Business Strategies

Conditions in the communications field, which includes advertising, are changing dramatically, characterized by such factors as progress in Internet and mobile technologies and the expansion of social media. Accordingly, advertisers are demanding communications programs that emphasize return on income (ROI) in order to maximize the impact of their communications investments. Responding to overseas markets, where solid growth is anticipated, is also a key priority.

Facing these challenges, the ADK Group in the short term will seek to raise operational efficiency and promote rigorous cost controls, with a focus on restoring consolidated operating income at an early stage. In addition, we will strive to reinforce competitiveness and raise corporate value through the core initiatives described below.

1. Global Business

The ADK Group worked to build overseas networks, centering on Asia, in order to address the needs of advertisers who have been advancing their overseas operations for some time. Many advertisers are actively moving into overseas markets with the aim of "producing close to consumption" rather than simply exporting products. Communications activities in various markets are becoming more and more vigorous as a result.

Responding to the activities of such advertisers, ADK established its second subsidiary in Malaysia, Dai-Ichi Kikaku (Malaysia) Sdn. Bhd., which commenced full-scale operations in August 2010. Going forward, we will allocate strategic resources into growth markets, such as Indonesia, Vietnam, Thailand, and India, as well as China. In addition, we will focus on fostering human resources, including by convening "Planners' Village" forums to nurture and strengthen the skills of local planners in our Asia Regional Office. In these ways, we will further boost our competitiveness in Asian markets. At the same time, we will address the diversified needs and issues of advertisers by effectively deploying the global resources of WPP Group.

In the Chinese market, we will reinforce our nationwide network functions using our core local subsidiary in Shanghai as a hub. In addition to Japanese advertisers, we have built a solid track record in China through our involvement in the Chinese Private Enterprise Pavilion at Expo 2010 Shanghai, in which many large Chinese companies participated. We hope to seize this opportunity to attract more local clients. In addition, we will foster human resources who will spearhead our local subsidiary in the future, such as training employees of our local subsidiary to become Account Directors, with the aim of providing further impetus for business expansion.

2. Digital Business

The digital domain is an important component of the cross communications programs provided by the ADK Group. Our aim is to efficiently deliver communications programs with an optimal mix of digital and traditional mass media, with a strong emphasis on ROI. To this end, in January 2011 we shifted the Communications Channel Planning Division from the Digital Business Group to the Media Content Center, with the aim of reinforcing our digital business infrastructure. At the same time, we are strengthening our alliance with ADK Interactive Inc, a 80% subsidiary specializing in Internet advertising.

In March 2010, ADK teamed up with LAWSON (a convenience store chain operator) and NTT DOCOMO (a mobile phone provider) to establish Cross Ocean Media Inc., which has taken on the challenge of developing new, high-value-added in-store media centering on digital signage.

3.Solutions Business

The ADK Group is committed to swiftly providing 360-degree cross communications programs that address the diversified, sophisticated needs and challenges of advertisers. Accordingly, in January 2011 we merged the Creative Division, Planning Division, Interactive Communications Division, and the Direct Communications Division to form the new Integrated Solutions Center. Through the organic integration of highly specialized staff in each field, as well as the functions of ADK Arts Inc. and other Group companies, we will strengthen our ability to propose effective, efficient communications programs. In addition to reinforcing our systems in such growth areas as the global business, direct business, and sales promotions, we will seek to develop new branding methods that address the changing circumstances of consumers and thus enhance our competitiveness.

4.Content Business

Animation content is a traditional strength of the ADK Group and an important additional income source after regular advertising. Our plan going forward is to develop attractive content and expand sales channels for such content, both in Japan and abroad. Overseas, we will broaden our operations in order to secured secondary income from our diverse sales channels. In Japan, meanwhile, we will upgrade our content portfolio by rolling new animation content while reinvigorating existing popular content, with the aim of achieving sustained growth.

5.Fostering Human Talent

Recognizing that human talent is the source of its competitiveness, the ADK Group is working to foster personnel who can respond to future changes in the business structure. We are paying particular attention to training Global Account Directors to serve as business partners to Japanese advertisers expanding overseas; Communications Designers who can devise cross communications programs optimized to suit to the "POE media" age*; and Communications Channel Planners who can provide ROI analyses demanded by advertisers. We are also taking advantage of a reorganization to focus on fostering management personnel.
*POE (paid, owned and earned) media
1) Paid media: Media in which companies can purchase advertising space
2) Owned media: Media that companies own directly, including proprietary sites and branded sites
3) Earned media: Media (such as SNSs, blogs and Twitter) that evaluate companies and their trustworthiness, based on information generated by consumers and other third parties

6.Controlling Costs

In the current economic climate, which is not conducive to major improvement of business results, the ADK Group will continue adopting rigorous controls of purchasing costs in order to raise operating efficiency. Through ongoing suppression of business expenses, as well, we will endeavor to boost profitability.

7.Reinforce Groupwide Management

Looking at overseas members of the ADK Group, there are companies in China and Southeast Asia generating steady growth. In Japan, too, we have exceptional Group members with strengths in business domains requiring specialized expertise. By stepping up interaction between Group companies and further raising the level of work performed done in-house, we will increase Groupwide competitiveness. We will also consider expanding our operations through new business alliances and M&As.

In addition to the aforementioned initiatives, the ADK Group will strive to secure stable growth by promoting risk management policies aimed at minimizing uncertainties affecting its business. Consistent with these aims, we will further upgrade our information security systems according to ISO27001 standards, and also solidify our compliance framework. In addition, we will continue improving our internal control and reporting systems pursuant to the Financial Instruments and Exchange Act. And we will fulfill our social responsibilities as a company, including by adopting environmental management practices that conform to ISO14001 standards.

Adhering to our "Management by All" corporate philosophy, which has not changed since our establishment, we will renew efforts to reinforce our corporate foundation, so that we can achieve sustained growth even is the most difficult business conditions. We ask for the ongoing support and understanding of all shareholders.

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