INTAGE : 04. CEO MESSAGE881KB

07 CEO MESSAGE

Message from the President

We aim to achieve medium- to long-term growth and increase corporate value through trial and error, and by taking changes in the business environment as opportunities

President and Representative Director

Noriaki Ishizuka

Accurately grasping needs in the COVID-19 era and accelerating the online shift

During the fiscal year ended June 2022 (July 2021- June 2022), the second year of the 13th Medium-Term Management Plan (3-year plan), the INTAGE Group improved its earnings structure thanks to the strong performance of the panel business and the acceleration of the online shift.

Amid the drastic changes in consumers' purchasing behavior and attitudes due to the spread of COVID-19, we combined our high-quality panel data in the fields of consumer goods, services, and healthcare with online research. This has enabled us to accurately catch up to the constantly changing research needs of our customers. In addition, as the domestic market matures, many of our customers expanded to overseas markets and in addition to this our outbound surveys in the Southeast Asian market from Europe, North America, China

and South Korea are growing. In collaboration with dataSpring Inc., which became a subsidiary in 2020, we have further accelerated the online shift, and the number of mobile monitors in Southeast Asia is steadily

increasing. In order to respond to further global shift, it is essential to further promote the online shift. We will continue efforts to achieve an online ratio of 70% or more in our overseas business.

In the meantime, we still lack the capacity in human resources needed to meet the strong demand in the research business. This is a major challenge but we plan

1. to strengthen hiring of new graduates to increase manpower, (2) to provide skill training for boosting the quality level, and (3) to strengthen our ability to respond to speed-oriented research with a low human weight among inputs, to become more efficient.

Steadily implementing measures to visualize the offline purchasing process

In the already mature Japanese market, companies are looking for more optimized, leaner marketing activities. In order to meet this demand, we have to enable visibility of the offline purchasing process. This is one of key measures of the management strategy we are working on. First, this involves the establishing of a Customer Experience (CX)1 marketing platform that enables research, test marketing, sales promotion, and

1: CX (Customer Experience) refers to the customer's (consumer's) experience in using a product or service

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advertising to be carried out in a coordinated, integrated manner. Full-scale development is underway in preparation for the first release in 2024. We will link consumer profiling services based on SCI®, our keynote panel service component in measurement research, with fan development support services based on CODE, which is responsible for implementing test marketing, advertising, and sales promotion measures and measuring of their conversion.

The second strategy is the realization of media planning support through collaboration. After renewing the i-SSP® (INTAGE Single Source Panel), we have expanded the sample size to 24,000 and improved data accuracy.

The i-SSP® was transferred into Switch Media's SaaS service. Further, TVAL, a media planning support effectiveness measurement solution, was released. TVAL users can keep track of shared viewing, and household viewing, in addition to individual viewing, and see details of the area analysis, which can help advertisers optimize media planning. At INTAGE, we would like to use this to re-grow the communication domain.

The third strategy is to facilitate business transformation by retailers and manufacturers. In April 2021 we began

to provide the ß version Easy! digi-signage Teibancho, and the number of installed units is steadily increasing. Although face-to-face marketing and sales activities were restricted due to the COVID-19 pandemic, we have accumulated a variety of use cases of Easy! digi-signage Teibancho, so we will actively promote it in the fiscal year ending June 2023.

By responding to changes in the environment and repeating trial and error approaches, we intend to firmly maintain our No. 1 position in Japan

We are surrounded by uncertainty of the environment, driven by the spread of COVID-19, as well as climate change, changing geopolitical conditions, soaring prices of energy and raw material prices, and other factors. This makes consumers constantly change their attitudes, priorities, and purchasing behavior. Our corporate customers have solid needs to understand these changes. In the meantime cost increases in recent years have made our customers more insistent on cost-effectiveness in marketing. I therefore feel strongly that we need to increase the value of our panel data more than ever.

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As such, changes in the environment always bring new challenges. Until now, we have concentrated on how to turn the external changes into positive outcomes and have acted accordingly. For example, in the early days of our business, we started with an inventory survey of pharmacies and drug stores called SDI (nationwide drugstore tracking research, now called SRI+® or nationwide retail store tracking research). Then we launched SCI® (nationwide household consumption panel research, now renamed nationwide individual consumer panel research). We subsequently acquired IBM's large general-purpose computers to process

a massive amount of panel data, which has led to today's business intelligence business. In addition, the domain of custom research that responds to specific customer's marketing issues was expanded through collaboration to delve deeper into what had been revealed by the panel data. The shift from real research to online research, and the expansion of such research overseas, were also results of responding to changes in the environment. And now the CX Marketing Platform is about to be realized.

The market is becoming mature and more diverse. We therefore need to be clear what actions need to be taken to what targets to achieve what results. To this end, it is important to continue trial and error, such as exploring how customers and consumers will perceive environmental changes, and clarifying consumer- oriented marketing actions and consumer perceptions. I think that is what we have done in our growth history of 62 years and will need to do hereafter as well. Of course, some attempts may not produce immediate results. However, some other persistent efforts may lead to good outcomes. We were forced to quit some other projects in the past but the knowledge and experience gained from them have been useful to the following projects. We should continue to be wary of changes in the external environment albeit in a constructive way, see them as opportunities, and do our best to tackle them with caution.

As a "customer business strategy (development &) implementation partner," we contribute to customers' problem solving and business outcome

In the Medium-Term Management Plan, we have mapped out a "customer business strategy (development &) implementation partner" to achieve goals in the next three years.

In the Marketing Support (Consumer Goods & Services) business, which is our core business, we are rolling out a growth strategy by taking an outcome-oriented approach that assists customers with marketing through research, resolving issues, and continuously contributing

to business outcomes. By adding weapons such as TVAL and CX Marketing Platforms that I stated earlier, we will truly become a "customer business strategy (development &) implementation partner" who contributes to customer business creation and transformation.

Next, in the Marketing Support (Healthcare) business, the mainstay research business is expected to recover, and the data science business is growing significantly by strengthening the areas of clinical development and utilization of RWD2. In addition, as part of digital transformation (DX), we are introducing digital tools to refine sales support and talent management, aiming to increase talent growth and profitability.

Lastly, in the Business Intelligence business, sales expansion in new co-creation fields through the DX Co- Creation Center, a sales organization capable of making comprehensive proposals to satisfy DX needs, has achieved certain results. Our next plan is to strengthen the creation of a framework for data utilization in marketing. Over the medium- to long-term, amid environmental changes such as the declining birthrate and the aging of the population, maturation of society, diversification of values, acceleration of DX, and a global shift, the INTAGE Group will grow along with an increase in the volume and utilization of data. This will be realized by contributing

to solving customers' issues by a combination of (1) increasing the data handled, (2) turning data into value, and (3) creating a framework for data utilization, while utilizing the assets of its core businesses.

We currently have a medium-term management plan (a three-year plan) but a span of three years is too short to present a long-term vision for the future. We need a bit more long-term backcasting thinking. We will therefore examine how to present our future vision or long-term targets, such as our ideal potential balance of domestic sales and overseas sales.

We will accelerate strategic investments with the aim of increasing value through M&As and alliances

We have recently redefined our investment activities based on growth strategies as "basic investment" and "strategic investment." "Basic investments" are investments to maintain "Japan's No. 1" position in research and to further enhance productivity and customer satisfaction. "Strategic investment", on the other hand, are investments aimed at expanding domains, creating new businesses, and establishing a revenue base. Going forward, we plan to accelerate strategic investments with the aim of increasing value through M&As and alliances.

In 2016, the INTAGE Open Innovation Fund was established with the aim of accelerating alliances in existing and new business domains. The fund invested

1. RWD (Real World Data) is data collected electronically in a form that enables secondary use of actual medical practice-based data, such as electronic medical records and health insurance claims data.

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in Research and Innovation Co., Ltd. which had grown and was welcomed to the INTAGE Group in May 2021. In addition, numerous other alliances have been realized both in Japan and overseas, and some have started creating specific synergies. Entrepreneurs of venture companies possess two weapons-a sense of speed and a healthy, pragmatic view of what appears to be common sense-which can be said to be the springhead of innovation. By coming into contact with innovative technologies of these ventures, we can enhance our imagination and creativity. I would like to spread this awareness throughout the Group and aim to strengthen our corporate culture.

With regard to capital policy, we will focus on capital efficiency and allocate all final profits to "shareholder returns" and "growth investments." In addition, we have decided to repurchase our own shares for the purpose of improving capital efficiency and returning profits to shareholders, as in the previous year. Moreover, we introduced a restricted stock compensation plan with the two aims of providing incentives to continuously improve the corporate value of the Company and promoting further sharing of value with shareholders. The Board of Directors has increased the number of outside directors

by one to five for reasons such as strengthening our reference to a third-party perspective, ensuring diversity, and emphasizing business experience.

We aim to achieve sustainable growth and increase corporate value based on our Purpose

Our vision is "Know today, Power tomorrow: We connect our customers to their customers,

to create a prosperous society of limitless possibilities." Based on our Purpose as a public instrument of society, we must raise expectations from customers and companies, facilitate empathy from society, consumers and patients, earn trust from research collaborators and data providers, and ensure the satisfaction and pride of employees and partners. This is essential for our sustainable growth. Further, we have launched a project aimed at systematically measuring these non-financial values as KPIs and disclosing them in concrete terms. While emphasizing these matters, we are dedicated

to ensuring transparency and conducting sound management with the aim of increasing corporate value over the long term. Please look forward to the future of the INTAGE Group.