Advertising Expenditures in Japan down by 1.3 percent

Dentsu Inc. in its annual report of advertising expenditures in Japan for the 2010 calendar year has said that the nation’s advertising expenditures in 2010 totaled 5,842.7 billion yen, a decrease of 1.3% compared with the previous year. Looking back, total advertising expenditures turned upward in 2004 due to a recovery in the Japanese economy and the proliferation of digital home electric appliances and broadband Internet services. Spending continued to grow in 2005 (up 2.9%), 2006 (up 1.7%) and 2007 (up 1.1%), but fell by 4.7% in 2008 as a result of the financial crisis in the United States and subsequent global recession. Spending shrank further in 2009 (down 11.5%), and again in 2010, but the rate of decline narrowed sharply (down 1.3%).

Total advertising expenditures in 2010 were boosted by a number of positive factors, such as a gradually recovering economy and improved corporate earnings, major international events including the Vancouver 2010 Winter Olympic Games, the 2010 FIFA World Cup South Africa tournament, and Expo 2010 Shanghai China, as well as economic stimulus measures such as subsidies for eco-friendly cars and the eco-point system. As a result, overall advertising expenditures held steady at 5,842.7 billion yen, a decline of only 1.3% compared with 2009. On the positive side, spending on Television advertising grew during the second half of the year, and the rate of decline in overall spending narrowed sharply compared with the previous year (down 11.5%), indicating that the downturn in advertising spending is bottoming out.

Broken down by medium, expenditures in Television rose (up 1.1%), but fell in Newspapers (down 5.1%), Magazines (down 9.9%) and Radio (down 5.2%). Year-on-year spending in the traditional media declined for a sixth consecutive year (down 1.9%).

In other media, Promotional Media dropped for the third year in a row (down 4.4%). Satellite Media-Related advertising posted double-digit growth (up 10.6%) on the strength of BS digital broadcasting. Internet advertising also rose sharply (up 9.6%), due to an increase in marketing campaigns incorporating Internet advertising.

By industry category (for traditional media), expenditures grew in 8 of the 21 industry categories, including Information/Communications, due to rapid growth in website-related advertising; Apparel/Fashion, Accessories/Personal Items, on increased placements for women’s clothing, jeans and men’s clothing; and Cosmetics/Toiletries, as a result of higher spending on hair care and cosmetics advertising. In contrast, spending fell in 13 of the 21
industry categories, including Government/Organizations, where previous-year spending had been boosted by the Lower House election; and Hobbies/Sporting Goods, on cutbacks in advertising for game software and other items.

Advertising expenditures in the traditional media declined 1.9% compared with 2009. Spending was up in Television for the first time in six years, but continued to fall in all the other traditional media. Among other media, Promotional Media advertising was down 4.4%, marking a third straight year-on-year decline, but the rate of decrease was smaller. Satellite Media-Related advertising expenditures grew 10.6% on the strength of BS digital
broadcasting. Internet advertising also posted a sharp gain of 9.6%.

A quarterly breakdown of advertising expenditures for the traditional media in the 2010 calendar year shows that spending strengthened steadily in the second half of the year. Year-on-year spending in the October–December quarter was higher than during the same period in 2009.

Advertising expenditures increased in 8 of the 21 industry categories surveyed during 2010 and figures showed an improvement compared with the previous year, but fell in 13 categories. By comparison, in 2009 annual spending decreased in 20 of the 21 categories and increased in only one category.

The eight industry categories posting gains were Household Products (up 10.3%), due to increased placements for furniture, deodorizers and other items; Apparel/Fashion, Accessories/Personal Items (up 8.8%), boosted by growth in the areas of women’s clothing, jeans and men’s clothing; Information/Communications (up 8.6%), on an upsurge in website-related advertising; Energy/Materials/Machinery (up 4.8%), on increased spending
by gas and electric power companies; Cosmetics/Toiletries (up 4.4%), which saw higher spending on hair care products and cosmetics; Home Electric Appliances/AV Equipment (up 4.0%), on growth in ads for televisions and Blu-ray Disc recorders; Food Services/Other
Services (up 2.8%), on stronger demand from the restaurant industry and law firms; and Finance/Insurance (up 1.6%), due to growth in placements by consumer finance, securities and insurance companies.

On the other hand, three industry categories posted double-digit declines (compared with 14 double-digit declines in 2009). These were overnment/Organizations (down 14.4%), where previous-year spending had been boosted by the Lower House election; Hobbies/Sporting
Goods (down 13.3%), on weaker demand for game software, pachinko machines and “pachi-slo” slot machines; and Pharmaceuticals/Medical Supplies (down 10.6%), on cutbacks in ads for cold remedies and digestive aids. Other categories where spending fell were Transportation/Leisure (down 9.6%), due to reduced placements by airlines, leisure facilities and entertainment industries; Real Estate/Housing Facilities (down 8.6%), on

declines in corporate advertising by condominium and construction companies; Classified Ads/Others (down 7.2%), on declines in temporary help-wanted and classified ads; Distribution/Retailing (down 4.8%), on lower placements by department stores, convenience stores and direct marketing companies; Education/Medical Services/Religion (down 4.3%), which saw reductions in educational and religious advertising; Precision Instruments/Office Supplies (down 4.3%), due to cutbacks in ads for office equipment and other items; Beverages/Cigarettes (down 4.0%), due to a fall in spending on Japanese green tea, Japanese sake and shochu (a distilled liquor), and mineral water ads; Automobiles/Related
Products (down 2.2%), on fewer placements for domestic passenger cars and used cars; Publications (down 1.9%), as a result of lower spending on newspaper and book ads; and Foodstuffs (down 0.2%), where fewer ads were placed for meat products and retort pouch foods.

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