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Vol.2 : Brian Nelson (ValueCommerce)
March 7, 2007
Global money seeks new home after 'China shock'
TSE poised to delist Nikko Cordial
Would you like that delivered?
Panel maps out Japan's own NSC
Asia developing taste for Japanese style
Renewable energy under a cloud
Professional eye for the busy guy
Expanded coverage: Brit brings aliens to Yuzawa slopes
click fraud：クリック詐欺
affiliate websites：アフィリエイトサイト
EC site：ECサイト（広告主）
text advertising：テキスト広告
search engine results：サーチエンジン検索結果
banner advertising：バナー広告
initiatives：主導権
（ B: Brian, T: Terri ）
| T : |
Describe your business. |
| B : |
ValueCommerce, which I'm the CEO of, is Japan's #1 affiliate marketing business. Specifically in terms of market share, with the largest revenue in the affiliate marketing industry in Japan. And we've been able to maintain the position in the industry because we have very high quality. A lot of people in the internet industry have had the difficulty of working with things like click fraud, or working with expectations of internet advertising by industries...
And we've really been able to keep the lead market share by making sure that we always did a very good quality job. For instance, we have our individual staff looking at all the websites that register to be our customers, each and every day. Now, this is a large number. It's not like we're just adding one or two a day. We have now 375,000 affiliate websites. We have over 1,600 EC site customer sites... |
| T : |
And someone's looking at them every day? |
| B : |
We have people, when they register to join our company, that review all those companies. And we're the only ones in the industry that do that. This makes sure that we maintain very high quality. We turn back 20% of everyone who registers to try to be part of our network.
And we try to help them by telling them how they can improve, to come back and try again. And we do this because a lot of the large brand customers that we work with want to make sure that their brand is protected on the Internet. They don't want text advertising, search engine results, banner advertising showing up on website that are not of high quality, because that helps protect their brand.
I think that is one of the reasons why we have been able to obtain the No. 1 spot and maintain the No. 1 spot.
Of great importance is that we do our sales as a direct sales model.
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| T : |
Can you explain a little to our listeners? |
| B : |
Yes, from the very beginning, from the nature of the management team that we have, and the salespeople and the training we've provided them, we go directly to large companies and work with their senior management on how they can build their initiatives, and how they can build their sales channels for the internet. It's a lot easier for us to get bigger budgets, because people trust us, because they work with us each and every week, on a person-to-person basis with our customers.
Whereas some companies in our industry work through resellers and agencies. And reseller/agency connections, can help you grow quickly, but you can find that you don't have the closeness of a relationship, when it comes to dealing with your large customers. So that's another reason, beyond just quality, just working with the large companies in a very close relationship, that's helped us maintain the No. 1 spot in the industry.
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| T : |
You are giving back to the community in a way, by telling companies that can't quite meet your standards what they could do to do better. Do you have some success stories of people who've changed their models and been able to jump in there? |
| B : |
Absolutely. You're thinking of companies and people that are going to generate revenue. And by making their websites up to the level of compliance, and up to the level of quality that we require at ValueCommerce, it actually helps them to make more money.
And so from that standpoint, when we educate people to come back and provide a better website with the right kind of content that's acceptable for us, they actually realize in hindsight that that was great, because they make more money.
And we show those success results to them, and that's why they're motivated to want to make changes.
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Web 2.0 (web services)：ウェブ2.0
P & L：損益
M & A：合併・買収
（ B: Brian, T: Terri ）
| T : |
You actually went into a description of the market, but can you get a little more in depth? |
| B : |
Sure. The affiliate marketing industry in Japan is still growing at about 30-40% a year. So, it's a very high growth industry. There's a lot of competition: there's about 50 different companies doing affiliate marketing in Japan. |
| B : |
Which is very similar to the trends you see in overseas markets – the United States and Europe and Asia. And being the No. 1 company, we find that a lot of companies try to mimic us - to copy the things we do, so it's always staying one step ahead.
For instance, last year we came out with the first fully automated product database API, which allows us to show products, millions of products from our EC-side customers, on the affiliate sites, in a way that makes it easier to make purchases. No longer does a consumer have to go to an affiliate website, and then click on an advertisement, and then go to the EC site. They can actually stay at the affiliate, and they the product description, they get the product link, they can go directly to the products, and that links to more purchases as well.
So they're making more money, they're feeling better about the way they can show products on their websites, and that's something that we have done first, before everyone. |
| T : |
Is that like a Web 2.0 thing you're using? |
| B : |
Yes, it is, it's very much a Web. 2.0 product. Web services, as it's referred to in Japan. In the Nikkei, in fact, in Japan, there was a large article written about how ValueCommerce is the leading company in doing Web 2.0 services. Thanks to Nikkei for that. |
| T : |
How would you like to see the market develop here, if you had your ideal situation? |
| B : |
For the industry that we're in or for the economy of Japan? |
| T : |
If you can do both that would be great. |
| B : |
First of all, the space that we're in, I think the leadership we've shown by providing high quality – I'd like to see that continue, and I'd like to see that continue throughout the whole industry. We've provided, again, leadership in that, where we started last year, along with 6 other affiliate marketing companies, a new affiliate marketing association, called JASK. Japan Affiliate Marketing (Services) Kyokai. Kyokai stands for organization.
From that standpoint, JASK is providing initiative where, we were on NHK last year and providing a new arena to make sure that people are compliant and giving good quality to the market.
That's the way I'd like to see the market continue to grow, because it will provide, actually, the base for the growth, because it provides for trust in the industry. And that is one thing that all industries must strive for as they're growing.
The second part, with Japan: you have a financial and corporate structure situation whereby companies still, when they acquire companies, they still need to write off something called 'good will'.
And in writing off good will, that puts Japanese corporations at a disadvantage to foreign companies. In that standpoint, I would like to see Japan change to allow for good will not to have to be written off in the same way, to make everybody more competitive on a P&L standpoint, and a balance sheet standpoint, in growing their industries through M&A from Japan.
But, you have in Japan a great, a wonderful thing, which is that a small piece of land, with a population that's large, but not the largest, you have what is a very large economy. And that allows for ValueCommerce and other companies a great opportunity to grow a local market, but also work out a launching pad to go overseas.
I think that's where, maybe, Japan is underestimated, and you hear a lot about the emergence of China now, and India, and of course those things are going to happen. But if you look at the economic numbers behind all of that, Japan is doing very well, with investment into both China and India. That comes from the basis of the strong economy that Japan has. So that's great for us, and great for the future of Japan. |
| T : |
Last question: your experience with the Nikkei Weekly... |
| B : |
Is absolutely excellent. I think that if you have to look at the resources that you have available to you in the limited time you have each day, specifically for someone like myself, who does read Japanese, but I read English much faster because that's my mother language, if you will. From that standpoint, having the information compiled in a way that I can get through it very quickly in English, is very useful to me.
So I find it to be one of my most helpful resources, and I've used the online version for the last five years as well. So I'm looking at the Nikkei online every day, I'm looking at the Nikkei Weekly on weekends, and I'm also looking at the Japanese version on a daily basis. So I find it to be one of my best resources. |
 Eric Feigenbaum / Managing Director
Expedia Holdings, KK 
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