Internet Ad
Business

Growth Strategy

Driven by technological capabilities and operational excellence, the Internet Advertisement business has consistently adapted and thrived within a rapidly evolving market. As the rise of generative AI brought a paradigm shift in advertising, our proactive investments in AI, focused on maximizing ad performance, have crystallized into a competitive advantage. Currently, we are leveraging these technological capabilities to expand AI use to improve operational efficiency and profitability. Simultaneously, we aim to sustainably expand our business by developing new AI businesses through specialized organizations and creating markets, such as the DX business, for future growth.

Converting Structural Shifts of Generative AI into Growth Opportunities

Profile

Takahito Naito

Managing Executive Officer, Head of AI Business, CyberAgent, Inc.

Establishing Superiority through AI Technology

While generative AI has lowered the barriers to creative production, what matters in advertising is not merely production capacity, but the efficacy of output. This gap in performance is our competitive advantage, supported by vast data accumulated through years of ad operation, expertise cultivated through in-house creative production, and high technical capabilities.

To enhance advertising effectiveness based on technology, we developed a proprietary Japanese Large Language Model (LLM) specialized in advertising expression. The LLM offers advantages in cost and speed, and its strength lies in its ability to optimize for subtle differences in expression across various social media platforms. Integrating this LLM with our extensive performance data, our "Kiwami Prediction Series" enables high-volume, effective advertising creative generation with diverse appeals, maximizing return on ad spend.

AI implementation has triggered a quantum leap in productivity. In creative workflows, top creators have increased their average output by 15x, with the highest achieving up to a 70x increase^*. Similarly, in ad operations, automation via our proprietary "CA Assistant" has reduced report generation time from 2 days to 2 minutes, demonstrating the tangible impact of our operational DX.

On the other hand, high-volume AI generation can strain clients' approval processes. To address this, we deployed solutions such as "Screening AI," which automates compliance reviews by learning specific brand guidelines, and "Kiwami Prediction Interaction AI." We are committed to resolving emerging on-site challenges through agile product development to enhance client satisfaction. Moreover, by capitalizing on our internal development prowess, we are diversifying the support we provide to clients' AI adoption. This includes selling "AI Worker," a dedicated corporate AI agent, and launching a BPO division specialized in GenAI creative production.

*: Results in FY2025

Creating New Advertising Business with Strategic Partners

Since 2020, our DX business has partnered with approximately 30 companies—spanning retail, finance, airline, and telecommunications—that hold rich first-party data. By applying our digital expertise, we are co-creating novel advertising models. The booming retail media represents a strategic convergence of our strengths and market demand. Success here requires two engines: the development capability to build ad platforms and the production capability to generate a massive number of creatives. Through years of ad technology development and in-house creative production, we possess both of these essential elements for the retail media business at a high level.

Leveraging these strengths, we create cross-channel touchpoints that bridge the online (apps, e-commerce) and offline (in-store digital signage) worlds. By integrating retailer purchasing data with our AI expertise, we precisely measure consumer behavior and impact, optimizing ad delivery to drive sales. Currently, the DX business is in a foundational phase, preparing for significant future scale. We anticipate substantial market expansion in the coming years and are strategically positioning this segment to become a high-profit driver over the medium to long-term.

Key Partners in Advertising DX Business

AI Lab: Bridging Technical Prowess and Business Impact

Supporting these initiatives from a technical perspective is our R&D organization, AI Lab, established in 2016, one of the earliest among domestic advertising companies. Its research capability is globally recognized, evidenced by 85 papers accepted annually. It is ranked 4th in Japan^*1 for AI research leadership, and the proprietary Japanese LLM was rated 1st among Japanese companies^*2, validating our superior R&D capabilities.

Crucially, "AI Lab" transcends academic theory to focus on deployable technology, driving approximately 150 social implementation projects each year. We conduct demonstration experiments with retailers and manufacturers through research integrating AI and economics to optimize prices. Our efforts to accelerate retail DX earned the Vendor Category prize at the Retail AI Award 2024. Furthermore, our "Price Agent" solution, a direct product of this research, has demonstrated the ability to reduce coupon funding costs by up to 70%, significantly boosting clients' ROI.

*1: Thundermark Capital "AI Research Ranking 2022" released in May 2022
*2: Joint survey by NIKKEI Digital Governance and Weights & Biases of 42 major Japanese-compatible LLMs based on 14 indicators in August 2024

New Value Creation Centered on AI

The pervasive adoption of generative AI is driving a structural overhaul of the advertising industry. Innovations like Google's AI Mode may disrupt search advertising but also promise more direct engagement between brands and consumers, potentially rewriting the fundamental rules of business. While our core mission—bridging brands and consumers—remains constant, generative AI has enabled us to execute faster and more granularly execution. We believe this necessitates a shift in the agency's role: from media planner to becoming a strategic partner in co-creating business value. We embrace this structural shift as a prime opportunity to pivot toward higher-profitability business models.

Anticipating the AI search era, we are leveraging our adaptability to rapidly launch AI-driven ventures. This includes GEO Lab for next-gen marketing research, the AI Customer Success Division for customer relationship management (CRM), and specialized units for low-cost, performance-based GenAI video production. Through these initiatives, we will establish new advertising methods and evolve beyond the traditional agency framework into a technology company that creates novel value, continuously adapting to change to drive sustainable growth.