Internet AD
Growth Strategy

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Our "Client First Principle"
Has Not Changed
Since Our Founding
Yasuo Okamoto
Executive Vice President, Head of Internet Advertising Headquarters

The internet advertising industry now accounts for roughly half ofCyberAgent's total sales.
We spoke with Yasuo Okamoto, Executive Vice President, and Head ofInternet Advertising Headquarters, who has long led the business,
which boast the largest market share in Japan, about CyberAgent'sstrategies for continued growth and the strengths of the company.

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Maximizing Advertising Effectivenessfor Clients―CyberAgent holds the top market share in Japan forInternet advertising transaction volume, but what competitive
advantages have made this possible?
It all comes down to the systematic implementation of ourstrategy to "maximize advertising effectiveness'' for clients.
While our advertising business has grown in line with market
growth, we have been committed to effective advertising since
the early days of the internet, and have continued to improve
the structure and technology required to achieve it.
The biggest difference between traditional mass advertising andinternet advertising is the fact that we can quantitatively
visualize advertising effectiveness.
We have a long history of improving our clients' sales andprofits through meticulous processes designed to optimize
advertising budgets, such as product-specific targeting, the―What are some of the ways you are maximizing

financial crisis of 2008 and rapid market shifts caused by theadvertising effectiveness?

emergence of smartphones; however, I believe that "change iswhat makes the difference."

We do this by improving operational and technological capabilities.

Without being bound by past practices or preconceived notions

The early days of internet advertising were dominated by "pureof how things should be done, we put tremendous thought intoadvertising," where ad space was reserved and purchased inminimizing downsides and into the process of all employees

advance, but gradually, "programmatic advertising," which allows

working as one to implement the solution. We are able to growbidding for each ad impression or per click, became widespreadsignificantly both as an organization and as individuals.

and now accounts for approximately 80% of internet advertising.

This previous experience has taught us to view crisis as anIn response to the proliferation of search services, CyberAgent

opportunity, and even when economic conditions worsened after

founded CA Search Inc. in 2003, a search advertising company.

2020 due to the COVID pandemic, we were still able to achieve

In 2008, we founded CA Advance Inc., an advertising operating

revenue growth that outpaced market growth by shifting to newcompany, and in 2016, we built AI Lab, a facility dedicated to AI

business areas where there was client demand.

research. I'm proud to say that through efforts such as these,

Going forward, as the mainstay of business shifts from the physical

we've done everything we could to contribute to the goal ofworld to the internet, we want to remain our clients' most valuable"maximizing advertising effectiveness."

partner by using our ability to respond to change, and we hope to

Aiming for Sustainable Growth ThroughAdaptability to Change

provision of creatives with high advertising effectiveness,bidding adjustments, and more.

―Internet advertising is said to be heavily influenced byThis is why we have been able to capture a large share of thethe external environment, such as business sentiment, butmarket, and it has contributed to recognition and trust fromwhat is your view on this?

clients.

reshape the history of the advertising industry itself.

Yasuo Okamoto
Executive Vice President,
Head of Internet Advertising Headquarters
Apr. 2013 Joined CyberAgent, Inc.
May 2003 President, CA Search Inc.
Apr. 2007 Director of Internet Advertising Headquarters, CyberAgent, Inc.

We've faced various environmental changes, such as the global

Dec. 2008 President, CyberAgent, Inc.
Dec. 2020 Executive Officer and Vice President, CyberAgent, Inc. (current position)

037

The Goal of Training
Is the Success ofClients' Businesses
Noriko Kawai
Executive Officer, Sales Director of Internet Advertising Headquarters

With the number of executives and employees in internet advertising increasing
by 419 over the previous year to 2,381*, human resource development is
becoming increasingly important.
We spoke with Noriko Kawai, Executive Officer and Sales Director of Internet
Advertising Headquarters , about the company's approach to training programs
and specific initiatives.
*Total number of executives and employees in the internet advertising business (As of the end of September, 2023)

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Fostering a "Client-First" Culture
Through Training Programs―W h a t a re y o u r p r i o r i t i e s w h e n i t c o m e s t o h u m a n
resource development?
We have prepared several programs in the internet advertisingbusiness that are geared to each member's stage of development.
The concept of "understanding our advertising clients to help theirbusinesses grow" is the topmost priority in all programs.
Each program is designed from the client's perspective, including"market forecast" and "the best account strategy to increase client
sales", and the evaluation criteria for the outputs are aligned withthis. The "client comes first" culture has been a core value for us
since our inception, and we have built it into our training programs.
The fact that many employees can work autonomously towards
the business strategy of "maximizing the effectiveness of client
advertising" is the result of a training program that simultaneously
disseminates the strategy and fosters culture.

Continuing to Provide Opportunities ThroughDiverse Training Programs

members to leadership training for executives, our training

Overview of Training Projects

programs systematically cover every stage an employee goes
through and are administered according to effectiveness andsituation.
Specifically, "CYBIRTH," an orientation program for new hires todeepen their understanding of our culture, and "Generations,"

Management

Executive

which trains new hires to become full-fledged account planners
members and veterans, we offer the "HEROES" program, which
is designed to increase the number of new client acquisition

Middlespecialists. Through these various programs, we strive toi n t e r n e t a d v e r t i s i n g b u s i n e s s , w h i c h h a s u n d e rg o n eTrainer training

Executive training
HRAwarenessWorkshop

Improvesolutionproposing
capabilities

Newclientdevelopment
capabilities

Specialtyenhancement training

Role-playing quest

maximize our organizational performance.
― Was it difficult to create a training scheme for theDirector training
Manager training

over six months, are core programs we focus on. For key

PlayersRookie

Honing competitivenessPromotion of cultural understanding

significant changes in technology and organizational scale?
In line with changes in digital advertising, the knowledge andA major factor, in my opinion, was the urgent need to rebuild theskills required for staff involved have changed on a daily basis.

training program as a mechanism for understanding work

As our business has grown, so has our organizational scale,conditions and managing motivation to ensure that work efficiency

making it necessary to consider training programs optimized foris not compromised when employees work remotely.

each employee.
It took many years of trial and error, but the fundamentals of the―How much time does the leadership devote to training?

programs have become well-established in recent years. We have
―What kinds of training programs do you provide?
From onboarding training to developing the capabilities of new

made excellent progress, especially during the COVID pandemic,

It is not an exaggeration to say that they devote half their time

when working from home was introduced as a new way ofto training. Yasuo Okamoto, one of CyberAgent's topworking.

executives, has always told the leaders to "watch for signs of039hidden talent in members and give them opportunities." I think it

We will continue striving to create an environment in which

is a good example of our commitment to human growth in theeveryone can maximize their potential in any situation, and weorganization.

aim to create an organization that can produce incredible results.

Female Managers Account for 28.8% ofInternet Advertising Business * 1―What are your thoughts on promoting and developing
female executives?

*1: Percentage of female employees in management positions at CyberAgent (InternetAdvertising Headquarters) (as of June 30, 2023)*2: Number of employees in the internet advertising business at CyberAgent (InternetAdvertising Headquarters) (as of June 30, 2023)*3: Percentage of women in managerial positions equivalent to section managers or higher
at companies (MHLW, "FY2022 Basic Survey of Gender Equality in Employment

Management," published in July 2023)

Of the 1,075 * 2 executives and employees in our internet
advertising business, 41.3% are women, an even higher
percentage than the 32.3% of engineers in our subsidiaries,
which itself is quite high.
Since we have many clients that sell women's products,
diversity in our organization is essential.
As a result of our decades-long focus on women's empowerment
and executive development, our ratio of female managers is
28.8%, which is very high compared to Japan's overall ratioof 12.7%.*3
We have also implemented a follow-up system after being
selected for executive positions, including the "WE PROJECT,"a cross-organizational talent maximization measure aimed atstrengthening ties and building relationships among managers.
It is critical that we strengthen our organizational capabilities toprepare for future difficulties in meeting client expectations andsolving business problems. Calculating backward from theprojected growth of the internet advertising market, we believethat we will need two to three times as many top players andleaders as we currently have.

Noriko Kawai
Executive Officer, Sales Director of Internet Advertising Headquarters
Apr. 2014 Joined CyberAgent, Inc.
Oct. 2017 Corporate Officer, CyberAgent, Inc.
Mar. 2019 Maternity/childcare leave
Apr. 2020 Returned to the Internet Advertising Headquarters as Director of Sales
Oct. 2022 Executive Officer, CyberAgent (current position)

040

A Sense of Crisis Inspires
Creation of New Advertising Business
Takahito Naito
Managing Executive Officer, Head of AI Business Unit

Armed with advanced technological and creative capabilities, the internet
advertising business has been pioneering the advertising industry.
Takahito Naito, Managing Executive Officer and Head of AI Business Unit, hasbeen engaged in ma ximizing adver tising effec tivenes s by adopting
cutting-edge technology and maintaining a forward-looking perspective.
We spoke with him about what led to using AI technology, future development
plans, and the potential for entering new fields.

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Plunging into the Research andDevelopment of AI Technology After
Reaching the Limit of Human Effort―AI has been in the news almost every day in the last yearor so. I believe you were among the first advertising agencies
to start researching and developing AI technology, but what
was the chain of events or background that led to this?

Since then, we've used AI technology to accomplish various―AI Lab also seems to be strengthening

tasks, including effective ad delivery based on machineindustry-academia collaboration with universities andlearning, support for creating ad creatives such as text,academic institutions.

banners, and videos, and automatic data analysis.
We are proud of the highly effective advertising of the "Kiwami

To date, we have collaborated with numerous universities andPrediction Series" (ad products using generative AI) that has

institutions in Japan and abroad (Osaka University, Yale

resulted from these efforts, and we are confident that we areUniversity, Tokyo Institute of Technology, University of Tokyo,

helping our clients maximize the effectiveness of theiretc.) in a variety of research areas, and we have implementedadvertising.

around 30 projects based on industry-academia collaboration
with major research laboratories.

We first conceived the idea in our internet advertising businessWe have conducted joint research with top researchers,around 2014, and then in 2016, we launched "AI Lab" as an

Kiwami Prediction AI

R&D organization tasked with conducting R&D on a wide range

U ses AI to create highly effectiveadcreatives.
Preliminary results*1 show 2.6 times
greater advertising effectiveness.

of AI technologies related to digital marketing.
By 2019, we had established an AI Business Unit dedicated todeveloping internet advertising businesses with AI technology
and creating new AI-related businesses.
newspapers, in that advertising messages can be personalized to

Kiwami Prediction TD

suit the target. In particular, programmatic advertising requires
the production of a broad spectrum of advertising creatives in ashort timeframe and rapidly implementing creative work tomaintain advertising effectiveness.

language processing and has published several books; andProfessor Takehito Kojima of Tokyo University, one of theeconomics.
AI Lab, which aims to create business value through AI
technology while also contributing to academia, has submitted

Preliminary results *2 show 2.3 times
greater advertising effectiveness.

conferences in a wide range of academic and research fields.

and presented numerous papers at world-renowned international
Approximately 50 papers are peer-reviewed and accepted
annually, with a high acceptance rate of about 45% in 2022.

staffing burden on agencies that produce digital advertising. We
also felt a sense of urgency to find new ways to be creative andadvantage in the future.

Tokyo Institute of Technology, who leads research in natural

Uses AI to automatically generate ad textthat matches searches.

This massive and ever-increasing workload places a heavy

resolving these issues while also providing a competitiveleader in robotics research; Professor Manabu Okumura ofworld's leading researchers in market design research inInternet advertising differs from mass advertising, such as TV andgenerate value. Using generative AI would be critical toincluding Professor Hiroshi Ishiguro of Osaka University, a world

予測AI人間

極予測LED*1 Ad effectiveness win rate when comparing creatives made using the "conventional
produc tion process" versus those created using the "K iwami Predic tion AI
production process."*2 Increase in search keyword quality score when comparing creatives made using the"conventional production process" versus those created using the "Kiwami Prediction
AI production process."*3 Thundermark CapitalCapital " AI Research Ranking 2022. "042

CyberAgent has also been ranked among the Top 100 Global

This has raised expectations for using the "proprietary data heldModel) early in the internet advertising business, but what isCompanies Leading in AI Research in 2022*, placed 4th inby companies" I mentioned earlier.

your view on the future possibilities of generative AI and LLM?

Japan and 49th in the world.

When the Banking Act was revised in May 2021, it greatlySince 2016, CyberAgent has also prioritized the recruitment andbroadened the scope of banking business, allowing banks to

We are currently using generative AI and LLM in-house totraining of highly specialized personnel, including the appointing aenter the advertising business.

generate ad text for our "Kiwami Prediction AI" and "Kiwami

researcher a recruiter. We hope to contribute not only to businessThis has helped CyberAgent quickly form partnerships withPrediction TD," but we have also begun to apply them toexpansion but also to Japan's technological advancement.

major Japanese companies, especially in the finance, retail,services beyond advertising and to improve internal operations

mobility, and telecommunications sectors, and we are working

and boost work efficiency.

to create new advertising businesses.

We p l a n t o w o r k w i t h o t h e r c o m p a n i e s t o d e v e l o p

We h a v e n o w s i g n e d c o l l a b o r a t i o n a g r e e m e n t s w i t h"industry-specific LLMs" by having the technology learn uniquecompanies that have a strong affinity with our advertisingindustry-specific data, and we also plan to launch a business tob u s i n e s s , a n d w e a re w o r k i n g h a rd t o d e v e l o p t h e s esupport other companies' use of LLM.

partnerships into actual businesses.

In the rapidly changing internet industry, we will continue toIn addition to our distribution network, which boasts top

shape the future of internet advertising by leveraging technology

performance in the internet advertising industry, we intend toand creativity while incorporating technological innovations.

New Advertising Business Created
Together with Partners―Given the various changes that digital advertising has
undergone, what changes do you expect to see in the future?
Major global media sites like Google and Facebook are primarydestinations for advertisements today, but I believe similar
global platforms will not emerge in the future.
Instead, we believe that a number of "local platforms" will emerge,
on which each company that owns so-called first-party data, suchas purchasing data and behavioral data on e-commerce sites andcreate new businesses for our clients and turn the business intoa sustainable growth industry by leveraging our track record inoperating digital advertising, developing technologies for the addevelopment of AI technology.

Takahito Naito

apps, will build their own advertising business.
In recent years, regulations governing the use of third-party data
to protect personal information have become more stringent,
making it more difficult to obtain cookies (recorded data fromFuture Opportunities of Generative AIand LLMs

websites visited) and IDFAs (identifiers for advertisers used oniOS devices) that can be used for advertising.

*Thundermark Capital, AI Research Ranking 2022 (May 2022)

distribution infrastructure, and conducting research andManaging Executive Officer, Head of AI Business Unit
Apr. 2001 Joined CyberAgent, Inc.
Apr. 2008 Head of Internet Advertising Headquarters, CyberAgent, Inc.
Oct. 2014 Head of Ad Tech Division (currently AI Business Unit), CyberAgent, Inc.

―The AI lab developed and released an LLM (Large Language

Dec. 2010 Director, CyberAgent, Inc.
Oct. 2020 Managing Executive Officer, CyberAgent, Inc. (current position)

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Kiwami AI Odaiba Studio opened in September 2023. Equipped with state-of-the-art facilities, including threeof Japan's largest LED walls, various scanning systems, including 4D scanning, and a BOLT motion control
camera, the studio pursues advertising effectiveness and image quality while utilizing AI and CG technologies.

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