Oct 30, 2017
It is undeniable that we are living in an increasingly global landscape, and CJ Affiliate is keeping up with these international industry trends, most recently announcing its partnership with Interspace.
Established in 1999, Interspace has focused on digital media to expand affiliate marketing and native advertising in their respective markets of Japan and Southeast Asia.
At CJU17, CJ had a chance to catch up with Shinichiro Kawabata, Founder and CEO, Kazushige Muroyama (Muro), VP of Affiliate Business, Shohei Fujita (Jerry), Head of Global Business, and Miri Kanamura to gain some insight into how brands can successfully tap into these emerging markets.
CJ: What was the affiliate landscape like in Japan that led to the launch of Interspace?
IS: At the time we launched Interspace, the market size was roughly 1.5 billion. And 10% of those consumers were spending in Japan. Now we see the market growing here in Japan at a rate of 10% annually. Our sub affiliates are some of the best in Japan. There are about five or six major affiliate service providers in Japan, and we are one of them.
CJ: What separates you from the other affiliate service providers in Japan?
IS: We have a specialty focus in the financial market, credit card and personal loan issuers for example. In addition we specialize in various forms of ecommerce such as retail (cosmetics, etc) and healthcare. We are also now focused on HR: company promotion and recruitment.
CJ: So we touched on the market penetration for affiliate. What is the affiliate consumer like and what are their buying habits?
IS: We are seeing a lot of younger people, in their 20s and 30s, trending on the female side. They are shopping in the areas of fashion, cosmetics, and health. As for men, they are primarily interested in gadgets. They are purchasing consumer electronics like cameras, smartphones, and things like that.
When purchasing more expensive products, we are seeing a longer consideration period. Then when the purchase is made for these more expensive products, it tends to happen on the desktop more so than the smartphone. However, we are seeing a lot of the younger, female population start to purchase from smartphones as well. So, the percentage of conversions on smartphones is increasing, but desktops are still strong (60% desktop, 40% smartphone).
CJ: What are some other trends you are seeing in the current market in Japan?
IS: 10 years ago the Amazon model (sort of like a general store) was really popular. But now we are seeing a rise of the subscription model, think Netflix or telephone companies. As a result, our customers and our advertisers want to sell customers via that model and are willing to pay a lot more in commissions to publishers that offer this. This seems to be trending more here than in other countries.
We’ve also seen a rise in credit card usage for purchase. 10 years ago, cash on delivery was much more common, as shoppers were anxious about whether or not the product would actually arrive. Now, ecommerce has become second nature, and we are seeing over 80% of purchases paid for by credit card.
CJ: We’re interested in your perspective on the affiliate channel. What do you think is going well and the channel is doing right? And what do you think it needs to improve upon, especially in terms of your market?
IS: About 10 years ago affiliate tried to create a free market in China, but at that time the affiliate model couldn’t work well there because there was a lot of issues with fraudulent publishers. For example, with CPL (cost per lead) a lot of fake leads were produced. After witnessing that, here in Japan we’ve made every effort to make our advertisers trust the affiliates. We guarantee the quality of the leads and the sales, as we check every conversion to make sure it is correct. We also work to counsel publishers and stop the fraudulent ones to be able to offer a quality network. Because we are able to do this, the affiliate market immediate potential is much larger here in Japan than other countries in Asia.
CJ: What are some other important things that North American or European brands should know about your market and consumers?
IS: To be honest, the people in Japan aren’t very skilled in the English language, so they hesitate to use English when they shop online. It would be wise for online retailers/websites to adapt to that language barrier by catering to Japanese speakers.
Also, customers here really care about shipping costs. Most online retailers here provided free shipping, so they are really diligent when it comes to figuring out how to offset any extra costs. We recommend online retailers/websites to be clear about their shipping costs, taxes, and any extra fees that might be associated with the purchase.
Brands should also know that we have an office in Southeast Asia as well, extending the market to the likes of Vietnam, Thailand, and Indonesia. This is good to note, as in Vietnam for example, 25% of consumers there want to buy from Amazon US or UK sellers because they are hesitant to work with ecommerce sites in Vietnam. This creates a large opportunity for European and American brands to break into Southeast Asian markets.
CJ: Interesting! That said, what are your growth plans?
IS: When we started growing into Southeast Asia, there was no affiliate market there—Interspace was the first network in that area. Now we are seeing growth each year in Indonesia, Thailand, and Vietnam. There is now price competition where there wasn’t before. We plan to work on scaling the penetration in those markets.
In addition, previously people only shopped on their PCs. Now that most people have a smartphone, we are seeing a rise in online purchases on the smartphone, so we will need to adjust to meet those changing consumer behaviors and device patterns.
CJ: Sounds like you have some big plans. Thank you so much for your time today. Before we wrap, any last thoughts on how to succeed in your market? What are the successful companies doing well?
IS: It is very hard to get a Japanese person to buy something. To know and understand the behavior of a Japanese person is difficult, so I think spending a good deal of time getting to know the culture and patterns of the consumers here is very important. Naturally the more you cater to a consumer, the better off your chances of converting them. We’ve seen many companies hire Japanese employees and it definitely helps them improve their effectiveness in this market, as they now have access to an insider perspective.
In addition to that, just creating a website that is simple and easy to understand. Many ecommerce sites that I see are too busy. Not only does it make it difficult to navigate, but it also is hard to trust a website you can’t understand. Which is another crucial point, creating that trust with the consumer. That is very important in being successful here, and in any market.