What will happen in Japan’s AdTech Market in 2023?
Sarah Juen, Team Leader AdTech & MarTech
2022 was tough for AdTech in Japan, especially the later half of the year. A lot of companies stopped hiring and some even closed down operations in Japan for good.
So what does 2023 have in store?
We sat down with Sarah Juen, Team Leader AdTech & MarTech, to talk about the status quo of AdTech in Japan. She provided some great insights on the latest trends and shared her predictions for this year.
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2022 Recap
What were some of the major AdTech trends in Japan in 2022?
An ongoing topic across the whole AdTech industry was the phasing out of third party cookies because this will have huge implications on how companies deal with data and privacy. On a bigger scale it will affect how ads are sold and bought online. For companies this means finding alternative ways to collect information about target audiences while remaining transparent and complying with the new privacy rules.
A big trend we saw emerging and growing further in 2022 was CTV (connected television). The time people spend on CTV increased dramatically in 2022 and strong growth is predicted for this year. Therefore a big focus for companies is on how they can improve their ad targeting and timing for different audiences.
Another topic was so called ad blindness or banner blindness and low click through rates (CTR) online. CTRs for online ads are low in general and on top of that over 40% of internet users worldwide use some type of ad blocking tools. Companies have been investing into possible solutions to make ads more engaging and innovative to reduce their negative perception. Native advertising is becoming more and more important with the goal to better embed ads into blog or news pages.
How did the Japanese AdTech industry compare to other markets? Is it true that Japan is a couple of years behind?
It is definitely noticeable that Japan is behind other markets when it comes to digital marketing in particular. A few years back, many companies in Japan were still investing heavily into more traditional advertising like TV or magazine ads instead of online. Since 2019, Japan has started to catch-up to the global market, and in 2021 the internet ad spendings in Japan exceeded the traditional channels for the first time.
While it seems to take longer for Japan to catch-up in certain areas, outside factors like the phasing out of third-party cookies increasingly force Japan to adapt faster to international standards.
To add some anecdotal evidence, my jobs offers me the opportunity to speak to marketers and AdTech experts in Japan on a daily basis. One reoccurring theme I hear over and over again is that whenever someone visits a conference or event overseas they get reminded that Japan is still lagging behind. Most innovations come from outside Japan, mainly the US and Europe as well as Israel.
How did the global tech recession and layoffs affect AdTech in Japan? Did you see similar things here in Japan?
During the first half of 2022 things went really well. Our clients were growing and had a lot of open positions. However we started to see a shift in the market from H2 last year.
In Q3 we started to feel the impact as companies were more cautious in terms of hiring. A number of our clients were re-evaluating their hiring needs and closed non-priority positions. More and more clients froze their hiring completely and this trend continued into Q4.
We didn’t see many layoffs though. A lot of our clients are subsidiaries of foreign companies and they don’t have a large headcount in Japan. Therefore it’s hard to lay off essential people.
On the contrary there was a small number of companies that closed their operations in Japan due to the global recession and in these cases they had to lay off their whole team. But this was rather the exception.
2023 Outlook
What are some of the predicted future developments for AdTech in 2023?
Third-party cookies will be an ongoing topic in 2023. While most browsers have stopped using cookies, Google Chrome is still using them. Originally they planned to do the privacy change in 2022, but then postponed it to late 2023. As they are holding a market share of over 60%, this will have an impact on the AdTech landscape in 2023. First-party data, user intelligence and cookieless solutions will become more important in 2023.
With the change of data accessibility, which has already begun in 2022, the lines between DSPs and SSPs become more and more blurred. In 2023 programmatic platforms will look at diversifying their business, connecting both sides, optimizing and developing new features, while at the same time aiming at a transparent business model to tackle the new landscape.
Another trend in 2023 will be contextual/targeted advertising. New programmatic tools, like AI-based marketing platforms to help analyze and predict consumer behaviour as well as contextual solutions for behavioural marketing, will play a major role. Companies are investing more into adapting and optimizing their current solutions to be able to provide their clients with data and strategies for cookieless targeting and user engagement.
The CTV area will also expand further in 2023 as CTV ad spending increases. Streaming services have launched ad-supported models, which will lead to an increase in ad inventory. Optimization and customization of video ads will be a big part of 2023, finding ways to monitor data, recommend music/films based on consumer behavior and increase engagement. This will also lead to a change in the overall AdTech landscape, as social platforms like Instagram or Facebook are investing more into their video features to keep up with the recent developments.
Another trend will be around the ad servers. In the current market, rather than having in-house solutions, companies will look at affordable platforms offering customization to their needs, supporting advertising campaign set up, data transparency and efficient processes. This will lead to an increase of SaaS platform models offering features to maximize revenue for advertisers and publishers alike.
What are some of the biggest challenges facing the Japanese AdTech industry in 2023?
One of the biggest challenges in 2023 will be around measuring data and privacy, which will have an impact on where revenue is coming from and the advertising strategies. One example in CTV is identifying users across different platforms. This will become increasingly important in order to understand user behavior and serve more targeted ads. Nielsen was one of the first to come up with a solution, but further developments are needed in this area. We are only at the very beginning of solving this issue.
Hiring in AdTech
How is the job situation in Japan? Are companies hiring right now?
Overall we noticed that towards the end of last year, companies approached hiring with more caution and planning for headcount is still ongoing. However, we do have companies hiring right now, especially when it comes to essential roles for the business. These tend to be new, more sales related roles or replacement roles.
I expect hiring to pick up later this year. Right now companies are only hiring for need and not for growth. If I would have to give you a number I’d say about half of our clients are currently hiring. Similar to other sectors within the tech industry we can see that a lot of domestic companies continue hiring. They seem to be less affected by the global tech downturn.
What were some of the most in-demand roles in AdTech in 2022?
Last year everybody needed sales people to expand and grow. The most in-demand people were sales managers, followed by account managers and customer success managers. Most companies follow the same process as they hire a sales person first and then an account manager to take care of the customers. We have also seen quite a few first hires in the market when foreign companies enter Japan. Similarly these will be sales managers or sales directors to build an initial customer network.
Besides sales positions we have seen many clients open data focused roles in marketing, consumer insights or even data oriented account managers. This is a direct impact of the cookie effect because there is a bigger need for in-house data.
Will this trend continue this year or do you see any changes?
I think this trend will continue and sales roles will be a focus this year. Changes I do see are more related to the marketing side. Many companies will re-evaluate if they have the budget and need for in-house marketing support based in Japan. The alternative would be to have marketing more centralized in HQ or APAC. So there might be less marketing roles in Japan this year.
What are some of the biggest challenges in finding qualified people? Are there any specific qualifications or skills that are particularly valued by companies right now?
The biggest hurdle is to find people who have the desired skills for a position plus the industry knowledge. Especially the later part is very challenging since AdTech is a fairly new sector and the pool of good people in Japan is limited. Our clients are searching for people who have an in-depth understanding of the advertising landscape in Japan and/or have an agency background. They also need to know the ins and outs of digital marketing and its latest trends and developments. Having a broad network in the industry would be the cherry on top.
Most AdTech companies in Japan are overseas companies so they don’t have the resources to onboard industry outsiders from scratch which is very time consuming. They need someone who can deliver results right away.
Language requirements are another big challenge. For all business side positions our clients require native level Japanese and business to fluent level English. If you’re in sales you need Japanese to speak to customers, find partners or negotiate with potential clients. If you’re in marketing you need Japanese to write Japanese content, communicate with agencies and vendors as well as localize promotional material. English is needed for internal communication on all levels, from your local team in Japan to APAC and HQ. Depending on your position and the size of the company you would have to report your results to someone in a regional HQ or HQ.
How do AdTech companies attract and retain top talent?
To attract top talent you have to present a solid business plan during the interview process. Potential employees are very interested in seeing that your company understands the challenges AdTech is facing as an industry and is prepared to tackle these. Furthermore they have to buy in to the mission and vision of the company and must believe that there is a lot of room for growth in the Japanese market.
People also really care about the work environment and most of our candidates prefer a hybrid work style over a full remote or full office style. Flexible work times are another big factor but most of our clients have this in place already.
The biggest factor to retain your people is to offer them an attractive career path. As an employer you have to create new opportunities for your employees to grow and develop their skill sets. Once they feel they have reached a ceiling, whether that’s a real ceiling or only a perceived one, they will start looking for new challenges.
Are you looking for a new job in AdTech? Get in touch with us or reach out to Sarah directly.
