Advertising rates decline by 6% in Japan

28 January 2010

TOKYO: Advertising rates decreased by more than 6% in Japan last year, as the financial crisis and declining levels of demand exerted deflationary pressure in the country.

The Bank of Japan's Corporate Service Price Index reported that companies in the Asian nation saw total costs across their operations decline by 2.5% on an annual basis in 2009.

According to the Bank's estimates, "advertising services" recorded a contraction of 6.2%, reaching a peak of 8% in August, before the situation began to stabilise towards the end of the year.

Within this, TV, magazines, newspapers and radio experienced a combined drop of 8.6%, with the May-to-August period proving particularly adverse.

"Other advertising services", a category that includes outdoor, direct mail and online advertising, posted a more modest decline of 1.1%.

Warc's most recent Consensus Forecast predicted that adspend levels in the country would fall by 2.6% this year, having tumbled by some 11.6% over the previous 12 months.

In recognition of both the current unfavourable climate and longer term trends like the ageing of the population, Dentsu, the biggest player in the domestic ad market, has previously announced an intention to expand its operations abroad.

The company recently purchased Innovation Interactive, a US network with assets including 360i, the digital agency, Search Ignite, the search specialist, and Net Mining, a targeting and analytics firm.

Tim Andree, president/ceo of Dentsu Holdings USA, argued the holding group, which also owns Mcgarrybowen, would consider making further acquisitions in an effort to develop its global reach.

"We're the world's largest agency brand, and we're described as the fifth-largest agency holding company, but it's hard to describe us as a classic holding company when 90% of our revenue comes from Japan," he said.

Data sourced from The Japan Times/MediaPost; additional content by Warc staff