Although the Asia-Pacific region has been slower to adopt affiliate marketing than the US and Europe, brands and partners are quickly embracing the pay-on-performance model and the region offers western brands an exciting expansion opportunity.
The third-largest economy in the world, Japan offers many opportunities for brands looking to reach new consumers. Its unique culture and business etiquette means Japanese expansion is more hands-on than most Western countries. But with the right planning, research and support, brands can find success in this growing e-commerce market.
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Japan has a population of around 126 million people1 with a high internet penetration of 91% 2. eCommerce revenue is predicted to reach $99,130 million by the end of 2020, amounting to an annual growth rate of 5% (CAGR 2020-2024) 2. While this means that digital marketing is now important for any brand, affiliate marketing is an exception because it allows advertisers to pay based on performance and by 2023, the market size of affiliate marketing is expected to reach $4,357 million.
Thanks to growth in mobile use and social media proliferation, the affiliate market has shown steady growth, with increasing sales at leading sub-networks (known as ASP's, affiliate service providers in Japan). Affiliate marketing has proven its value in businesses ROI, and brands are starting to view the channel as a crucial part of their overall marketing strategy, more than ever before. If you feel that Japan is the next step towards expanding your company to the APAC region, then read on for some essential tips and nuances.
Japanese culture and traditions are incredibly unique, and recognising business culture, etiquettes and nuances are vital before engaging with Japanese people to prevent any miscommunication.
The most widely spoken language in Japan is Japanese. It has no official status, but it is a national language. In terms of the number and quality of English speakers, Japan is one of the weaker countries because the differences in grammar, syntax, and pronunciation between English and Japanese are so significant. Japanese-speaking support is essential when managing your affiliate programme and communicating with affiliates. Reach out to Japanese business partners in native Japanese to build trust in a shorter timeframe, avoid ignorance and receive friendly and faster responses.
Being polite is essential, as it is closely tied to respect. Japanese people are well-mannered and courteous, and business culture is less relaxed than countries such as the UK, Australia and America. In the business world, a respectful attitude is essential. Saying no directly is considered rude in Japanese culture. Instead, it is preferential to say no euphemistically and avoid any confrontation. Lastly, when addressing people, use last names with the honorific -san to show respect, like "Smith-san".
In Japan, business cards have more considerable significance than in Western culture. Exchanging business cards is a formal self-introduction used to remember the names and roles of other people. Double-sided business cards in Japanese and English are great for building trust and showing potential partners that you are serious. The card should be clean, removed from a professional business card case and presented with both hands.
The affiliate marketing industry is well established in Japan. Sub-affiliate networks control most of the affiliate traffic, known as ASP's (Affiliate Service Provider). For any brand new to Japan, a partnership with at least one of the largest ASPs is recommended. Due to the market dominance of ASPs, SaaS platforms are not yet widely known, and there is hesitation to work with networks directly that are not CPA-networks. Both are growing in popularity, and we expect this trend to increase.
In terms of affiliates, loyalty sites are popular, with a particular focus on points sites such as Chobirich and Hapitas. These sites allow customers to collect points with purchases and exchange these for products and services. Any brand new to the Japanese market should consider partnering with points sites to gain brand awareness and build customer loyalty.
Localising your website and creatives into the local language and currency have significant effects on marketing strategies, enhanced visibility and brand recognition. Before entering the Japanese market, we encourage conducting a competitor analysis of affiliates creatives and websites to understand what kind of creatives can attract the attention of Japanese customers and increase engagement. Japanese customers are used to high-quality creatives, and often they do not read English websites unless they are straightforward.
Building trust with affiliates is also crucial for long-lasting relationships and smoother negotiations in Japan. Punctuality is key. Japanese people are punctual, particularly in the business world. If you are going to be late or miss a deadline, inform partners in advance. It's also important to note that business decisions can take longer compared to the European and American markets. Japanese businesses tend to follow a top-down approach in terms of the company hierarchy, and therefore, sign-off can take a little longer.
If you are planning on a business trip to Japan, it is a great idea to meet business partners in person, to forge stronger connections and build trust. The local word, "Nominication", combines "Nomi (drink)" and the English loanword "communication". It refers to the practice of connecting with others through the drinking process. I recommend cherry blossom or foliage season if you can pick a time to visit. The breathtaking views make Japanese sake even more delicious!
As the affiliate marketing space grows in popularity in APAC, Japan offers an excellent opportunity for brands. As consumers spend an increasing amount of time online, the affiliate industry is rapidly evolving with new partners and players entering the space. Like any business expansion adapting your strategies to the countries cultural and business nuances is key to success and winning the hearts of new customers in Japan. If you're interested about learning more about affiliate marketing across the APAC region, find out more about Hong Kong, China and South Korea, on the blog.
Keiko Tsuboi is an Account Manager at Acceleration Partners
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