Welcome to Japan, a country where most premium ad inventory is still bought and sold direct over a high-speed exchange of time-stamped … Excel docs.
Newspapers are still read here too. It’s weird, I know.
Here are two tips for spending less and running a successful ad campaign that I learned from buying over $60 MM in ad inventory while at Groupon.
1. All Prices Are Inflated for Negotiation.
Japan, and Asia in general, is a region where people spend much time negotiating. They call business here “wet” for a reason. Sales teams begin with chit chat, gifts of sweet rice snacks, bowing and if performance has been poor probably a whole lot of apologies too.
The norm here is to get a discount. There are factors such as length of the business relationship and your total spend that come into play.
Always start with “Is that really the lowest price? We talked to another agency and it was much cheaper.”
Here’s the relationship breakdown of the industry:
Publisher > Media Rep > Agency > Another Agency
Unless you buy in excess of a $1 MM USD per month you’ll be meeting an Agency. Sometime’s an agency’s agency (ridiculous I know). Unnecessary margins are here and I guarantee you there’s always a lower price. As a point of contrast, in Korea you’ll get production costs and consultations included in the media price, but in Japan, that’s not the case.
If you’re buying much more than that then quit meeting the agency. Talk directly to the Publisher if possible or Media Rep. Normally this is difficult Getting a third-party introduction is most effective. To ease any anxieties about industry relations being hurt for dealing directly, you can setup a special purpose entity.
A story from a friend that’s an account manager for a big Japanese brand illustrates how bad the media buying culture is here:
“One time after selling hard, the online marketing manager sensed he wasn’t going to get a discount and said, ‘I have to show I got a discount or I’ll get in trouble. Mark up the price so it looks like I negotiated a discount.’”
2. Don’t Believe CTRs/CVRs
After greetings, the junior member of the sales team will start passing out several PAPER copies (remember, newspapers aren’t dead yet) of a 30-page proposal he’s stapled together and after all the details of how targeted and refined the media is, you’ll find a media plan with estimated performance.
This will probably be your second or third time meeting them. They’ve asked your average conversion rates among other questions. It’s so they can put one of these sheets together to “help” you with the whole decision-making process.
Here’s your line to save you time and money:
“Tanaka-san, thank you so very much for this. Unfortunately, my boss in <foreign city> must decide. Let’s meet after we talk so please send me the Excel version by end of today.”
Stand up, giving them the cue that no deals get signed today and your meeting concludes after just 20 minutes.
Take this sheet, add a new column next to each CTR and CVR estimation. Multiply the CTR/CVR by 50% and see what’s a more realistic and worst case scenario.
Take these numbers and based on what seems like a realistic campaign, reverse the calculation to find a target price you can negotiate.
Remember, these will be well-dressed sales people who were hired based on looks and ability to drink. Even if their title is “Chief Consultant” their goal is a bigger bonus.
It’s all just an elaborate trick. Take heed and control your KPIs.