Japan Deal to Put Ads on Cell Phones

TOKYO (06/05/2000) - Japan's cellular phone giant, NTT DoCoMo Inc., and the nation's largest ad agency, Dentsu, say they have created a joint venture to handle advertisements for DoCoMo's mega-hit mobile-phone Internet service, i-mode.

The deal marks the advent of competition for online advertising on wireless telephones in coming years. The joint venture, which also includes NTT Advertising, another unit of Nippon Telegraph and Telephone, will be called D2 Communications. DoCoMo has a 51 percent stake in the new company, while Dentsu holds 46 percent. NTT Advertising owns the rest of the company, which will be capitalized at $4.5 million. D2 Communications will begin operation in July.

It will coordinate advertisers who wish to place their ads on i-mode service, which had 7.11 million subscribers as of May 31. Akihisa Fujita, president of the new company, says he expects it to post ad revenue of $9.2 million by the end of March 2001. Advertisements are scheduled to appear on i-mode's screens this September. "This is a brand-new business that nobody has done before," says Fujita, who has worked for Dentsu's division of newspaper advertisement since 1995.

Fujita has developed Internet advertising for Japan's national newspapers and advised them on online content. "Japan will lead the world in the field of wireless advertisement," Fujita says. "I would like to prove our business model to the world." The i-mode service, which launched in February 1999, enables users to access Web pages that have been truncated to fit DoCoMo's devices.

Display windows on i-mode-enabled phones tend to be larger than those of typical cell phones, which accommodate eight to 10 characters horizontally and six to eight lines vertically. In addition to making regular voice calls, these phones enable customers to log on to a DoCoMo-operated central gateway server by pressing a button above the number keypad marked "i."

Dentsu's latest figures show that Internet-related ad spending reached $226.5 million in Japan in 1999, four times the 1997 total. "Clients who have put their ads online know how effective it is to place their ads on popular media," Fujita says. "Unlike ads that you see via PCs at work or home, this enables advertisements to follow customers wherever they go with their cellular phones." DoCoMo has i-mode contracts with more than 500 portal sites, including online banks, bookstores, ticket reservation agents and animation sites. In addition to the official sites, about 13,000 sites offer a variety of interactive content and services voluntarily, according to the company.

DoCoMo's spokesperson says i-mode's main homepage has about 5 million hits each day. I-mode subscribers pay DoCoMo a fixed monthly service fee of $2.77, plus a communication charge that averages about $11.40 per month, depending on how often the customer uses the service.

The more data customers exchange by phone, the more money DoCoMo would make from the communication charge. Fujita says that the new company will be agency-neutral. "We want every ad agency in the world to come to us," he says.

"We won't discriminate against agencies that compete with Dentsu, and we won't favor Dentsu, either." Dentsu spokesperson Koichi Sonoda says the agency remains open to collaboration with other cellular phone carriers, such as J-Phone and Nippon Ido Tsushin. "They are all media for advertisement," Sonoda says. "If other carriers call us, we will consider doing the business with each of them.' Nippon Ido Tsushin, the cell phone unit of DDI, has about 2 million subscribers to its Web-access services, EZ Web and EZ Access. J-Phone, the mobile phone unit of Japan Telecom, has more than 1.04 million subscribers to its J-Sky Internet service.

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