Businesses

ValueCommerce engages in performance marketing. With a vision of becoming a global leader in online sales and marketing, it addresses its mission to offer services with high quality and effectiveness for helping clients make success in e-commerce.

The performance marketing provides clients as advertisers with pay-per-performance means of online marketing over the Internet to support effective e-commerce and online marketing. While operating the Affiliate Marketing service as its mainstream service, ValueCommerce also offers the Storematch Service, which is a cost-per-click based online ad distribution service. Starting 2011, ValueCommerce is reporting financial results in two different business segments-the Affiliate Marketing service and the Storematch service-in place of the previous single segment constituted by the performance marketing.

(1) Affiliate Marketing Service

The Affiliate Marketing Service refers to a service of distributing ads of clients operating online businesses, including e-commerce clients that sell goods and services on their websites and sites that accept membership registrations and catalog requests (hereinafter "EC sites"), on websites run by corporate and individual users (hereinafter "partner sites") and enabling partner sites to earn compensation based on the results of ad distributions including commodities purchases, member registrations, and catalog requests.
EC sites pay compensation to partner sites via ValueCommerce when EC sites enjoy goods sales and other tangible results from running the ads. Partner sites drive Internet users via their websites to EC sites and receive payments commensurate with goods sales and other results that occur on the EC sites.
EC sites need only pay for the actual results reaped from the ads. At the same time, they can track and analyze statistics on the effect of their ads. This service thus enables them to conduct marketing activities with excellent cost effectiveness.
Under the service, partner sites can have the opportunity to earn compensation by distributing ads of partnering EC sites on their websites and blogs via ValueCommerce.
ValueCommerce operates the ValueCommerce Program, a unique system at the heart of its Affiliate Marketing Service, to help EC sites and partner sites construct a network of partnerships so that partner sites can obtain compensation for performance. The ValueCommerce Program acts as a database that manages information about the Affiliate Marketing Service, such as data as to what are sold, when they are sold, and for what price they are sold in online transactions, as well as data on how much compensation is payable to partner sites.

(A) Services for EC sites

To EC sites, ValueCommerce offers the following services.

a) Affiliate Service Provider (ASP) platform

The ASP platform provides EC sites with the Affiliate Marketing Service based on the ValueCommerce Program. EC sites operate the program on its administration screen and carry out their advertising and sales activities. Service fees consist of the base administration fee for using the system, the pay-per-performance compensation to partner sites, and the commission for ValueCommerce commensurate with the partner payments.

b) Consulting service

Under the Consulting service, ValueCommerce undertakes to provide EC sites with integrated services of planning, operation, and management of advertising methods to produce optimal advertising outcomes in the Affiliate Marketing Service on behalf of EC sites. Under the service agreement, EC sites pay the fixed-value monthly service fee as well as compensation according to the results.

c) Optional services

In addition to those explained above, ValueCommerce offers optional services from which synergies with the Affiliate Marketing System are expected, such as the search engine marketing (SEM) service and ad displays on other media.

(B) Services for partner sites

For partner sites, ValueCommerce offers the functions of the ValueCommerce Program and opportunities to construct an affiliate network with EC sites. In addition, it provides seminars, educational opportunities, and other services helpful to effective website operation.

(C) Mechanism of the ValueCommerce Program

The ValueCommerce Program is a system that offers opportunities for forming partnerships between EC sites and partner sites. It is also a database that manages relevant information to the Affiliate Marketing Service, such as data as to what are sold, when they are sold, and for what price they are sold in online transactions, as well as data on how much compensation is payable to partner sites.

The following explains the process flow of the services using the ValueCommerce Program.

An EC site seeks partner sites wishing to form a partnership with it by suggesting payment conditions on advertising for goods sales or for the acquisition of new members or customers. They include, for example, the amount of compensation per purchase or per request for catalogs or other materials. A partner site studies the payment conditions suggested by EC sites and applies to tie up with an EC site that interests it. When the EC site accepts the application, the partner site can display its ads on its website or blog. On the ValueCommerce Program, partner sites are sorted by the subject they cover into various categories including travel, computers, and shopping so that EC sites can quickly search for partner sites best suited to their alignment. In addition, it provides an iTarget function (*1) unique to the Company. It allows EC sites to effectively manage their partner sites. The Company also offers the iTrack function (*2) to record and store on the program all data about reactions to ads and sales generated from clicks on ads so that EC sites can review the effect of their ads on the statistical data view screen.
The ValueCommerce Program features several types of compensation that EC sites pay to partner sites, such as cost per action (CPA) and cost per click (CPC). The program calculates the compensation amounts for separate types. The partner payments are determined by combining the amounts of compensation thus calculated, managed on the system, and paid to partner sites. The amounts of commission earned by the Company are calculated on the basis of pay-per-result compensation to partner sites and billed to EC sites.

*1 iTarget Function: A function that allows EC sites to group partner sites by their own criteria and to set different partnership conditions for individual groups. It facilitates the construction of a more effective sales network of partner sites, illustrating by applying preferential payment conditions to a group of high-performing partner sites.

*2 iTrack Function: A function that constantly monitors which partner sites generate ad effects that benefit EC sites and offers this information to EC sites as needed.

The diagram below illustrates the process flows explained above.

1) An EC site applies for ValueCommerce's service. ValueCommerce may receive a guarantee deposit prior to the start of the service according to the terms of agreement.

2) A partner site registers for valueCommerce's service.

3) A partner site studies the conditions for alignment disclosed by EC sites and makes an application for partnership. The partnership is formed when the EC site accepts the application.

4) The EC site distributes ads to the partner site.

5) ValueCommerce tracks data on the performance of ad distribution.

6) The EC site pays ValueCommerce the administration fees, the partner payments, the commission for ValueCommerce, and optional service fees when necessary.

7) ValueCommerce pays pay-per-result compensation to the partner site.

(2) Storematch Service

The Storematch Service is a cost-per-click online ad distribution service for merchants participating in Yahoo! Shopping and other online malls. It provides two features: Store's Ichioshi and ItemMatch.
In Store's Ichioshi, ads of merchants related to search keywords entered by Internet users in the search field provided on the online mall are displayed around the search results. ItemMatch is ideal to merchants wishing to attract Internet users selecting goods from a specific product category on an online mall. It enables the display of ads of subscribing merchants dealing in items that fall under the product category in question in the online mall.
The Storematch Service adopts pay-per-click billing. This indicates that the fee is based on the number of clicks performed by Internet users on the ad. Each merchant sets the per-click rate that applies to itself, and ads of those merchants suggesting higher rates will be displayed preferentially. Merchants pay ValueCommerce the fee calculated by multiplying their respective rates by the number of clicks earned. ValueCommerce pays the online mall operator the ad distribution fee by a predetermined rate with the mall operator. As a result, ValueCommerce earns the difference between the per-per-click fees collected from merchants and the ad distribution fee paid to online mall operators.

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