Why Rakuten launched a big-data marketing consultancy

Rakuten Data Marketing, a joint-venture between Rakuten and Dentsu (the companies hold 51% and 49% stakes respectively) opened for business in late 2017. As high-tech as you might expect a data consultancy led by an ecommerce company to be, president and representative director Makoto Arima explains that at its heart is the desire to finally measure the impact of TV on purchase behaviour.

The new venture aims to grow Rakuten’s advertising business as the company comes under increasing pressure from Amazon, not just in terms of its core business but also in peripheral areas such as media and creative strategy services, which the latter is now developing in Japan. In simple terms, Dentsu’s account management and sales ability should now enable Rakuten to put the wealth of purchase data it sits on to use for paying clients.

The former Japan country manager of Google, Arima sees data-driven marketing as “just starting” in Japan. That might underestimate the situation in a country where digital marketing has been highly sales-oriented from the very beginning. But he admits that finding data scientists is not easy. Rakuten Data Marketing consists of 10 dedicated staff and between 40 and 50 staff from Rakuten and Dentsu who support the company on a partial basis.

Arima adds that in his 20-year career, he has not yet seen a credible link between TV and online and offline consumer behaviour.

Makoto Arima

“Each category is advancing, but they are not connected,” he observes. “So from an advertiser’s point of view it’s still hard for them to track the ROI throughout their campaigns.”

Central to Rakuten Data Marketing is linking viewing data stored by internet connected TVs with Rakuten’s online shopping data and its offline loyalty programs, which it is in the process of expanding. In theory, tracking the consumer’s journey between those three points will show whether or not a TV commercial has had any effect. “That’s what they advertisers really want to know,” Arima says.

It’s as if almost nothing has changed since the dawn of advertising. Marketers at companies such as Kao, for example, can spend US$500 million a year on TV advertising without knowing if it has any real effect, Arima says. As an experiment, he says Rakuten has measured its own quarterly advertising for its Super Sale. He claims more than 70% of people exposed to the TV spots came to the sale. Rakuten also compared the purchase rate at the sale between those who saw the ads and those who did not, and found it higher among those who had seen them.

Of course, many ads are likely to be shown up as ineffective. That would seem to go against the business model of a company like Dentsu, which has never been under pressure to demonstrate the actual effectiveness of its TV work.

“They’ve made big money from TV,” Arima says, but adds that the internet is at last starting to change things. To be sure though, it’s a case of one foot in the past and one tentatively in the future. “All TV is connected. Many people are scared of change, but they also want to step into a new age with us. They say they really don’t want too much change, but on the other hand they want to lead change by making things more transparent.”

Whether people are on board or not, Japanese TV is heading for change. In a separate development, in April, the country’s five main commercial broadcasters are due to switch the focus of the ratings metrics used for buying advertising from households to individuals. In the best case scenario, some observers anticipate more linkage between individual viewing habits and point-of-sale data, making the interaction between advertisers and retailers more sophisticated.