Transforming the Services We Provide
to Implement Full-Funnel Sei-katsu-sha Data-Driven Marketing

The COVID-19 pandemic has accelerated the widespread adoption of online services, which in turn has led to increasingly digitalized lifestyles. Within these lifestyles, the relationship between people and things has evolved from a simple contact point to an interface through which information is mutually shared.As a result, we have seen the emergence and rapid expansion of the Sei-katsu-sha Interface Market, which is a concept that the Group has long championed.
As the objects, devices, stores, and media that surround Sei-katsu-sha become connected to networks, the marketing activities of companies have changed dramatically. For example, by integrating data obtained from indirect contact points, such as advertising, with data gained from direct contact points, such as stores and e-commerce sites, and managing and utilizing such data, it is now possible to provide products and services that are optimized for each individual sei-katsu-sha. In addition, the frequency of contact with sei-katsu-sha through the use of displays found in all types of locations, including on televisions, tablet devices, and smartphones and in cars, electrical appliances, and homes is increasing. With the emergence of various new display-based communication methods, we expect business opportunities for the Group to expand even further.

To date, the Group’s businesses have been centered on the development of advertising communications. However, as the data related to the overall marketing activities of companies is becoming completely digitalized and integrated with communication data, there is now a growing need to offer services with more sophisticated marketing functions and ensure that these services provide tangible outcomes. To that end, the following three elements are indispensable to the Group.
The first element is integration and the provision of integrated solutions. There is a need for services that combine the effects of communication—the main purpose of which is to expand brand awareness and improve brand favorability—with the effects of overall marketing activities—which include leading sei-katsu-sha to websites, selling products and services, and acquiring new customers—and to offer such services in the form of integrated solutions. Additionally, in terms of TV and digital media, it is necessary to manage these forms of media using the same indicators, and this requires the use of platforms as a foundation.
The second element is the utilization of dynamic data. In addition to the static data that we have accumulated to date through surveys and other measures, the importance of dynamic data such as internet access and browsing history data is increasing. For this reason, while utilizing dynamic data as a foundation, we must evolve our services to better contribute to the marketing activities of our clients.
The third element is visualization and the implementation of a visualization model. Programmatic advertising is an advertising model for constantly setting into motion the Plan-Do-Check-Act (PDCA) cycle based on constant connection. To realize this kind of advertising, it is essential to create systems that visualize data and advertising effects. While to date there have been unseen elements in terms of advertising effects, it is imperative that we leverage technologies to transition to a model that visualizes such elements.

Utilization of Integrated Data Foundation

In order to transform the services we provide, we must evolve Sei-katsu-sha Data-Driven Marketing, with which we have led the industry, into a comprehensive full-funnel marketing approach covering everything from awareness, interest, consideration, and purchase to repeat purchase and customer relationship management. To that end, we are implementing two types of DX: marketing DX and media DX.
With regard to marketing DX, we are strengthening marketing proposals that leverage not only the data we receive from clients but also the data held by the Group and media companies. At the same time, we are enhancing the speed with which we collaborate with platform owners.
For media DX, amid the diversification and decentralization of media and platforms, which constitute the medium for interaction with Sei-katsu-sha, we are seeking to integrate all forms of advertising media with the data and insights gained through our marketing DX activities while operating such media in a cross-sectional and integrated manner. By doing so, we will transform media into sophisticated client services that guarantee both communication effects and marketing results.
In terms of establishing a solutions development structure for implementing both marketing DX and media DX, we launched the cross-company strategic organization, HAKUHODO DX_UNITED, in April 2021. Under this organization, we are undertaking a range of initiatives and in the first year of its operation we achieved positive results. HAKUHODO DX_UNITED initially comprised around 700 specialists from Hakuhodo Inc., Hakuhodo DY Media Partners Inc., and D.A.Consortium Inc., a number that has now expanded to approximately 1,000.

As the core of our activities to implement media DX, we are accelerating the rollout of Advertising as a Service (AaaS), a next-generation model for advertising media, which we announced and introduced services for in December 2020. The concept behind AaaS is to evolve our advertising media business from one that simply sells ad space to one that operates various forms of media in a cross-sectional and integrated manner and delivers effects that contribute to the businesses of our clients. The profit model for AaaS emphasizes not just commissionbased transactions but fee-based ones as well, and therefore performance and engagement are two important key performance indicators (KPIs).
To enhance performance, we provide AaaS systems and data warehouses in the advertising layers of marketing, TV and digital, TV, and digital. We have been strengthening initiatives in these domains since 2018, and I can say with confidence that AaaS has become an industry-leading service as a result.
In order to enhance engagement, as well as utilizing AaaS, we have been undertaking work on methods to establish a brand image leveraging new content under the Brand Integration Division, which was launched in 2022.
Creative capabilities are crucial to enhancing the impact of engagement. “Creative” has a broad meaning, and one example is creatives that use more effective expressions and designs based on the data collected through the marketing activities of a company and media interaction data. The conventional strength of the Group has been the ability to develop such creatives, and we will further enhance this strength going forward. Another meaning of creative is the capability to leverage technologies to massproduce advertising materials in a timely and appropriate manner amid the rapid acceleration of the PDCA cycle, which has followed the shift from direct buying advertising to programmatic advertising. At Creative technology lab beat, a cross-organizational research and development organization established in January 2022, we are working to develop artificial intelligence (AI) tools that can automatically generate creative. In these ways, we are introducing the latest technologies into the creatives know-how that we have cultivated over many years.

Amid the expansion of e-commerce and electronic transactions, it is important that we strengthen our proposal-making capabilities that leverage data to boost marketing efficiency if we are to expand our full-funnel marketing services. To that end, we will provide optimized services in physical contact points, which include e-commerce deliveries and customer service at physical stores. We will then leverage the data collected through these services to develop new communication initiatives and design new marketing strategies. By doing so, we will be able to set in motion a PDCA cycle across the entire marketing process.
In addition, to reinforce our media business, we will strengthen our approach to small- and medium-sized venture companies across Japan, including in more rural areas. The market for programmatic TV spot advertising, which sets in motion a PDCA cycle in the same manner as digital advertising, has been expanding and is expected to grow from its current scale of ¥10 billion to ¥100 billion by around 2025. In light of this, we will leverage TV AaaS, a TV ad operation service that maximizes advertising results, to spur the development of small- and medium-sized businesses (SMBs). In April 2022, we made SoldOut,Inc. a consolidated subsidiary. SoldOut offers community-tailored digital marketing services to regional SMBs and venture companies active primarily in rural regions across Japan. Through SoldOut, we will not only expand our business into local TV stations and newspapers but also pursue various collaborations with Hakuhodo DY Media Partners and other Group companies.
Furthermore, we will expand and evolve our services domains over the medium to long term in the pursuit of multiple layers of profit. With the rapid expansion of marketing communication activities focused on displays, we will expand fee-based transactions, which pursue greater advertising effects while maintaining commission-based transactions as a profit pillar. In addition, we will aim to generate profits by promoting collaborative projects with application service providers (ASP), such as those that provide data analysis tools, and client companies.

Our greatest strength is our creativity and communication design capabilities, and I am confident that no company surpasses us in this area. Furthermore, by refining our data operation and performance abilities, which are essential in this era, and integrating them with all of our other capabilities, we can further demonstrate our competitiveness. These kinds of integrated capabilities will provide us with a significant edge.
In addition to these capabilities, we must constantly be on the leading edge of the digital communication world. We are therefore focusing on the development of new services, such as the Metaverse and Web3, centered on the MIRAI Business Division and the Marketing Technology Center (MTC). In this way, we will spur innovation while constantly providing seikatsu-sha with attractive experience-based value.
Through these endeavors, we will strive to become one of the world’s preeminent corporate groups, leading advances in marketing and innovation generation, which we adopted as part of our Group philosophy.