Japan’s Mobile Market Leads US

Japan is currently one of the three largest markets for smartphone apps, and according to a report published by analytics firm App Annie, Japan has overtaken the US as the world’s largest mobile app market.  Japanese smartphone and tablet owners spent 10% more than their U.S counterparts in the iOS App Store and Google Play in October 2013.

As in America, the Japanese mobile phone market is moving swiftly from feature phones to smartphones. This move will have great implications for mobile online advertising, because Japan will have the same tension between the mobile web and apps.

Japan has always had a large installed base of feature phone users, but the number of smartphone buyers nearly doubled between 2013 and 2014.  Smartphone ownership rates are about evenly split between males and females, with about 45.4% of the males and 46.7% of females owning a smartphone. By this year smart phone ownership should reach 50% of the population, and by 2018 that will rise to 61%.

Unsurprisingly, younger people were significantly more likely to have smart phones, with more than 75%  of internet users 15-19 owning one, and more than 70% of those between 20-29. As people upgrade their feature phones, they seem to be moving to iPhones; 56.4% of users named the iPhone as their preferred smartphone brand.

Mobile ad market revenues also jumped in 2014. In Japan, 44% of mobile phone owners click on ads they receive on their phones. In 2013, mobile advertising was worth over $1 billion in Japan alone, and by 2017 that number is expected to double.

Over 60% of mobile ad spending was on paid search ads used by real estate, education, travel, and financial companies. 30% was from display advertising used by app developers, e-books, travel, and real estate agencies, and 10% is from app developers incentivizing users to install their apps.

Japan’s mobile shoppers love marketplace promotions:

  • Rakuten Market (楽天市場), the mobile app of Japan’s largest e-commerce website, found itself among Google Play’s top 10 apps by downloads
  • Rakuten Market’s app downloads appeared to spike around July 5-8. This might tie into Rakuten’s aggressive “Shopping Marathon” promotion held that weekend
  • Different from Amazon’s “daily low price” strategy to attract and retain shoppers, Rakuten Market designed its “Rakuten Super Points” rewards program to do so
  • Rakuten frequently runs promotions by giving extra bonus points to specific customer segments, merchandise categories and time periods.

And they are serious about dating. Dating services YYC and Pairs (????) found their apps among the top 10 on iOS by revenue, with YYC also finishing at #8 on Google Play by revenue. Both YYC and Pairs allow free registration, but monetize users’ actions, such as  profile views and user-to-user messages with their in-app currency.

Originally a web service, YYC has 14 years of history with 7 million
registered members; Conversely, Pairs is a relatively new app built
on Facebook with 1.3 million current active users. Both apps are further developing their security and privacy mechanisms, and Pairs has started expanding to other East Asian markets, leveraging cultural carry-over.