Insights from CMOs: Why Japan Is Lagging in the Digital Marketing Evolution

May 2016

These days, companies are finding it difficult to keep up with consumers’ fast-paced shift to digital. A Google survey was conducted in five Asia-Pacific countries and revealed four critical issues that companies are facing - and that a number of Japanese companies are lagging behind.

Are Japanese companies responding to the digital shift?

So far in this series, we’ve discussed new marketing approaches that will help marketers evolve to meet changing consumer behavior in the digital era. Most marketers, if not all, know they need to adapt to these consumer changes quickly.

However, recent data shows that companies have yet to catch up with consumers' digital shift. For example, according to data from 2014, Japanese companies’ overall advertising spend on digital media is considerably lower than consumers’ use of the same media, creating a deviation of approximately 30%.1 So, why the gap? A survey among CMO-level marketing executives in five major APAC countries (India, Australia, Singapore, China, and Japan) aimed to investigate the reasons behind this delay.2

Four common obstacles to digital marketing growth

According to the Google survey, companies not only face obstacles in evolving the marketing process, they also struggle with structural bottlenecks across the organization. Regardless of region or industry, marketing organizations are facing the following challenges:

  1. An organizational structure optimized for conventional marketing
  2. Inconsistent performance indicators assessing marketing ROI
  3. Insufficient digital-savvy professionals and resources
  4. A complex, restrictive mix of digital media and assets

Challenge 1: An organizational structure optimized for conventional marketing

Marketing in the digital age requires awareness of the many different ways consumers engage with companies across various media channels. Today’s marketing tools enable marketers to obtain performance data in real time, allowing them to make quicker decisions and optimize their marketing spend with more flexibility. However, in a vertically structured organization tailored to a rigid, pre-fixed media plan and implementation schedule, it’s very difficult to act with speed and flexibility when adapting to insights from mid-campaign assessments.

Historically, many companies have used well-defined strategies to plan and implement advertising campaigns that rely heavily on conventional media, such as TV. Sales promotions and events also have their own set of processes and resources that are independent of TV.

Let’s consider an example: A company wants to implement a mobile promotion campaign to direct consumers to stores or call centers. Ideally, the advertising team would collaborate with the team that manages the stores and call centers to properly assess the campaign’s impact. The advertisers could then decide how best to manage the ad spend in a timely manner. Unfortunately, in a conventional organization, departments are often disconnected, making it difficult to optimize the overall budget flexibly across multiple departments.

The CMO of Acer, a Taiwanese computer manufacturer, aptly describes the attitude of sticking to the long-time tradition: “There are still a lot of people who prefer to do the same thing repeatedly, placing outdoor advertising or proposing sponsorships for local golf events. They tend to stick to the things they’ve always done.” These customary practices, such as keeping the same year-round level and mix of media distribution, can take time to evolve.

Challenge 2: Inconsistent performance indicators assessing marketing ROI

On one hand, advances in digital technology have enabled marketers to visualize the ROI for a given marketing spend. On the other, companies are finding it increasingly difficult to align with stakeholders (both internal and external) on deciding which performance indicators to use, or how to define a campaign’s success.

For example, TV advertising uses GRP (gross rating point), which shows how much money should be spent on TV ads and how much was spent in the past. While it doesn’t necessarily indicate the ads’ impact on consumers, it’s widely recognized as the industry standard and used as the common language. In digital advertising, there are several indicators that act as metrics, such as CTR (click-through rate), CPA (cost per action), likes, +1s, and tweets. Even with so many metrics to consider, none of these offer an overall view of the total investment, making it a daunting task to draw comparisons among them and other media channels.

Due to its relative recentness and high volume of data, digital advertising often demands a logical explanation and assessment of its result and impact. However, without a common and consistent definition of metrics, it’s very hard for stakeholders to understand and evaluate digital advertising’s outcome. Hyper-targeted ads, delivered only to a select group of consumers to create maximum impact, may give stakeholders the impression of a small-scale investment with negligable impact when compared to the reach of mass media. These types of barriers are hindering the penetration of digital advertising across marketing organizations.

Challenge 3: Insufficient digital-savvy professionals and resources

Many of today’s marketing professionals built their careers on experience in conventional marketing principles and execution. The result is a limited number of marketers with a deep knowledge of digital technology and the ability to apply that knowledge practically to actual marketing campaigns. Utilizing digital technology for marketing requires a different set of skills than more entrenched media does, including frequently analyzing large amounts of data, drawing insights from the findings, and developing engaging content that people will choose to watch or click, no matter the size or format.

Especially in the creative area of business, many companies outsource the "digital part" to specialized agencies. However, very few creative agencies retain professionals capable of developing ideas for integrated marketing campaigns based on knowledge of digital technology.

Another challenge regarding resources involves purely digital marketing strategies. For example, consumers can choose to be on social media at any time of the day, requiring marketers to connect with them across a number of intent-driven moments for effective brand engagement. One CMO of an alcoholic beverage manufacturer shared their example of this challenge: “Our target consumers come on to social media and actively share information on Friday nights. We had a hard time responding with our then-existing teams, but after we got a new team to work specifically at that time, we were able to release information about our product and special content in real time, and this has resulted in a very positive response from consumers.”

Challenge 4: A complex, restrictive mix of digital media and assets

Here’s a question to consider: How many executives within your organization have mastered the latest digital devices? And how many not only understand the devices, but are aware of and can interact with a variety of digital media? The answer is probably very few. Marketing executives need to have a firsthand knowledge of digital technology to fully understand how their consumers are interacting with the various devices, media, and content on a daily basis.

The number of ways and moments in which consumers engage with brands continues to grow as the number of devices and types of content supported by them also expand. This growth dramatically expands the number of ways brands can reach consumers. Without a deep understanding of these options, it’s extremely difficult to prioritize which ones are best suited for the brand in any particular campaign. Digital technology is constantly evolving, and marketing executives need to stay alert to the latest trends and be flexible in adjusting to the needs of their marketing campaigns.

Why Japan has fewer "digital leaders"

We’ve detailed the four common challenges faced by companies in the Asia-Pacific region, but let’s look at a few that are unique to Japan.

In the same Google survey, we identified companies in their respective countries that said they’re creating business impact by using digital technology in their marketing activities as “digital leaders.”3 Across the Asia-Pacific region, each country had an average of 19% “digital leaders,” but Japan only had 8%. The reasons for this low number from Japan are intriguing.

As illustrated in the chart below, Japanese companies evidenced large gaps on a few key statements, including, “We encourage marketing teams to take on new challenges” and “Utilizing digital technology is one of our most important strategic requirements.” The statement that entailed the biggest gap between Japan and the region was, “We have to clarify the position and objective of our brand more than before” (as the use of digital expands). This shows how executives approach brand marketing in Japan compared with the rest of the region.


In order to make the most of digital technology’s advantages, it’s important to have a holistic view of all marketing activities and be able to apply digital strategies to areas where they’ll be most effective. For example, data lifted from various moments of interaction between the brand and consumers can be analyzed and lead to new insights. However, if the organization is disconnected and vertically structured, the collected data may be incomplete and fragmented. This results in a limited ability to glean new insights and develop a complete marketing strategy.

An advertising agency executive characterized the current state of Japanese companies: “The biggest issue is vertically structured organizations and the lack of a shared purpose. Gathering knowledge and experience from a bottom-up process is there. There is also little concern of scarce resources. The issue may be how the senior staff in the organization can think ahead and prepare the teams for it.” The same executive also mentioned that “it is difficult to change the way we have done things over a long time. I think another challenge is creating the motivation to make changes when there are so many reasons not to.”

To summarize, Japanese companies need to recognize that digital is a key strategic component for their business success, and they need to share that knowledge across their management teams and apply it to daily marketing activities. We’ll discuss in our next article what can be done to accelerate the use of digital and evolve the way marketing is deployed.

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