online media in japan today - nielsen

Online Media in Japan Today

Seizing business opportunities in a

fast-changing environment

August 2010Issue: 1

2

Copyright © 2010 The Nielsen Company.

Table of Contents

About this report ..................................................................................................................................................................................... 3

1. Internet user population trend ........................................................................................................................................................ 4

• The PC /mobile combination goes mainstream • Growth potential lies in Japan’s older demographic

Column: The co-existence of panels and census-based measurement in Japan ........................................................................... 7

Haruki Watanabe, Manager, Corporate Communications and Advertising Department, beBIT Inc.

2. Today’s social media .......................................................................................................................................................................... 8

• Japan’s social media users are steadily growing • Facebook enjoys explosive growth in the U.S., not so much in Japan • In Japan, Twitter is on the rise with high reach versus other markets • Japan loves Q&A sites

Column: Will Twitter see continuing growth in Japan over the next year? ................................................................................. 11

Motohiko Tokuriki, Representative Director and President, Agile Media Network Inc.

3. Internet usage via mobile – the current situation ...................................................................................................................... 12

• Internet population via mobile reaches 41.6 million • Most mobile Internet users are young • Smartphone penetration in the U.S. market • Smartphones have a 5.8% share of Japan’s market

Column: Mobile growth in Japan over the next 12 months ............................................................................................................ 14

Hiroto Ebata, Director, E-marketing, Marketing Operations, Coca-Cola (Japan) Company, Ltd.

4. Latest video site trends ................................................................................................................................................................... 15

• YouTube visitors are on the rise • Video sites run by TV broadcasters are struggling • Live video download services enjoy rapid user increase

Column: 3 key trends to make interactive marketing more attractive ........................................................................................ 17

Masashi Hagiwara, Executive Researcher, Transcosmos Inc.

5. Latest EC site trends ......................................................................................................................................................................... 18

• Japanese consumers show higher loyalty to E-commerce category than in other countries • Rakuten, Amazon and Yahoo! Shopping attract more than 20 million visitors • At Kakaku.com, male-female split differs dramatically depending on product category • In the U.S., Groupon sites are scoring fast growth

2010: A Tipping Point for the Online Industry in Japan .................................................................................................................. 20

Charles Buchwalter, Chairman and CEO, Nielsen Online Japan

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In the ever-changing market environment, online content and communications platforms play an increasingly significant role. Yet, the reality is, Internet use is unique based on the viewpoint of every user, depending on his/her demographic and psychographic attributes, lifestyles and online literacy. That is why the word “Internet” can mean different things to different people, because each user accesses the Internet for different purposes, seeking information and images that reflect who and what he/she is. The lesson for us is: the “Internet” as a medium is becoming more and more complex and thus difficult to fathom.

Devices used to access the Internet have multiplied over recent years, empowering users to consume online content using Internet technology on increased occasions, for varieties of purposes, at wider touch-points.

The question we ask ourselves is: how do enterprise users understand and deploy the Internet to communicate and engage consumers in today’s marketing environment?

At Nielsen Online Japan, we strive to help our client companies enhance their online marketing planning and implementation.and have a better understanding of today’s consumer through the following two perspectives.

The first perspective is “WHO and WHERE,” in other words, “What kind of consumers are found where?”

Understanding the target customer – their preferences, how and why they access the Internet and in what kind of environment – is probably one of the most important perspectives required to successfully implement strong marketing programs. That is why Nielsen Online Japan

categorizes consumers by attributes, devices used and touch-points, and compares their online usage trends with the overseas market data, to understand their unique characteristics.

The second perspective is “WHAT,” as in “What is happening on the Internet now?”

Compared to other media, the Internet stands out as a fast-changing medium due to the exceptional speed of technological evolution and also being a young medium. For example, everybody talks about social media today. The emergence and evolution of social media has empowered consumers to influence others on a scale and speed like never before. Today, consumers have the freedom to share information at an amazingly fast speed without being controlled by enterprises and media. To take advantage of this new information-sharing behavior, having a 360 understanding of online user behavior and characteristics, then elaborately planning and executing sophisticated marketing programs based on their dynamics, are absolutely essential.

Those two perspectives are embraced at Nielsen Online Japan, reflected in our daily data collection, analysis and reports. This report highlights five topics identified from our insights for your review.

Each topic is accompanied with a column contributed by leading online marketing experts in Japan. We would like to thank the columnists for their valuable contribution to this report.

We hope that the data and insights covered in this report will contribute to your marketing plans.

About this report

About NetRatings Japan

NetRatings Japan Inc. was founded in May 1999 as a joint venture company of The Nielsen Company group. Through its diverse product and service offerings including online viewer ratings and ad statistics, access analytics, mobile usage trend survey and social media listening service, combined with customized data creation, researches and analyses, NetRatings Japan plays a key role in client’s online business decision making process. To learn more about NetRatings Japan’s services and details of the company, please access http://www.netratings.co.jp/.

About The Nielsen Company

The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. The privately held company is active in approximately 100 countries, with headquarters in New York, USA. For more information, please visit http://www.nielsen.com/.

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1. Internet user population trend

84% 67%54%

48%41% 40% 40% 40% 37%

46% 43% 10%

18%

29% 33% 38% 39%

43%

44% 50%

43%46%

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22,423

31,705

48,528

53,869

59,036 59,236

66,22869,689 71,149 71,985 73,503

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(in thousands)

PC only PC & mobile Mobile only

Chart 1-1: Internet user population trend, access via PC and mobile

As of April 2010, Internet user population stands at 73.5 million, 46% of which access Internet via PC and mobile. Even though the Internet user population has been on the rise, the growth has slowed somewhat. Looking at PC versus mobile as a preferred means of Internet access, PC stood at only 84% back in April 2000. As mobile phones have evolved over time to enable Internet access, consumers using a combination of PC and mobile have increased in number. As Smartphones are expected to further penetrate the market, it is very likely that the population of Internet users via mobile will further increase (see Chart 1-1).

The PC/mobile combination goes mainstream

At Nielsen Online Japan, a national phone survey called the “Internet Base Survey” is conducted every month to help identify basic online trends. Data such as Internet usage, devices used, usage frequency and place of access such as home and office, are collected through the survey, which are then analyzed to identify online usage based on age, gender and location, as well as measuring shifts over time.

In this section, we have taken a close look at devices commonly used by consumers to access the Internet (PC, mobile phone, or both) and plotted how these options have changed over time.

Source: Nielsen Online Internet Base Survey

Note: Questions on Internet usage via mobile have been modified from April 2009 survey. Starting with April 2009 survey, user stands for users who access Internet via mobile at least once a month; monthly usage frequency was not taken into consideration in the previous surveys.

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63%60%

57% 57% 57%56% 56% 56% 56% 55% 54%

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24,30427,071

30,794

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Male Female

(in thousands)

Moving on to Internet user population via PC at home, based on data collected by NetView, an online rating service provided by Nielsen Online, the population stands at 51.6 million as of April 2010. Looking at the past trends, the population growth has somewhat slowed down. If your website, which used to generate a steady stream of visitors, suffers from decreased traffic over the recent years, it is likely that the slow down of the total Internet population may have influenced your website traffic. Regarding the gender split, it used to be that the Internet was populated by men (63%), which created a common perception that the Internet was for men. But the female user population substantially increased from 2000 to 2002, and the growth continued, albeit slowly, to reach 46% today, or nearly half of the total Internet population (see Chart 1-2).

Growth potential lies in the elderly population

This section breaks down Internet usage (the proportion of the Internet population against national population) into age and gender. Looking at the data, it is clear that the rate varies depending based on age group. Men and women 30 to 44 are the most active Internet users. Interestingly, Internet usage decreases in direct proportion to age, despite the large elderly population in Japan caused by the aging of society. The trend is best showcased by the 8% participation rate of women age 60 and older. In spite of the Internet reaching maturity in this country, demonstrated by a slow down of total Internet user population, the gap in the Internet usage by age and gender still exists (see Chart 1-3).

Chart 1-2: Internet user population trend, access via PC at home

5,080

4,380

3,870

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4,930

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14,770

6,640

30%

37%

62%

69%

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58%

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Population by the age group (in thousands)

MALE FEMALE

55-59

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18,370

25%

57%

46%

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63%

71%

68%

64%

52%

36%

20%

8%

Chart 1-3: Internet penetration by age and gender, access via PC at home

Source: Nielsen Online NetView; access from PC at home,

Source: Nielsen Online NetView; access from PC at home, April 2010Population by age group comes from National Census, 2005

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321589

1,1651,548

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Age 60+ Approximate curve

(in thousands)

Chart 1-4: Internet user population trend, (age 60+), access via PC at home

Source: Nielsen Online NetView; access from PC at home,

However, the Internet user population trend of the elderly population (age 60 and older) is on the rise year over year. The growth rate is significantly larger compared to the growth rate of total Internet user population. As the elderly are expected to be increasingly involved in Internet usage, the elderly Internet user population is expected to further grow. Moving forward, attracting and engaging the elderly population will be key to any Internet business looking for success (see Chart 1-4).

Internet growth in Japan has mainly been driven by the “second” Baby Boomer generation (those born between 1970 and 1974), but the user base is widening over recent years. Today, devices such as the Apple iPad, which can be intuitively operated, are launched to the market, facilitating the elderly to access the Internet. It is very likely that the Internet will become an effective communication tool to reach and interact with the elderly population. On the other hand, the younger generation are said to access the Internet via their mobile phones. Hence, consumers access the Internet via different devices depending on their attributes, and companies will have to plan their marketing programs accordingly. For any company, regardless of industry, communicating with the target users via relevant channels and devices will be critical.

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Co-existence of panels and census-based measurement in Japan

Haruki Watanabe, Director of Public Relations, beBit Inc.

I have long been dedicated to thinking about how corporate websites (aka “owned media”) can be deployed. Online ratings are measured by the same standards for all websites across Japan, which facilitates comparison of scale and user attributes. Typically, owned media and online media were compared on scale, to help make a decision whether to advertise or not online. Understandably, there is no reason to spend advertising money on medium smaller than your own.

I have been told that there are many advertisers who subscribe to online ratings services. There are probably a very few advertisers subscribing to TV ratings services, but for online marketing, it seems that many marketers are proactively involved in planning based on objective performance evaluation, including the use of their own media.

Even though online advertising spending has only recently exceeded newspaper spending, it is generally said that the online advertising budget remains small compared to the time consumers today spend online. And time spent online includes significant amount of time spent on the company’s “owned media.” If the time spent on “owned media” is taken away from the total time spent online, one could say that online still remains an immature medium. But it would be fair to say that it has a big growth potential going forward.

I have been a long-time advocate of complete census as the goal of online ratings, measured by a mega panel or access log. Population statistics are measured based on an assumption that all potential users are found on the websites subject to measurement. But the reality is, the assumption may work for relatively large sites, but smaller sites would likely not reach the desired target. Estimation may be possible without a panel for bigger sites, but not for smaller sites – this is the perennial problem with statistical data. That is why I believe that panel data should be corrected by mega panel or complete census using an access log. And I am not alone – Nielsen Online’s attempts in integrating, or creating a “hybrid” of panel survey and complete census is very close to my own thought. I am looking very much forward to Nielsen Online achieving the hybrid methodology in the near future.

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Social media users are steadily growing

“Social media”, or websites empowering users to communicate with websites or among themselves, began to attract users in Japan in 2004.

This section takes a look at user population trends by social media category. Social media are categorized into four groups – 1) blog site (Ameblo, kokolog), 2) video site (YouTube, Nico Nico Douga), 3) Q&A site (Yahoo! Chiebukuro), and 4) Social networking site (mixi, including Twitter). It is evident that all categories are enjoying continuous growth. Among the four category groups, blog sites are visited by the largest population (see Chart 2-1).

2. Today’s social media

13,501

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(in thousands)

Chart 2-1: Social media user population trend, by category

Source: Nielsen Online NetView; access from PC at home

Chart 2-2: Number of crawled blogs, by language (April 2010)

LanguageNumber of

crawled blogs *1Number of blogs by 1,000

Internet users, by language *2

English 10,480,600 21

Japanese 4,908,029 51

Chinese 2,638,516 6

Spanish 1,521,908 11

Portugese 1,273,723 16

French 1,037,705 18

*1 Number of crawled blogs by BuzzMetrics, a CGM analysis tool*2 Internet user population by language comes from Internet World Stats 2009 survey http://www.internetworldstats.com/stats7.htm

At Nielsen Online, blog and Twitter posts are collected for analysis using Nielsen BuzzMetrics. Analyses are conducted to quantify online buzz volume on brands. Simultaneously, qualitative analyses are conducted by our analysts reading the posts. Since BuzzMetrics® is a global service, blogs written in different languages can be crawled for data collection. Looking at the number of crawled blogs by language according to BuzzMetrics data, blogs written in Japanese exceed those written in Chinese and Spanish. Furthermore, Japan is top-ranked in terms of number of blogs per 1,000 Internet users by language. It can be said that blog sites are popularly used in Japan (see Table 2-2).

Facebook enjoys explosive growth in the U.S.

Many social media services have originated in the U.S. Looking at key social media service visitor trends in the U.S., Facebook, an SNS site boasting over 500 million users worldwide, is undergoing explosive growth, generating more than 120 million visitors in the U.S. alone in April 2010. 120 million visitors translate to 62% of the Internet user population in the U.S.! Conversely, MySpace, another SNS site which was a precursor to Facebook and initially attracted huge user traffic, is on a downward trend. Twitter reached a peak in September 2009, but remains flat at around 20 million (see Chart 2-3).

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2 Channel, 11,533

COOKPAD, 6,905Facebook, 1,873

Twitter, 9,882

Wikipedia, 26,934

mixi, 9,344

Ameblo, 22,029

Yahoo! Chiebukuro,26,079

YouTube, 25,023

0

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Chart 2-4: Key social media visitor traffic trend, Japan

Source: Nielsen Online NetView; access from PC at home and work

Facebook, 122,337

Flickr, 15,218LinkedIn, 11,597

Myspace, 48,784

Twitter, 19,327

Wikipedia, 59,260

YouTube, 94,050

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Chart 2-3: Key social media visitor traffic trend, U.S.


In Japan, Twitter is on the rise with high reach versus other markets

Among key social media sites, Twitter is showing rapid visitor traffic growth in Japan. Visitors to Twitter have been consistently increasing since 2009. An explosive growth was observed in December of the same year thanks to mass media coverage (TV and magazine), and the visitor population reached 9.88 million in April 2010 which is 19-times the 520,000 measured in April of 2009 (see Chart 2-4).

Looking at reach (proportion of visitors against total Internet user population) versus the U.S., U.K. and France, Twitter reach continues to rise in Japan while the reach in other countries remains flat since October 2009. Obviously, Twitter is particularly strong in Japan versus other countries (see Chart 2-5).

Japan, 16.3

U.S., 9.8

U.K., 10.4

France, 4.4

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Chart 2-5: Twitter reach trend, by country


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Japan loves Q&A sites

There is one social media category attracting significantly more users in Japan: knowledge-sharing CGM, such as Wikipedia, Yahoo! Chiebukuro, OKWave, Oshiete! goo. The category has a high affinity with search engines; more shared information results in top listing of these sites, which in turn helps attract more users. Such a positive cycle is enjoyed by the category.

Among the knowledge-sharing CGM, the Q&A site in particular is simple to use – you ask a question which is answered by others. Yahoo! Chiebukuro, the most popular Q&A site, has clearly exceeded popular Q&A sites in other countries in terms of reach (see Chart 2-6). The popularity may be attributed to its accessibility compared to social networking sites, which allow more flexibility to users. Some companies have started to use a Q&A site as one of their key customer support channels.

43%

19% 17% 17%11%

JapanYahoo!

Chiebukuro

U.K.Yahoo!

Answers

AustraliaYahoo!

Answers

U.S.Yahoo!

Answers

FranceYahoo!

Answers

Chart 2-6: Reach generated by Q&A site, by country


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Is Twitter in Japan going to enjoy continual growth over the next 12 months?

Motohiko Tokuriki, CEO, Agile Media Network Inc.

Twitter is definitely the most talked about online service in Japan, from the summer of 2009 to 2010.

Research results indicate that Twitter has undergone a massive growth over the past year in Japan. Twitter has been increasingly used for corporate PR and ad campaigns. Today, not a day goes without reading the news of latest campaigns embracing Twitter.

Many consumers may be asking themselves – “yeah, Twitter is really hot now, but I wonder how long it is going to be around?”

Given consumer’s excessive infatuation with Twitter, there is no doubt that at some point, the infatuation will come to an end. The real question is, will Twitter be another Second Life, or will it continue to attract a steady stream of users like the blog boom back in 2005?

Looking at the U.S. market, Facebook has succeeded in adding Twitter functions, which helped Facebook penetrate wider and growing faster than Twitter. In that regard, a non-Twitter SNS in Japan may stop the momentum currently enjoyed by Twitter.

However, considering the current situation, Twitter has a great potential to reach wider users in Japan than in the U.S. due to the fact that Facebook is rather inactive in Japan, but another important point is the impact of 140-character limit on English and Japanese languages.

In English, the number of characters or alphabets comprising each word is greater than in Japanese. For instance, the word “beautiful” takes up 9 letters, but in Japanese, “綺麗 (kirei)” takes up only2 Chinese characters. The advantage for the Japanese language is that a post on Twitter can contain more information than when the post is written in English. As a result, when posting a “RT” or quotes on Twitter, English posts end up as merely quotes while Japanese posts are accompanied with user’s own comment. As many as three to four RTs are inserted to a post, causing posts to be chained like beads. This is precisely the reason that a Twitter post can become a small bulletin board in Japan.

Due to the linguistic differences, Twitter tends to be used as a one-to-one conversational tool in the English-speaking markets, but in Japan, Twitter can host a chat among a small group, like a casual conversation at a local bar. Twitter in Japan is not “Twitter” in a real sense, but localized as a “Tsuitta” to suit Japanese preference and sensibilities.

Web service can be used differently by different users depending on country, local culture and language. This point needs to be taken into consideration when monitoring Twitter’s growth and popularity in the near future.

In Japan, TV plays a crucial role in further penetrating Twitter. The real-time nature of Twitter may prevent audiences from time shifting, in other words the recording of TV programming on HDD recorder and other storage media. If TV stations in Japan are intent on aligning their TV programming with Twitter, the current Twitter fad may be viewed as a beginning of a genuine paradigm shift, and not a short-lived trend.

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Internet population via mobile reaches 41.6 million

Unfortunately, continual trends cannot be identified by data collected by our Internet Base Survey, as research specs on Internet usage via mobile were modified starting with April 2009 survey. Yet the Internet user population via mobile has reached 41.6 million as of April 2010 (see Chart 3-1).

Most of the mobile Internet users are young

Internet usage via PC showed that consumers in their 30s through early 40s were main users, while the rates were high among young men and women for Internet usage via mobile phone. Internet usage by men ages 16 to 24 was particularly high; 80% of the age group was found to access the Internet via their mobile phone (see Chart 3-2).

The young and senior generations show dramatic difference in usage frequency. Looking at Internet usage frequency via mobile, the younger age group frequently accesses the Internet via mobile phone, while the percentage of “almost every day” declines as age goes up (see Chart 3-3).

3. Internet usage via mobile – current situation

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Internet usage via mobile

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Chart 3-1: Internet user population trend accesss via mobile

Source: Nielsen Online Internet Base Survey

Note: Questions on Internet usage via mobile have been modified from April 2009 survey. Starting with April 2009 survey, user stands for users who access Internet via mobile at least once a month; monthly usage frequency was not taken into consideration in the previous surveys.

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Population by the age group (in thousands)

MALE FEMALE

Chart 3-2: Internet penetration via mobile, by age and gender

Note : Penetration is based on mobile owner population of each age groupSource: Nielsen Online Internet Base Survey, June 2010

13


Smartphone penetrates the U.S. market

Smartphone penetration is a hot topic in the mobile phone industry. The forecast in the U.S. is that Smartphone penetration among mobile phone owners will catch up with the traditional mobile phone penetration in 2011 (see Chart 3-4).

Smartphone has 5.8% market share in Japan

In the Internet Base Survey conducted in June 2010, Smartphone penetration among mobile phone owners in Japan stood at 5.8%. The usage rate was relatively high among men in their 30s through early 40s, and late 20s through early 30s for women (see Chart 3-5).

50% 58%73% 70% 67%

53% 44% 44% 38% 46% 36%20%

30%29%

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2-12 13-15 16-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+

Almost every day 2+ times a week Once a week-once a month

Chart 3-3: Internet usage frequency via mobile, by age group

Source: Nielsen Online Internet Base Survey, April 2010

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Tota

l

Mal

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ale

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Chart 3-5: Smartphone penetration in Japan

Note : Penetration is based on mobile owner population of each age groupSource: Nielsen Online Internet Base Survey, June 2010

Traditional mobile Smartphone

90% 87% 86% 84%83% 81% 79% 76%73%

69% 65%60%

55%51%

10% 13% 14% 16% 17% 19% 21% 24% 27%31%

35%40%

45%49%

0%

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40%

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Q2

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2011

Dashed lines indicate projections

Chart 3-4: Smartphone penetration in the U.S. (projections for Q4 2009 and beyond)

Source: The Nielsen Company (U.S.)

14


Mobile growth in Japan over the next 12 months

Hiroto Ebata, Director, Marketing Operations, iMarketing, Coca-Cola (Japan) Company, Ltd.

It seems that marketers in Japan have yet to fully exploit mobile. At Coca-Cola, our philosophy is “anytime anywhere any place,” meaning that we want our products to be there when people are thirsty; we want to immediately address consumer desire whenever and wherever. The same goes for mobile; mobile digitally addresses human desire to talk to someone, view information and kill time, just like soft drinks. With many mobile e-money-enabled vending machines across Japan and the highest share of domestic market for non-alcoholic beverages, Coca-Cola is intent on further addressing human desires using mobile. Many companies appear to invest in their corporate PC sites, but their effort has not yet extended to mobile. Today, mobile coupons and games have penetrated the market. I expect to see location-based marketing, which can never be done with PC, combining the effort with in-store activities in the near future.

Moving forward, I believe that marketing that exploits location information will flourish. Because Smartphones come with a location information function, the location information services will be driven by further penetration of Smartphones. But Smartphone-only subscribers are few, and subscription over the next 12 months will be mostly additional to existing mobile phone subscription, not switching. Switching to Smartphone may take place if Smartphone with Felica function is launched to counter e-money function of existing mobile phones. Another issue with Smartphones is that some women say that they have difficulty typing in text with a touch pad, which they never struggle to do with existing mobile phones. Considering the current circumstances, Smartphones have a big potential to grow as a second phone. The iPad is more intuitive than PCs, with a large screen for better visual expression, which is likely to be more suitable to the elderly and women than for business purposes.

Starting last year, advertising using mobile applications has grown to an extent that it may be the leading advertising medium based on media spend by industry, helping to drive mobile membership sign-up. This fact suggests great affinity between TV and mobile. Currently, 80% to 90% of consumers carry a mobile phone at all times; when the mobile phone rings while they watch TV, they tend to answer the phone rather than waiting for the show to end or wait for the commercial break. As mobile has a bigger share of eyeballs, my educated guess is that TV access can be further driven by mobile. In the second half of the current fiscal year, we are witnessing TV shows and commercials produced on an assumption that the audience has a mobile phone lying around nearby, and the trend is likely to accelerate.

One of the reasons for Social Media’s lower popularity in Japan is that people exchange personal information via mobile using SMS mail, so there hasn’t been a compelling reason to sign-up for Facebook. Outside Japan, SMS was not popularly used, and consumers resorted to using Facebook and similar sites, but similar functions were already offered by mobile in Japan. Furthermore, Japanese consumers tend not to disclose their real names, which also explains the unique situation. A good analogy is, the Japanese tend to go to a local bar as a group, whereas Europeans and North Americans go to a bar alone and enjoy conversation with fellow drinkers. To me, such differences rooted in local culture may have created slight differences in how mobile and social media are used.

15


YouTube visitors are on the rise

The three biggest video sharing sites in Japan, based on visitor traffic trend, are YouTube, GyaO!, and Nico Nico Douga. YouTube, which made a breakthrough in 2005 in Japan, is still on a steady upward trend, with 25.02 million visitors recorded in April 2010, or 34% increase over the same month of previous year. GyaO! was established in August 2009 by merging of Yahoo! Douga and GyaO. Thanks to small overlap of visitors to those two sites, GyaO! succeeded in attracting significant visitor traffic, exceeding Nico Nico Douga. Nico Nico Douga enjoyed a big boost in visitor traffic in 2006, but since then the traffic has remained flat at close to 10 million.

Visitors to Dai1NTV, a video-on-demand service run by a TV broadcaster attracting many visitors, and the fast-growing Ustream, still remains small compared to the three biggest video sharing sites (see Chart 4-1).

When those sites are compared based on loyalty indices, including number of visits per visitor and time spent per visitor, the winners were the video-posting and sharing sites YouTube and Nico Nico Douga. Both sites generated more visits per visitor and longer time spent by visitor, demonstrating strong user support to social media where each user is empowered to create his/her own content (see Chart 4-2).

Video sites run by TV broadcasters are struggling

Video-on-demand sites run by key TV broadcasters struggle to boost visitor traffic. Some TV broadcasters even offer their own video content to video-sharing sites such as YouTube, GyaO! and Nico Nico Douga in addition to running their own sites. Despite owning a great variety of content, the TV broadcasters are likely to continue exploring how their assets can be exploited online (see Chart 4-3).

4. Latest video site trends

You Tube, 25,023

Nico Nico Douga, 8,434

GyaO!, 12,994

Dai2 NTV, 844Ustream, 992

0

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Chart 4-1: Key video site cisitor traffic trend

Note: Gyo! was founded by integration of Yahoo! Douga and GyaO in September 2009 Source: Nielsen Online NetView; access from PC at home and work, April 2010

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Ustream

Chart 4-2: Positionings of key video sites

Note: Size of bubble denotes visitor population Source: Nielsen Online NetView; access from PC at home and work, April 2010

16


Dai2 NTV, 844

TV Asahi Douga, 164

Fuji TV on Demand, 276

NHK on Demand, 753

TBS on Demand, 560

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Chart 4-3: Key TV station video site visitor traffic trend

Source: Nielsen Online NetView; access from PC at home and work, April 2010

Nico Nico Live, 1,383

Ustream, 992

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Chart 4-4: Nico Nico Live and Ustream visitor traffic trend

Source: Nielsen Online NetView; access from PC at home and work, April 2010

Chart 4-5: Nico Nico Live and Ustream inflow site Top 5

Site (# visitors) Rank Inflow: site/sub-domain% inflow against

total visitor

Nico Nico Live(1.38 million)

1 Nico Nico Douga 54

2 Nico Nicommunity 18

3 Google search 7

4 Yahoo! Search 5

5 Nico Nico News etc. 3

Ustream(990,000)

1 Yahoo! News 14

2 Sub domain on Ustream 13

3 Twitter 10

4 Google search 5

5 Facebook 4

Live video download services enjoy rapid user increase

Video sites that are successful in boosting visitor traffic in 2010 are Nico Nico Live and Ustream, both live video streaming services. Looking at visitor traffic trend from April 2009, visitor traffic on Nico Nico Live went up from May to October 2009, then remained flat, followed by a big boost in March 2010, reaching 1.38 million in April of the same year. Ustream was met with a gradual ups and downs until December 2009, but a big boost came in January 2010, followed by an even bigger boost in April of the same year to reach 990,000. As of April 2010, both sites enjoy increased visitor traffic thanks to live broadcasting of “budget screening process” run by the Government Revitalization Unit (see Chart 4-4).

Looking at Ustream’s traffic inflow, social media such as Twitter and Facebook are ranked at the top. This is not observed with YouTube, Nico Nico Douga and GyaO!, and is likely to have been caused by strong affinity between Twitter’s real-time nature and Ustream’s live video streaming service (see Table 4-5).

As the Internet continues to evolve over time, users are further empowered to own various online media including blogs and video streaming. For personal media content, such as the personal production program offered on Ustream, social media will play a significant role in further commanding attention. At the same time, linkages with mass media content will also attract attention and interest, made possible by cooperation with TV broadcasters.

17


Three key trends to make interactive marketing more attractive

Masashi Hagiwara, Executive Researcher, TransCosmos Inc.

From the latter half of 2010 to 2011, 3 key trends in interactive marketing will emerge, helping marketers and service providers develop new services and marketing techniques that are more attractive in the eye of consumers.

1. Penetration of corporate applications

Innovative, radical devices stir the imagination of consumers and companies alike. That is why the world’s best talents are found in Smartphone and iPad application development. Games and tools dominate at the moment, but creative and smart corporate and sales promotional applications will burst into the market. At the iPhone 4 launch, Steve Jobs said that the best device people are born with is their fingers. An interface that takes advantage of touch screen characteristics has a possibility of creating a totally new brand experience, clearly different from the ones enjoyed on the Internet.

2. Use of Social Graphs

When looking for a nice eatery or seeking an answer to a question, functions traditionally offered by search engines have been shifting to Social Graphs. Undoubtedly, we will see more and more promotions and advertising incorporating human connection. Facebook heads the Graph platform outside Japan, but in Japan, mixi and Twitter are likely to assume Facebook’s role. Along with SEO, SGO (Social Graph Optimization) initiatives will be higher up on marketers’ agenda.

3. Real-time experience

Twitter and Ustream created user value that is different from blogs and YouTube, both heroes of Web 2.0. Many consumers are increasingly attracted to real-time experiences. For example, time-driven sales cannot be announced by blogs, but they can be powerfully communicated on Twitter. Speeches delivered by Masayoshi Son, Chairman and CEO of Softbank, and a Japanese space probe “Hayabusa” returning to the Earth move our hearts when viewed or heard live. Many companies will explore ways to add real-time, live nature of their promotions to evoke human emotions.

Of course, these changes will not render websites, search engines and blogs outdated. Companies will be blessed with wider channel and methodological options to communicate with consumers. For Nielsen Online, equipped with online measurement technologies, an emerging challenge is to develop metrics for application usage, impact of Social Graphs, and real-time media.

18


Japanese consumers show higher loyalty to the E-commerce category than other countries

When the e-commerce category of major countries was compared based on loyalty indices, including number of visits per visitor and time spent per visitor, the e-commerce category in Japan was found to be larger than in other countries. It can be said that the e-commerce category in Japan is more actively used than in other countries (see Chart 5-1).

5. Latest E-commerce site trends

Tim

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Chart 5-1: Positionings of key EC sites

Note: Size of bubble denotes visitor population.Source: Nielsen Online NetView; access by PC at home and work, April 2010

Amazon, 22,292

Rakuten Ichiba, 24,936

Yahoo! Auction,18,491

Yahoo! Shopping,20,108

Kakaku.com, 13,357

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Chart 5-2: Smartphone penetration in Japan

Source: Nielsen Online NetView; access by PC at home and work

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Male Female

Rakuten Ichiba(24.97 million)

Amazon(22.29 million)

Yahoo! Shopping(20.11 million)

Yahoo! Auction(18.49 million)

Kakaku.com(13.36 million)

Chart 5-3: Key EC site visitor population, by gender

Source: Nielsen Online NetView; access by PC at home and work, April 2010

Rakuten, Amazon and Yahoo! Shopping attract more than 20 million visitors

Moving on to the visitor traffic trend of major E-commerce sites, the big three players – Rakuten, Amazon and Yahoo! Shopping – attracted more than 20 million visitors in April 2010. Yahoo! Auction, which dominates the online auction category in Japan, generated similar traffic, but a downward trend was observed from November 2009. Kakaku.com, the king of price comparison sites, generates visitor traffic around 13 million (see Chart 5-2).

When EC site visitors are broken down into gender, males dominate on all sites. The trend is particularly notable on Kakaku.com, with a male-female split of 2 to 1. Looking at the age groups, Kakaku.com has a higher mix of users in their 30s and older, while Amazon attracts a higher percentage of the

younger generation – high teens to 20s. Interestingly, Rakuten Ichiba and Yahoo! Shopping showed a highly similar user composition in terms of both age group and gender (see Charts 5-3 and 5-4).

19


6

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Amazon(22.29 million)

Yahoo! Shopping(20.11 million)

Yahoo! Auction(18.49 million)

Kakaku.com(13.36 million)

Below 20 20s 30s 40s 50s 60+

Chart 5-4: Key EC site visitor population, by age group


6688

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9279

76808082

5873

7044

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3412

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821

24202018

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0% 20% 40% 60% 80% 100%

Kakaku.com total (13.357 million)

WOM (bulletin board) (4.87 million)

On-site search results (3.506 million)

Household appliance (3.226 million)

User review (3.033 million)

Automotive, motorcycle (2.976 million)

PC (2.899 million)

Camera (1.331 million)

New product news (998,000)

Sports, outdoor (825,000)

Provider (564,000)

Mobile phone, PHS (544,000)

Fashion, timepieces (450,000)

Interior (449,000)

Hobby (403,000)

Household goods (384,000)

Game (316,000)

Baby/kids (251,000)

Beauty, health (205,000)

Food, drink (196,000)

Male Female

Chart 5-5: Kakaku.com visitor male-female split, by category


BuyWithMe,2,374

Groupon, 5,771

LivingSocial,4,388

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Chart 5-6: Groupon site visitor traffic trend in the U.S.

Source: Nielsen Online NetView; access by PC at home and work

At Kakaku.com, the male-female split differs dramatically depending on product category

Male-female split of visitors to Kakaku.com greatly varies depending on category. Visitors to product categories such as “PC,” “sports/outdoor” and “game” are more than 80% men, while “household goods,” “baby/kids” and “beauty/health” categories are visited by more women than men. More men visit “WOM (bulletin board)” and “user reviews”, (see Chart 5-5).

In the U.S. Groupon sites are scoring fast growth

Groupon sites are scoring fast growth in the e-commerce category in the U.S. Groupon is coined from the words “group” and “coupon,” offering discount coupons once the required number of buyers check in for discount. Visitor traffic on major groupon sites in the U.S. show large growth beginning in October 2009 (see Chart 5-6). The hot trend in the U.S. has since landed in Japan, giving rise to many Japanese groupon sites. The Japanese groupon sites are yet to attract big user population and are not measured by online ratings in Japan, but the trend is well worth monitoring.

20


2010: A Tipping Point for the Online Industry in Japan

While my 10 years of online marketing experience in the U.S. gives me an appreciation of several key industry trends, I am still a newcomer to Japan’s media and marketing world. But I have observed several significant differences between Japan and the rest of the world when it comes to online media adoption:

• Online advances/innovations appear to be somewhat stalled in Japan, which is one of the most advanced tech-savvy global economies;

• Social Media is galloping ahead elsewhere in the world, but Japanese marketers appear to view it with skepticism and caution;

• While Japan’s mobile market is uniquely advanced in many ways, smartphones (i.e. iPhone, Android, Blackberry) are struggling to gain share; and

• Elsewhere in the world online access has transformed the political process (witness 2008 US presidential election and coverage of Iran unrest). But Japan politicians continue to impose restrictions on online activity surrounding elections.

Japan does share one important thing with just about every other country: given how consumers around the world are spending more and more time online, everyone is wondering why it is taking so much time for companies to allocate more of their marketing budgets to online. In a nutshell: old habits die hard, and given how important TV advertising has been to all major marketers, it is not straightforward for marketers to dramatically shift established media spending practices, especially to online.

The findings in this report paint a picture that online’s successes in Japan have passed a point of no return, and marketers in all industries understand that their practices must change if they want to communicate effectively with their customers. The Japanese people have a genuine appreciation for the power of brands, and it is clear that online exposure contributes positively to brand awareness, impact and purchase.

In my opinion, 2010 will prove to be a tipping point for the online industry in Japan. The industry will break through the shackles imposed by the recent recession and will see stronger growth later this year, with solid double-digit growth in 2011, coupled with a breakthrough in smartphone penetration and increasing adoption of social media.

Do you agree? Please feel free to share your thoughts by writing me at [email protected].


Copyright © 2010 The Nielsen Company. All rights reserved. Produced in the U.S.A. Nielsen and the Nielsen logo are trademarks or registered trademarks of CZT/ACN Trademarks, L.L.C. Other product and service names are trademarks or registered trademarks of their respective companies. 2010/2024

About contributors (in order of appearance)

Haruki Watanabe: Director of Public Relations, beBit Inc. Joined Honda Motor in 1977 and worked on advertising and sales promotion inside and outside Japan. Watanabe was named web master in 1996 to supervise Honda’s corporate website. Watanabe has assumed the current position since April 2010.

Motohiko Tokuriki: CEO, Agile Media Network Inc. After working on fleet sales and IR activities with NTT, Tokuriki moved on to IT consulting firm and Ariel Networks, later joining Agile Media Network operation in 2006. Tokuriki was appointed Director in July 2007, and promoted to the current position in February 2009.

Hiroto Ebata: Director, Marketing Operations, iMarketing, Coca-Cola(Japan) Company, Ltd. Ebata worked with Space and Information Division of Itochu Corporation, moved on to founding a venture capital Digipri before taking the current position in 2005.

Masashi Hagiwara: Executive Researcher, TransCosmos Inc. After working with Nikkei Research, Hagiwara was appointed Representative Director and President of NetRatings in 1999 and took the position for 10 years. Hagiwara assumed the current position in August 2009.

Supervision

Shigenori Suzuki, Senior Analyst, Nielsen Online Japan

Planning and text

Shigenori Suzuki, Senior Analyst

Shunsuke Usui, Analyst

Masaru Nakagawa, Analyst

Yoshiya Nakamura, Analyst

Tomohiro Nishimura, Analyst,

Ryo Yamada, Analyst, Nielsen Online Japan

Contributor:


Contact:

NetRatings Japan, Inc. Sales Division

Tel: +81-3-4363-4201

e-mail: [email protected]

online media in japan today - nielsen

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