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November 29, 2010 Japan Makes Ideal Proving Ground for Digital Marketing Innovations By Debbie Howard Japan is without a doubt the hottest laboratory in the world for consumer connectivity. There are some 69 million subscribers who use mobile data services, putting mobile Internet penetration in Japan at twice the level in the U.S. or top European countries. And despite the brutal recession of the last couple of years, Japanese online sales are thriving and have increased by 17% annually since 2005. By 2015, Japan’s online retail market is projected to grow as large as $70 billion. One interesting way to gauge the increasing significance of "all things digital" is through the health of mobile marketing and advertising expenditures. In 2009, outlays on mobile marketing and advertising reportedly totaled ¥103 billion, demonstrating a 13% year-on-year growth rate. It should be noted that this was considered low, presumably as a result of the poor economy; growth in the previous year had been 59%. Thinking ahead, Dentsu Inc., which is said to be the world’s largest advertising agency, recently announced a partnership with Apple Inc. of the U.S. for sales of the iAd smartphone ad network in Japan. Dentsu also recently announced its establishment of a ¥10 billion investment fund that will target a broad range of digital businesses with foreign and domestic partners. Believe me, Dentsu is well aware of the market’s potential. Looking at the digital space as yet another media channel (or set of channels), it is clear that: More consumers are constantly exposed to information and promotional offers through increasingly user-friendly and mobile devices (i.e. devices that can access the Internet, be they laptops, smartphones, tablets, PDAs, etc.). Consumers’ relationships with products and brands are changing, and the "path to purchase" is becoming more complex and nuanced. "Social" aspects (i.e. blogs, social networks, etc.) are playing an increasingly important role in how consumers evaluate, purchase, and share opinions about brands. Marketers today are scrambling to "meet the consumer halfway" with new ways of communicating, interacting and selling via the various connected devices available. There are many interesting examples of how companies are incorporating digital-based strategies into their marketing and communications activities with customers and prospective customers. American firm Twitter Inc.’s social networking environment – centered on short messages of up to 140 characters – has rapidly become even more well leveraged in Japan than in its home market. Not surprisingly, companies are finding new a different ways of using it. Coca-Cola (Japan) Co. promoted both its Georgia Espresso Blux and its new "self care" drink called Love Body via accounts on Twitter; both were multidimensional campaigns involving creative use of "tweeting" as well as interrelated use of subway ads and TV commercials. U.S. computer maker Dell Inc. reportedly reaches Twitter users in 12 countries; the number of users who have signed up to received the firm’s messages has grown steadily over the past several months, to 1.5 million. Other companies actively working to engage current and potential customers via the digital space are diverse, ranging from bricks-andmortar convenience store chains like Seven-Eleven Japan Co. and Lawson Inc. to high-end foreign luxury brands such as Burberry and Polo Ralph Lauren. Worldwide, approximately 80 of the Fortune Global 100 companies are reportedly using at least one of the social media platforms to actively engage with stakeholders. Considering its high degree of mobile adaptation and device sophistication, Japan appears to offer multinational companies a fertile environment for honing digital marketing strategies that can in turn be used elsewhere in the world.