Where does the true value of "data analysis," the key to Japanese corporate growth, lie?

Dentsu Inc. partnered with BrainPad, renowned for its top-tier data analytics capabilities in Japan, to establish the joint venture "DENTSU CROSS BRAIN INC." (DXB) in July 2020, commencing operations in October.

Our interviewees are Hiroyuki Sato of BrainPad, one of Japan's foremost data scientists who serves as a university visiting professor and has authored books while contributing to nurturing the next generation, and Tadashi Kawabe, who has long worked on developing marketing solutions at Dentsu Inc. and recently engaged in data marketing in the United States.

We asked these two key figures, who will serve as directors of the new company DXB, about the challenges Japanese companies currently face in utilizing data and the purpose behind establishing the joint venture.

<Table of Contents>
▼Why the market's abundant data isn't being effectively leveraged for business&nbsp; &nbsp; &nbsp;
▼Taking on everything from data analysis to proposal and execution of measures, aiming for performance improvement with clients
▼Leveraging both companies' strengths to demonstrate the potential of data-driven marketing

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Data flooding the market is not being effectively utilized for business

──DENTSU CROSS BRAIN INC., which handles everything from data analysis to strategy planning and execution, is finally launching. As a joint venture between BrainPad and Dentsu Inc . , it will likely excel at data analysis, but what exactly is "data" in the context of marketing?

Kawabe: In everyday life, examples include personal information registered for online shopping or smartphone apps, time information when logging into sites, or data from point cards presented at drugstores. We live in an era where the volume of obtainable data keeps growing, and diverse data is abundant. Of course, acquiring and using data requires the consent of consumers.

Sato: The technology for processing collected data is also advancing. Companies independently gather and analyze this data to identify customers likely to become heavy users or understand customer preferences. While the importance of data analysis itself has permeated among Japanese executives, with understanding significantly improving over the past decade, there are still many challenges at the operational level.

Kawabe: Mr. Sato, you teach a seminar on digital marketing at Tama University and have trained many data scientists, making you a true data analysis specialist. From your perspective, what are the key benefits of using data for marketing?

Sato: Often, "using data to improve various digital marketing KPIs" is highlighted. However, I feel that improving KPIs is only a small part of the benefits of data utilization.

Fundamentally, improving KPIs should result from deeply understanding consumers and tailoring initiatives to fit their needs. In other words, the core benefit of data utilization lies in "gaining a deeper understanding of consumers." Especially with the pandemic accelerating the digitization of consumer behavior, I believe we'll struggle to understand consumers without leveraging data.

──Many companies now collect and analyze customer data. Are there any challenges in how Japanese companies utilize data?

Kawabe: The biggest challenge is the shortage of "people who analyze data"—data analysts, data scientists—both within companies and in the market. I was working at a data marketing company in the US until just recently. There, it's standard practice for major American companies to have in-house teams of data analysis specialists. However, many Japanese companies lack sufficient data analysis resources relative to the scale of their business and marketing activities.

Sato: When marketing data analysis is performed at Japanese companies, it's often handled by people in the marketing department. But marketers have their own marketing responsibilities, and in most cases, they don't have the bandwidth to focus on data analysis as well. Furthermore, they are ultimately marketing professionals; it's rare for them to possess a high level of expertise in data analysis.

──So the U.S. is ahead in terms of utilizing data-specialized talent.

Kawabe: That's correct. The U.S. market inherently has high labor mobility, and it attracts top talent globally with expertise in statistics and machine learning. This likely makes hiring "data utilization talent" relatively easier.

Furthermore, American companies are proactive in integrating and utilizing data collected across various touchpoints. For retailers, it's very common to match online browsing and purchase histories from websites or apps with in-store purchase histories to gain deeper consumer insights. They also sometimes share portions of their proprietary data with other manufacturers to support their promotional activities.

Thus, since clients in the U.S. often possess substantial data utilization talent themselves, external vendors like us provide "data the client doesn't have" or "algorithms for matching data," creating added value by combining it with the client's data.

And in the U.S.,

"There's no such thing as perfect data, right?"

"But using it will make things better than before, right?"

Many clients adopt a probabilistic approach, relying to some extent on estimation.

In contrast, in Japan,

"We can't utilize data until we've cleaned it up properly,"

This seems to be the prevailing view among many companies.

──That kind of data integration and statistical work seems difficult for Japanese companies with limited in-house talent, doesn't it?

Sato: While the number of personnel is an issue, the difficulty for companies in conducting data analysis internally also lies in quality. Generally, many analysts accept market data without question and use extracted data as-is. However, data analysts must fundamentally question whether the data itself truly represents accurate information.

This is because the landscape of data available online changes rapidly. For example, cookie information from iPhone website visits now gets deleted after just seven days. If you don't factor this in and rely on outdated knowledge about cookie data, you can't perform accurate analysis. But for analysts whose primary expertise is marketing, it's difficult to consider such nuances when they're already juggling numerous other responsibilities.

──So in Japan, due to this internal talent shortage and the difficulty of data analysis, companies are turning to external vendors specializing in data analysis, right?

Sato: Yes. By engaging external data analysis specialists like BrainPad, companies can obtain the appropriate data analysis they need. However, the client's true objective isn't simply "to obtain an analysis report from an external vendor." They must ultimately consider "how to approach customers based on the acquired analysis results" and "how to leverage the data to improve company performance."

Many Japanese companies, even after obtaining analysis results, either don't know how to effectively approach customers using them, or if they do approach customers, they only execute a few initiatives without pursuing ongoing efforts. This approach may yield temporary sales increases, but it doesn't lead to long-term improvement. The valuable data utilization ends up being limited to improving specific promotions at best.

While Japan has many examples of "partial KPI improvements leveraging data," there are few cases where data utilization has dramatically boosted overall performance. This failure to translate valuable customer data into business growth—much like the GAFA companies—is likely fueling the current stagnant mood in data utilization.

To solve this, we need to shift from "company-centric" data utilization to "customer-centric" data utilization.

Dentsu CrossBrain: A New Company Born to Tackle Performance Improvement

──Given this context, what kind of company is the newly formed 'DENTSU CROSS BRAIN INC.'?

Kawabe: In a nutshell, it's a company that supports the data utilization aspect of a company's Always-on Marketing. Its mission is to transform how client companies utilize data into its ideal form by combining the strengths of two completely different companies: Dentsu Inc. and BrainPad.

Sato: Traditionally, data analysis was handled by specialized vendors, while the approach based on those results was often determined by the client themselves or by partner marketing agencies. DENTSU CROSS BRAIN INC., however, doesn't stop at data analysis; it devises and executes effective approaches to target audiences. That's why we're not just a "data analysis company," but a "company that grows clients' businesses through data utilization."

Kawabe: The company name itself was chosen to combine the strengths of BrainPad and Dentsu Inc. "Dentsu" multiplied by "BrainPad" equals "DENTSU CROSS BRAIN INC."

Sato: The abbreviation for DENTSU CROSS BRAIN INC. is "DXB." After naming it, we realized it evokes various business terms—like "DXB's DX seems to stand for Digital Transformation" or "DXB sounds like 'Digital × Business'" (laughs). So, we think we came up with a great name.

──When supporting clients' DX, what is DENTSU CROSS BRAIN INC.'s greatest strength?

Kawabe: It's our ability to tackle challenges alongside the client. When we identify issues through data analysis, we work collaboratively with the client to address and improve them. This "working together with the client" is crucial—we don't just unilaterally analyze data and execute planning or initiatives. We always work in close collaboration with the client's marketing department and relevant teams.

Sato: DENTSU CROSS BRAIN INC.'s approach is to collaborate with clients, becoming one team to tackle challenges. To achieve this, we may even station ourselves at the client's office if necessary.

However, more important than physical presence is becoming a true team—entering the client's mindset, so to speak, and becoming one mentally. By building a relationship of mutual trust with the client, we can become a real team, deliver our best performance, and effectively improve the challenges.

Kawabe: Unlike traditional data analytics firms, our goal is to be a company that provides services committed to our clients' key performance indicators (KPIs). We provide both the data analysis and the talent capable of devising strategies based on those analyses. Furthermore, this talent integrates into the client's team, working together on daily operations and the PDCA cycle. BrainPad and Dentsu Inc. partnered to gather and develop such talent.

Leveraging both companies' strengths, we want to demonstrate the potential of data-driven marketing.

──What kind of company do you envision DENTSU CROSS BRAIN INC. becoming?

Kawabe: As mentioned earlier, it's a company where professionals with specialized knowledge from BrainPad and Dentsu Inc. come together, mutually reinforcing each other's strengths.

Sato: BrainPad is a company focused on data analysis. We've executed countless projects using data analysis to understand customers and discover optimal touchpoints. However, even when clients receive the data, they often don't know how to approach it effectively. We wanted to support them but couldn't.

Even when we identify business opportunities through data analysis, clients often ask, "Should we run web ads?", "Is TV or radio advertising better?", or "Would newspaper ads be more effective?" We felt frustrated not being able to fully support them. At DENTSU CROSS BRAIN INC., Dentsu Inc. members cover that aspect. The new company's purpose is to achieve fundamental "improvements in customer experience" through this collaboration.

Kawabe: "Planning and executing effective strategies for consumers" is Dentsu Inc.'s area of expertise. They can identify and approach clients using the optimal method from a variety of techniques, including mass media advertising and organizing real-world events.

Conversely, Brainpad is a top-tier company in the field of data analysis. By having Brainpad's data scientists collaborate with Dentsu Inc.'s creators, we can provide more effective services.

Actually, BrainPad is a company I've admired since I was young, and I've known Mr. Sato for a long time, so I'm truly delighted we can collaborate now. BrainPad's high analytical capabilities will undoubtedly be a plus for clients and for Dentsu Inc. itself. For example, if BrainPad's data analysis helps us identify more core target segments, Dentsu Inc.'s planners and creators can then build pinpoint initiatives that stimulate the interest of precisely those segments.

Sato: Furthermore, our respective talents can complement and elevate each other's skills. I also anticipate that through personnel exchanges between our companies, we will see an increase in "talent capable of handling everything from data analysis to strategy formulation and execution."

Kawabe: While the importance of "data utilization in marketing" has long been emphasized, data analysis and subsequent action planning have historically been disconnected. DENTSU CROSS BRAIN INC. will launch new services bridging these two areas.

Sato: Utilizing analytical data more effectively will undoubtedly unlock greater potential within Japanese companies. This enables long-term performance improvement, not just short-term KPI achievement. To that end, DENTSU CROSS BRAIN INC. will uncover untapped areas for data utilization. We aim to demonstrate that "truly effective data utilization delivers significant results for a company's long-term performance" and spread this approach throughout Japanese businesses.

For inquiries regarding 'DENTSU CROSS BRAIN INC.', please contact us here
Dentsu Inc. Data & Technology Center
dtc_release@group.dentsu.co.jp