The Japanese Advertising Industry in a Nutshell #2

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The Japanese advertising industry is not well understood from the outside. In fact, I am not sure it is that well understood from the inside. In a post I published in 2014 called “The Japanese Advertising Industry in a Nutshell” I tried to sum up what makes it unique, the characteristics of the advertising itself, and explain why it has remained dominated by domestic agencies.

In the context of my readership the post “went viral”, still gets a lot of traffic, led to a bunch of speaking offers, and sparked off a lot discussion among my peers who work in advertising here in Tokyo. From all of this I learned a tremendous amount and it helped to solidify the ideas, and hence this post is an overdue follow up that aims to:

  • Summarise the original article’s assertions
  • Describe the context within which the advertising industry has come about, and so help to explain why it is
  • Address the question of whether Japanese consumerism is fundamentally different or not
  • Revisit the claim that the western agency planning model does not work in Japan, explain where I stand now on this point
  • Bring the story up to date – what if anything has happened in the last few years to suggest that change is afoot

Japanese advertising in a nutshell – the original

The central assertions of the original essay, all of which I still stand by, are:
  1. The Japanese advertising scene has been “captured” by a sort of cartel made up of the TV stations (who make the programming that creates the celebrities), the talent agencies (who “manage” the celebrities’ commercial contracts) and the advertising agencies (the dominant one being Dentsu, who effectively auction off access to programming and celebrities).
  2. The most powerful entity in this symbiotic ecosystem is Dentsu (the middleman prevails!), and most outsiders assume it is based on exclusive access to media, but actually it is just as much to do with controlling access to the celebrities
  3. The rise of CyberAgent is a proof point of this reality: the web media company (actually today it is essentially a Dentsu style agency for the web) which rose to prominence off the back of AMEBA, the celebrity studded blogging platform, are the upstarts that beat the agency establishment at their own game, but on the web, by creating a business model based around access to celebrities and selling its associated media and influence
  4. Because of Japan’s relatively more homogeneous society and consumer mindset of wanting to be integrated into the whole of society, Japanese advertising aims more to fit brands into the communal cultural zeitgeist, to feel “of the now”, than it does to make them stand out in a conceptual way
  5. Hence Japanese executions tend to have lots of small cultural references, thematic and aesthetic, that make them “highly crafted” in a way that obviously foreign creative directors and award show judging panels will always struggle to appreciate
  6. Casting TV talents who are currently a la mode (and these trends are rapid) is an expedient way to achieve “of the now”, make the brands relevant to consumers here and now, especially those who like watching TV, without having to think too hard about communication strategy, while keeping the client happy and excited at the same time.
Japanese celebrities are typically manufactured on TV, and access to their endorsement is controlled by the big agencies

Japanese celebrities are typically manufactured on TV, and access to their endorsement is controlled by the big agencies

This brand sponsored-entertainment complex is a monster, and it’s not budging. Since I first arrived in Japan the decline and fall of its lead protagonist, the chief bully in this old-boys playground, DENTSU, has been confidently predicted but it has not happened yet.  Such a complex cannot exist in isolation from the broader consumer economy, but rather it sits on top of it, dependent on it for all the string-pulling it gets away with. And there are characteristics of the system that allow the model to be sustained and help explain its robustness.

Japanese advertising’s broader context

Broadly speaking I think there are 5 key factors that the advertising industry (with a focus on the dominant TV media) has co-evolved with, and which need to be understood as part of and underpinning the status quo in Japan:
  1. Japanese manufacturing is more agile, so product variants come to market at a much higher frequency than in other countries, so many brands can stay salient through announcing new products regularly without having to think much about long term brand positioning or making advertising that supports a long term emotional role
  2. Fed on this diet of product innovation (continuous functional evolution) the trade / retailers have a less than sophisticated appreciation of the potential role of advertising to sharpen emotional relevance, and generally like to see i) high awareness campaigns ii) with big celebrities iii) announcing product news, and will reward this formula with more shelf space or equivalent priority status.
  3. Advertising space in Japan tends to be cut up into smaller chunks, because the media-revenue-driven agencies can make more money that way and it fits the expectations of the retailers. Taking TV as a case in point, the vast majority of TV spots in Japan are 15secs, rather than mix of 15, 30 and 60secs you see in most other developed markets. Creative execution quality being equal, a 15sec spot-based media spend provides perhaps a 10% increment in awareness over a 30sec based media flight, so for short term salience-grabbing campaigns, the 15sec model is pushed by media planners and tends to prevail.
  4. 15secs gives the creative teams less options to create a conceptually-driven ad, particularly when the client is keen to see the celebrity that they have just been sold by the agency at vast expense in every single frame of the 15secs (not to mention the other media channels) if at all possible. Since TV is still in general the central spend, this tends to drag everything else down.
  5. Japanese TV is almost pure escapism, and tends to be dominated by “noisy” programming (variety shows, celebrity panel discussion shows, stand up comedy, edutainment style shows also with talent panels, with some fantastical dramas thrown in), combined with the fact that most households have digital TVs with recording functions that allows ad-skipping on playback, hence advertising needs to be entertaining and eye catching first and foremost, and there is truth in the idea that some viewers are interested in seeing what the celebs are up to in their endorsements

Of course every market has its unique set of factors that can be drawn on similar dimensions as those outlined above. Is Japan just a bit of an outlier in where it sits on all those dimensions, or is it fundamentally different?

Japan’s unique consumerism

When I wrote the original nutshell article I was harbouring an inner dialectic on whether Japan’s brand advertising culture was just an outlier on what are essentially dimensions it shares with other developed consumer economies, or whether it is actually fundamentally different. The 5 differences in the section above are described relative to a generalised western market, the US basically, and hence imply the former.On the other side of the dialectic, one of the first books that piqued my interest about Japan was 1999’s “The Lexus and the Olive Tree” in which the idea that Japan proves that consumerism is not a singular economic and social phenomenon made a particularly strong impression. Friedman actually asserted that Japan was effectively a communist country that happened to have a strong consumerist economy.

Coming to work in Japan in 2002 as a tender 23y/o my naive assumption that consumerism is always driven by individuals’ desire to express their individuality was challenged by Japan’s massive luxury goods market, where at one point practically all adult women owned a Louise Vuitton handbag. Obviously consumerism can also be driven by a desire to fit in as well as stand out, and I now realise these is a lot of this in western luxury consumption as well.

In the last couple of years I have read and thought a lot around this question of whether the “fundamentally different” assertion is valid, and my conclusions can be summarised as follows:

  • Japan’s consumers are not fundamentally different. Like all people on the planet they come from an extremely tightly defined genetic stock (species homo sapiens only just scraped through a climatic extinction event before we expanded from Africa, so we ALL descend from perhaps as few as a thousand individuals), so the fundamental archetypal emotional responses and drivers are shared by every human alive today
  • But Japan’s society and culture does make it an extreme outlier among developed countries at the least, which equates to Japanese consumers being programmed very differently to the extent that you really cannot rely on fundamental assumptions about consumer behaviour that you develop in other markets when looking at Japan. And hence when importing advertising strategies and brand propositions developed outside Japan, the same input will hardly ever elicit the same response as consumers in other markets, because Japanese consumers’ cultural programming is different.
  • The medium is part of the message. All communications have a context, and while superficially the context of a communication may seem familiar, e.g. a TV ad spot, the possibility of the local context implying the need for a localised approach should never be underestimated.

Does the western advertising planning model work in this context?

The assertion that the western agencies have failed to colonise the Japanese advertising space, despite proportionately larger invasions by western brands, is beyond doubt. The biggest western brands here are working with Japanese agencies or joint-venture agencies that tend to be closer in culture to domestic agencies.

The more philosophical question about the western planning method itself requires a deeper analysis and discussion, which I will leave for another post, but by way of a preview:

  • There are actually a few competing “western planning models”, and they are really quite different in their thinking
  • The model that has more or less won out is the simpler one to apply, but it’s theoretical underpinnings are deeply flawed, and you could say the best work happens despite its application
  • It’s shortcomings can be papered over when working in a single market (but not always), but when applied across markets with distinct cultures the shortcomings lead to gaping misconceptions and compromised advertising
  • This goes a long way to explaining why this model does not give western agencies an advantage in a Japan agency marketplace that does not really distinguish between “strategy” and “creative planning”
  • The alternative western planning model is based on valid assumptions, being true to human psychology, and should be the one we all apply, and could be applied to global brands across cultures, but brands and their agencies seem unable to apply it, perhaps because it requires a little more subtlety of thought and agility of process than the dominant model

The House of Cards

Could it all come tumbling down at some point in the future? Of course everything is always evolving all the time, and the biggest driver of change today is undoubtedly the internet and digital platforms. LINE for instance has become incredibly successful and profitable in recent years, mainly through selling digital goods, and now expanding its service ecosystem to include eCommerce, even a part time jobs listing service. It also has advertising products, but unlike Facebook and Twitter they do not dominate its revenue streams. Most brands that buy into LINE’s advertising products still do so via their agency where they park their TV and other media budgets, so for that reason I do not see LINE upsetting the Dentsu applecart on its own.

There are examples of brands that have decided to grow through buying digital media directly, disintermediating the big domestic agencies, but they are still only a tiny sliver the of the market. If they grow in scale and number then they can also drive change towards a tipping point. I think that tipping point will come  when digital media spend becomes bigger than TV, which will happen at some point, but it is still a long way off.

Perhaps in response to this scenario, Dentsu has recently spun off its digital media work into a separate subsidiary “Dentsu Digital”, just as the rest of the world is shifting towards more integration and omni-channel,  but then whom am I to judge the wisdom of this stunningly and perennially successful business?

 

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