■Overview of Netyear Group <3622>

2. Business Content and Strengths

The digital marketing area that the company operates in refers to a marketing method that enhances the experiential value at each customer touchpoint by coordinating owned media with existing media, sales, call centers, and stores in corporate activities, thus strengthening the relationship between the company and end users. It is a service that derives results such as improving brand value, revenue growth, and promoting business transformation for clients such as companies and municipalities by proposing and implementing new digital marketing strategies.

The digital marketing field is classified into the following four media based on customer contact methods. The first is "Paid Media," which publishes online advertisements; the second is "Earned Media," which conducts influencer marketing, etc.; the third is "Social Media," where consumers post word-of-mouth on platforms like SNS; and the fourth is "Owned Media," which conducts various communication initiatives on its website or app. Among these, the company specializes in developing digital services based on "Owned Media" and planning, developing, and operating digital marketing initiatives.

The company's strength lies in the fact that, for 25 years since its establishment, it has been working on projects based on improving customer experience (CX), thus possessing a wealth of resources to realize the ideal CX (high consulting capability). CX, literally translated, refers to customer experience, representing the series of experiences where customers become interested in and continue to use the services or products offered by the company through various touchpoints such as stores, advertisements, websites, and apps. By enhancing CX, the final goal is to lead to product purchases or to create fans of the company or brand. The process of designing, building, operating, and improving CX is cycled through PDCA to improve it further and support the business growth of client companies. Additionally, the company's strength is that personnel beyond specialists such as UX designers understand the value of UX design and can drive the project forward. To elevate the level of UX design within the company, a certification system is in place for employees who meet certain skills, and about 80% of all employees, 156 individuals, have taken the UX training, of which 12 are certified as qualified (as of the end of May 2024).

※ The training lasts six months, focusing not only on acquiring basic knowledge about UX but also on actually conducting UX design in workshops.

Methods to effectively enhance CX vary depending on the client's business content; therefore, each case becomes a custom project that sets "goals to aim for" based on the fundamental issues faced by the client. Generally, project durations are around three months, with longer ones spanning about a year. Furthermore, services are provided to accompany clients to continue producing results afterward. Regarding system development, necessary technologies are combined according to the goals, and a flexible structure involving external partners is created. The order price varies by project; however, it requires actively driving the overall project progress by incorporating complex integrations with the client's existing systems and coordinating across the client organization, leading to a trend of projects becoming more complicated and large-scale. This is also due to the increasing tendency of CX/DX projects aiming for "the transformation of the clients themselves." Additionally, digital marketing technologies continue to evolve daily, incorporating AI technology, and client demands have become increasingly specialized and sophisticated. In this market environment, the company has been resolving issues related to advanced system development by collaborating with NTT Data, and the increase in collaborative projects has begun to generate synergy effects, helping the company escape the stunk period.

Besides custom projects, support for introducing self-developed and other companies' products is also provided. The client's industries are diverse, including retail, restaurant, service, manufacturing, and finance, with customer scale primarily consisting of major companies representing japan. Many clients operate in the BtoC field, where the importance of digital marketing through owned media is high. Recent large-scale projects handled include collaborations with Starbucks Coffee Japan, Inc. (hereinafter referred to as Starbucks) and Mos Food Services <8153>.

In the sales composition ratio by customer for the three periods leading up to March 2024, the NTT Group, centered around NTT Data, has the highest share at 30-40%, followed by the retail and food service industry at 20-30%, and the service industry at around 10%. For the individual sales composition ratio in the fiscal year ending March 2024, NTT Data accounts for 30.9% and starbucks for 12.3%, maintaining a situation where both companies account for over 40% of revenue. For NTT Data, there are many collaborative projects in the communications industry, finance, and local governments, and it is expected that strengthening these collaborative relationships will lead to medium-term revenue growth.

(Written by FISCO guest analyst, Jo Sato)