Japan Digital Overview from Neo @ Ogilvy 2010

Japan digital landscape and

insightsDecember 2, 2010

Neo@Ogilvy Japan

Agenda

• Japan Market

• Social Media

• Mobile

• New Device & Technology

Japan Market

Transition of Internet Users• 94.08 million users, 78.0% penetration

rate

11.55

16.94

27.06

47.08

55.93

69.42

77.3079.48

85.2987.54 88.11

90.9194.08

9.2%13.4%

21.4%

37.1%

46.3%

57.8%

64.3%66.0%

70.8%72.6% 73.0%

75.3% 78.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

The Number of Users Penetration Rate of Population-based(million people )

Data source :Ministry of Internal Affairs and Communication 2010 4

65.6

95.5 97.8

95.5

92.0

82.2

63.4

37.6

27.7

14.5

71.6

97.4 96.6 97.1 95.4

86.1

71.6

58.0

32.9

18.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

6-12 13-19 20-29 30-39 40-49 50-59 60-64 65-69 70-79 80-

Male (n=6,858) Female (n=7,070)

Usage rate by Age/Gender• Male 81.3%, Female 74.9% over age 6

(%)

Data source :Ministry of Internal Affairs and Communication 2010 5

Internet Usage Device• Slight increase in Mobile & Game/TV

connection (year-on-year)

PC only12.92 M(13.7%)

PC & Mobile64.92 M(69.0%)

Mobile only8.85 M(9.4%)

Mobile80.10

M(85.1%)

PC85.14

M(90.5%)

Game or TV5.67 M(6.2%)

4.75 M(5.2%)

0.76 M(0.8%)

0.02 M(0.0%)

0.13 M(0.1%)

+2.5% (vs 2009)

-0.3% (vs 2009)

+1.7% (vs 2009)

(Unit = million people )

Data source :Ministry of Internal Affairs and Communication 2010 6

Corporate Internet Usage• Almost all companies use Internet

97.8

99.7 100.0 100.0 100.0

99.2 99.2

100.0 100.0 100.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

100-299 300-499 500-999 1000-1999 2000-

2008 (n=2,012) 2009 (n=1,834)(%)

94.5

96.1

97.5 98.1

97.6

98.1 98.7 99.0 99.5

92.0

93.0

94.0

95.0

96.0

97.0

98.0

99.0

100.0

2001 2002 2003 2004 2005 2006 2007 2008 2009

(%)

Data source :Ministry of Internal Affairs and Communication 2010 7

By Businesses of Different Employee Size

Internet Use Trend (Business)

By type of Internet line• Gradual increase in Broadband,

decrease in Narrowband

41.1%

18.5%17.1%

3.4%0.7% 0.4%

11.5%9.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

72.0%

15.7%

2.6%0.2% 0.1%

10.2%

4.4%3.1%

20.6%

0.1%0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Broadband76.8%

Broadband76.9%

Data source :Ministry of Internal Affairs and Communication 2010 8

Households Businesses

• Mobile/PHS/PC are highly popularized

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1999(n=3,657)

2000(n=4,278)

2001(n=3,845)

2002(n=3,673)

2003(n=3,354)

2004(n=3,695)

2005(n=3,982)

2006(n=4,999)

2007(n=3,640)

2008(n=4,515)

2009(n=4,547)

Penetration of Communication Device

(%)Mobile Phone & PHS

PC

Car Navigation System

Gaming Hardware (Internet-enabled)

TV(Internet-enabled)

Data source :Ministry of Internal Affairs and Communication 2010 9

Transition of Ad Spend by Media• Internet has grown 1.9 times bigger than

2005, and has become 2nd largest media following TV

20,681 19,351 19,480 20,436 20,411 20,161 19,981 19,09217,139

12,02710,707 10,500

10,559 10,377 9,986 9,4628,276

6,739

4,180

4,051 4,0353,970 4,842 4,777 4,585

4,078

3,034

1,998

1,837 1,8071,795 1,778 1,744

1,671

1,549

1,370

735

845 1,1831,814

3,777 4,826 6,003

6,983

7,069

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

TV News Paper Magazine Radio Internet(M USD / 1 USD = 100 JPY)

Data source :dentsu 2010

TV : 17.1% down

NP : 44.0% down

MG : 27.4% down

INT : 861.8% up

TV : 16.0% down

NP : 35.1% down

MG : 37.3% down

INT : 87.2% up

10.2% down

18.6% down

25.6% down

1.2%　 up

10

Transition of Internet Ad Spending

• Listing and Mobile are the pulling force

(M USD / 1 USD = 100 JPY)

Data source :dentsu 2010 (2006-2009) / Mizuho Corporate Bank (2010-2012)

2,310 2,6882,885

2,707 2,7752,836 2,895

930

1,2821,575 1,710

1,881

2,050 2,214

390

536

743 807888

1,0651,246

85

170224

280

325

364

25.6%

29.8%

32.5%

35.5%37.1% 37.8% 38.4%

10.7%

13.5%

17.0%

18.9%20.1%

22.1%24.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2006 2007 2008 2009 2010 Forcast 2011 Forcast 2012 Forcast

PC - Display PC - Listing Mobile - Display Mobile - Listing Listing AD Ratio(vs Internet Media)

Mobile AD Ratio(vs Internet Media)

(M USD / 1 USD = 100 JPY)

11

Usage Site Ranking• Prominent change in user usage trend

from portal/ISP to social media

Yahoo!74.3

Nifty48.2

MSN42.4

NEC39.7

Sony31.6

Microsoft

31.4

DTI27.9

Rakuten

26.9

Lycos26.8

DDI26.2

1

2

3

4

5

6

7

8

9

10

2001.3

Yahoo!74.6

Nifty47.9

MSN44.8

Rakuten

43.4

NEC40.3

Microsoft

37.7

Sony36.2

NTT Com.

31.6

Lycos26.6

NTT-X26.0

2002.3

Yahoo!78.9

Rakuten54.8

Nifty50.9

MSN49.6

NEC43.7

Microsoft

41.7

Sony35.2

NTT Com.

33.9

KDDI28.9

Asahi Net

25.5

2003.3

Yahoo!81.9

Rakuten

57.4

MSN55.1

Nifty50.1

Microsoft

43.8

NEC43.6

Sony35.9

NTT Com.

35.8

GMO32.4

KDDI28.7

2004.3

Yahoo!83.8

Rakuten

60.7

MSN51.4

GMO49.1

Nifty47.5

NEC42.7

Microsoft

39.2

NTT Com.

37.7

Sony34.7

NTT-R34.2

2005.3

Yahoo!86.4

Rakuten

60.2

GMO Internet

52.9

Nifty48.7

MSN47.4

NEC43.0

Amazon

40.2

FC238.6

NTT Com.

38.5

Livedoor

37.9

2006.3

Yahoo!87.3

Rakuten

56.1Microsof

t54.7

NTT Com.

52.9

Google50.0

GMO Internet

48.0

Nifty46.1

NEC43.5

FC241.7

Livedoor

40.0

2007.3

Yahoo!88.0

Google59.2

Rakuten55.0

NTT Com.

52.5

Microsoft48.1

GMO Internet

46.8

FC244.2

Nifty43.2

Livedoor

38.4

Wikimedia37.8

2008.3

Yahoo!82.2

Google63.9

Rakuten50.7

NTT Com.

47.8

FC244.2

Microsoft

42.9

Nifty37.9

Livedoor

34.6

2009.3

Yahoo!83.7

Google66.0

Rakuten

53.1

NTT Com.

50.1

FC246.5

Nifty40.4

Microsoft

39.7

Cyber Agent

39.0

2010.3(Ranking)

Twitter0.7

Twitter12.2Appendix

GMO Internet

41.9

Wikimedia34.9

GMO Internet

43.6

Wikimedia40.5

Data source :Nielsen Online (Home Panel) 12

Social Media

Special Sneakers

14

Types of Social Media

15

Micro blog

16

Micro blog

17

8.2%

17.5%

89.7%

17.4%

47.7%

95.3%

19.5%

51.2%

92.7%

7.8%

17.6%

98.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Ameba now

mixi voive

Twitter

Smartphone Mobile Combine use PC and Mobile PC

Types of Micro-blog

Data Source : Internet White Paper 2010

• Twitter usage is dominant, mainly accessed from mobile

18

0

5,000

10,000

15,000

20,000

25,000

30,000

2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09

Twitter mixi Ameba

Twitter visitor number trend• As of Sept. 2010, Twitter has acquired

over 11 million visitors, exceeding mixi

19

（ in1000）

Data Source : Neilsen Netview ※Excluding access from client exclusive to Twitter

How is Twitter used?

20

Learn Tell Share

What are they tweeting?

Data Source : Internet White Paper 2010

• Mostly private things…

21

about the same, 13.4%

More private, 34.9%Mostly private,

40.8%

Can't say, 5.0%

Mostly business / school work, 2.2%

More business / school work, 3.7%

Twitter as Business Tool• Many business leaders and media

delivering information on daily basis

Business Leader Media

1,373

10,862

3,890

1,827,353

680,768

221,312

90,04751,398

7,469

7,437

4,462

4,144

3,301

47,146

2,472

29,582

+ CompetitorData Source : Twitter (November 29, 2010)

What companies are tackling?

PR Promotion Communication CRM

Case Study

Twitter icon projected on the wall of Roppongi Hills like fireworks

24

• au – IS Series

• Stride – Find the Monkey Campaign

Case Study

25

• GAP – WANT CAMPAIGN

Case Study

26

SNS

27

19.93 million

SNS in Japan

20.74 million

20.59 millionpeople

Affiliation

Conflict Conflict

28Membership as of June 2010

Strategy of 3 SNS companies

Addressing the mechanism that strengthens real relationship between people on the web

Strengthening virtual relationship with Social

Game as the principal axis

29

Hot SNS

Real name & Open culture

Closed office environment

Anonymity

Career- move style

Twitter and Facebook• Using both is standard in US

6,229 2,341 25,203 1,570,472

204,137 47,827 70,427 345,349

Data source :Twitter and Facebook (November 29, 2010)

Usage situation of companies in Japan

• Facebook is not penetrated in Japan

12,775 4,334 4,481 11,907

n/a n/a 571 3,098

Data source :Twitter and Facebook (November 29, 2010)

• Levi’s – Levi’s Girl

Case Study

33

• General Mills – Coping With Disbelief Clinic

Case Study

34

• Dell – Social Media for Small Business

Case Study

35

Mobile

• Shipment volume is slightly on the increase since 2009. However, overall, it seems to have hit the peak.

Mobile terminal shipment volume

( x 1,000 )

Data source :Yano Research Institute 2010

39,902 36,817 37,360

39,450 41,480

45,165

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

2008 2009 2010 (E) 2011(E) 2012 (E) 2013 (E)

37

• Smartphone holds 5.9% share of total mobile phone, and is expected to reach 30% by 2013

Smartphone shipment volume

Data source :Yano Research Institute 2010

1,677 2,175

4,625

7,030

9,940

13,540

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2008 2009 2010 (E) 2011(E) 2012 (E) 2013 (E)

38

( x 1,000 )

72.2%

11.1%

6.8%

4.3%4.3%

1.3%

Apple

HTC

TOSHIBA

RIM

Sony Ericsson

Samsung

• iPhone reign supreme in 2009 taking up over 70% of the market

Shipment by Maker

Data source :MM Research Institute 2010 39

GALAXY S start exceeds iPhone 4. Reservations alone over 50,000 - Oct 27, 2010

Ｎ

Expansion of Smartphone Devices

40

460,000 Xperia shipped by end of Sept.9- Oct 27, 2010

KDDI ISO3 to be launched 250,000 tentative reservations made already – Nov 26

Clash with Android as 15 new models from 3 companies in winter/spring

１ .69 million iPhone shipped in 2009, 72.2% of smartphone - Apr 23, 2010

• Both Corporations/Individuals are considering active usage of smartphone

Smartphone used for business

41

Provided by Company

etc

Business Usage

Seminar

Book

• Advanced business usage of mobile in various areas

Case Study

Advanced companies/corporationsToden Home Service, Keio Electric Railway, Kawatsu-cho PTA

Mobile

Internet GPS Cloud

Application

ASP Camera

Sound&

Video

実現例• 店舗の売上商品、金額のスピーディな把握• 現場、本社がタイムリーに連携した顧客情報、サー

ビス• ペットの遠隔健康管理• 高齢者や子供と家族を繋ぐ情報システム

Mobile

Internet GPS Cloud

Application

ASP Camera

Specifically,• Quickly grasping sales of merchandise and price at each

store• Delivery of timely customer information and service from

headquarters to stores • Simple information system connecting seniors and kids with

family

Responding Companies

iPhone4 - Nov 25, 2010 43

Application

44

• App Store is downloaded 3 times more than Android Market worldwide, with 1.5 times more registrations

App Store vs Android Market

Data source : Apple Inc / Google Inc 45

Registration #150,000

(Feb 2010)

Downloads3 billion

（ Jul 2010)

Registration #100,000

(Jan 2010)

Downloads1.2 billion

(Aug 2010)

• Daily-use Applications – essential to business

Business-related applications

46

• Sankei Shimbun - iPhone APP AD

Case Study

• SUNTORY - Highball Master

Case Study

48

• Mercedes – SLS AMG Showcase Application

Case Study

49

• Chopper 2 - iPhone + iPad

Case Study

50

iAd

51

52

iAd is an…

Advertising platform within applications

Enables delivery of interactive advertising or high-quality images when clicking ad

in full screen within the applicationwithout moving to another site

Supports targeting by Location InformationAd is created with HTML5 avoiding Flash

By end of 2010

$ 60 million

Worth placement is expected

Advertisers

Walt Disney, NISSAN, Citigroup, Unilever, AT&T, Chanel, General

Electric, Liberty Mutual Insurance, State Farm Mutual Automobile Insurance, GEICO,

Campbell Soup, Sears Holdings, J. C. Penney, Target, Best Buy, DirecTV, Turner Broadcasting

System etc…

iAd in the

US Marke

t53

Market size

Case Study - US

iOS vs Android

55

Installed OS Share

56

36.9%

63.8%

47.3%

4.0%

15.8%

32.2%

0% 20% 40% 60% 80% 100%

2015

2009

iOS Android Others

Data source :Seed Planning “ Smartphone / iPad (Tablet PC) Report

iOS devices and Android devices

Smart Phone

Tablet PC

TV

Home ElectronicsCar etc….

Projection

57

New Technologies & Devices

Digital Books

59

Device Map 2010• iPad has established a new position

Light TaskHeavy Task

Personal

Public60

Movement of digital books

Mar

Apr

May

Jun

Jul

Aug

Sept

2010

Seven&I holdings announced entry into digital book business

The Electronic Book Publishers Association of Japan established

“Astand” (Digital book delivery site for Asahi Shimbun PC) opened

“iPad“ launched“Digital Library Publication”(digital publication purchase application for iPhone offered free of charge)

“Kindle”announced 2 new product models

“SONY Reader“ new series released“Galaxy Tab”(Samsung) announced

“GALAPAGOS(Sharp) announced (to be launched in December)

”agora-books” (publisher specializing in digital books) established

Kinokunia Books announced entry into digital book delivery market

NTT docomo, Dainippon printing formed business partnership in digital book platform construction

0

200

400

600

800

1,000

1,200

1,400

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

for New Platform

for Mobile

for PC

• Previously driven by comics for mobile phone

• With the appearance of iPad and exclusive terminal, demands on new platform is expected to grow

Digital Book Market Size

PROJECTION

62Data source :Impress R&D “Digital Book Business Report 2010”

(M USD / 1 USD = 100 JPY)

Digital Book Terminals (new platform)

Tablet PC

Digital book exclusive terminal

GALAPAGOS

Galaxy TabiPad

LifeTouch

FLEPia

Kindle SONY Reader

63

Social Reading

4 other people highlighted this part of the book Online Book

Club

64

Reading together

• Where did other readers

highlight?

• What were other readers’

comments?

• Review

• Twitter favorite phrase on Twitter

Layer Reading

65

Idea of digital book creating new reading experience and

business opportunities

Layer for sharing thoughts and impression with

members

Layer for comments by other writer

Layer for discussion with friends about book purchase

• iPad used in advanced ways by various industry

Case Study

PRESENTATION

TOOL

AR

67

• Mini Cooper – Application + AR

Case Study

68

69

Case Study

Insight forConstituencies

Contact Media Depending on Information Type

• Various contact media have separate purpose– Business : NP, MG, Online / IT : MG, Online

0%10%20%30%40%50%60%70%80%90%

100%General Newspaper

Nippon Keizai Shimbun

Industry Newspaper

Industry Newspaper/Magazines of your industry

General Weekly Magazine

Business Magazine

IT Magazine

PC Magazine

News Program on TVOther TV Program

News Channel on CS/BS

Other Channel on CS/BS

News Website

Business Website

IT Website

Portal Website

Train, OOH

Resource for General Hobby and Amenity Resource for Business Resource for IT and IS n/a

Data source :Japan Media Consumption Study 5 71

Contact Media Depending on Purchase Process Activity

• Transition of top 10 media– IT site, IT magazines, Portal site/News site

are influential when accessing information

Data source : ES quantitative research 2010

21.7%

22.0%

23.6%

31.6%

31.9%

34.5%

41.2%

42.8%

53.7%

56.9%

0.0% 20.0% 40.0% 60.0%

7.0%

11.2%

33.9%

39.6%

25.6%

25.2%

40.9%

24.3%

30.7%

36.7%

0.0% 20.0% 40.0% 60.0%

7.0%

11.2%

33.9%

39.6%

25.6%

25.2%

40.9%

24.3%

30.7%

36.7%

0.0% 20.0% 40.0% 60.0%

72

Accessing info. Considering Decision-making

ITpro, @IT information site

Portal/News site

IT magazines

Vendor homepage

Exhibition/Seminar

Seminar hosted by Vender

Person in charge of Vender

Person in charge of Agent

Business Magazine

NP (national)

Usage frequency of each website

• Usage pattern differ depending on site– Tendency to access portal site every day

Yahoo! JAPAN Google NIKKEI NET Amazon.co.jp YouTube infoseek asahi.com goo MSN Japan YOMIURI ONLINE

Every day 5-6 times by Week 3-4 times by Week 1-2 times by Week 2-3 times by Month Under once monthly

（現、日経電子版）

73Data source :Japan Media Consumption Study 5)

Current Situation of Smartphone

89 ％ aware of smartphones

among which12 ％ are already using them

51 ％ are considering using

themData source :Japan Media Consumption Study 5 74

※Total of all target (CxO, LOB, IT in LEE/MM)

※Research conducted in 2010.3

Usage rate of Social Media

30%

10%

7%

2%1%

Data source :Japan Media Consumption Study 5 75

※Total of all target (CxO, LOB, IT in LEE/MM)

※Research conducted in 2010.3

Thank you

76