See the original story in Japanese.
Some readers who participated in our community events since we started up our business may recall Youngwook Ko. In those days, we regularly held pitch events at a co-working space located in Nishiazabu, Tokyo. He had based his activities then in Roppongi and sometimes dropped by our events.
20 years ago, Ko came to Japan by himself from Korea when he was just 20. After working at a TV station, he founded his company called Rocket Staff in November of 2010, taking on cross-border app development between Japan and Korea while coordinating app marketing or acting as a reporter introducing Japanese tech trends for a Korean IT-focused TV program. The firm’s representative works include chat and photo-sharing app Peppermeet and ad-based user engagement app Ad&Joy.
Ko contacted us again in a long while. 20 years has passed since he came to Japan and he told us that he has embarked on a new journey before reaching the age of 40.
At age 40, becoming free from hesitation
According to Ko, Rocket Staff’s business has still been doing well. Its current key product is free Manga app such as KING (for iOS / Android) or Manga Kiss (for iOS). The business model is to digitalize Mangas which are already published through partnering publishing companies and to share the revenue earned from advertising. Rocket Staff was initially managed by Ko with support from shareholders including VC firms and angel investors, after which Ko bought shares back under the strong performance of Manga app sales, and now the firm is wholly owned by him.
He is married with children, and has produced a stable business. He can be called a successful man, and yet never settles for the situation. That is because he is full of entrepreneurial spirit.
Eight years has passed since I started the business of Rocket Staff. The current business has been doing well in Japan, but I noticed there are different patterns of successful businesses between startups in Japan and that in the world.
I want to create a service that can compete on the global market and do not want to regret. I think the limit that I can work super-actively enough to start new business may be 40s or 50s, so there is only 20 years left for me then.
To create a global service, an overwhelming strength surpassing other players is needed. In addition, what is the service which can be created only by them? Ko found a hint in advertising which earns profit for Manga apps.
Why blockchain-based ad network?
In a lot of apps including Rocket Staff’s Manga apps, ad frames are inserted as set by ad agencies. Good sales performance can be seen right after a salesperson first visits an office for promotion and the firm adopts the new ad, as it is fresh. But the performance starts diminishing as freshness wears off a few weeks later. Once the ad agency is prodded into making improvements, the sales recovers but then soon goes down again after refreshment periods. Ko explained that to be a typical cycle of ad sales.
Ad agencies provide either ads they acquired the contracts by themselves through promotion activities or ads distributed from ad network through RTB (Real-time Bidding) to their ad frames. According to Ko, ad agencies tend to prioritize the ads they won contracts due to its better gross profit in many cases. As a result, they often provide ads making much of the number of impression and sales rather than the affinity to media or apps; therefore, the advertising revenue for media or app operators declines.
For example, ads for women are sometimes distributed in Manga app for men. This tragedy is not caused by technical problems but caused by contradictions of the current online advertising business. More than a few global media or app developers earning advertising income must recognize the same issue. So, is it possible to construct an ad network securing transparency by using blockchain? That is the answer Ko found.
Trying to secure transparency of an ad network is like trying to handle one of the sacred cows in the ad industry. Since conventional ad networks are unlikely to work on it, I felt certain that it is worth doing by ourselves.
Perhaps, it might become a disruptive product that presses conventional ad agencies or ad networks. Rocket Staff now is a company with 100% owned capital, so that Ko can strive for development of new platform at his unrestricted position without disturbance by conflict or delicacy.
Reverse import from Estonia
To realize the new business idea, Ko found a new company in Estonia and moved his base to there. Cooperating with remote developers and staffers in Japan or Korea, the firm will be engaged in development of a decentralized ad network named ACA Network.
In ACA Network, all settlement of buying and selling of ads between advertisers and ad frame providers are conducted by using a ERC20-based token JPYT (provisional name); no problem about volatility will arise by setting 1 JPY = 1 JPYT as the fixed value (pegged rate). On that platform, ordering designers for banner ad creating will also be available via JPYT settlement. ACA Network plans to reduce its commission fee to around 5%, while typical DSPs (Demand-Side Platform) require several tens of % fee.
By the way, since the JPYT token is legally treated the same as prepaid e-money such as Suica or Edy in Japan, service operators have to deposit an amount equivalent to a half of the value of the unused money (Payment Services Act). To secure the capital for deposited money, ACA Network is going to conduct ICO (Initial Coin Offering) selling its own token “ACA” this May. Since ACA Network is an Estonian corporation but not a Japanese cryptocurrency exchange operator, AMA (Ask Me Anything) or white paper will be provided only in English (as not targeting only the Japanese).
Settlement on ACA Network requires JPYT, not ACA. Users cannot use ACA acquired by ICO for settlement of ad trading but can receive a discount on commission fee of ACA Network based on the amount of ACA (there is a risk that paying rewards back to ACA owners may be regarded as equivalent to stock dividend, and the firm adopted such a style to avoid the conflict with regulations).
In this field, rival players such as Bulgaria-based AdEx (ADX) and San Francisco-based browser developer Brave Software providing Basic Attention Token (BAT) exist, but both of them are ad networks targeting the European and the U.S. market, so that ACA Network seems to focus on the Asian market of the white space. AdEx had raised $10 million within three hours in its ICO conducted last June, and Basic Attention Token had raised $35 million within 30 seconds last May as well.
Translated by Taijiro Takeda
Edited by “Tex” Pomeroy