Maximizing SEM Opportunities in Japan's Fast Growing Apparel Market

14% of all apparel purchases will be made online by 2020 in Japan.

“Japan is one of Asia-Pacific’s more mature digital ad markets but ad spending growth is still in double digits” – according to eMarketer. E-commerce in the apparel industry in Japan is also on the rise and projected to account for 14% (2.6 trillion Japanese Yen) of the industry revenue by 2020 (compared to 8% (1.4 trillion Japanese Yen) in 2014. At present, approximately half of all purchases are made in a store location (mall, standalone shops). (2014 July Ministry of Economy, Trade and Industry

For brands looking to capture demand in Japan, search engine marketing can play a powerful role in capturing the opportunity in this category.

Apparel is a competitive space. Expect higher CPC’s for non-brand terms. 

From Google’s quarterly competitive landscape report for 2015 Q1, we found the following.  

  • eCommerce advertisers (online retailers that sell multiple fashion brands) have larger budgets and aggressively bid on non-brand terms to acquire large sets of product purchases. They bid on high-demand keywords (mainly the non-brand keywords), which lead to lower CTR and higher CPC.
  • eCommerce advertisers invest 3 – 5 times as much as fashion brand advertisers. This indicates that they’re bidding on a wider range of products in comparison to fashion brand advertisers with limited stock.

(CPC of eCommerce advertisers – Google Peer To Peer Comparison Report 2015 Q1)

(CPC of fashion brand advertisers – Google Peer To Peer Comparison Report 2015 Q1)

Focus on non-brand terms to seize missed opportunities.

Even in this competitive market, plenty of space exists to compete and capture people wanting to purchase clothes. From one of the apparel category accounts we manage out of iProspect Japan, the highest impression share received is for the keyword “baby clothes” (49.07%, May 2015), “boys clothes” (27.90%) and “student clothes” (27.90%). This indicates that there are still more than 50% missed opportunities for apparel advertisers through non-brand terms

Ad customizers help boost conversion rates in competitive spaces.

To survive in a competitive space, its important to be creative with your ad copy. Conversion rates when using Google Adwords’ ad customizers were nearly double those of other standard promotional copies (~5% compared to 2.5%). Using ad customizers is a good way to notify the audience of the urgency to purchase using messaging like “3 days left”, “9 hours left” etc. Dynamic Keyword Insertion was not as effective in Japan as the standard headlines, which we have seen drive a higher CTR and ROAS. We also found that “free shipping” messaging had a higher ROAS than the others without although with a lower CTR.

Similar to other markets, apparel purchases in Japan peak on specific days and months.

Sales opportunity for the industry rises in preparation for fall and winter when people are shopping for the new season, preparing for Christmas and engaging in end of year sales – all of which are quite large in Japan.

In terms of the days of the week, we found that Mondays, Thursdays and Sundays are the days when the majority of purchases are made. Regarding the time of day, people tend to shop during lunchtime and late noon as well as later in the evening when they are back home.

Mobile is a growing channel where appropriate bid management and messaging tactics are needed.

Almost half of online traffic and dollars spent online, happens on mobile. It’s definitely a growing channel. The chart below shows that mobile queries jumped 33% over a 12-month period, while desktop queries increased by only 1%.

To make the most of this opportunity, mobile bid modifiers need to be raised to increase exposure on the mobile devices, and device specific ad copies are highly recommended. Using this strategy, we saw an improvement in CTR up to 28% in a given 5-month period. Using display URLs specific to mobile sites, differentiating titles using different bracket symbols and using messaging noting that the purchases can be made at the store works for the mobile environment.


Actionable Insights

From the analysis given above, I recommend the following action steps to maximize return on investment.

  • Prepare a sufficient budget to capture non-brand opportunities that have not been met in the market. Expect CPCs to be comparatively high especially with the competition from the eCommerce sites.
  • Utilize ad customizers to stay competitive in the environment for higher conversions. Test DKI and free offer messaging wisely to reach target CTR (which could impact quality score for lower CPC) and ROAS. Although not mentioned above, I also recommend testing new releases from the search engines such as ad extensions to capture larger real estate on the SERP.
  • Manage bids effectively by raising it to the highest level for greatest exposure during the peak sales periods.
  • Prepare to increase exposure on mobile devices where consumers are increasingly turning to for purchase. Write device specific ad copies to meet the growing demands from the mobile audience.