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Ad expenditure down 2.3% in Japan: Dentsu

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MUMBAI: Japan‘s advertising expenditure in 2011 totaled 5,709.6 billion yen, a decrease of 2.3 per cent compared with the previous year, according to a report released by Dentsu.

The ad expenditure rebounded in 2004 after a three-year decline, due to a recovery in the Japanese economy and the rapid proliferation of digital home electric appliances.

Spending continued to grow in 2005 (up 2.9 per cent), 2006 (up 1.7 per cent) and 2007 (up 1.1 per cent), but fell by 4.7 per cent in 2008 as a result of the financial crisis in the United States and ensuing simultaneous global recession.

Annual spending shrank further in 2009 (down 11.5 per cent) and 2010 (down 1.3 per cent), and dropped slightly again in 2011, largely due to the impact of the Great East Japan Earthquake and Tsunami.

In 2011 the Japanese economy was battered by a number of factors that adversely affected advertising spending, including the March 11 Great East Japan Earthquake and Tsunami, the financial crisis in Europe, a sharp rise in the value of the yen, and major flooding in Thailand, which disrupted production and logistics systems in the manufacturing sector.

In particular, after the earthquake and Tsunami many companies cut back on their advertising activities out of respect for the victims of the disaster. As a result, overall ad expenditures totaled 5,709.6 billion yen, a decline of 2.3 per cent from the previous year, Dentsu said in its annual report which provided an estimated breakdown of the ad expenditures in Japan for the 2011 calendar year.

However, placements recovered strongly during the second half of 2011, and spending in the traditional media during the October-December quarter was even higher than during the same period in 2010, which also recorded robust growth.

Broken down by medium, expenditures were lower in Television (down 0.5 per cent), Newspapers (down 6.3 per cent), Magazines (down seven per cent) and Radio (down four per cent).

Overall spending in the traditional media declined by 2.6 per cent. In other media, advertising in Promotional Media also fell (down 4.6 per cent). Satellite Media-related spending posted double-digit growth (up 13.6 per cent) as the switch to digital terrestrial broadcasting boosted demand for television sets equipped with 3-band tuners.

Internet advertising continued to grow (up 4.1 per cent), due in part to the development of new advertising modalities targeting social media.

By industry category (for the traditional media), expenditures grew in 5 of the 21 industry categories, including Apparel/Fashion, Accessories/Personal Items, where placements were higher for women‘s clothing and handbags; Distribution/Retailing, as a result of a rise in spending by direct marketing companies and convenience stores; Information/ Communications, on growth in smartphones and related services, and web content advertising; and Government/Organizations, due to an increase in ad placements by Advertising Council Japan.

In contrast, expenditures fell in 16 of the 21 industry categories, including Beverages/Cigarettes, where spending for domestic beer and shochu (a distilled liquor) declined; and Home Electric Appliances/AV Equipment, which saw weaker demand for LCD and plasma televisions.

A quarterly breakdown of advertising expenditures for the traditional media in the 2011 calendar year shows that spending recovered steadily in the second half of the year, and was higher in the October--December quarter than during the same period in 2010.

The industry categories posting gains were Apparel/Fashion, Accessories/Personal Items (up 6.8 per cent), on increased placements for women‘s clothing and handbags; Distribution/Retailing (up 2.6 per cent), due to stronger demand for direct marketing and convenience store advertising; Real Estate/Housing Facilities (up 1.5 per cent), as a result of an increase in corporate advertising by housing manufacturers, and placements related to solar power systems; Information/Communications (up 0.5 per cent), thanks to growth in smartphones and related services, and web content advertising; and Government/Organisations (up 166.4 per cent), as a result of an increase in ad placements by Advertising Council Japan.

On the other hand, five industry categories posted double-digit declines. These were Home Electric Appliances/AV Equipment (down 25.7 per cent), on reduced placements for LCD televisions, plasma televisions and batteries; Energy/Materials/Machinery (down 20.6 per cent), due to a sharp decline in advertising by electric power companies; Food Services/Other Services (down 10.9 per cent), which was hurt by cuts in spending on ads for ladies‘ wigs and ads for legal services; Precision Instruments/Office Supplies (down 10.6 per cent), as the result of a drop in digital camera advertising; and Hobbies/Sporting Goods (down 10.2 per cent), where demand was weak for pachinko machines and "pachi-slo" slot machines, and for audio software ads.

Advertising expenditures were also lower in Beverages/Cigarettes (down 9.9 per cent), due to reduced spending on domestic beer, happo-shu (low-malt beer), no-malt "third category" beer and shochu; Finance/Insurance (down 8.2 per cent), which was impacted by cutbacks in advertising for direct-marketed medical insurance, corporate advertising by insurance companies and ads for investment funds; Foodstuffs (down 7.6 per cent), where fewer ads were placed for instant noodles, tsukudani (food boiled down in sweetened soy sauce to preserve it) and beauty-related food products; Transportation/Leisure (down 7.5 per cent), as overall travel-related advertising was depressed, especially on the part of hotels and travel agencies; Education/Medical Services/Religion (down 7.3 per cent), which saw reductions in advertising for schools and correspondence education; Cosmetics/Toiletries (down 3.8%), where spending fell on cosmetics series for women, facial cleansers and hairdressing products; Pharmaceuticals/Medical Supplies (down 1.7 per cent), on lower demand for medicines for intestinal disorders, mouthwashes and sore throat remedies; and Automobiles/Related Products (down 1.4 per cent), due to reduced placements for sedans, mono-box minivans and sports coupes.

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