From Japan, The Biggest Social Network You Never Heard Of

'Line' Has Gone Viral With Consumers, Fueled by Ads and Stiff Fees for Business

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The Japanese spend a lot of time commuting, and mobile devices are an essential part of the journey. Commuting accounts for 28 percent of mobile-device usage time in Japan, with social-media consuming a hefty chunk of it.

Nine months ago, nearly everyone on my daily commuter train was using Twitter, which now has 20 million users in Japan. But most of have since switched to the homegrown platform, Line, which was launched in 2011 by NHN Japan after the Tohoku earthquake. The name refers to the lines that formed outside of public phones after the disaster.

Driven by strong advertising support and celebrity endorsements, the app, which provides free IM and calling via smartphones, tablets and desktops, is now the world's fastest-growing social network. It recently reached 50 million followers in just 399 days. In January 2013, Line's total number of Japanese followers hit 40 million; and a whopping 60 percent of Japanese women in their 20s and 30s, Line's research shows, use the platform every day.

Line and its parent NHN (which also owns Naver, Korea's largest search portal) have monetized the network by motivating users not only to follow brands but to take action, which has made Line incredibly attractive to marketers in retail. According to research commissioned by Line, more than half of female users follow official brands. In addition, 63 percent of all users read brand messages, 32 percent have used a coupon delivered via Line, and 27 percent have clicked on a link.

Unlike Facebook, however, advertisers can use the platform only if they pay. There is a fixed-rate card, and the number of messages is strictly controlled. For example, a four-week campaign with five messages will cost 8 million yen ($81,000), while a 12-week campaign offering 15 messages (at a maximum of two per week) will set you back 15 million yen ($151,000).

Brands can use messages to link to content or offer coupons, presents and prizes. There are additional charges if brands want to create sponsored stamps, a form of emoticons that are hugely popular in Manga-obsessed Japan. These are based on client creative but generated by Line. And marketers have major incentives to remain on Line for the long haul, as a decision to stop paying means a brand's account is deleted and it loses not just followers but the content that was created.

None of this tight control has put off potential advertisers, which now include Coca-Cola, Lawson convenience stores and the Sukiya fast-food chain. When Matsumoto Kiyoshi, a drug store chain, needed to attract more customers aged 10-20, it offered a 10%-off coupon via Line and, within five days, more than 10,000 people had used one -- half of them in the target group. An additional 300,000 people also started following the brand on Line.

One of the most remarkable aspects of Line's fast rise and its ad-funded business model is that so many businesses have bought into it so quickly. While consumers are quick to leap onto the next big thing, businesses in Japan are notoriously wary of new platforms. The constant search for first-mover advantage is simply not as ingrained in the marketing psyche as it is in Western countries.

As Line becomes more global, NHN will get the chance to see whether these characteristics apply outside of Asia. Early results appear promising: Line claims on its English-language website that it is the most downloaded app in more than 40 countries and available in 230 markets. Services such as avatar community Line Play have recently become available in English, and the app itself is available for iPhone, Android, Blackberry and Windows phones. In February, Line signed a deal with Nokia to make it available on Asha handsets across Asia. Line's status as the biggest social network you've never heard off won't last for long.

John Stampfel is Head of Emerging Digital at MediaCom Japan.
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