Japan’s Ministry of Internal Affairs and Communications (MIAC) has announced its annual report on “State of Internet Search Engine Marketing and Market Size” by Institute for Information and Communications Policy department.

According to the report, Japan’s PPC advertising market (PC websites only) in 2008 grew 20% from 2007 to 1254 billion yen ($1.2 billion). MIAC predicts that the PPC advertising market (PC) in Japan will surpass the radio advertising market in 2010-2011 and will grow to $2 billion market by 2013.

The report also points out following:

• The search-able information on Internet grew 6 times from 2005 to 2009 due to the increase in video and music data available online.
• The number of average search engine users (per month) grew from 16.46 million in 2002 to 47.75 million in 2008.
• The number of Internet users grew from 21.59 million in 2002 to 47.77 million in 2008.
• 52.3% of businesses using PPC advertising think it’s effective.
• While PPC advertising market (both PC and mobile) continue to grow, the display advertising market may peak by 2011.

Although more than 50% of businesses using PPC advertising think it is effective, to many of them are running PPC ads for branding purpose, and not for the online conversions. According to the report, more than 65% of advertisers on web and mobile web run the campaign to improve the branding. Not sure how many companies in US can keep investing in PPC advertising which seems to be not bringing online conversions. And, this concerns me more than a little that Japanese businesses may be mislead or not being informed/educated about the effectiveness of SEM, and may end up disappointed in the Search Engine Marketing in near future.