing and handbags; distribution and retail, led by direct marketing companies and convenience stores; information and communications, as a result of the growth of smartphones and related services; and government, due to an increase in placements by the Advertising Council of Japan.

Expenditure fell in 16 of the 21 categories surveyed, with five posting double-digit declines. These included electrical appliances and audio-visual equipment, affected by reduced placement for LCD and plasma TVs; energy, materials and machinery; food and other services, attributed somewhat unexpectedly to reduced spend on ladies’ wigs and legal services; precision instruments and office supplies as a result of less digital camera advertising; and hobbies and sporting goods, where demand fell for pachinko machine and audio software advertising.

In terms of sectors, Menat said the outlook for premium products and inexpensive everyday items was positive. He said that the earthquake had reinforced consumer desire for products providing Immediate gratification and adding to the overall enjoyment of life. However, while there are few barriers to buying power in Japan, Menat said mid-range products lacking clear definition were likely to continue to struggle.

"People do not see a reason to spend more on products that do not provide a really fulfilling experience," he said.