TOKYO -- Ad agency Hakuhodo DY Holdings will partner with Tokyo Electric Power Co. Holdings and others to launch Japan's first online advertising service driven by electricity consumption trends, getting a head start in the field before Japan eases restrictions on such data in April 2022.
Targeted advertising so far has largely been dominated by tech-first companies. But Tepco and other Japanese utilities are now wading into the field armed with real-time data from smart meters, opening the door for new services while also fueling privacy concerns.
The new service will be spearheaded by Hakuhodo unit D.A. Consortium in tandem with Grid Data Bank Lab -- which counts Tepco, Kansai Electric Power, Chubu Electric Power and NTT Data as investors. Electricity usage in Tokyo's 23 central wards will be analyzed to identify what types of households are most common in which postal codes. Tepco has roughly 3 million customers in the area.
The companies will track more than 10 types of households, like single-member units, families, detached homes, apartments and environmentally conscious homes. They will then cross-reference this information with over 100 million device IDs tracked by D.A. Consortium, so they can display tailored smartphone ads to Tokyoites for condos, shopping malls and more.
Advertisers will pay about 50,000 yen to 100,000 yen ($455 to $910) a month to D.A. Consortium for the service, and DAC will pay a fee to Tepco and other utilities for the use of their data.
Big utilities have been installing smart meters across Japan that track electricity use in 30-minute increments. Most households under Tepco's service area had been equipped with these meters as of March, and other utilities are expected to complete installations by fiscal 2024.
These efforts will allow utilities to glean real-time insight on electricity use at roughly 80 million homes and offices across Japan that were not available through once-monthly meter reads. For example, a residence that uses a small amount of electricity, mostly at night, is likely home to a single individual.
Japanese law currently allows utilities and other companies to tap such data without customers' consent only after all personally identifiable information is scrubbed. But under an amendment taking effect in April 2022, power companies will be able to use personally identifiable data with user consent for purposes beyond their mainstay business. Tepco and its partners are eager to solidify their foothold in the field ahead of this change.
Other companies are also making inroads. Courier service Sagawa Express in 2023 will start analyzing electricity consumption to predict when customers are most likely to be home, so it can optimize delivery routes. Chubu Electric and trading company Mitsubishi Corp. are considering offering a service where they track electricity use by elderly customers who live alone, and notify family members of unusual fluctuations.
But while such data opens up new business opportunities, it also presents additional challenges for companies in protecting customer privacy.
"Incorporating a consent clause [for data use] as part of utility contracts robs consumers of their choice," said Yoichi Itakura, partner at Hikari Sogoh Law Offices. "It is important to gain explicit, prior consent."
In order to better protect customer privacy, the government and utilities are discussing the creation of an independent body in charge of managing data. Utilities would feed customer data to this body in exchange for a fee.