In May 2019, the Hakuhodo DY Group announced its Medium-Term Business Plan, which runs through to the end of fiscal 2023, and the Group has proceeded with a range of initiatives accordingly. However, the drastic changes to our business environment stemming from the impact of the COVID-19 pandemic forced us to withdraw our numerical targets, as a result of which, in February 2022, we announced our revised Medium-Term Business Plan covering the three-year period from fiscal 2021.
Medium-Term Business Plan
Review of the Medium-Term Business Plan
Numerical Targets
The Group has positioned the three years spanning fiscal 2021 to fiscal 2023 as a period in which it will accelerate the transformation of its services and business foundation and build a solid platform for achieving significant growth over the medium to long term.
- Annual growth rate of gross profit after adjustments and before amortization of goodwill:
- At least 7%
- Annual growth rate of operating income after adjustments:
- At least 7%
- Operating income before amortization of goodwill:
- At least ¥65.0 billion
Important Indicators
- Operating margin after adjustments and before amortization of goodwill:
- Approx. 15%
- ROE before amortization of goodwill:
- At least 10%
Overview of Progress in Fiscal 2021
-
Gross Profit
after Adjustments*1
-
Operating Income / Operating Margin after Adjustments and before Amortization of Goodwill
Note: Bar graph/Left: Operating income after adjustments and before amortization of goodwill
Line graph/Right : Operating margin after adjustments and before amortization of goodwill -
Operating Income before
Amortization of Goodwill
-
ROE before Amortization of Goodwill
-
*1 After adjustments: Excluding investment projects
*2 Period covered under the Medium-Term Business Plan
*3 Covers domestic operations and excludes pandemicrelated BPO business
*4 Covers domestic operations on a consolidated basis
Target Levels for Core Domains
-
Gross Profit in
Marketing Execution Domains*3
-
Billings in
the Internet Domain*4
-
Gross Profit in Overseas Business Domains
Awareness of the Business Environment and Core Medium-Term Strategy
Awareness of the Business Environment
The COVID-19 pandemic has spurred the pace of digitalization in all aspects of our lifestyles as well as drastic changes in the Group’s business environment from every angle.
Radical Changes in the Business Environment Arising from the Shift to Digitalization
We have seen online services rapidly become mainstream and lifestyles drastically evolve to become constantly connected. There has also been a sudden emergence of new services and markets that transcend industrial borders, and this is gradually redefining the frameworks of industries. We are living in a world in which the connection of things to the internet has become a reality. As a result, the relationships between things and sei-katsu-sha have evolved into interfaces for the mutual exchange of information, rather than simply points of contact.
Expansion of the Sei-Katsu-Sha Interface Market
In the Sei-katsu-sha Interface Market, the objects, devices, stores, and media that surround sei-katsu-sha have formed a network of digitalized interfaces. By leveraging this network, companies are now able to provide the best possible services to each sei-katsu-sha.
Expansion from Indirect Touchpoints to Direct Touchpoints
As the Sei-katsu-sha Interface Market expands, the marketing needs of companies will also evolve. In addition to advertising and other indirect touchpoints, direct touchpoints, including stores and e-commerce websites, will become essential to establishing and maintaining connections between companies and sei-katsu-sha in the years ahead. We believe this will create a need for managing this connection overall in an integrated manner through the use of data.
Core Medium-Term Strategy
With Sei-katsu-sha Insight as our cornerstone,
the Hakuhodo DY Group will combine its cr eativity, integrative capabilities, and data and technology utilization skills to play a leading role in evolving companies’ marketing activities and gener ating innovation in a completely digitalized era.
In this way, we will continue to impact
and provide value to sei-katsu-sha and society as a whole.
In response to our rapidly changing business environment, we will continue to proceed with our Core Medium-Term Strategy while pursuing the following four initiatives and revamp the Group as a whole. We have positioned the three years spanning fiscal 2021 to fiscal 2023 as a period in which we will accelerate the transformation of our services and business foundation to ensure that we take the lead in resolving the marketing- and innovation-related issues of clients and realize the sustainable growth of both the Group and its clients.
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1
Transform the services we provide: Implementation of full-funnel Sei-katsu-sha Data-Driven Marketing
-
2
Strengthen cross-organizational functions to accelerate transformation
-
3
Continuously pursue transformation based on existing strategies
-
4
Strengthen our foundation for sustainable business managemen
Four Initiatives to Update the Entire Group
1Transform the services we provide: Implementation of full-funnel Sei-katsu-sha Data-Driven Marketing
Behind the rapidly advancing shift to a digitalized era, there has been a growing need for data-driven full-funnel marketing, which entails a comprehensive approach that covers everything from awareness, interest, and consideration to customer relationship management. To evolve our Sei-katsu-sha Data-Driven Marketing into an approach that can be implemented across each stage of the funnel, we will pursue three strategic initiatives.
Expand Marketing Execution Domains
As the Sei-katsu-sha Interface Market continues to increase in scale, it is imperative that we expand our functions in marketing execution domains. Going forward, we will continue to strengthen our marketing execution domains and thereby enhance our full-funnel marketing capabilities. We will also facilitate the implementation of marketing activities by going beyond the confines of marketing, such as by developing functions in domains that become necessary with the increase in online services and expanding our efforts to resolve social issues.
To assess our progress with this initiative, we have established an annual gross profit growth rate of at least 10% in marketing execution domains as a target for our revised Medium-Term Business Plan.
OMO: Online merges with offline EC: E-commerce BPO: Business process outsourcing
Transform Our Media Business
Through the promotion of Advertising as a Service (AaaS), we will focus on transforming our media business from one that simply involves the sale of ad space to one that involves the provision of services for maximizing the effects of advertising and maintain and expand our existing media business by enhancing the added value of media. Furthermore, we will establish an ecosystem within the Group to provide digital services that cater to the growth of clients. An annual growth rate of at least 15% for billings in the internet domain has been established as a target for our Medium-Term Business Plan.
Promote Sei-katsu-sha Insight-Based Digital Transformation
Through its digital transformation operations, the Group aims to transform companies’ marketing activities and in essence their businesses, based on its insights into sei-katsu-sha.
2Strengthen Cross-Organizational Functions to Accelerate Transformation
To accelerate our transformation and bolster the competitiveness of the Group overall, we will strengthen our three cross-organizational functions as indicated in the chart below in addition to continuously enhancing our existing media functions. We will also promote a management approach that places even greater emphasis on Groupwide optimization.
The use of technology is crucial to strengthening our competitiveness in the coming era. In order to evolve into a more technology-driven corporate entity, we established HAKUHODO Technologies Inc., a new technology company that will form the core of our Groupwide infrastructure. We will actively invest in this new company and promote innovation in the marketing business by uniting the creativity and technology of the Hakuhodo DY Group.
3Continuously Pursue Transformation Based on Existing Strategies
We will continue to pursue transformation based on our existing strategies by strengthening our response capabilities for borderless activities, which entails continuing to expand our overseas business based on the following three elements: global shift of our clients, specialization and innovation, and full-funnel Sei-katsu-sha Data-Driven Marketing. In terms of accelerating innovation through external collaborations, we will continue to enhance our collaborative foundation while pursuing the development of new businesses that provide new value to sei-katsu-sha.
Accelerate Innovation through External Collaborations
4Strengthen Our Foundation for Sustainable Business Management
The most essential element underpinning the sustainable growth of the Group is its people. For that reason, we believe that actively investing in our human resources is of paramount importance to becoming an attractive company that continues to grow significantly over the medium to long term. In the near term, we will proceed with an array of initiatives as indicated below, including those that incur costs in advance, with the aim of establishing an environment where each employee can leverage their creativity to the greatest extent possible.
