Electronic Retailers Association E-Commerce in Asia / Japan Brian Nelson, CEO & President April 25, 2007

Affiliate Consolidation Globally Japan Europe US US, Europe, Japan US, Europe 1999 1999 1998 1996 1998 Yahoo! Japan (AOL) ValueClick Rakuten DoubleClick / Google Where When Ownership

Asia’s Increasing Profile

Asia’s Increasing Profile

Asia Forecast - eCommerce & Online Advertising eCommerce US$ Millions Online Ads US$ Millions

Japanese Internet Growth Japanese Internet Users: over 78m by the end of 2006 (Over 60% broadband penetration)

Japanese Market Continues to Grow Estimates of Internet advertising expenses Estimates of the Scale of the Affiliate Services Market (Unit: billion yen) (Source: Dentsu Communication Institute) (Source: Yano Research Institute) actual estimated estimated estimated 2005 2006 (estimated) 2007 (estimated) 2008 (estimated) ValueCommerce holds a market share of around 20%. (Unit: billion yen) 2009 2008 2007 2006 2005 330.4 288.8 247.7 207.1 170.0 Web ads 566.0 488.6 414.3 342.1 272.2 Total 92.7 4.5 14.0 55.4 110.6 8.0 14.6 66.6 77.5 44.0 30.0 Mobile ads 15.0 13.1 11.9 E-mail ads 129.2 75.4 59.0 Search linked ads 13.9 2.5 1.3 Content linked ads 24.5 17.5 11.2 6.2 Mobile affiliate services 106.4 76.0 51.0 31.4 Total 58.5 81.9 39.7 25.1 PC affiliate services

Unique Features of the Japanese Market

Japan leads in Consumer Generated Media Japanese users are the most active publishers in the world More than 25% of Japanese Internet users self-publish content via Websites, Blogs and SNS Sites Blog registrants grown 83% in the last months. SNS users increased by 79% over the past six months

Japanese users are the most active publishers in the world

More than 25% of Japanese Internet users self-publish content via Websites, Blogs and SNS Sites

Blog registrants grown 83% in the last months.

SNS users increased by 79% over the past six months

World leading in Mobile Internet use… In 2005, the number of mobile internet users exceeded PC users. PC Internet Users Mobile Internet Users User only of cellular phone, PHS, and portable terminal (Data: IAC Ministry) 4,980 5,722 6,164 6,416 6,601 2,504 2,794 4,484 5,825 6,923 657 1,061 1,453 1,511 1,921 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2001 2002 2003 2004 2005 (10thousand)

Japanese Mobile eCommerce Market Mobile Market Breakdown Mobile eCommerce Breakdown Mobile eCommerce- purchases, subscriptions, services Contents- downloads to phone, ring tones, screen savers Usage of next generation electronic cash enabled phones (Felica) on the rise

Products Purchased with Mobile eCommerce

Introducing ValueCommerce /

Introduction to ValueCommerce 234 Japan Staff & 50+ Moscow R&D office 1,600+ eCommerce clients, 400,000+ media partners 600+ million Ads a day; 25,000+ transactions per day Strategic partnership & Capital relationship with Yahoo! Japan Operate Sozon (Search & Agency business) as a subsidiary Leading Performance Marketing Company in Japan

234 Japan Staff & 50+ Moscow R&D office

1,600+ eCommerce clients, 400,000+ media partners

600+ million Ads a day; 25,000+ transactions per day

Strategic partnership & Capital relationship with Yahoo! Japan

Operate Sozon (Search & Agency business) as a subsidiary

Japanese Market Trends Internet advertising is shifting towards cost-per-action ads. Step 1: In the initial stage, the most common form of Internet advertising was CPM ads, a commission for which was paid for every thousand page views. Step 2: CPC ads emerged as the mainstream. The attracting effect can be better measured with CPC ads than with CPM ads. Step3: More and more e-commerce firms choose the CPA program based on actual sales and registrations. Cost per mille (i.e. thousand impressions) (CPM) Cost per click (CPC) Cost per action (CPA) 1995 ROI Increasing demand for cost-effective cost-per-action ads 2007

Internet advertising is shifting towards cost-per-action ads.

Step 1:

In the initial stage, the most common form of Internet advertising was CPM ads, a commission for which was paid for every thousand page views.

Step 2:

CPC ads emerged as the mainstream. The attracting effect can be better measured with CPC ads than with CPM ads.

Step3:

More and more e-commerce firms choose the CPA program based on actual sales and registrations.

What is Affiliate Marketing Ad distribution

How it works

ValueCommerce Mobile Affiliate Network ValueCommerce Mobile Affiliate Service Media Partner Merchants E-commerce, memberships, subscriptions, and brand awareness Mobile Internet pv count : 250 million/ month Click through count: 5.53 million/ month Transactions: 14,000/ month Approved Mobile Partners Adding 300-400 partners per month . 12,736 Partners

Mobile Internet pv count : 250 million/ month

Click through count: 5.53 million/ month

Transactions: 14,000/ month

Affiliate Platform – Targeting Control Manually reviewed & categorized partner sites (400,000+ sites) Sophisticated content and quality based segmentation & offer targeting Ability to group, communicate and manage relationships

Manually reviewed & categorized partner sites (400,000+ sites)

Sophisticated content and quality based segmentation & offer targeting

Ability to group, communicate and manage relationships

Sophisticated Reporting Dashboard / Interface Reporting Templates

Some Affiliate Example’s Affiliate Links

Comparison Shopping Integration Site: BEST GATE Type: Comparison Site Affiliate Links

Blogs & Fan Sites

Just some of our Clients..

ValueCommerce Advantage - Consulting ＜ Reporting samples ＞ Clients receive the following services ： Dedicated online marketing strategy and planning Customized reporting, analysis, and consulting services Creative advertising management Multiple campaigns and rich media functionality Partner & alliance recruitment Partner approvals, grouping and optimization Advanced budgeting features ValueCommerce provides major corporations with an experienced team of experts to help manage and build online sales channels for each client. Clients gain access to industry-experts who understand their client’s marketing metrics and objectives and have already demonstrated results. Daily data (in graph form) Number of affiliate partner websites Click counts and the number of orders Extensive data, expertise & experience.

Clients receive the following services ：

Dedicated online marketing strategy and planning

Customized reporting, analysis, and consulting services

Creative advertising management

Multiple campaigns and rich media functionality

Partner & alliance recruitment

Partner approvals, grouping and optimization

Advanced budgeting features

VC Advantage: Agency Services ValueCommerce acquired an SEO specialist company, Sozon in 2005. From its SEO roots and position as a Japan’s leading provider of Search Engine Optimization software, Sozon has since evolved to become a leading Search and Online marketing agency for the Japanese & Asian markets. ValueCommerce consolidated its agency & International service offering under the Sozon brand at the end of 2006. Comprehensive Search & Online Marketing Solutions Analytics Site Data Review Log File Analysis / Reporting Conversion Analytics Production / Usability Site Review Navigation & Usability Design Web Design / Production Online Advertising Digital Media Campaign Planning Media Planning / Buying Creative Design & Execution Search Engine Optimization (SEO) Site Analysis & Consulting Web Tuning & Site Optimization Website Ranking & Reporting Pay Per Click Advertising (PPC) Keyword Selection / Buying Bid / Budget Management Copy Writing / Translation Affiliate Marketing (International) Campaign Planning & Optimization Affiliate Program Management Detailed Reporting / Analysis

ValueCommerce Advantage – Yahoo! Alliance Sep 2005 Alliance with Yahoo! JAPAN has continuously evolved May 2005 Aug 2005 Invitation to Yahoo! JAPAN research monitors and light monitors Jul 2005 Aug 2005 Aug 2006 Sep 2005 Jul 2006 Dec 2005 Feb 2006 Nov 2006 Jan 2006 Sep 2005 Aug 2006 Yahoo! JAPAN as an e-commerce website (advertiser) Yahoo! JAPAN as a media distribution channel Invitation to launch stores Yahoo! JAPAN Affiliate Program Domestic hotel booking Sales Promotion Overseas tour and hotel booking Storematch (paid listings on Yahoo! Auction) Shoppingstorematch (paid listings on Yahoo! Shopping) Matchsmart (paid listings matched on site content) Nov 2006 All products covered in the database Yahoo! JAPAN provides its Japanese text analysis technology. SHOPPING AUCTIONS TRAVEL Business Travel MESSENGER Premium Services SHOPPING SHOPPING AUCTIONS TRAVEL Web Hosting

ValueCommerce + Yahoo! Affiliate Affiliate Program for Yahoo! Geocities & Yahoo! Blog users Affiliate Program for Yahoo! Auctions users Yahoo! Japan Geocities, Blog & Auction monetization

Compound Network growth with Yahoo! Japan ValueCommerce 134,000 Yahoo! JAPAN 130,000 Total 317,000 [Number of Affiliate Partners] ValueCommerce 187,000 VC’s affiliate network expanded with the Yahoo! JAPAN tie-up Largest in the affiliate marketing industry ValueCommerce used to recognize a single site that collectively represented all the websites in the Yahoo! JAPAN Affiliate Program. From Sep 2006, this was changed to count all unique websites included via Yahoo! JAPAN. ValueCommerce 404,000 Sep 2006 Mar 2007 Sep 2006 B/D Sep 2005

ValueCommerce Mobile: RealAffiliate Affiliate program that directs mobile user from internet to store 1) User receives points for making reservations to visit the store via the affiliated point site 2) Upon completion of purchase at the store, the user is awarded additional points via the ICReader using the Felica enabled handset ＰＣ point site Mobile point site QR Code or Email Access User receives points for making reservation Reservation and purchase are confirmed by affiliate Points are awarded to user via the point site Banner Access User visits store After purchase, user zaps IC Reader w/ handset WebTo function confirms sale and points User receives additional points based on purchase Collaborative Project with NTTDoCoMo ＶＣ Affiliate ＶＣ Affiliate

ValueCommerce - New Products - Yahoo! JAPAN Auctions Affiliate Program Website owners and bloggers can earn commissions by carrying ads on items auctioned at Yahoo! JAPAN Auctions. - RSS banner 2.0 RSS Banner 2.0 offers considerably enhanced functions. It supports image, audio and video content and enables affiliate partners to freely create RSS banners based on RSS feeds from e-commerce websites. - ValueCommerce Web Service This service registers product information from e-commerce websites on a product database and offers an Application Program Interface (API) for searching to affiliate partners, to deliver higher sales to both e-commerce websites and affiliate partners. - Pay per Call ad tracking technology - Yahoo! JAPAN Shopping storematch When any Yahoo! JAPAN Shopping customer performs a product search by entering a keyword that coincides with the word pre-registered by a merchant, the text ad designated by the merchant (advertiser) is automatically displayed. A Pay per Call service using affiliate marketing makes it possible to identify details about past phone calls with customers, specifically what websites from ValueCommerce’s affiliate network have led to phone communications from customers. A Constantly evolving Space

Future Strategies Enhance the content linked ad distribution service. Boost the search engine optimization (SEO) service. Execute further expansion of the consulting service. Promote corporate alliances and M&A. Enlarge the scale of services to continuously lead the affiliate marketing industry. Attain a growth in sales from existing clients and acquisition of new corporate clients Recruit and train skilled personnel Develop new services and functions Secure powerful media Enlarge the media network Improve the SEO technology, launch new services Strengthen the sales force Implement integrated control of online marketing and e-commerce operation including media recruiting Focus on prospective alliances with portal sites, blogs, SNS services, and mobile services Possible M&A with businesses owning services superior in e-commerce and online advertising Possible global M&A Key strategies for the future

Enhance the content linked ad distribution service.

Boost the search engine optimization (SEO) service.

Execute further expansion of the consulting service.

Promote corporate alliances and M&A.

Enlarge the scale of services to continuously lead the affiliate marketing industry.

Future Strategies: Roadmap for Growth Revenues Period Growth of existing businesses New products and services Partnerships and alliance M&A 2005 2004 2003 2002 SEM Matchsmart E-mail/Mobile Affiliate Services Affiliate Consulting Service Product Links (MyLink) SEO RSS From past growth to the future 2006 2007

Client Case Studies

Shop Japan Case Study

Shop Japan Profile Leader in the electronic marketing industry both in Japan and worldwide “ Shop Japan Branding” is core business strategy Web Shop for e-commerce Running Affiliate program since 2000 Utilizes Web, Email & Mobile affiliate channels

Leader in the electronic marketing industry both in Japan and worldwide

“ Shop Japan Branding” is core business strategy

Web Shop for e-commerce

Running Affiliate program since 2000

Utilizes Web, Email & Mobile affiliate channels

Affiliate Strategy: 2 pronged approach Shop Japan Branding Shopping and Lifestyle related sites, portals, and blogs Cross-media electronic marketing raises brand awareness Targeting Sales of Key Products Comparison shopping sites, portals, and blogs Offering partners over 35 products from around the world Performance Structures Web CPC Web CPA ¥1 CPC (Specifically targeted) 1 – 25% - percentage for Booking / Lead Mobile CPA 1 – 25% - percentage for Booking / Lead Result: A loyal network of partner sites dedicated to Shop Japan products

Shop Japan Branding

Shopping and Lifestyle related sites, portals, and blogs

Cross-media electronic marketing raises brand awareness

Targeting Sales of Key Products

Comparison shopping sites, portals, and blogs

Offering partners over 35 products from around the world

Example Partner Promotions VC Affiliate Banners/Text Links Shop Japan RSS Banner

Partner Network Total Affiliates Selling Affiliates New Affiliates

Monthly Performance Clickthroughs Impressions Clickthroughs Impressions

Monthly Transactions Transactions Average Cost of Sale- 3,000 Yen

Travel Client Case Study

Client Profile Top 5 “Online Travel” Company Provides accommodation information for 80,000+ destinations in Japan Online Bookings for 15,000+ Hotels Running Affiliate program since 2003 Utilizes Web, Email & Mobile affiliate channels

Top 5 “Online Travel” Company

Provides accommodation information for 80,000+ destinations in Japan

Online Bookings for 15,000+ Hotels

Running Affiliate program since 2003

Utilizes Web, Email & Mobile affiliate channels

Campaign Structure Performance Structures Web CPC Web CPA ¥1 CPC (Specifically targeted) ¥200 - ¥800 - ‘fixed fee’ for booking / Lead Key Targeting: Travel related information sites, portals & blogs Points & Comparisons Sites Broad targeted of site categories Mobile ¥1- ¥5 CPC + ¥800 CPA

Key Targeting:

Travel related information sites, portals & blogs

Points & Comparisons Sites

Broad targeted of site categories

Channel Strategy Super Affiliates (Volume) Points & Loyalty Networks Blog & Individual Sites Email Affiliate Channel Mobile Affiliate Channels Travel Client Affiliate Channels

Partner Network Partner Sites New Sign-ups Total Affiliates Active Affiliates New Affiliates

Monthly Performance Impressions Clickthroughs Clickthroughs Impressions

Sales Performance Transactions Commission Value Transactions Affiliate Commissions Average Cost per Sale - ¥ 352

Affiliate Performance by Category The “Long tail” of other content verticals are important…

Mobile Affiliate Channel Average Cost per Sale - ¥ 446

Deloitte Technology Fast 50 in Japan (2003~2006)