Joi Ito's Web

Joi Ito's conversation with the living web.

Yesterday I visited Google Japan's offices then later had dinner with Yajima-san, the CEO of Digital Advertising Consortium (DAC).

We talked a lot about the future of blogging as well as the good old days. Sato-san who was recruited by Google to get the Tokyo office going and Mr. Yajima both worked with me in the early days of getting Infoseek Japan going. We recruited Sato-san from Asatsu to startup Infoseek Japan inside of Digital Garage and Yajima-san was at Hakuhodo in charge of looking at the Internet advertising business.

My company Digital Garage had just lost our offer to do Yahoo Japan because Softbank invested in the parent company in the US and got to do Japan as part of the deal. Softbank offered to give us 1% of Yahoo Japan in exchange for helping them with Yahoo Japan, but we told them to take a hike. (In retrospect, maybe we should have done this deal.) Anyway, I shifted gears and we ended up with Infoseek. I was convinced that search engines were going to be the next big thing.

Softbank needed to get Yahoo Japan's business going so they joined forces with Dentsu the biggest ad agency in Japan to make an ad rep company called Cyber Communications Inc. (CCI). In response, we decided to set up a competing ad rep company. It turns out that all of the non-Dentsu ad agencies combined is about equal to the total revenue of Dentsu. Hayashi-san, my partner at Digital Garage and I gathered all of the other ad agencies together and put together the first consortium of its kind in Japan. We spent close to six months explaining the concept of banner ads and ad impressions. I remember that we couldn't get the ad agencies to understand the notion of ad impressions and how ad prices should be set by page views and not page position. Yahoo was an easier sell because they framed their pitch in old-media terms. IE, the "top page" will cost you X, sponsorship of section Y would cost you Z, etc. I remember explaining that we should be able to target ads based on what people are searching for and that eventually you would even be able to track click-through rates and disintermediate ad sales guys. No one believed me. They did believe me enough to rally against Dentsu/Softbank and form DAC with us to sell Infoseek ads. The first year, our guys were in the market competing with Yahoo Japan, which had a clear head start and we struggled to make a million dollars in sales. That was about seven years ago. Now DAC is public and I'm happy to hear they've got about $100M in revenue and are neck-to-neck with CCI.

Yesterday, we joked about how I was basically dreaming about Google AdSense and AdWords seven years ago. We also talked about how Steve Kirsch, the founder and Chairman of Infoseek was right and the others were wrong. Steve wanted to keep working on the Infoseek search engine, but in the "portal days" Infoseek tried to become a media portal, hiring media people and eventually being acquired by Disney. Infoseek pursued a big media strategy and dropped its focus on search. It's not clear whether Infoseek would have been able to compete with Google, but if they had stayed "just a search engine" maybe they could have given Sergey and Larry a run for the money.

Anyway, seven years after I was getting all excited about search, the search engine has finally become an essential part of the Internet. Even Yahoo has built its own search engine. Too bad it's Google and not Infoseek. ;-p

Having said that, Infoseek Japan still exists and is the third largest portal in Japan after Yahoo and MSN. It is owned by Rakuten and I continue to actively advise the group. Infoseek Japan is a strong profitable portal business but alas, it uses Google for its search results. Considering the fact that most of the original search engine people are gone, I think that Sato-san, Yajima-san and I have probably been in the Internet search engine business longer than just about anyone else in the world... scary thought.


Joi, this is fascinating stuff, thank you for sharing.

What really interests me are the differences between US and Japan Internet usage (broadband or mobile) because that's the area where you can leverage differences or time or expertise, etc.

Interesting story. Thanks

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Search Big in Japan from Bernhard Seefeld's Blog
February 25, 2004 5:37 PM

Joi Ito has an interesting story about the early days of search and online advertising in Japan. And his last bit is scary indeed. The more so, as I am getting into my ninth year at this summer. Could... Read More

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