Leading Japanese mobile telecommunications company NTT Docomo and advertising agency Dentsu Inc. are investing $9 million during the next six months to set up an ad agency that will handle advertising on Internet-capable cell phones.
Docomo's "i-mode" service allows for scaled-down Internet surfing over cell phone handsets and is the No. 1 Internet access point in Japan with more than seven million subscribers. The new agency,called D2 Communications Inc., will mainly act as media representative for companies wishing to place ads on the service.
"The new medium represented by i-mode is destined to become a medium that is well suited for placing advertising and we believe that advertising will also be a new source of income," says NTT Docomo President Keiji Tachikawa.
Docomo has a 51% stake in the new company, while Dentsu holds a 46% share and an advertising company called NTT Advertising Inc., which is affiliated with the mobile telecom company, will have a 3% share. D2 Communications will be capitalized at $4.6 million.
The new advertising agency is looking to turn a profit in the business year staring March 31, 2001, with sales of about $18 million to $28 million, company officials said.
At present, some of the advertising ideas include banner ads to run atop welcome menus as well as allowing companies that have i-mode sites to place ads on their pages. In the future, the D2 Communications will look to produce and mange ads by the use of PUSH-type information supply services.
"D2 Communications will help to increase the marketability of i-mode. Since we are a mobile telecommunications company, we are enlisting the help of Dentsu for this advertising venture," Mr. Tachikawa says, adding the company will be open to all advertising agencies.
The i-mode service allows users to access stripped down pages on the World Wide Web, send and receive email, and tap into a variety of interactive services such as online banking, restaurant guides, news headlines and even daily cartoon strips.
The typical i-mode phone weighs less than four ounces and has a slightly larger LCD display than a typical cell phone, and it can accommodate about six to 10 lines of text. Above the number key pad, there is a button marked "i," which accesses the service, along with other buttons for navigation.
Subscriptions for i-mode service cost $2.80 a month and NTT Docomo estimates that an option that allows users to phone to numbers displayed on Internet sites adds on average about $9.40 to $18.80 a month in phone fees.
The No. 2 Net phone service in Japan is from Nippon Ido Tsushin Corp., which is based on the Wireless Application Protocol (WAP) format. IDO has enlisted about two million subscribers to its service.
Copyright June 2000, Crain Communications Inc.