Japan’s 1998 Internet Ad Spending Tops 11 Billion Yen

Japan’s domestic Internet advertising market grew
by 89 percent in 1998, according to a survey by the nation’s top
advertising agency Dentsu Inc.

Based on data obtained through its third annual survey of Internet
advertising expenditures in Japan, announced on March 16, Dentsu estimates
that corporate spending for ads on major Japanese sites reached 11.39
billion yen (US$95.8 million) in 1998.

This marks an 88.6 percent growth from the previous survey’s tally of 6.04
billion yen (US$50.3 million) for 1997, and it surpasses Dentsu’s spring
1998 forecast of 9 to 10 billion yen for the entire calendar year.

The Dentsu estimate covers production costs and placement fees for Internet
advertising targeted at the domestic market by information providers
operating in Japan.

Internet advertising is defined by the survey as independent ad content
placed on major sites at clearly specified per-space rates. It does not
include fees for server rental, mall services, or directory links.

The 1998 increase in Internet advertising spending came amid an overall drop
in advertising expenditures by Japanese firms. According to a Japan media
market survey released by Dentsu in February, total 1998 advertising
revenues were down by 3.8 percent to 5.76 trillion (US$48.0 billion) yen.

At just two-tenths of one percent, Internet advertising is barely a drop in
the bucket of the nation’s total ad market.

Last year’s 89 percent rise in Japanese Internet ad spending was slower than
the pace of the previous year. Dentsu estimated Japanese Internet
advertising expenditures in 1997 at 6.04 billion yen (US$50.3 million), a
nearly 280 percent jump over 1996’s 1.60 billion yen (US$13.3 million).

Dentsu forecasts that Japan’s Internet ad market will increase a bit more
slowly, by about 74 percent, this year.

“If the current rate of growth continues,” said Dentsu, “Japanese
Internet-related advertising expenditures will grow to about 19.80 billion
yen (US$165.0 million) in 1999.”

The survey does not address the efficacy of banner advertising, something
that remains open to question since most Japanese Internet users do not
surf to the same extent that users in the US do.

Dial-up users in Japan must pay a time-based telephone connection fee (the
cost of a daytime local phone call is 10 yen ($0.083) per three minutes).

A common pattern of usage, therefore, is either to go directly to only one
or two favorite portal sites, or to skip quickly between sites by clicking
on links while saving or printing pages of interest to be read later

A Nikkei Market Access (NMA)
survey found that Japanese users typically
spend less than 20 seconds viewing more the majority of Web pages they
access. This suggests that, except for a few popular portal sites, Japanese
users are less likely to pay attention to banner ads, let alone click on

In an experiment aimed at creating greater visual impact and increasing ad
effectiveness, Excite Japan in
February signed a contract with Coca-Cola
Japan to display the bottler’s logo and other promotional illustrations as
part of the page background.

Interestingly, e-mail–a medium not considered by the Dentsu survey–is
enjoying increasing success as a vehicle for advertising in Japan.

Users responding to a 1998 Nikkei
survey said that they are more
likely to access an advertiser’s site listed in an interesting ad in an
e-mail newsletter than to click on a webpage banner ad.

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