JAPAN'S MOBILE LANDSCAPE: A PEEK INTO ASIA-PACIFIC'S FUTURE

By Campaign Asia on July 12, 2012

While the rest of the world has only just started buzzing about NFC-enabled mobile phone payments, the Japanese have been paying with their phones (and much more) for over six years now.
“The first RFID enabled advanced feature phones hit the Japanese market around 2005, and by 2008 most of the phones had RFID chips embedded in them,” said Marco Koeder, digital marketing group director at MRM Worldwide over a phone interview with Campaign Asia-Pacific. Koeder, along with McCann Worldgroup’s chief technology catalyst, Greg Armshaw, were speaking from McCann’s first Digital Immersion event in Japan about learnings Asia can draw from the market and vice versa.

For Armshaw, just watching a Japanese consumer use their mobile phones to pay for merchandise naturally and easily was a learning experience. “Anywhere else, it’s awkward both for the buyer and the seller,” he said. “But they’re used to it here and it’s a glimpse at a market where this form of payment is mature.”  While it may surprise most to learn that smartphones are relatively new to the Japanese market, with the iPhone only making its debut there in 2008, the Japanese have been living with and using mobile technology for years that’s still relatively new to the rest of the world. “Besides RFID, Japanese advanced feature phones have GPS, high-res screens, high-res cameras and QR code readers and have done for years,” commented Koeder.


The mature ecosystem that’s sprung up around these features is a glimpse into the future of Asia-Pacific’s more mobile-centric markets, commented Armshaw. “There are more people in China using social networks on a mobile phone then there are people who have smartphones in the USA. Over a half a billion people in Asia-Pacific have a mobile data connection, and when you consider markets like Indonesia, India, the Philippines—these markets aren’t as advanced as Japan yet but they will be.”
One of the biggest revenue generators in Japan’s mobile ecosystem are social mobile gaming platforms. Japan’s two largest social networking services, GREE and DeNA, generated revenues of US$560 million and US$529 million, respectively, in the first quarter of 2012, reported the UK’s Guardian.  For GREE, most of this revenue stems from its 30 million users in Japan. In-app purchases account for 93 per cent of revenue, and only 7 per cent comes from advertising.


The low figure for advertising can be misleading, however, as it doesn’t take into account in-app sponsored items or brand tie-ups, commented Armshaw. “We need to change the way we talk about mobile in the industry as it’s more about marketing solutions and less about advertising in terms of media value,” he said. Coca-Cola Japan for example tied up with DeNa’s mobile gaming platform Mobage to release Coca-Cola-themed virtual items on mobile social game Pirate Treasure to users who had purchased selected Coke merchandise. “Mobile gaming in Japan is also extremely location enabled,” commented Koeder. “There’s a fishing game, for example, where depending on your location you can fish in different rivers, also a Sim City-like building game that grants points for travelling.” These game developers often work with Japanese rail and tourism offices to see where best to direct mobile gamers. “Some games can even be used for CSR causes, the more you travel, the more is donated to charity,” he continued. 


The love for mobile gaming can also be used to drive traffic to bricks-and-mortar locations. For example, Gurunabi (a restaurant review site in Japan) has developed a cooking game that rewards users who eat in different restaurants and check in with new recipes for the game, explained Koeder. Japan has also evolved a sophisticated loyalty-marketing service around its GPS and RFID enabled phones. McDonalds Japan, for example, has a CRM programme called Toku with 21 million users that enjoys a coupon redemption rate of 85 per cent. The coupons can be downloaded into a ‘mobile wallet’ which can be redeemed via contactless technology.

By factoring in location-based information with redemption patterns, McDonald’s is able to customise its promotions by item, location and timing to the customer’s mobile phone. “It’s the world’s most advanced CRM programme,” commented Koeder.“ A virtual CRM system like this means we can link the loyalty programme to the brand rather than just to the store,” observed Armshaw. “A programme like this could bring an added dimension to a brand community like Nescafe’s on Facebook in the Philippines, getting them to engage offline as well as online.”


For Japan, while smartphones are relative newcomers, their growth has been rapid and by next year about 50 per cent are expected to own smartphones. “Japan won’t be a mobile Galapagos island anymore,” said Koeder. “This is great, because now if there’s a great app or promotion elsewhere, like the Philippines, it can be brought to Japan and vice versa.”


The result of greater shared mobile content is a likelihood that the Japanese consumer profile will become more aligned with the rest of Asia, he added. “We’re already seeing strong similarities, like a love and obsession with food—eating it, talking about it, taking photos of it,” he said with a chuckle.