Despite its status as one of the world's most important economies, Japan's PR market remains curiously underdeveloped.
This is not because of any paucity of messaging opportunities. Japan has more than 120 daily national and regional newspapers, with a total circulation that is the highest in the world.
Then there are issues that would challenge the smartest communicators. Perhaps the biggest story of the past year has been the change in government, which saw the Democratic Party of Japan end the long-ruling Liberal Democratic Party's monopoly on government.
The election also marked a watershed of sorts in its enlightened use of social media strategies.
The other major story has been the global recall crisis of Japanese automotive giant Toyota. ‘There was a saying here in business circles that when Toyota falls, Japan will fall,' says Edelman Japan president Ross Rowbury, a 30-year veteran of the country's PR market.
‘It has had a devastating effect on national pride and Japan's global reputation for quality. As a result of the Toyota incident I am observing a lot of Japanese companies that have been shaken awake by the realisation that they need to get their global PR function into shape.'
Japan's PR market is valued at under $700m, making it – according to Weber Shandwick president/CEO Akihiko Kubo – worth approximately one per cent of the country's advertising industry. Cosmo PR executive director Paul Hasegawa, meanwhile, estimates that the industry shrunk by 12 per cent in 2009.
‘Historically, the PR industry in Japan has struggled to match the other developed markets in terms of quality, value and recognition,' says Kubo. ‘That said, the core PR market has picked up significantly in the past two quarters and client confidence has started to return.'
There is widespread consensus, meanwhile, that Japan's PR market is poised for significant growth. Foreign companies, says Rowbury, ‘have long used PR as a strategic function to build their businesses'.
Japan's economy, though, is dominated by domestic heavyweights, which have been far slower to appreciate the value of strategic communication. Several trends are accelerating a change in this mindset.
The first, says Burson-Marsteller Asia-Pacific CEO Bob Pickard, is an ageing, shrinking population. ‘It is already the case in Japan than many of the biggest PR retainers are for "big pharma" corporate and product communications campaigns, and the current trajectory is towards even bigger budgets.'
Globalisation, and the troubles faced by Toyota, are also forcing change. ‘As the society becomes more diverse, the pressures for even local firms to improve transparency and actively communicate and interact with their stakeholders internally and externally will only increase,' explains Rowbury.
Finally, the explosive growth in digital media consumption is becoming an economic driver of PR. ‘Clients want the agile and nimble real-time attributes of digital on their account service teams, but they also want the focus and attention span of traditional analogue consulting,' says Pickard.
Meanwhile, Rowbury points out domestic advertising giants are ‘beginning to look seriously at PR as a needed addition to their stable'. In addition, the large domestic PR firms are all facing succession issues. ‘I expect that in the next five years or so we will begin to see significant consolidation in the industry, which will present opportunities for both the large local advertising firms and foreign PR networks,' adds Rowbury.
Newspapers retain a high degree of credibility with the public, led by the big three: Yomiuri Shimbun, Asahi Shimbun and key business daily Nikkei.
‘The Nikkei remains at the top of the media food chain in Japan, as the country's paper of record and the most desired publication for the "dream" pitch placement,' says Pickard. ‘Other media follow the Nikkei and it defines the news cycle.'
Newspapers are also affiliated with national TV broadcasters, of which public broadcaster NHK remains the most trusted.
'People still rely strongly on written media such as newspapers because they are seen as consistent and reliable,' says Hasegawa.
Japan is an advanced nation as far as digital connectivity is concerned, and leads in such areas as mobile TV and online advertising. However, digital PR, says Rowbury, has lagged. ‘Japanese have tended to favor anonymity on the web,' he says. ‘This may have contributed to a slower process in the building of credibility for this media.'
Mixi is Japan's leading social network, counting more than 27 million members - 20 per cent of the country's population. Twitter is also popular, but faces rising competition from homegrown rival Ameba Now.
Nico Nico Douga, meanwhile, is Japan's most popular video-sharing site.
‘It's important to note that people tend to blog differently in Japan compared with the West,' says Pickard. ‘Blogging in Japan tends to be about creating a record of one's thoughts and sharing those thoughts with others, whereas in English-speaking countries it tends to be more about showcasing one's knowledge or opinions in a particular field.'
Kubo points out that the main delivery platform for digital in Japan remains the mobile phone. ‘Digital media are key in terms of changing consumer buying behaviour. This is most marked for digital goods, where peer reviews by early adopters and alpha bloggers have a powerful influence on purchase decisions. Japanese corporations are growing increasingly conscious of consumer-generated media.'
Japan has birthed some of the world's most successful brands of recent times: Sony, Canon, Toyota, Honda and Panasonic. Other players that are strong domestically include clothing brand Uniqlo, beer major Suntory and telecoms giant NTT Docomo.
Consumers demand a high degree of quality in terms of both product and service. However, the focus on communications at domestic companies remains advertising-led.
‘I think the biggest reputation challenge for Japanese companies is their lack of readiness and preparedness to deal with the domestic and global communication issues that they will be facing both internally and externally over the next five years,' says Rowbury. ‘The next Toyota is just around the corner.'
Another reputation challenge, says Kubo, is the charge of price deflation, which has been levelled against the competitive pricing structure of companies like Uniqlo and Aeon. ‘This has been interpreted in the media as having a negative impact on the Japanese economy.'
The market supports a number of large domestic players, led by PRAP, worth approximately $45m, Kyodo PR ($40m) and Ozma. Dentsu PR, the PR offering of Japan's biggest advertising agency, is also a large, traditional player.
Newer entrants include such independent firms as Vector, Bilcom and Sunnyside Up. Cosmo PR is also well regarded for its healthcare prowess.
Japan has always been a difficult market for the holding groups, regardless of marcoms discipline. Fleishman-Hillard and Weber Shandwick are the two biggest international players, while Ogilvy PR's presence includes a 20 per cent stake in PRAP. Other reasonably large international players include Edelman, Hill & Knowlton and Burson-Marsteller.
‘The traditional domestic giants are long on press club and advertorial skill, but short on strategic expertise,' claims Pickard. Rowbury, meanwhile, notes that local firms tend to be stronger in consumer, while foreign agencies focus on corporate.
For his part, Kubo believes that the domestic heavyweights are ‘struggling to re-engineer their traditional media-centric business model in response to changing media consumption patterns among target audiences'.
‘Salaries have remained stagnant but in the past two months or so I have observed some fluidity beginning to return to the job market,' says Rowbury. ‘This has not yet had an impact on salary levels but I would venture to say that the job market is trending positively.'
The nexus between politicians and journalists is often the source of considerable intrigue where Japan is concerned. Similarly, lobbying has a traditional flavour in the country. Most observers view public affairs as a growth area, thanks to numerous market regulations and a high level of discretionary control by the central government.
‘While I doubt that this country will ever see an independent lobbying industry like that in the US I strongly feel that "government affairs" work will be one of the high growth areas for PR firms in this market over the coming decade,' says Rowbury.
‘The good news is there is no regulation on lobbying,' adds Kubo. ‘Since this is a relatively underdeveloped practice area in Japan at the moment it offers tremendous opportunities for growth.'