When Lyft and SoFi this year rolled out their first ever TV advertisements, they were already startups-turned-tech-giants that had raised over US$1 billion in venture capital funding. Over in Japan, however, startups turn to TV ads at a surprisingly early stage.
“In Japan it’s really hard to get traction or users or attention only through digital channels,” says Brandon Hill, CEO of creative agency Btrax.
That means Japanese startups cannot grow only through social media like Facebook, Twitter, or Weibo, a viral – and cost-saving – tactic employed by many Silicon Valley and Chinese startups, from Uber to Xiaomi.
It’s considered an incredible waste of money in the US.
“You’ve really got to have some sort of physical, tangible presence somewhere on the ground” to woo Japanese consumers, adds Brandon. He’s been working with Japanese firms for nearly two decades in various roles.
After all, it’s where CDs and faxes still endure.
“Japanese startups, once they raise a certain amount of funding – it seems to be around 10 million or so, they immediately start running TV ads,” says Tim Romero, an author and entrepreneur who runs the Disrupting Japan blog. “Which is considered an incredible waste of money in the States.”
A shopping app called Fril is a great example of all this. It debuted a TV ad in 2014 when it was still a largely unknown #startup – just two years from inception – fighting several other similar flea market apps in the Japanese market. The ad rolled out shortly after the team raised US$9 million in funding. As if the screen time wasn’t costly enough, the commercial starred four funkily-dressed actresses from a popular drama series.
It’s not known how well that strategy paid off for the fashion app and if it brought in any new shoppers. But the startup survived the huge expense and was this month acquired by ecommerce titan Rakuten.
“Social media here is more of an amplifier,” says Koichi Yamamoto, head of community design center at Dentsu, a huge advertising and PR firm in Japan. “You need something that feeds into social media” in order to get into the minds of potential new users in Japan, he explains.
TV adverts are often what comes first. And then the ads help garner press for the startup in newspapers and on TV shows.
The ad brings a “sense of popularity” to an app, Koichi says. That and the good PR from the media coverage help engender trust in something that’s unfamiliar.
“In a sense it’s a validation,” says Tim. “If a company has got the money to run a TV ad, it says they’re for real and they can be taken seriously.”
This comes from a panel discussion at Tech in Asia Tokyo 2016, our conference that took place on September 6 and 7.