Japan's internet ad market shake up

I was aware that Yahoo! Japan is totally a different animal from its U.S. version, and that they have the majority share of searches in Japan, not Google.

But I didn't know that Yahoo's dominance is such, until I saw the article on Nikkei last night.

It reported that NTT (Japan's dominant telecom carrier) and Microsoft are teaming up to form an Internet advertising network.  The initial network will include MSN/WindowsLive and Goo/OCN/Plara (NTT group's portal/search engine), as well as third party sites such as Niko Niko Douga (YouTube-like video sharing site), nifty, and Sony's So-net.  The entity will sell the ad space to the advertisers and distribute through the network sites.

And according to the chart that goes with the article, the pageview ranking of Japanese domestic internet sites (Dec.08) are:

  1. Yahoo! Japan   23.710
  2. Google  3,738
  3. Rakuten  3,277  (e-commerce site)
  4. YouTube  1,822
  5. Mixi  1,774  (social network site)
  6. MSN/Windoes Live  1,615
  7. Goo  1,152  (NTT's search and portal)

(numbers are in million pageview, during the month of December 08)
(Source:  NetRatings via Nihon Keizai Shimbun)

New NTT/MS ad network would jump up to the #2 position with almost 5 billion PVs, surpassing Google, but it sill is less than 1/4 of Yahoo Japan.

Yahoo! Japan, despite its namesake, is a separate entity from Yahoo!.  Yahoo! US has just a minority investment and provide brandname and trademark, similar touch and feel and menu of services, but the strategy and site management decisions are totally up to the Japanese entity, the crown jewel of Mr. Masayoshi Son's Softbank group.

Japan's net advertisement market is said to have gone through a major shakeout in 2007, when SNS site Mixi started to dump its huge page inventory and the price per PV plummeted in order of 1/100's.  With the tough economic environment, this move by NTT and MS is seen not only as the challenge to the mighty Yahoo, but also as an effort to consolidate the market, in a Japanese way, to avoid further damage.

Another special factor in Japan is Dentsu's existance.  Dentsu is the largest ad agency in Japan, and I am hearing that they still have significant power even in the Internet ad market, through their close relationships with the advertisers.  I don't know how Dentsu's position will be in this situation. Dentsu is often accused by "net" side people as the "dark side", who tries to keep the traditional media dominance and suppress the new development in the net media. I am curious how the power will (or will not) shift in this world's #2 ad market.