26-year-old aims to be online ad king

by Sayuri Daimon

Staff writer

Susumu Fujita, president of a rapidly growing Internet advertising agency, has a big dream — to build his company’s market capitalization to 10 trillion yen in 10 years.

Even though corporate heavyweights NTT Corp., NTT Mobile Communications Network Inc. (NTT DoCoMo) and Toyota Motor Corp. are the only companies in Japan with market capitalization of more than 10 trillion yen, the astonishingly fast pace of growth at Fujita’s enterprise is enough to make one believe his dream might just come true.

The 26-year-old Fujita had a former colleague and two part-timers as his only employees when he launched Cyber Agent Ltd., an advertising company specializing in the Internet in April 1998.

Within a year and a half, the online ad venture firm has grown to 43 employees and is Japan’s third-largest Internet advertising firm in terms of sales, following two competitors affiliated with industry titans Dentsu Inc. and Hakuhodo Inc.

It is also the leading firm in its neighborhood. Like many other fledgling online service firms, Cyber Agent is located in Tokyo’s Shibuya district, recently dubbed Bit Valley as Japan’s growing center for Internet-related venture businesses.

“We’ve concentrated our business on sales and marketing from the very beginning,” Fujita said in describing his company’s strength. “Unlike other firms that conduct Internet-related business, many of our employees did not even have a background in computers or the Internet.”

Its corporate clients now total 500, and it posted net sales of 560 million yen and pretax profits of 40 million yen in the business year that ended Sept. 30.

Cyber Agent, however, did not start out as an advertising agency. Fujita, who sought to start an Internet business, established a company to sell products related to the Internet, ranging from software to servers. But the business model did not allow for the rapid growth he was seeking.

“In order to (grow quickly), we cannot just undertake sales for somebody else,” he said. “We must have our own service that is unique in the industry.”

Based on the business model of the U.S. company Value Click, Fujita launched new services called Cyber Click and Click Income.

Once Cyber Agent receives advertisement orders from its clients, the company sends out online ads to about 2,500 Web sites it has contracts with and to 1.9 million subscribers of 1,500 online mail magazines operated by the company.

Unlike other online ads, whose prices are determined by the number of hits a Web site receives, there is no set price for the advertisements Cyber Agent handles.

Instead, corporate clients are charged according to “click-through rates” — the number of Web viewers who actually click on the advertisement.

Besides the unique pricing scheme, Fujita also attributes his company’s success to getting into the market early.

“Because we launched our services earlier than our rivals, people now put Cyber Agent at the top of their list when they want to run an Internet advertisement,” he said.

To earn more fame for his firm, Fujita wants to become Japan’s youngest entrepreneur to realize an initial public offering.

Cyber Agent is scheduled to debut in February on a new stock market called Mothers, short for market of the high-growth and emerging stocks, to be created by the Tokyo Stock Exchange for venture firms.

Asked why he chose Mothers over future competitor Nasdaq Japan, Fujita said he wanted to list his company’s shares as soon as possible.

“Nasdaq will be created later than Mothers,” he said.

The Bit Valley entrepreneur said Japan’s Internet market has great potential because various barriers to Internet business have begun to fall.

The NTT group companies’ notoriously high telephone charges have started to drop, and Japan’s poor telecommunications infrastructure is gradually improving as a result of criticism from consumers and the United States.

Meanwhile, the number of Internet users and the number of companies offering high-quality Internet-related services are growing.

“Many companies have started to invest a lot of money in the Internet market,” Fujita said, adding that he has been approached by many venture capital firms and banks since last spring.

“Internet-related business is a great opportunity,” he said. “Many people may have business ideas, but what is important is to put those ideas into action.”