It was already in 2010 when JMRN pointed out that Japan’s online retail market had increased by 17% annually since 2005, At that time, Japanese consumers were more hesitant than the rest of the world to embrace e-commerce. Japan’s online retail market was projected to grow as large as US$70 billion by 2015. Today, the volume of Japanese e-commerce in general consumer goods is approaching US$82 billion—and growing at an annual rate of 7.5%—even though Japanese consumers are some of the most skeptical in the world.
Digital beats brick-and-mortar
Let’s face it. The digital marketplace is where it’s at today. How companies adopt technology to expose their brand and nurture virtual relationships directly affects their ability to compete. As we enter the age of machine learning, companies are leveraging new tech to uncover new markets, attract new customers, and foster brand devotion. The key to gaining the trust of Japanese consumers lies in harnessing the tools available to create consumer relationships and keep them.
Expect Japanese consumers to vet companies online
Japan’s consumers have ranked 2nd to lowest in their trust in businesses and media institutions in both 2018 and 2019, according to the Edelman Trust Barometer. This means that most Japanese consumers will not take marketing messages at face value. With the prevalence of internet and smartphone users in Japan today, organizations can expect consumers to do their due diligence by performing an extensive online search to verify a company’s claims after being exposed to a new brand.
Consumers generally look for reviews, influencers, and what people are saying about a company’s products or services when vetting a brand. Brick and mortar companies without a digital presence are missing a teaching moment here. Those with a digital presence who are not already using analytics to evaluate search engine results of their own brands are marketing in the dark. To realize what is driving consumers, brands need to be able to understand what consumers are looking for.
Brand strategy no longer depends on past performance
It’s no longer enough for companies to focus on past behaviors of consumers when creating future brand strategies and marketing campaigns. In the modern media marketplace, it’s become critical to understand what matters to people before brands engage with them to stay competitive. Machine learning is making this possible.
For example, tools such as data-driven attribution (DDA) are being used to analyze what motivates people to find a business and decide to become its customers in the first place by measuring various “touch points” along a customer’s journey. This technology is giving companies insight into how to personalize their customers’ journeys— and where to allocate marketing resources.
Winning businesses adopt a more agile approach
Take the Japanese marketplace Wowma (KDDI group) for instance. In 2018, it moved away from its “last click mindset” and adopted a more agile approach. Wowma used a combination of Dynamic Search Ads (DSA), Data-Driven Attribution (DDA), and Smart Bidding to discover untapped search queries, optimize its keyword bidding in real time (a time and money saver), and convert more customers amongst intense competition. The result was an increase in new customer acquisition by 16% and a 1000% increase in revenue for two of their weakest performing categories—men’s fashion and contact lenses categories.
Companies leveraging machine learning have higher growth
A recent survey by MIT Tech Review Insights revealed that companies leveraging machine learning to better understand customer intent rather than just past user behavior have increased growth in revenue and/or market share. Traditional marketing and brand strategy tend to focus on delivering a message by talking at consumers, but today’s developers are designing technology that speaks with consumers. The massive growth of voice recognition software is a prime example of this.
Brands need to focus as much on their voice as their message
Voice recognition software such as Siri and Alexis have provided brands with the opportunity to get even closer to their prospects by giving companies a window into “decoding” users’ intent so that they can understand the meaning behind their words. For example, using a creative ad tag, IBM’s Watson Ads enables brands to have intelligent and personalized one-on-one conversations with consumers.
This ability to speak with rather than talk at consumers means brands now have to focus on how something is said in addition what is said. The Speech Synthesis Markup Language (SSML) used by voice recognition software can customize pitch, tone, speaking rate, pronunciation and emphasis. Brands today can have a virtual voice that creates a more intimate relationship with the user.
Brand avatars can read and express emotion
But it doesn’t stop there. Beyond brand voice, technology is advancing to the stage where brand personality is adopting human emotion. For example, where chatbots used to use text-based logic to return the best possible answer to a user’s query, technology exists today that can not only read a consumer’s emotion, but can express emotion as well. In short, chatbots are learning empathy. “Emotion tech” such as Motion Portrait—which can both analyze the facial expressions of users and generate facial expressions of chatbox avatars— creates stronger more human-like bonds with users by anticipating and responding to their intentions, needs, and desires.
Japan is a top global leader in AI development
While Japanese consumers may have been slower than the rest of the developed world to jump into the digital marketplace with two feet, Japan is now one of the top global leaders in AI innovation. As of 2018, Japan was ranked 3rd as the country with the most published research on AI. The Japanese Government both anticipates and promotes moving towards an uber-smart “human-centered” society that integrates cyberspace and physical space to foster both economic advancement and the resolution of social issues. It calls this new landscape “Society 5.0.”
According to the Government, Society 5.0 will incorporate AI and IoT into the physical world—with drones, robotics, home appliances, autonomous vehicles, and cloud services—to “create a society in which anyone can enjoy a high quality of life.” While the J-Gov certainly has high ideals, the implications for data collection, marketing, and brand development in this type of future are endless. And this future is materializing as we speak.
Successful digital branding embraces innovation
We’ve entered a fast-paced, highly competitive, agile era where brands are able to do more than just measure conversion rates. Today’s tech can gauge a customer’s intent before any conversion or purchase actually occurs. Moving forward, successful branding will involve embracing machine learning to tap into consumers’ motivations and predict their needs. Brands that succeed at surpassing consumers’ expectations will overcome consumer skepticism, enhance brand loyalty and increase profits.