CyberZ&Digital InFact: Japan's smartphone advertising market reached 371.7 billion yen in 2015

Introduction: CyberZ Co., Ltd. of Japan and Digital InFact, a digital service research organization, conducted a survey on the Japanese smartphone advertising market from February to March 2016.

Survey Summary:

1. In 2015, the scale of Japan's smartphone advertising market reached 371.7 billion yen, with an annual growth rate of 23.6%;

2. Social media advertising and video advertising accounted for the majority of Japan's smartphone advertising market in 2015. The display advertising market size was 222.5 billion yen, with an annual growth rate of 35%, accounting for 60% of the total smartphone advertising market;

3. It is expected that Japan's two-way interactive advertising expenditure will reach 6.9 billion yen in 2016 and 35 billion yen in 2017;

4. In 2016, the size of Japan's smartphone market is expected to reach 454.2 billion yen, with an annual growth rate of 22.2%.

1. Changes in the size of Japan’s smartphone advertising market in 2015

In 2015, the size of Japan's smartphone advertising market reached 371.7 billion yen, with an annual growth rate of 23.6%.

In 2015, the use of smartphones by users of all ages in Japan increased significantly, and smartphones have become an indispensable terminal device for people to obtain information and communicate with each other in their daily lives.

The market size of various emerging businesses derived from smartphones, such as game apps, has shown a steady growth trend in recent years. Many advertisers have also begun to turn their attention to smartphones, intending to promote their products and services through smartphone advertising. In 2015, the scale of Japan's smartphone advertising market reached 371.7 billion yen, with an annual growth rate of 23.6%. It is expected that by 2020, the market size will double that of 2015, reaching 752.7 billion yen.

2. Trends in smartphone advertising categories

Social media advertising and video advertising accounted for the majority of the Japanese smartphone advertising market in 2015. The display advertising market was worth 222.5 billion yen, with an annual growth rate of 35%, accounting for 60% of the total smartphone advertising market.

In 2015, the keyword search advertising market in Japan was worth 138 billion yen (annual growth rate of 15%), the display advertising market was worth 222.5 billion yen (annual growth rate of 35%), and the performance-based advertising market was worth 11.2 billion yen, a decrease of 30% from the previous year.

3. Forecast of the market size of two-way interactive advertising (engagement-ads)

Two-way interactive advertising is mainly aimed at game apps and e-commerce advertisers, with the purpose of arousing users' re-engagement. It is estimated that Japan's two-way interactive advertising expenditure will reach 6.9 billion yen in 2016 and 35 billion yen in 2017.

Advertisers in the gaming app and e-commerce sectors usually acquire new users for their products through smartphone advertising. On the other hand, more and more advertisers are also beginning to make new demands on advertising products in order to consolidate existing users and reduce customer churn.

With the continuous development of smartphone advertising technology, advertising methods that enable communication between advertisers and target users have begun to emerge, and many leading companies have begun to provide advertisers with two-way interactive display advertising products and services.

In this context, the two-way interactive display advertising market will achieve rapid growth in 2016 and is expected to reach 6.9 billion yen. It is believed that in the next few years, as advertisers' demand for App promotion continues to expand, two-way interactive advertising will become a highly anticipated App promotion method adopted by more and more advertisers. It is estimated that by 2020, the scale of the two-way interactive advertising market will reach 35 billion yen.

4. Smartphone Advertising Market in 2016

The size of Japan's smartphone market is expected to reach 454.2 billion yen in 2016, with an annual growth rate of 22.2%.

Considering the content consumption patterns of Japanese smartphone users in 2015, with the continuous launch of friendly advertising products and advertisers' accumulated knowledge of various advertising products, Japan's digital advertising expenditure will increase significantly in 2016.

In 2016, the size of Japan's keyword search advertising market is expected to reach 155.9 billion yen (annual growth rate of 13%), the display advertising market is expected to reach 289.3 billion yen (annual growth rate of 30%), and the performance-based advertising market is expected to reach 9 billion yen (annual growth rate of 80.4%).

In the next few years, the size of Japan's keyword search advertising market and display advertising market will grow steadily, while the size of the performance-based advertising market will show a downward trend due to factors such as lower unit prices and a decrease in the number of advertisements published.

Summary: The consumer trends survey report released by the Cabinet Office of Japan at the end of March this year showed that the penetration rate of mobile phones in Japan (including smartphones) was 95.3%, among which the penetration rate of smartphones was 67.4%, an increase of 6.8% over the same period, and the penetration rate of functional phones was 64.3%, a decrease of 5.5 percentage points over the same period. Japanese mobile phone users are currently in a period of major transition from functional phones to smartphones, and the potential of Japan's smartphone advertising market in the future still needs to be explored.