‘Is more than half of this supplement an advertising expense?’ How much of the ‘advertising cost’ is for the product or service?

Ultimately, the consumer pays the “advertising costs.”

Commercials (CM) from sponsor companies are the main source of income for commercial broadcasters. For Fuji Television Network, a series of so-called “Fuji Television problems” have caused companies to withhold their own commercials and other sponsors to leave the network, shaking the very foundations of its management.

Commercials are always seen in commercial TV programs. For consumers, commercials are burned into their brains, and they are forced to be aware of them when purchasing products and services.

The cost of such advertising is factored into the price of the product or service, which is ultimately paid by the consumer. It would be interesting to know how much of the price is actually accounted for.

Advertising costs for “health foods,” which are often seen on BS/CS, can be found at ……

There is a company called “Pharma Foods” (Kyoto City) that engages in mail-order sales of health foods and other products. Its “advertising expenses” account for about 60% of its sales. In other words, approximately 60% of the product price can be thought of as advertising costs.

Tokyo Shoko Research (TSR), a credit research firm, surveyed 148,090 companies to determine trends in “advertising expenses” in FY 2011. These advertising expenses are the sum of “advertising” and “sales promotion” expenses. For companies that sell directly to retailers, the total amount of goods and services sold is roughly equivalent to net sales. On the other hand, if a company sells through a wholesaler, the total sales of goods and services is the company’s total sales plus distribution margins, etc. Here, however, total retail sales and total sales are not considered to be significantly different.

Regarding a company’s advertising expenses, “Even if the cost is high, it should be effective and generate a return. Familiarizing consumers with the company name and product name will increase name recognition,” says Yoshihiro Sakata of the TSR Information Department.

Advertisements and promotions of health food products are often seen on satellite broadcasting (BS/CS) and other media. With the exception of a few major companies, health food products are not all well-known. In addition to newspaper and Internet advertisements, it is necessary to get consumers to remember the company name and spread information about the product through television such as BS/CS to lead them to purchase the product.

In addition to “Farmer Foods,” there are several other companies with an advertising expense to sales ratio of around 50%, according to TSR. These are mostly Internet-related companies that are not well known to the general public, and improving their name recognition through advertising is seen as directly related to increasing the number of users.

Web-related companies tend to spend more on advertising

Atrae” (Minato-ku, Tokyo), which operates a recruiting media application that matches people with companies, has an advertising expense ratio of 54.8%. The company is involved in the planning, development, and operation of contingency-fee-based recruitment media, organizational capability improvement platforms, and business-version matching applications.

(Kamakura, Japan), which engages in web content creation and SNS marketing, had a 49.7% YoY growth rate. The company is developing its business in the areas of outsourced advertising-related content, games/entertainment, and e-sports.

Itochuro (Shinagawa-ku, Tokyo), which operates the tutoring school and prep school information portal site “Juku Navi,” had a 46.5% stake in the company. In addition to “Juku Navi,” the company operates a portal site for information on lessons, schools, and other subjects.

Jigen (Minato-ku, Tokyo), which plans and operates web media, had a 45.2% share of the market. The company operates a variety of platform businesses, including information and consulting for job offers and career changes, real estate rentals and sales, remodeling, hotels, airline tickets, and used car information.