Why Advertisers Are Moving Budgets From TV To Social...

...And The Opportunity For Japanese Advertisers

Advertisers have been gradually moving their ad budgets from traditional media such as TV and print to digital for over a decade. With the growth of Facebook advertising in particular, this shift has started to accelerate over the last few years.

In many European markets digital ad spend overtook TV ad spend years ago (in the UK it now accounts for double the ad spend on TV). In the US, this is forecast to happen in 2017. In Japan this isn’t forecast to happen until 2020.

So, what are the reasons for markets such as the UK and US making such dramatic shifts in ad spend already? And is Japan justified in the slower shift to digital or missing an opportunity that other regions are capitalizing on?

In this blog we look to answer these questions.

What are the reasons behind the shift in ad spend?
UK vs US vs Japan: Media Usage vs Media Spend
What opportunities does this present Japanese advertisers?

What are the key reasons for the shift in ad spend?

CHANGING MEDIA CONSUMPTION HABITS

One of the core reasons advertisers have been shifting spend from TV to digital is as a matter of necessity. The simple need to go where their audience is.

Media consumption habits have changed dramatically over the last decade. In the US, daily digital media consumption overtook TV consumption for the first time in 2013. In the UK, this happened in 2013 as well. Since then the growth of digital and decline of TV consumption has continued apace in both these markets. In Japan, this change is forecast to happen in 2018—only five years behind two of the world’s top three Internet advertising markets.

GROWTH OF MOBILE USAGE AND DUAL-SCREENING

The smartphone revolution has been a big driver in the growth of digital media consumption. Consumers no longer need to logon to a desktop or laptop to get online, they can simply look at their smartphone anytime, anywhere. This allows smart advertisers to connect with their audience throughout the day.

In the US, mobile usage overtook desktop and laptop usage in 2014. In the UK, this happened in 2015 and mobile usage has been growing at double digit rates for the last five years. In Japan, mobile usage is forecast to overtake desktop and laptop usage in 2017.

Furthermore, a lot of the time consumers spend watching TV is actually spent dual-screening. In 2016, 85% of US Internet users surfed the web while watching TV. By 2018, 91% of US Internet users will do so and 79% of those will do it via a smartphone.

IMPROVED TARGETING AND SEGMENTATION

TV advertising offers marketers an opportunity to get their message in front of a large audience. However, beyond picking specific TV shows, channels and time slots to advertise during, there is little in the way of audience targeting.

Digital advertising has changed this and, in particular, platforms such as Facebook have revolutionized the targeting options available. Advertisers can target and segment based on factors including demographics, interests, behaviours and much more. In addition, digital advertising allows the testing of multiple creatives at any one time, allowing advertisers to understand how their messaging is resonating with various audience segments.

BETTER DATA AND INSIGHTS

Digital advertising provides marketers with a wealth of real-time data and insights to act on. ID based platforms such as Facebook also allow marketers to track users across desktop and mobile platforms—a big step forward from cookie based tracking.

For performance marketers, this has meant being able to track directly which ads and audiences have led to conversions and purchases and the ability to optimize advertising towards best performing target segments. For brand marketers, this has meant being able to show which target segments are reacting most positively to a brand messaging.

GROWTH OF FACEBOOK

Facebook is a juggernaut and, as of the beginning of 2017, has 1.86 billion monthly active users. In addition, Facebook owned Instagram has 700 million monthly active users. This is a huge chunk of the world’s seven billion people that are available to advertisers directly through Facebook. Advertisers have recognized this and begun to shift their ad spend to the platform.

UK vs US vs Japan: Media Usage vs Media Spend

Japan lags behind the rest of the world in shifting TV spend to digital. But as the below graphs demonstrate, the shift in media spend in leading markets has mirrored the shift in consumer media consumption habits. And Japan, inevitably, will follow this trend. 

As highlighted earlier, one of the key drivers in the shift of ad spend from TV to digital has been the changing media consumption habits of consumers.

Comparing the consumption of TV and digital media against the ad spend for TV and digital media provides an interesting insight into where a country is in the shift from TV to digital and what we can expect to happen in the Japanese market in the next few years.

UNITED KINGDOM

Digital media usage surpassed TV usage in the UK in 2013, however digital ad spend surpassed TV ad spend long before this. UK advertisers have been some of the earliest adopters of Internet advertising, taking full advantage of the shift in where users are consuming their media.

UNITED STATES

Digital media usage surpassed TV usage in the US in 2013 as well, in an almost identical trend to the UK. The shift of ad spend from TV to digital has been slightly slowly though, with digital ad spend forecast to surpass TV in 2017. Although the shift hasn’t happened as quickly as in the UK, the ad spend trend perfectly matches the changing trend in consumer media consumption, just a few years later.

JAPAN

The shift from TV usage to digital media usage has been slower in Japan than in the UK and US. Digital media consumption is forecast to surpass TV consumption in about 2018 - 2019 and—like in the US—digital ad spend is forecast to surpass TV ad spend a couple of years later.

In addition Japanese advertisers spend a disproportionate amount of ad budget on print advertising in comparison to its share of media consumption. In 2016, print media accounted for 4.9% of Japanese people’s media consumption, but an incredible 18.2% of ad spending. This means that—unlike in the UK and US—the amount of ad spend on TV and digital isn't proportional to the amount of time people spend on those mediums.

What opportunities does this present to Japanese advertisers?

Eventually, digital ad spend will surpass TV ad spend—it’s inevitable. It happened several years ago in the UK, it’s happening right now in the US, and it will happen in a couple of years in Japan. So, what does this mean for advertisers?

In the US and around the globe, advertisers should already be focussing their ad spend on digital over TV and, if not, then they are behind the curve.

In Japan, quite simply, there is a huge opportunity to get ahead of the competition by investing more in digital advertising at the expense of TV and print—right now. Case studies have shown that early adopters of digital and, in particular, social media trends have an unprecedented opportunity for branding, visibility and platform building.

Smart Japanese advertisers will gain a big advantage by shifting their ad budget to digital and social media now. In addition to the improved targeting, reach, insights, brand protection and ad formats that platforms such as Adgo offer, advertisers will also benefit from a greater share of their audience’s attention due to less competition and cheaper prices.

So, Japan, what are you waiting for?

* Ad spend statistics used in this blog were taken from eMarketer’s US and worldwide ad spending forecasts and estimates.