All About 2454
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Summary
All About, Inc. (JASDAQ Standard: 2454) operates the online media All About and also provides a sampling service through its website Sample Hyakkaten (Japanese for “department store of samples”).
Internet & Direct Marketing Retail
Key dates
2021-12-27
Coverage initiation
Executive summary
Business overview
All About, Inc. operates the online media All About * and also provides a sampling service through its website Sample Hyakkaten (Japanese for “department store of samples”). In FY03/21, consolidated revenue stood at JPY17.3bn (+10.8% YoY) and operating profit was JPY910mn (+111.3% YoY). The company has two reportable segments: Marketing Solutions (online ad business; 20.8% of total revenue, OPM of 11.6% in FY03/21) and Consumer Services (trial marketing and commerce business; 79.2%, 7.0%). All About (then, All About Japan) was launched in February 2001. In March 2012, the company acquired Luke 19, Inc. (currently, All About Life Marketing, Inc.), the operator of Sample Hyakkaten, and entered the sampling service business.
* Throughout this report, All About (italic) is used when referring to the website.
The online media business fueled All About’s growth in the first decade since the company’s inception. In the next decade from 2011, business expanded significantly thanks to the trial marketing and commerce business. For future growth, the company is working to build digital transformation (DX) platform businesses in both digital marketing and commerce.
In the Marketing Solutions segment, the company earns advertising fees from ad placements on All About, which is one of the largest comprehensive information sites in Japan with over 20mn monthly active users. Mainly targeting internet users around age 40, the site publishes articles written by over 900 experts (referred to as “guides”) on topics covering some 1,300 fields. The content is categorized by themes including housing/real estate, money, health/medical care, beauty, digital, living, gourmet, and travel. The guides reveal who they are (name, portrait photo, and profile) when authoring an article; the company says this feature allows readers to easily relate to these guides and enhances credibility of the site.
In terms of ad types handled by the company, advertorials (ads written in the style of editorial content) are the mainstay, accounting for roughly 40% of revenue in Marketing Solutions. Programmatic ads (providing ad slots via automatic and real-time bidding; pay-per-click type ads) make up another 20%. Other sources of revenue in this segment are content commerce (performance-based ads; a few percent of revenue), operational support (a few percent of revenue), and content sales.
Revenue in the Marketing Solutions segment has plateaued in the five years from FY03/17 to FY03/21. The company attributes this to the emergence of specialist sites dedicated to specific fields, such as those operated by ITmedia Inc. (TSE 1: 2148), istyle Inc. (TSE 1: 3360), Cookpad Inc. (TSE 1: 2193), and Kakaku.com, Inc. (TSE 1: 2371). Users are also spending more time on social media and YouTube videos; the company sees this shift in user behavior as another factor affecting its performance. Amid these changes, All About has moved away from relying solely on its own media. The company is working to apply its strengths in content production and ad management to offer customers overall support in digital marketing, and generate revenue from operating platforms.
In the Consumer Services segment, the company operates the sampling service Sample Hyakkaten, sourcing products from manufacturers and wholesalers, and providing them to consumers through the Sample Hyakkaten website. Sampling fees received from users are the source of revenue in this business. Manufacturers utilize the service for a number of reasons: for instance, to collect consumer input, to direct consumers to offline stores, and to optimize inventory.
Revenue in the Consumer Services segment roughly doubled in the five years from FY03/17 to FY03/21, backed by firm growth of transaction volume at Sample Hyakkaten. To further expand operations, in July 2020, the company began operating the d shopping online marketplace jointly with NTT Docomo (unlisted, consolidated subsidiary of Nippon Telegraph and Telephone Corporation [TSE 1: 9432]). In the d shopping business, the company earns a certain percentage of the total transaction volume (amount paid by the users) as commissions.
Since its founding, All About has undergone a series of capital and business alliances with mega firms. It started off as an in-house venture of Recruit Co., Ltd., and leveraged Recruit’s strength to get the online ad business off the ground. Thereafter, it achieved business growth by forging capital and business alliances with Yahoo Japan Corporation (currently, Z Holdings) and Dai Nippon Printing, Co., Ltd. At present, the company partners with Nippon Television Network (consolidated subsidiary of Nippon Television Holdings [TSE 1: 9404]) and NTT Docomo in a range of businesses in both Marketing Solutions and Consumer Services.
As a new business in the Marketing Solutions segment, the company launched the PrimeAd content marketing platform, offering a business matching system that provides revenue opportunities, better efficiency, cost reduction, and other benefits to both advertisers/ad agencies and various media involved in content marketing. As of end-September 2021, the company has partnered with 176 quality outside media, and introduced PrimeAd to 30 ad agencies. A major agency adopted the platform as an official planning tool from August 2021.
All About has consistently disclosed its quarterly operating expenses (fixed costs + controllable costs + variable costs) since listing. Fixed costs include personnel and systems-related expenses, while controllable costs are mainly marketing expenses, editing costs, and compensation paid to the guides. Variable costs in Marketing Solutions are primarily ad production costs, agency commissions, and outsourcing expenses; in Consumer Services, they include sourcing costs, shipping and delivery expenses, and sales commissions. Comparing the segments, Marketing Solutions has a low variable cost-to-revenue ratio (52.9% in FY03/21) and a high non-variable cost-to-revenue ratio (37.9%), while Consumer Services has a high variable cost-to-revenue ratio (71.0%) and a low non-variable cost-to-revenue ratio (22.1%).
Earnings trends
In FY03/22, revenue was JPY15.4bn, operating profit was JPY658mn, recurring profit was JPY670mn, and net income attributable to owners of the parent was JPY344mn. The company applied a new accounting standard for revenue recognition, but compared by the former standard, revenue was up 3.3% YoY and operating profit was down 27.3% YoY. In the Marketing Solutions segment, revenue and operating profit were both down due to a reduction in the placement of online ads brought about by the COVID-19 pandemic, and investment in PrimeAd. Revenue rose but operating profit fell in the Consumer Services segment as, although d shopping contributed to results through full-year FY03/22, opportunities were lost in Q3 as the company put in place a fraud countermeasure, and the company made marketing-centered investments in the NTT Docomo ecosystem.
For FY03/23, the company forecasts revenue of JPY17.8–19.2bn, operating profit of JPY360–720mn, recurring profit of JPY360–720mn, and net income attributable to owners of the parent of JPY200–430mn. The company forecast is premised on the COVID-19 pandemic continuing to have an impact, and lifestyle changes progressing. All About projects that revenue and operating profit will both increase in the Marketing Solutions segment, where it plans to make PrimeAd profitable on a monthly basis. The company projects that revenue will increase in the Consumer Services segment, but that operating profit will narrow due to marketing-centered investments in the NTT Docomo ecosystem.
To lay out its growth image, the company unveiled several quantitative goals for FY03/26: namely, JPY100.0bn in transaction volume, JPY30.0bn in revenue, and JPY3.0bn in operating profit (OPM of 10%). Based on these figures, the five-year CAGR from FY03/21 to FY03/26 comes to 26.4% for transaction volume, 11.7% for revenue, and 27.0% for operating profit. The improvement in OPM (from 5.3% to 10.0%) assumes a rise in the share of transactions whose profit growth hinges on the increase in transaction volume rather than revenue.
Strengths and weaknesses
All About’s strengths, according to Shared Research are:
20-plus years’ expertise and track record in operating a comprehensive information website that consistently attracts a substantial number of monthly active users (currently over 20mn) serving as an advertising medium
Business model of Sample Hyakkaten, which addresses the needs of both manufacturers (marketing-related needs including collection of user comments, new product promotion, and inventory optimization) and consumers (finding new products/bargain products, and discovering the appeal of existing products)
Track record of capital and business alliances with mega firms since the company’s inception, and resulting synergies
Weaknesses are:
Relative decline in value of the All About site as an advertising medium, due to rise of other media offering expert content
Unlike major online marketplaces, merchandise sourcing and sales at Sample Hyakkaten are irregular or one-off
Lack of new growth driver following All About, Sample Hyakkaten, and d shopping
(See the “Strengths and weaknesses” section for details.)
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures may differ from company materials due to differences in rounding methods.
Earnings in the Marketing Solutions segment tend to be weighted to Q4 (January–March). This is because many of the company’s main customers in this segment (advertisers) have fiscal years that end in March, and the use of their advertising budgets tends to concentrate around fiscal year-end. In contrast, there is no seasonality to earnings in the Consumer Services segment.
Full-year FY03/22 results (out May 11, 2022)
Summary
Progress versus full-year forecast
Results by segment
Marketing Solutions segment
Revenue: Global marketing revenue in the Marketing Solutions segment fell as demand from inbound tourists declined due to the COVID-19 pandemic. Digital marketing such as the placement of online ads stalled in some industries, which also caused revenue to decline. All About's session counts rose 48.0% YoY in Q4, but the unit price for programmatic ads was down 26.6% YoY.
Operating profit: Operating profit fell YoY in this segment, despite reduced fixed costs achieved through improvements to operational efficiency, because of investment in the PrimeAd content marketing platform.
Consumer Services segment
Revenue: Transaction volume rose 29.2% YoY to JPY30.0bn. The d shopping business, which the company launched with NTT Docomo in July 2020, contributed to revenue for the full year, and transaction volume and revenue both increased. Q3 was hurt by lost opportunities as the company put in place a fraud countermeasure; the company also faced difficulties procuring spot merchandise such as beverages. The fraud countermeasure involved the introduction of a two-step verification system for IDs and passwords, which made operations more cumbersome for users. While this stifled revenue growth, revenue recovered in Q4 after the company decided to apply the two-step verification only for high-priced items, and reintroduced the previous authentication method for general items.
Operating profit: The opportunity loss associated with the fraud countermeasure and difficulty in procuring spot merchandise among other factors temporarily lowered the profit margin in Q3. Marketing-centered investments in the so-called NTT Docomo ecosystem and mini apps for d-pay (mobile payment using smartphones) added to the YoY decline in operating profit.
Company forecast for FY03/23
Note: Figures may differ from company materials due to differences in rounding methods.
Summary
For full-year FY03/23, the company forecasts revenue of JPY17.8–19.2bn, operating profit of JPY360–720mn, recurring profit of JPY360–720mn, and net income attributable to owners of the parent of JPY200–430mn. The company forecast is premised on the COVID-19 pandemic continuing to have an impact, and lifestyle changes progressing.
Strategy
The company has set FY03/26 as the target year for building a business foundation to achieve transaction volume of JPY100.0bn, revenue of JPY30.0bn, and operating profit of JPY3.0bn.
The company will carry out strategic investment amounting to around JPY500mn. Specifically, this is to include investment in PrimeAd and tech startups, as well as marketing-centered investments in the NTT Docomo ecosystem.
Income from strategic investments is to be managed separately, with close scrutiny given to progress and prospects of success. At the same time, the company will continually grow existing income.
Forecast by segment
Marketing Solutions
The company plans to increase revenue and operating profit through recovery of the mainstay business, while also undertaking strategic investments. It aims to make PrimeAd profitable on a monthly basis by the end of FY03/23.
Consumer Services
The company intends to boost marketing-centered investments in the NTT Docomo ecosystem and increase transaction volume and revenue. It anticipates that operating profit will narrow as a result of increasing the scale of strategic investment.
Initial forecasts versus actual results
Note: Figures may differ from company materials due to differences in rounding methods.
In the eight fiscal years through FY03/20, revenue undershot the initial forecast once while profits fell short three times. Also, the margin of difference between actual results and the company’s forecasts tends be several times larger for profits than for revenue. FY03/14 and FY03/16 were irregular years when actual revenues overshot the initial forecasts, but profits fell short. The primary reasons for this irregularity were aggressive investment in media, investment in new businesses, and strategic investment for Sample Hyakkaten (outlay on TV commercials).
Image for business growth
All About has not disclosed a medium-term business plan, but says that for management purposes, it sets quantitative targets over a three-year period, updating these targets each year on a rolling basis. Meanwhile, the company did lay out an image of where it wants to be in FY03/26, unveiling specific figures: namely, transaction volume of JPY100.0bn (JPY30–40bn in Marketing Solutions and JPY60–70bn in Consumer Services), revenue of JPY30.0bn, and operating profit of JPY3.0bn (OPM of 10%). The annual targets (from FY03/23 onward) leading up to these figures nor their breakdown by segment have not been disclosed.
We understand that All About’s image of business growth going forward is underpinned by dramatic expansion of the PrimeAd content marketing platform (launch currently in progress) and the d shopping online shopping site in FY03/25 and FY03/26. In terms of the two pillars of the company’s current operations—the proprietary media business and the trial marketing business using its own website, we understand that the revenue targets are conservative, although the company expects steady growth in these areas as well.
Based on the figures for FY03/26 shown above, the 5-year CAGR from FY03/21 to FY03/26 comes to 26.4% for transaction volume, 11.7% for revenue, and 27.0% for operating profit. The improvement in OPM (from 5.3% to 10.0%) assumes a rise in the share of transactions whose profit growth hinges on the increase in transaction volume rather than revenue.
Note: Figures may differ from company materials due to differences in rounding methods.
Business
Business model overview
Business summary
All About, Inc. operates the online media All About, and also provides a product sampling service through its website Sample Hyakkaten (Japanese for “department store of samples”). In FY03/21, consolidated revenue was JPY17.3bn (+10.8% YoY) and operating profit stood at JPY910mn (+111.3% YoY). The company has two reportable segments: Marketing Solutions (online ad business; 20.8% of total revenue, OPM of 11.6% in FY03/21) and Consumer Services (trial marketing and commerce business; 79.2%, 7.0%). The web-based media All About (then All About Japan) was launched in February 2001. In March 2012, All About acquired Luke 19, Inc. (currently, All About Life Marketing, Inc.), the operator of Sample Hyakkaten, and entered the sampling service business.
Management principles
Founder and CEO Tetsuya Ebata wrote in his book The Age of Aspirational Management (Kodansha, published April 2006) that there were three management principles he valued the most as a top executive: the pursuit of intrinsic value, creation of new value, and thorough display of the service-provider spirit. Mr. Ebata was known for his ability to start up new businesses during his career at Recruit Co., Ltd., and we understand that his bold and aggressive approach back then remains the same at All About.
Organizational structure
Although the parent company All About, Inc. continues to run the mainstay Marketing Solutions segment, All About has intentionally split up its operations, establishing separate companies for individual businesses while operating collectively as a group. It shifted to this format after the Great East Japan Earthquake of March 2011. According to the company, splitting up the organization into several companies not only disperses business risks; it has the added benefit of creating presidents in charge of smaller units and encouraging autonomy among the employees. Since its inception in June 2000, the company has launched multiple new businesses, and although not all were successful, such efforts led to the growth of businesses like Sample Hyakkaten that are now core to All About’s operations.
Affiliated companies
Shareholders
The top two major shareholders of the company are Nippon Television Network Corporation (NTV; 25.1% ownership) and NTT Docomo, Inc. (15.5%). The board of All About has an outside director (Mr. Taizo Okada) and an outside auditor (Mr. Akira Ishizawa) from NTV and one outside director (Mr. Yoshiaki Maeda) from NTT Docomo.
The All About group and NTV have joined hands to strengthen social media marketing through the Facebook navi and Twinavi businesses operated by All About Navi, Inc., which received equity contribution from NTV. The two parties also established a joint venture, NTV Life Marketing, Inc. (an equity method affiliate in which All About owns a 40% interest) in August 2017, to operate a business involving shopping events and TV and e-commerce tie-ups. Further, All About partnered with NTT Docomo in July 2020 to jointly plan and operate the d shopping website (details to follow). All About and NTT Docomo also collaborate in a wide range of other initiatives in the marketing solutions domain, including utilization of user data, content provision, mutual customer referrals to the media operated by both companies, and operation of joint media.
Consolidated subsidiaries
All About Life Marketing, Inc. (wholly owned subsidiary)
The subsidiary mainly focuses on the product sampling business, commerce business, and marketing solutions business (ads, events, sales promotions).
Sample Hyakkaten: One of the largest product sampling websites in Japan with roughly 3.3mn users; allows consumers to sample goods at bargain prices
Chott-ple: Paid sampling service offering items in exchange for a reasonable sampling fee (including tax and shipping)
Real Sampling Promotion (RSP): Large sampling events that connect companies with consumers
Real Sampling Lab (RSL): Sampling events hosted by one company and featuring a targeted theme
Sample Hyakkaten Tie-up: Tie-up publications featuring customers’ products in a dedicated page within the Sample Hyakkaten website
d shopping: Comprehensive online shopping site operated jointly by NTT and All About Life Marketing; an e-commerce service leveraging NTT Docomo’s customer base and the d point reward program
All About Lifeworks, Inc. (wholly owned subsidiary)
Instructor training and support service: Based on the motto “turning what you love into a career,” the service fosters instructors in lifelong learning fields, particularly creative activities such as beaded jewelry making and knitting. It also supports women’s entrepreneurship by assisting instructors with the startup and operational phases of courses and providing other teaching opportunities. To date, the service has helped foster roughly 15,000 instructors with technical qualifications nationwide.
COSJWE (online store for beading supplies): The store handles parts, materials, tools, designer kits, and books for making beaded jewelry.
All About Navi, Inc. (JV with Nippon Television Network Corporation; 46.4% owned by All About)
Social media marketing solutions business: The subsidiary works with NTV to expand their marketing activities and ad businesses by distributing the broadcaster’s content mainly via social media. It also helps corporate customers manage their social media and YouTube accounts, leveraging the knowledge obtained from operating multiple online media including the Facebook navi and Twinavi accounts, NTV’s official social media account, and YouTube channels.
Facebook navi: Delivers interesting and useful information including hot topics and trivia to Facebook users through the Facebook navi site, which has roughly 4.1mn fans
Twinavi: Curates popular Twitter tweets encompassing various themes from hot topics and entertainment news to useful information for distribution to over 400,000 Twinavi account followers
All About Navi also operates the “Our Asobiba” YouTube channel, as well as other YouTube channels of key opinion leaders and All About guides. YouTube-based services include channel planning, production, operation, and consulting
DL Market, Inc. (wholly owned subsidiary)
Digital content marketplace: Online sales of various digital content (including e-books, music, and software), which buyers can download. The service was temporarily suspended in November 2018 because of the possibility that some credit card information had been compromised by unauthorized access. The subsidiary completely terminated the service on June 28, 2019.
LM Service, Inc. (wholly owned subsidiary)
E-commerce support: LM Service started off as Muse Co., Ltd. (founded in 2012), which operated MUSE & Co.—an online store focusing on women’s fashion. In May 2017, All About Life Marketing acquired all shares of Muse Co., making it a consolidated subsidiary of All About. MUSE & Co. had remained a stand-alone website after the acquisition, but was subsequently integrated into the Sample Hyakkaten website. At present, LM Service supports the e-commerce business of All About Life Marketing.
All About Partners, Inc. (wholly owned subsidiary)
The subsidiary, established in April 2021, engages in the programmatic ad and marketing solutions business.
Equity method affiliate
NTV Life Marketing, Inc. (40% owned by All About)
Through this joint venture, the company works with NTV in shopping events and TV content and e-commerce tie-ups.
Business development
Looking at the company’s performance over the past five fiscal years (FY03/17–FY03/21), revenue in the Marketing Solutions segment remained largely flat due to intensifying competition, whereas revenue in the Consumer Services segment doubled, bringing about a dramatic shift in the business portfolio. Since the company’s inception, All About has embraced its mission statement—“Enriching individuals and energizing society,” and has sought to resolve social challenges by focusing on the “power of people.” Maintaining this founding philosophy, we understand that All About currently pursues growth centered on platform businesses such as PrimeAd (content marketing platform) and d shopping (comprehensive online shopping site).
Target markets in Japan and All About’s positioning
Marketing Solutions segment mainly targets the tie-up ad (advertorials) market
According to a study by Dentsu Inc. (unlisted; consolidated subsidiary of Dentsu Group Inc. [TSE 1: 4324]), in 2020, the domestic internet advertising market grew 5.9% YoY to JPY2.23tn, accounting for 36.2% (+5.9pp YoY) of the JPY6.16tn total advertising spending in Japan (-11.2% YoY) during the year. Of the JPY2.23tn market, internet ad media expenditures were JPY1.76tn (and ad production and other expenses came to JPY472.3bn), and this figure further broke down to JPY1.46tn in programmatic advertising, JPY202.4bn in reservation advertising, and JPY98.5bn in performance-based advertising (See the “Market and value chain” section for details). All About primarily focuses on tie-up ads (advertorials) within the reservation advertising category, and has established itself as one of the major players in the content marketing market.
The All About website managed by the company features content assorted by different themes, each authored by experts in their fields, whom the company refers to as “guides.” Advertorials, handled by the company, is a type of advertising method that incorporates messages on the appeal of products and services into editorial content; it is also called content marketing.
Unlike paid search ads (text-based ads displayed on a search results page) that aim for user clicks and subsequent actions, or banner ads that aim to expand recognition, we understand that advertorials allow for greater flexibility of expression. They serve to enhance the appeal of products and services through storytelling (for instance, conveying the satisfaction gained from purchasing the featured items) that matches consumers’ interests. Advertisers such as manufacturers consider advertorials to be an effective advertising tool, particularly for marketing high-added-value products. All About stands out for adding value to its advertorials by featuring explanatory ads written by the All About guides. The capital and business alliance with NTT Docomo also allows the company to use NTT Docomo’s survey panels to measure the ads’ effectiveness.
The target markets (estimated at a total of JPY600.0bn) where the company thinks it can win market share through its own media and platform businesses are as follows.
Tie-up ads: Estimated market size of JPY100.0bn
Native ad network (network of web media that can distribute native ads): Estimated market size of JPY200.0bn
Owned media (company media managed by the companies themselves) and content creation support: Estimated market size of JPY300.0bn
Consumer Services segment mainly focuses on the product sampling service and online shopping sites
According to a survey by the Ministry of Economy, Trade and Industry, the e-commerce market in 2020 shrunk 0.4% YoY to JPY19.28tn, on the impact of the spread of COVID-19. However, a breakdown of this figure showed that e-commerce market in the merchandising sector (transactions involving goods) grew 21.7% YoY to JPY12.23tn, while the market in the service sector contracted by 36.1% YoY. The e-commerce ratio, defined as the ratio of e-commerce market size to total amount of overall commercial transactions, rose 1.3pp YoY to 8.1%, and was projected to further increase going forward. Particularly noteworthy was the fact that online purchases of goods via smartphones amounted to 50.9% of total e-commerce transactions in the merchandising sector (See the “Market and value chain” section for details). We understand that the ease at which online stores can be accessed using smartphones has widened the options available to consumers and lowered the hurdle to conclude purchases online.
Product sampling service
This environment gave rise to websites that allow consumers to try out a diverse range of products. Top websites in this category, commonly known as sampling sites, include the company’s Sample Hyakkaten and Moratame.net operated by Do House Inc. (unlisted). A sampling site introduces products sourced from manufacturers, delivering them to consumers who have applied through the site to try them out. Since users are able to sample items at a very reasonable price, they are less hesitant to purchase the items at a regular price if they like them. The site’s structure is such that users can also enjoy discovering hot new items and rare items, which can be bought at bargain prices simply by browsing the site and reading through user comments.
Meanwhile, the manufacturers can gain information on user trends and receive direct user input through these sampling sites. Allowing users to get a better idea of products through actual sampling could contribute to future sales growth as well. Items handled by these sites are not always samples of new products; manufacturers also use the sites to step up marketing of regular products or to optimize inventory.
Comprehensive online shopping site
On July 1, 2020, the company announced the participation of consolidated subsidiary All About Life Marketing in the operation of d shopping, an online marketplace operated by NTT Docomo. As joint operators, All About Life Marking is in charge of supporting individual online stores (the tenants of the marketplace), customer services, and construction of the website system, while NTT Docomo takes care of acquiring customers and operating the online payment system.
Softbank Group Corp. (TSE 1: 9984), NTT Docomo’s rival in the telecom carrier business, has Yahoo! Shopping and ZOZOTOWN (both online marketplaces) under its umbrella, and is strengthening the e-commerce business by leveraging its PayPay electronic payment service. Another rival, KDDI Corporation (TSE 1: 9433) has also revamped its online marketplace, and is working to improve linkage with online payment services. Conversely, Rakuten Group, Inc. (TSE 1: 4755)—a behemoth in the online marketplace sector—made a full-scale entry into the domestic telecom carrier industry in the spring of 2020. In these ways, the competition surrounding telecom carriers, online payment services, and e-commerce operators continues to intensify. NTT Docomo seeks to aggressively develop services that make effective use of its 82.6mn mobile phone subscriptions (as of FY03/21), and All About sees this as a growth opportunity.
NTT Docomo has continued to build expertise in e-commerce through acquisitions and alliances. For instance, d fashion (its fashion-focused online marketplace) is mainly operated by subsidiary MAGASeek Corporation it acquired in 2013. NTT Docomo and All About share a history of conducting business together in the marketing solutions domain through content tie-ups and other means. The relationship bloomed into the launch of All About’s Sample Hyakkaten store in the d shopping online marketplace in July 2016, and a capital and business alliance in May 2018, and has resulted in multi-faceted collaboration in both the Marketing Solutions and Consumer Services segments. All About Life Marketing has been successful in rapidly expanding the Sample Hyakkaten sampling service, and the two companies intend to apply the e-commerce knowledge acquired from this business to further develop the d shopping marketplace.
M&A and alliances
All About has its roots in an in-house venture of Recruit Co., Ltd., launched as a joint business with US-based About.com Inc. Thanks to Recruit’s credibility and the track record of its own website, the company subsequently managed to forge capital and business alliances with major companies such as Yahoo Japan and Dai Nippon Printing (TSE 1: 7912), and most recently Nippon Television Network (NTV; alliance agreement concluded in March 2017) and NTT Docomo (May 2018). The company partners with NTV and NTT Docomo in a range of businesses in both the Marketing Solutions and Consumer Services segments.
All About frequently acquired companies to launch new businesses as well. Not all acquisitions have been successful; for instance, it acquired KI & Company, publisher of men’s lifestyle magazine zino and operator of website @zino, only to withdraw from the business in eight months’ time. Other businesses the company withdrew from/sold include All About Financial Service, Inc. (financial service provider), financial magazine Argent (suspended the magazine business and focused on Argent net), All About en Factory, Inc. (specialist development business), Carcon Market, Inc., Five Stars Game, Inc., and the marketplace business operated by DL Market, Inc. As shown in the following table, among the businesses acquired and newly entered by the company, only eight remain in operation, while 11 have been discontinued (based on Shared Research).
That being said, the acquisition of Sample Hyakkaten operator Luke 19 (currently, All About Life Marketing) was a success, as the business has grown into an earnings driver serving as the company’s backbone.
In its vision statement, the company pledges to “leverage the power of individuals to eliminate irrationality in the world and become an innovative platform that can redesign the existing channels of information, commerce, and manufacturing. By doing so, it seeks to contribute to economic development and simultaneously build a sustainable society.” The company says it determines business alliances and entry into new fields based on whether or not the target business embodies this vision, while also taking into account investment efficiency and growth potential.
SDG-oriented initiatives
As manifested in its mission statement “Enriching individuals and energizing society,” All About seeks to contribute to the development of society by believing in the power of individuals and supporting their endeavors as an intermediary. A typical example that embodies this approach is the company’s founding business—the information website All About. The All About platform satisfies the intellectual needs of readers through content created by the many experts known as “guides,” at times encouraging the readers to take action. Moreover, it showcases the guides who individually shine in their unique specializations (including niche fields like “beautiful night views” and “wedding and funeral etiquette”), and has thus far produced some star guides who have gained presence through their work on All About. The company believes that the business model of All About in itself resonates with many of the UN Sustainable Development Goals (SDGs) themes, for valuing individuality and diversity, providing opportunities for individuals to shine, as well as raising general intellectual standards through the release and circulation of knowledge. The company expects this approach to generate greater results in line with further evolution of the internet, and that goals will become achievable with increasingly low environmental impact.
All About is active in several areas that support Japan’s national initiatives as well. It operates All About Japan—a website for the non-Japanese audience, assisting promotion of the Cool Japan initiative and encouraging personal spending by inbound tourists. The company also won a contract for the Ministry of Environment’s “STOP! Food Loss and Waste” project, which led to another project: the operation of the Collective Action Japan web platform that supports the implementation of SDGs in society. We understand that these activities have helped raise All About’s social credibility. For instance, the company’s Sample Hyakkaten, which helped reduce roughly JPY5.4bn worth of food loss in 2020, was selected by the Ministry of Agriculture, Forestry and Fisheries as one of the outstanding businesses that promoted sales of unused food products. All About participates in the Public-Private Partnership Platform for SDGs and Local Development led by the Cabinet Office (provides the delivery platform of Sample Hyakkaten to local governments and affiliated entities). It also supports the Ministry of Economy, Trade and Industry’s project to verify the effectiveness of certain products and services in view of creating a society that is friendly to dementia sufferers. In the latter project, the company is involved in the development/operation of recreational classes and the creation of opportunities to work/participate in social activities, and has contributed JPY9mn toward R&D.
Basic data
The company considers the following five items as basic data (items 2–5 refer exclusively to the All About website). See the “KPI analysis” section for more details.
Business model
Business structure of the Marketing Solutions segment
Media and digital marketing business (19% of total revenue in FY03/21)
The source of revenue in media and digital marketing, the company’s mainstay business in the Marketing Solutions segment, is advertising fees received from ad placements on the All About web media. All About is one of the largest lifestyle information websites in Japan with over 20mn monthly active users. Mainly targeting internet users around age 40, the site publishes articles written by over 900 experts (guides) on topics covering some 1,300 fields. The content is categorized by themes including housing/real estate, money, health/medical care, beauty, digital, living, business, gourmet, and travel. The guides reveal who they are (name, portrait photo, and profile) when posting an article; the company says this feature allows readers to easily relate to these guides and enhances credibility of the site.
All About not only expects the guides to be knowledgeable (having expert knowledge in their fields, as well as understanding of governing laws and regulations, general business protocols, and internet etiquette). It expects them to have awareness (sharing All About’s philosophy and commitment to service, and having a sense of hospitality, balance, and reader-centered approach), and be skilled (having guiding skills, communication skills, effective writing and execution skills). Out of the many applicants, only those experts who have cleared the stringent screening process of the company can become guides. Some of the professions and qualifications of All About guides are: physicians, attorneys, tax accountants, class 1 architects, financial planners, entrepreneurs, critics, journalists, consultants, advisors, coordinators, counselors, designers, editors, writers, essayists, copywriters, instructors, and dietitians.
All About earns advertising revenue from providing a diverse range of online ads that comprehensively meet the needs of advertisers. In addition to options such as banner ads and pay-per-click ads, the company stands out for the advertorials that leverage its expertise honed through the editing of over 180,000 articles (cumulative basis) on the All About website.
The company also operates Facebook navi (Japan’s only officially endorsed Facebook navigation site) and Twinavi (Twitter navigation site), and earns revenue from supporting various companies in their social media-based marketing efforts.
Recently, All About has been working to expand its revenue sources beyond proprietary media, by focusing on its content marketing platform PrimeAd, supporting development of owned media (company media managed by customer companies themselves), and stepping up ad management.
Global marketing business (2% of total revenue in FY03/21)
This business centers on content production and digital marketing, using the company’s broad overseas network and expertise from operating the All About Japan information website targeting a non-Japanese audience. Revenue comes from providing these services to central government ministries, local governments, and companies to support their inbound tourism strategies and SDGs initiatives. The global marketing business is closely aligned with Japan’s national strategy to expand spending by inbound tourists, and serves as a tool to promote the Cool Japan initiative. The company thinks this model can be applied to other countries, and hopes to roll out the business in Singapore, Thailand and other Asian nations.
Types of ads (Expanding into digital marketing support)
The types of ads handled by the company divide into advertorials, sponsored sites, traffic-oriented ads, and display ads. In advertorials, the advertiser and the company collaborate in creating a dedicated tie-up page aimed at educating the readers and promoting the advertiser’s goods and services. Sponsored sites are ads that take the form of a typical site page by an All About guide, but covering a theme that matches the advertiser’s needs. Traffic-oriented ads aim to increase traffic to the advertiser’s website; text ads fall under this category. Display ads aim to strengthen branding; a banner ad is a typical example. Tie-up ads (advertorials and sponsored sites) account for 40% of the company’s ad revenue.
In addition to focusing on unique advertorials that leverage the company’s editorial expertise, All About has been working to improve its services. In the content marketing domain, it utilizes the strengths in content production and customer acquisition (attracting users to its media) to support corporate customers in the development of owned media. Efforts to bring in cutting-edge technology in ad distribution and optimization, and use behavioral data of consumers/users are also underway. Consolidated subsidiary All About Navi provides marketing support centered on social media. In these ways, the company has been broadening its business scope from ads to overall support services for digital marketing, providing solutions based on its accumulated experience since the start of online advertising and an eye for the latest trends.
Transactions with ad agencies
All About actively partners with ad agencies. In fact, many of the counterparties in the company’s online ad transactions are ad agencies. The company says this arrangement allows it to expand sales of its ad products to advertisers, while building efficient sales channels and cost structures. Based on a contract, the company pays the ad agencies sales commissions at a certain rate. All About is moving away from relying solely on its own media, and is making efforts to gain new revenue opportunities through initiatives such as creating a business matching mechanism (the PrimeAd platform) that is both beneficial to the media (external quality media) and the advertisers/ad agencies.
All About’s positioning in the online space
Internet users typically follow the steps below when purchasing items online.
Internet users who already know the product or have high internet literacy may make purchases by directly accessing company websites, or after comparing with other products on a specialized information site, and checking blogs, social media, and YouTube videos. However, many ordinary users struggle to find information that is reliable.
The All About website plays a large role, particularly in the information collection and comparison phases of the purchasing process. It has earned steady support of consumers (site users), because the guides who disclose their names, profiles, and portrait photos deliver well-grounded information based on their knowledge and experiences. In particular, many of the All About fans are internet users aged around 40, who have a strong desire to collect information and are intellectually curious. On top of simply collecting reliable information from the guides, these users find value in relating to the guides and gaining satisfaction from their own pursuit for information.
Key point regarding the business structure
For the advertisers, All About is content media that captures and responds to the diverse interests of site users and consumers in this era where there is an overload of online information. The company has built a relatable and reliable brand based on its strong network of experts, editing skills, and efficient profit management, and has also contributed to the optimization of advertisers’ cost per acquisition by encouraging its users/consumers to take action, thereby raising the conversion rate. The advertisers also enjoy the added benefit of uncovering consumer insights (true feelings and latent needs that consumers themselves unconsciously harbor) through information provided by the guides and analysis of users’ actions before and after viewing ads; these insights can then be applied to the advertisers’ product development.
Shared Research understands that the company’s strength is its ability to provide unique solutions across the digital marketing domain. This ability stems from a combination of factors: the power of the company’s own media, knowledge on ad management and the content production expertise honed since the beginning of internet, and other assets such as the arrangement to share user data with capital and business alliance partner, NTT Docomo.
Business structure of the Consumer Services segment
Trial marketing and commerce business (77% of total revenue in FY03/21)
In trial marketing and commerce, All About’s mainstay business in the Consumer Services segment, the company provides the Sample Hyakkaten service, and also jointly operates the d shopping business with NTT Docomo. Merchandises are mostly foods and beverages and daily goods.
Sample Hyakkaten, operated by consolidated subsidiary All About Life Marketing, is one of the largest sampling services in Japan with over 3.3mn users (cumulative basis). In recent years, the service expanded its merchandise categories to include fresh foods among other items, and user counts have been increasing year by year. The main source of revenue in this business is the sampling fees paid by users. The company has also stepped up efforts in marketing solution services using this platform, such as organizing online and offline events and providing ad slots in the website.
d shopping is an e-commerce service (online marketplace) that leverages NTT Docomo’s customer base and its d point reward program. The company partners with NTT Docomo in the planning and operation of the site. The service charges a certain percentage of the total transaction volume (amount paid by the users) as commissions, which are then split between NTT Docomo and All About. The operating revenue after deducting operating expenses (such as marketing and system-related expenses, and labor costs) becomes the company’s income.
Lifelong learning/specialist instructor training business (2% of total revenue in FY03/21)
The core operation in this domain is the lifelong learning business centered on All About Lifeworks’ handicraft-related services. The company earns revenue from the development and operation of recreational classes such as beaded-accessory making and knitting, along with the sales of related course materials. To support certified instructors who have completed these courses, the company also introduces work opportunities to them. Additionally, All About has been working to develop courses in new areas and ensure efficient sourcing of materials, using its network of experts in diverse specialist fields. An underlying theme, which the company has focused on recently, is the promotion of healthy aging. Participation in a dementia-related project led by the Ministry of Economy, Trade and Industry (project to verify the effectiveness of certain products and services in view of creating a society that is friendly to dementia sufferers) is an example of such effort.
Logistics
All About Life Marketing outsources its logistics-related operations. Types of transactions vary: sometimes, goods are stored in a contracted warehouse and shipped with each order, and other times, they are shipped directly from the suppliers to the consumers. The company analyzes user needs and information on hot-selling items to develop strategic sales and inventory management plans. In transactions where the company purchases the products wholesale for resale to end users, the inventory turnover averages around 0.7x per month.
Key point regarding the business structure
The Sample Hyakkaten business accomplishes a number of things. It satisfies users’ needs to try out products and services, collects input from the users, and helps companies promote sales and optimize inventory. In addition to this business, All About has used its expertise in e-commerce to push forward d shopping, its joint endeavor with NTT Docomo. Further, using these two services, it has been bolstering the marketing solutions business that caters to manufacturers.
All About aims to strengthen its profit structure through the three-pronged approach leveraging its trial marketing service, operation of comprehensive online shopping site, and marketing solutions service.
Future business outlook and structural reforms
Marketing Solutions segment: Content marketing platform PrimeAd
All About launched the PrimeAd service in 2017 as a new business in the Marketing Solutions segment. The company defines PrimeAd as a content marketing platform that offers revenue opportunities, better efficiency, cost reduction, and other benefits to both advertisers/ad agencies and various media. As the first phase of this business, PrimeAd Business Matching Platform (BMP), which matches the supply and demand for digital tie-up ads, was released in July 2020. As of end-September 2021, the company has partnered with 176 quality outside media, and 30 ad agencies including some majors have adopted the platform as an official planning tool. To advertisers and ad agencies, PrimeAd BMP provides access to a wealth of quality creative content, standardized ad performance indicators, and the means to reduce management costs and raise efficiency of operational flow. To partner media, it offers revenue opportunities, access to cutting-edge ad technology, and the means to reduce fixed costs.
Taking, for instance, a case where the company receives a digital marketing assignment from a large advertiser for a budget of JPY50mn, often times, it would be much more effective and efficient for All About to collaborate with other quality media to attract an audience, rather than working alone. For advertisers and ad agencies, without a mechanism, they would need to approach multiple media one by one on their own while simultaneously developing an effective advertising plan, which could be troublesome.
Streamlining mechanisms such as real-time bidding (RTB) already existed for transactions involving standardized and ready-to-use ad formats like banner ads. In contrast, content marketing of tie-up ads had been more cumbersome and required a lot of manpower, since it typically involved a complex process that spanned planning, ad creation, placement, and reporting.
All About thinks that various issues associated with content marketing could be resolved by building a platform to match the needs of advertisers/ad agencies with those of various media; as a digital transformation (DX) business in the advertising sector, the platform could expand the market and bring about dramatic revenue growth for the company. It estimates the market for content marketing at around JPY600.0bn.
The company’s existing ad business is based on a one-time revenue model where fees are charged per assignment. Meanwhile, if the company can receive fixed-rate commissions on large volumes of transactions going through its matching platform, it could generate more stable revenue, similarly to a recurring-revenue model. All About aims to grow the transaction volume via its matching platform to JPY10.0bn within the next few years.
Consumer Services segment: d shopping
Considering the large number of mobile phone subscriptions in Japan, the company thinks the online shopping site d shopping (joint business of All About Life Marketing and NTT Docomo) has plenty of room for growth. The number of online tenants (stores) in the d shopping marketplace was just short of 100 as of October 2021. The company intends to increase the number of stores going forward to bolster the merchandise lineup and increase both user count and usage. The d shopping business has turned a profit in 1H FY03/22, and the company expects it to become a revenue driver in tandem with the increase in transaction volume.
New businesses
Life asset management
All About plans to develop a new business platform (membership-based paid platform) that comprehensively manages the resources that assist and enrich people’s living, which the company refers to as life assets. Focus areas include lifelong learning, healthcare, money, career, and home (love, marriage, family, and community). While the concept is to develop this business in combination with investment in tech startups in this domain (see below), the company has not disclosed the details of the plan as of yet.
Investment in tech startups
The company has invested some tens of millions of yen each in tech startups that focus on media, commerce, and life asset management. It intends to generate revenue through both incubation (providing support for growth) and pure investment. It also plans to develop synergies with the aforementioned platform business that helps these startups acquire customers. As of end-FY03/21, investment securities on the company’s balance sheet came to JPY136.7mn (JPY98.7mn in FY03/20), and valuation losses on investment securities under non-operating expenses was JPY4.1mn (JPY1.5mn).
Analysis of key performance indicators
Past and present
The table titled “Analysis of key performance indicators” shows the key performance indicators (KPIs) that have been disclosed by the company either regularly or on occasion. Taking a look at FY03/05, the fiscal term immediately preceding exchange listing, All About disclosed a detailed breakdown of businesses and KPIs under its single segment of Advertising. In FY03/21 (with two reportable segments), it added transaction volume as a new KPI, but limited the disclosure of other KPIs. We understand this change to reflect the shift in the company’s operating environment from a close-ended system (involving ad projects and merchandise sales using in-house websites) to an open-ended one (using a common platform to bring in ad projects and commercial transactions from media and websites of other companies).
Marketing Solutions segment
While the number of guides and theme categories as well as monthly active users (monthly unique users) are still important KPIs in the Marketing Solutions segment, it is no longer as simple as to say revenue grows in tandem with increases in these indicators. The guide count has increased from 286 at end-FY03/05 to 900 at end-FY03/21, and the number of themes being covered has increased almost fourfold from 340 to 1,300. Yet, monthly active users only grew from 12mn to 20mn during the same period, shy of a twofold increase. The company explained that the amount of information generally available online have expanded for each of the themes because of the emergence of specialist websites in recent years, and more people are also spending time on social media, video streaming services, and social games. This has led to fierce competition for the disposable time of internet users around their 40s, who make up the company’s core target.
According to the company, advertorials accounted for approximately 40% of FY03/21 revenue from content marketing in the Marketing Solutions segment (55.6% in FY03/05 [Advertising segment]), whereas display ads such as banner ads accounted for roughly 20%, the corresponding revenue amount shrinking to about half of what it used to be several years back. An advertorial is a type of tie-up ad in which the company wins an assignment to create an ad jointly with the advertiser (or an ad agency) within a certain budget. For display ads (referred to by the company as programmatic ads*), revenue is a function of the number of clicks (or impressions) times the unit price. In 1H FY03/22, revenue from display ads declined, largely due to deteriorating unit prices. Other sources of revenue include content commerce (Best One business [recommends popular goods and services in a ranking format]), which is a type of performance-based ad; operational support service (full-scale operation on contract); and other content-related services.
Consumer Services segment
KPIs in the Consumer Services segment are monthly unique users and transaction volume. Monthly unique users is defined as the number of users (excluding duplicates) who visit the company’s websites in a given month. The company also announced in October 2020 that total users of Sample Hyakkaten have exceeded the 3mn mark on a cumulative basis (reaching 3.3mn in November 2021).
The next table outlines the quarterly changes of KPIs in the trial marketing and commerce business. Since the company began operation of d shopping with NTT Docomo in July 2020, figures from Q2 FY03/21 onward include the transaction volume of d shopping.
Dividing the quarterly transaction volume by “monthly unique users x 3 (months)” results in JPY339 for monthly transaction volume per unique user. However, the company says actual average customer spend comes to about JPY5,000 per month for both Sample Hyakkaten and d shopping. In addition to the sampling fees paid by the users, transaction volume also includes sales from offline and online events, in-site ads, and marketing solutions services.
Note: Average customer spend per month is an estimate based on interviews with the company
Business overview by segment
Marketing Solutions segment
Revenue in the Marketing Solutions segment has trended largely flat YoY, just below the JPY3.6bn level, after reaching a record high of JPY3.8bn in FY03/18. The company attributes this mainly to the decline in display ad revenue, and maintains that advertorial revenue has remained firm.
The operating profit margin (OPM) in this segment reached 21.2% in FY03/18 and has since declined to the low 11% range (11.6% in FY03/21). Display ads have a high contribution margin ratio (at almost 100%), so the main reason for the drop in OPM is lower revenue from display ads. Display ad revenue can be approximated by multiplying the number of clicks (or impressions) by the unit price, but is also affected by changes in the algorithm of search engines like Google or shifts in the market prices of ads. The revenue decline in 1H FY03/22 was primarily caused by deteriorating unit prices.
Consumer Services segment
Since the acquisition of Sample Hyakkaten operator Luke 19 (currently, All About Life Marketing) in FY03/12, revenue in the Consumer Services segment continued to increase each year, from JPY4.0bn in FY03/15 to JPY13.7bn in FY03/21. Operating profit margin hovered around 2% between FY03/15 and FY03/20, then jumped to 7.0% in FY03/21. Reduction of sourcing costs at Sample Hyakkaten and marketing service revenue from corporate customers mainly contributed to the OPM improvement, says the company. The d shopping business, which began in July 2020, has been profitable since Q1 FY03/21.
Note: Figures may differ from company materials due to differences in rounding methods.
Cost structure
Since its exchange listing, All About has consistently disclosed its quarterly operating expenses (fixed costs + controllable costs + variable costs). Fixed costs include personnel and systems-related expenses, while controllable costs are mainly marketing expenses, editing costs, and compensation paid to the guides. Variable costs in the Marketing Solutions segment are primarily ad production costs, agency commissions, and outsourcing expenses; in the Consumer Services segment, they include sourcing costs, shipping and delivery expenses, and sales commissions. Comparing the two segments, Marketing Solutions has a low variable cost-to-revenue ratio (52.9% in FY03/21) and a high non-variable cost-to-revenue ratio (37.9%), whereas Consumer Services has a high variable cost-to-revenue ratio (71.0%) and a low non-variable cost-to-revenue ratio (22.1%). Controllable costs doubled in the Consumer Services segment in FY03/21 due to an increase in sales promotion expenses.
Notes: Operating expenses in the table above are sums of quarterly results. There is a small difference (margin of error) between the operating expense figures above and the sum of cost of revenue and SG&A expenses.
Figures may differ from company materials due to differences in rounding methods.
Relationship with advertisers and major ad agencies
All About’s customers in the Marketing Solutions segment are mostly advertisers and ad agencies. In its briefing materials on business performance in FY03/06, the company disclosed the cumulative and quarterly counts of advertisers and ad agencies it had worked with. It also provided information on revenue composition by advertiser industry (showing percentage increases in the transportation, leisure, automobile, and digital home electronics sectors) and the ratio of major national brands among all customer advertisers (Q4 FY03/06; 10.0% on a customer count basis and 31.1% on a transaction volume basis). Although such information is no longer disclosed, we understand that the company’s strong relations with advertisers have not changed.
Between FY03/11 and FY03/14, Cyber Communications Inc. (currently Carta Communications Inc. [unlisted], a Dentsu subsidiary engaging in media representative service) and Yahoo Japan Corporation (unlisted, consolidated subsidiary of Z Holdings Corporation [TSE 1: 4689]) appeared in the disclosure materials as major customers accounting for over 10% of the company’s total revenue. There have not been any major customers accounting for over 10% of revenue from FY03/15 onward. Yahoo Japan concluded a capital alliance with All About in September 2004, becoming a major shareholder, but subsequently sold most of its shareholdings in the company to Nippon Television Network in March 2017. Dentsu participates in the company’s PrimeAd service, and remains a customer.
Note: Figures may differ from company materials due to differences in rounding methods.
Profitability analysis
All About’s revenue structure changed dramatically from FY03/16 onward, when the company launched and expanded the trial marketing and commerce business. Until FY03/15, the company’s mainstay business was advertising. Since the cost of revenue in the trial marketing and commerce business is large, the company’s gross profit margin (GPM) decreased in tandem with revenue growth in this business. GPM, which was 81.6% in FY03/12, has trended around the 50% level since FY03/18. OPM, on the other hand, has remained mostly flat in the 3–5% range.
The cash conversion cycle has contracted from 1.0–1.5 months (FY03/13–FY03/16) to around five days (FY03/20, FY03/21), mainly due to the contraction of days of inventory outstanding and sales outstanding; the days of payables outstanding has been largely constant.
Market and value chain
Market trends
Advertising market
According to the Dentsu Group survey—2020 Advertising Expenditures in Japan, expenditure on internet advertising showed double-digit growth from 2005 to 2019 (CAGR of 13.1%), while total advertising expenditure during the same period trended mostly in line with GDP growth (CAGR of 0.1% and 0.4%, respectively). In 2020 amid the spread of COVID-19, internet advertising expenditure was up 5.9% YoY, despite YoY decline in both total advertising expenditure and GDP. The share of internet advertising in total advertising expenditures (JPY6.16tn in 2020) grew from 5.5% in 2005 to 36.2% in 2020, closing on the combined expenditures of the four mass media (newspapers, magazines, radio, and TV), which fell 13.6% YoY due to the pandemic. Expenditure on promotion media advertising* dropped sharply in 2020, down 24.6% YoY. In 2021, internet advertising is expected to become the largest advertising medium.
The cash conversion cycle has contracted from 1.0–1.5 months (FY03/13–FY03/16) to around five days (FY03/20, FY03/21), mainly due to the contraction of days of inventory outstanding and sales outstanding; the days of payables outstanding has been largely constant.
By transaction methods, the survey breaks down internet advertising into programmatic advertising, reservation advertising, and performance-based advertising. By target devices, expenditures on ads for mobile devices exceeded those for desktops in 2015; in 2019, ads for mobile devices accounted for 75.9% of internet advertising media expenditures.
E-commerce market
According to a survey by the Ministry of Economy, Trade and Industry, in 2020, the B2C e-commerce market in Japan remained largely flat YoY at just over JPY19tn. Of this total, e-commerce market in the merchandising sector accounted for JPY12.23tn (+21.7% YoY), the service sector JPY4.58tn (-36.1% YoY), and the digital sector JPY2.46tn (+14.9% YoY). While the e-commerce market and the internet advertising market have basically grown in sync, ads for mobile devices have taken the lead and expanded dramatically in recent years (the ratio of expenditure on ads for mobile devices to total internet advertising media expenditures was 54.2% in 2015 and 75.9% in 2019). Smartphone transactions in the merchandising sector reached 50.9% of the total in 2020, exceeding the 50% mark five years later from when ads for mobile devices surpassed the same mark versus total online advertising expenditure. The e-commerce ratio rose 1.3pp YoY to 8.1% in 2020, reflecting the continuing digitalization of commercial transactions. Within the merchandising sector, the e-commerce ratio of the food, drinks, and liquor category (All About’s focus area) was a low 3.3%, compared to such categories as books, clothing, and home electronics, so there is plenty of room for growth going forward.
Competition
The company has established a strong brand presence for its proprietary media All About in the Marketing Solutions segment and website Sample Hyakkaten in the Consumer Services segment. The monetization model differs for each segment (source of revenue being corporate customers [advertisers] in Marketing Solutions, and website users in Consumer Services); still, the two segments share a common thread in a sense that they both support the marketing needs of companies. We understand there are no direct competitors in Japan with operations that encompass both of these fields.
By individual segment, the company has identified a number of listed companies as comparable businesses. In Marketing Solutions, these included ITmedia Inc. (TSE 1: 2148), istyle Inc. (TSE 1: 3360), Cookpad Inc. (TSE 1: 2193), and Kakaku.com, Inc. (TSE 1: 2371). These companies all operate websites dedicated to specific fields (namely, IT, beauty, economy/finance).
ITmedia Inc. (TSE 1: 2148)
Softbank ZDNet Inc. (currently, ITmedia) was established in December 1999 as Softbank Group’s first online publishing company operating a comprehensive information website that focused on information technology. SB Media Holdings Corp. has a 52.47% stake in the company. ITmedia offers various information content and services to users via its proprietary internet media ITmedia. At the same time, it accumulates user data (interests, profile information, etc.), and earns advertising and service fees by providing advertising products, promotional services, and information on potential customers to companies (advertisers).
istyle Inc. (TSE 1: 3360)
istye Inc. plans and operates @cosme (a comprehensive portal site focusing on beauty) and also provides advertising services. @cosme started as a website listing customer reviews for cosmetics. The company stands out for its database with over 20 years’ worth of data, enabling end-to-end analysis of consumer behaviors.
Cookpad Inc. (TSE 1: 2193)
Cookpad Inc. mainly operates a recipe-sharing website, Cookpad.
Kakaku.com, Inc. (TSE 1: 2371)
Kakaku.com Inc. operates websites such as Kakaku.com (price comparison website to support shopping) and Tabelog (website for searching and booking restaurants).
In Consumer Services, the company considers Moratame.net and otameshi as services similar to Sample Hyakkaten. In terms of d shopping, competing services include other online marketplaces operated by NTT Docomo’s rival telecom carriers (namely, Yahoo! Shopping, au PAY market, and Rakuten Ichiba), as well as other e-commerce sites like Amazon.
Note: Figures may differ from company materials due to differences in rounding methods.
Strengths and weaknesses
Strengths
20-plus years’ expertise and track record in operating a comprehensive information website that consistently attracts a substantial number of monthly active users (currently over 20mn) serving as an advertising medium
The company’s All About website is one of the leading comprehensive information sites in Japan with over 20mn monthly active users and a cumulative collection of over 180,000 articles.
While there is competition with specialist information sites that focus on a single field (operators include ITmedia, istyle, Cookpad, and Kakaku.com), the company has succeeded in maintaining brand value of the All About website as a comprehensive source of diverse information provided by experts in their fields. Through media operation, the company has polished its content editing skills and acquired knowledge on user trends. It uses these assets to strengthen the content marketing business through which the company helps elevate the cost-effectiveness of ads placed by advertisers—its main customers.
With All About, the advertisers also enjoy the added benefit of uncovering consumer insights (true feelings and latent needs that consumers themselves unconsciously harbor) through information provided by the guides and analysis of users’ actions before and after viewing ads; these insights can then be applied to the advertisers’ product development.
Business model of Sample Hyakkaten, which addresses the needs of both manufacturers (marketing needs including collection of user comments, new product promotion, and inventory optimization) and consumers (finding new products/bargain products, and discovering the appeal of existing products)
The company’s Sample Hyakkaten is one of the largest sampling services in Japan with users totaling 3.3mn on a cumulative basis. One of the reasons behind the success of Sample Hyakkaten is its ability to address the various marketing needs of manufacturers. This has allowed the company to source a wide range of merchandise from the manufacturers for distribution via Sample Hyakkaten. By using the sampling service, manufacturers can obtain information on consumer trends and receive direct input from the site users. The site also serves to enhance product understanding among its users, helping manufacturers promote sales and optimize inventory. While there are many companies that sell merchandise at bargain prices by sourcing them outside of their regular distribution channels, Sample Hyakkaten sets itself apart as a top brand with a different business model.
On top of the wide range of product lineup and competitive pricing, Sample Hyakkaten offers additional perks such as free sample lotteries and free sampling events that attract many fans.
We understand that the virtuous cycle underpinned by support from both manufacturers and site users has fueled the speedy growth of this business.
Track record of capital and business alliances with mega firms since the company’s inception, and resulting synergies
All About has its roots in an in-house venture of Recruit Co., Ltd., launched as a joint business with US-based About.com Inc. Thanks to the high credibility of Recruit’s backing (as a major shareholder providing referrals to customers and business partners) and the track record of its own website, the company subsequently managed to forge capital and business alliances with major companies such as Yahoo Japan, Dai Nippon Printing, Nippon Television Network (NTV), and NTT Docomo. These partnerships have been instrumental to the company’s business growth.
All About and NTV have joined hands to strengthen marketing that integrates TV and internet media, including the online distribution/use of NTV’s video content and promotional activities through social media. Their joint venture, NTV Life Marketing, Inc. operates a business involving shopping events and TV and e-commerce tie-ups. Further, All About partnered with NTT Docomo in July 2020 to jointly plan and operate the d shopping website. The two parties also collaborate in a wide range of other initiatives in the marketing solutions domain, sharing their content and user base.
In the PrimeAd content marketing platform business (launched in 2017), a focus area for the company, All About has partnered with 176 quality outside media as of end-September 2021, and 30 ad agencies including some major players have adopted the platform as an official planning tool. Shared Research thinks All About’s track record and ability to establish partnerships with leading companies in key industries will continue to serve as an asset in its future business growth.
Weaknesses
Relative decline in value of the All About site as an advertising medium, due to rise of other media offering expert content
Revenue in the Marketing Solutions segment has remained largely flat YoY at just below JPY3.6bn, after peaking in FY03/18 at JPY3.8bn. In advertorials (editorial ads; the company’s mainstay ad format), it is no longer as simple as to say that ad revenue grows in tandem with increases in the number of All About guides, theme categories, and monthly active users. Taking these indicators alone, for instance, the guide count has increased from 286 at end-FY03/05 to 900 at end-FY03/21, and the number of themes being covered has increased almost fourfold from 340 to 1,300. Yet, monthly active users only grew from 12mn to 20mn during the same period, shy of a twofold increase.
The All About website grew rapidly as a comprehensive information site offering content authored by experts. Many continue to rely on the site as an information source, but competition is also intensifying with the rise of specialist sites that cater to specific fields (such as sites operated by ITmedia, istyle, Cookpad, and Kakaku.com). The emergence of blogs, social media, YouTube, and other media platforms has also brought about changes in user behavior. Many users select whatever content that interests them at the time, which has had a significant impact on their use of disposable time.
All About has survived for over 20 years by working to maintain its media value. However, it has also faced difficulty being a top runner in an environment where users’ interests constantly change and diversify. With the emergence of specialist and other newer media in the competitive landscape, Shared Research understands that All About’s value as an advertising medium has declined in relative terms, notwithstanding the certain level of presence it maintains as an information media. We believe the sluggish revenue growth in the Marketing Solutions segment is indicative of this factor.
Unlike major online marketplaces, merchandise sourcing and sales at Sample Hyakkaten are irregular or one-off
Sampling services produce irregular benefits. Although sampling services have given rise to a new type of consumption behavior that opens doors to regular purchases, such services rarely cause customers to make continuous and regular purchases. Manufacturers derive various benefits from sampling services, as well, but they also only supply merchandise to these services on an irregular basis. Further, because of the nature of “sampling,” the websites do not always carry the same products.
In comparison with major online marketplaces that offer an extensive lineup of merchandise regularly, Sample Hyakkaten’s business model allows for high-margin transactions, according to the company. For the same reason, however, the service’s volatility is high when it comes to merchandise sourcing and sales.
Lack of new growth driver following All About, Sample Hyakkaten, and d shopping
At present, the company’s main sources of revenue are the media and digital marketing business—its founding business centered on the All About comprehensive information site, and the trial marketing and commerce business underpinned by the Sample Hyakkaten and d shopping operations. All About is currently searching for the next growth driver following these two businesses.
One candidate is the PrimeAd content marketing platform, which the company hopes will strengthen the Marketing Solutions segment amid plateauing earnings in the All About proprietary media business. Although the company has disclosed PrimeAd’s qualitative progress, we understand the business is still in the stage of upfront spending and is yet to generate meaningful revenue. The company plans to continue focusing on PrimeAd, but it will likely take some time for the business to materially expand and achieve profitability.
Historical results and financial statements
Income statement