Overview of Netyear Group <3622>.

2. Business Content and Strengths.

The company's business area is digital marketing, which refers to a marketing method aimed at strengthening the relationship between companies and end-users by enhancing the experiential value at each customer touchpoint through collaboration with owned media, existing media, sales, call centers, stores, etc. By proposing and practicing new digital marketing strategies to clients such as companies and local governments, this service leads to outcomes such as improving brand value, growing revenue, and promoting business transformation.

The digital marketing domain is classified into the following four types of media based on customer contact methods. The first is "Paid Media," which involves placing online advertisements; the second is "Earned Media," which involves influencer marketing, etc.; the third is "Social Media," where consumers post word-of-mouth reviews via platforms like social networks; and the fourth is "Owned Media," where various communication initiatives are conducted on the company's website or app. Among these, the company specializes in digital service development and the planning, development, and operation of digital marketing initiatives centered on "Owned Media."

The company's strength lies in the fact that over the past 25 years since its founding, it has tackled projects starting from improving CX and has a wealth of experiences to realize the ideal CX (i.e., high consulting capability). CX refers to the complete series of experiences where customers show interest in and continue to purchase and use the services or commodities provided by the company through various touchpoints such as stores, advertisements, websites, and apps. The ultimate goal is to connect the improvement of CX to purchasing commodities or converting customers into fans of the company or brand. By cycling through a series of processes such as designing, building, operating, and improving CX through PDCA, better results are achieved, supporting the business growth of client companies. Additionally, the company has the strength of ensuring that personnel other than specialist UX designers understand the value of UX design and can promote projects. As an activity to raise the internal UX design level, the company has a certification system for employees who meet certain skills, with approximately 80% of all employees taking UX training courses, totaling 156 participants, and 12 of whom are certified (as of May 2024).

* A 6-month training program that not only imparts basic knowledge of UX but also involves practical UX design through workshops.

Since effective methods for enhancing CX differ depending on the client's business description, custom projects are set based on the fundamental challenges the client faces in each case, establishing "goals to aim for." Generally, project duration is around three months, extending up to about a year for longer projects. Furthermore, to continue delivering results afterward, services are provided to accompany the client. Regarding system development, necessary technologies are combined based on the targeted goals, adapting the organizational structure flexibly, including external partners. Unit prices vary by project, yet the project often requires actively connecting complex integrations with existing client systems and cross-functional coordination within the client company, indicating a trend toward increasing complexity and scale. This is also due to the growing tendency for CX/DX projects to aim for "transformation of the clients themselves." In addition, digital marketing technologies continue to evolve, incorporating AI technologies, and client demands have become increasingly specialized and advanced. In this market environment, the company's challenges regarding advanced system development are gradually being resolved through collaboration with NTT Data, and the increase in collaboration projects has begun to show synergy effects, helping the company's performance recover from a period of stagnation.

Aside from custom projects, support is also provided for the introduction of both in-house and externally developed products. The clients span various industries such as retail, food and beverage, services, manufacturing, and finance, primarily comprising Japan's leading large corporations. Among them, many clients operate in the BtoC domain where the importance of digital marketing through owned media is high, with recent large projects including those with Starbucks Coffee Japan Co., Ltd. (hereinafter, Starbucks) and Mos Food Services <8153>.

In the sales composition ratio by customer for the three periods up to March 2024, the NTT group centered around NTT Data has the highest proportion at 30-40%, followed by the retail and food service industry at 20-30%, and the service industry in the 10% range. In the individual sales composition ratio for the March 2024 period, NTT Data accounts for 30.9% and Starbucks 12.3%, with both companies continuing to hold over 40% of total revenue. For NTT Data, there are many collaborative projects in the communications industry, finance, and local governments, and it is expected that strengthening collaborative relationships will also expand the scale of revenue in the medium term.

(Written by FISCO guest analyst, Jo Sato)