Dentsu: Advertising Expenditures in Japan Totaled 5,891.3 Billion Yen in 2012, Up 3.2% from 2011

  Dentsu: Advertising Expenditures in Japan Totaled 5,891.3 Billion Yen in
  2012, Up 3.2% from 2011

—Expenditures Rose for the First Time in Five Years; Traditional Media Posted
                                    Gains;
  Satellite Media-Related Advertising Up Sharply; Internet Remained Strong—

Business Wire

TOKYO -- February 20, 2013

Dentsu Inc. (TOKYO:4324)(ISIN:JP3551520004)(President & CEO: Tadashi Ishii;
Head Office: Tokyo; Capital: 58,967.1 million yen) released today its annual
report of advertising expenditures in Japan for the 2012 calendar year,
including an estimated breakdown by medium and industry.

According to this report, Japan's advertising expenditures in 2012 totaled
5,891.3 billion yen, an increase of 3.2% over the previous year. Overall
spending on advertising began to fall in 2008 (down 4.7%) as a result of the
simultaneous global recession precipitated by the financial crisis in the
United States. Yearly spending continued to decline in 2009 (down 11.5%), 2010
(down 1.3%), and 2011 (down 2.3%), but bounced back in 2012 (up 3.2%),
benefiting from a resumption in spending that had been delayed or postponed
after the Great East Japan Earthquake and Tsunami. Japan's advertising
expenditures increased in 2012 for the first time in five years.

Overview of Advertising Expenditures during 2012

1.Ad placements recovered strongly during the second half of 2011 on
    reconstruction-related demand after the Great East Japan Earthquake and
    Tsunami, and this trend carried over through the first half of 2012. After
    the London 2012 Olympic Games, however, a slowdown in the overall economy
    depressed advertising expenditures. This was caused by a number of
    factors, including a fall in consumer spending after the discontinuance of
    the tax reduction and subsidy program for eco-car purchases, the high
    value of the yen, economic stagnation in Europe, and a decline in exports.
    Nevertheless, for the year as a whole advertising expenditures totaled
    5,891.3 billion yen, a gain of 3.2% from the previous year; this was the
    first annual increase in five years. A strong recovery in ad placements
    pushed spending in the traditional media to 2,779.6 billion yen, exceeding
    the level achieved in 2010 before the Great East Japan Earthquake and
    Tsunami.
2.Broken down by medium, expenditures were higher in Television (up 3.0%),
    Newspapers (up 4.2%), and Magazines (up 0.4%), and held steady in Radio
    (down 0.1%). Overall spending in the traditional media was up 2.9%.
    Advertising in Promotional Media also grew (up 1.4%). Satellite
    Media-Related spending posted double-digit growth (up 13.7%) for a third
    straight year, boosted by placements related to the London 2012 Olympic
    Games. Internet advertising again posted solid gains (up 7.7%).
3.By industry category (for the traditional media), expenditures grew in 16
    of the 21 industry categories, including Automobiles/Related Products (up
    26.9% on increased placements for K-cars [engine displacement up to 660cc]
    and 2-box vehicles), Information/Communications (up 10.5% on expenditures
    related to smartphone services, satellite broadcasting, and web content
    advertising), and Beverages/Cigarettes (up 7.0 % on expenditures related
    to beauty and energy drinks, lactic acid drinks, and carbonated
    beverages). In contrast, expenditures fell in 5 of the 21 industry
    categories, including Government/Organizations, where spending fell
    dramatically (down 69.4%) compared with 2011, which had seen a massive
    increase in public service placements by advertising organizations after
    the Great East Japan Earthquake and Tsunami; and Classified Ads/Others
    (down 19.8% on declines in placements by corporate groups as well as the
    movie and theater industry).

• Outline of Advertising Expenditures by Medium
Advertising expenditures in the traditional media grew 2.9% compared with the
previous year, reaching a total of 2,779.6 billion yen. Spending rose not only
in Television (up 3.0%), but also in Newspapers and Magazines. Promotional
Media advertising also posted gains (up 1.4%). Satellite Media-Related
advertising expenditures were up 13.7%, boosted by demand related to the
London 2012 Olympic Games. Internet advertising showed solid gains, up 7.7%
year on year.

• Quarterly Breakdown of Growth in Advertising Expenditures in the Traditional
Media in 2012
A quarterly breakdown of advertising expenditures for the traditional media in
the 2012 calendar year showed that spending rose steadily during the first
half of the year, but fell below previous-year levels during the last six
months as the overall economy weakened.


(Year-on-year, %)
                      2012    Jan.–   Jul.–   Jan.–   Apr.–   Jul.–   Oct.–
                    (Full  Jun.   Dec.   Mar.   Jun.   Sep.   Dec.
                      Year)
Advertising
Expenditures in the  102.9  107.8  98.3   105.2  110.6  98.8   97.8
Traditional Media
                                                                 

• Outline of Advertising Expenditures by Industry (21 Categories, Traditional
Media Only)
Advertising expenditures increased in 16 of the 21 industry categories
surveyed during 2012, and declined in 5 categories.

Two industry categories posted double-digit gains: Automobiles/Related
Products (up 26.9%) on increased placements for K-cars and 2-box vehicles, and
Information/Communications (up 10.5%) on expenditures related to smartphone
services, satellite broadcasting, and web content advertising. Expenditures
also rose in Precision Instruments/Office Supplies (up 9.7%), aided by growth
in placements for digital SLR cameras and wristwatches; Distribution/Retailing
(up 8.6%), which saw stronger demand for general merchandise store and direct
marketing advertising; Transportation/Leisure (up 8.2%) on a recovery in
outlays by travel agencies, hotels and inns; Apparel/Fashion,
Accessories/Personal Items (up 7.6%), due to increased spending on ads for
women's clothing and shoes; Beverages/Cigarettes (up 7.0%) on expenditures
related to beauty and energy drinks, lactic acid drinks, and carbonated
beverages; Foodstuffs (up 6.4%), led by health foods and beauty-related food
products; Food Services/Other Services (up 4.4%), which saw increased
placements for ladies' wigs and aesthetic salons; Real Estate/Housing
Facilities (up 4.1%) on an upsurge in demand for household fixtures and
condominium advertising; Cosmetics/Toiletries (up 4.0%), boosted by growth in
ads for skin toners and emulsions; Pharmaceuticals/Medical Supplies (up 3.4%),
helped by a rise in corporate advertising by pharmaceutical companies, and in
placements related to eyeglasses; Education/Medical Services/Religion (up
3.2%), which recorded increased spending on ads for English conversation and
language schools, preparatory and tutoring schools, and correspondence
education; Publications (up 3.0%) on higher placements for hardcover books,
corporate advertising by publishers, and ads for hobby-related magazines;
Finance/Insurance (up 2.7%) on the strength of corporate advertising by
insurance companies, and ads for credit card loans; and Household Products (up
1.2%), led by placements for furniture and kitchen accessories.

Advertising expenditures fell in five industry categories, most notably in
Government/Organizations (down 69.4%). This category saw a massive increase in
public service ad placements by advertising organizations in 2011 after the
Great East Japan Earthquake and Tsunami, but spending dropped back
significantly in 2012; Classified Ads/Others (down 19.8%) on declines in
placements by corporate groups as well as the movie and theater industry;
Energy/Materials/Machinery (down 3.7%) on cutbacks by electric power and gas
companies; Hobbies/Sporting Goods (down 1.9%), hurt by weakness in the areas
of video software, pachinko machines and "pachi-slo" slot machines, and game
software; and Home Electric Appliances/AV Equipment (down 0.7%), which saw a
fall in demand for placements related to LCD televisions and Blu-ray disc
recorders.

The full text of 2012 Advertising Expenditures in Japan is currently being
compiled and will be available on Dentsu's website at the end of March 2013.
For reference, please refer to the tables on the following pages.


TABLE 1
Japan's GDP and Advertising Expenditures (2008−2012)
      Gross Domestic Product (B)  Advertising Expenditures (A) 
Year   GDP            Compared      Advertising      Compared      A / B
       (¥ billion)   to Previous   Expenditures    to Previous   (%)
                      Year (%)      (¥ billion)      Year (%)
2008   501,209.3      97.7          6,692.6          95.3          1.34
2009   471,138.7      94.0          5,922.2          88.5          1.26
2010   482,384.4      102.4         5,842.7          98.7          1.21
2011   470,623.2      97.6          5,709.6          97.7          1.21
2012  475,729.0     101.1        5,891.3         103.2        1.24

Notes:
• The above figures for GDP are those released in the Cabinet Office's 'Annual
Report on National Accounts' and 'GDP Estimates'.
• All the above figures are for the calendar year.


TABLE 2
Advertising Expenditures by Medium (2010−2012)
                Advertising Expenditures      YoY             Component Ratio
Media          (¥ billion)                  Comparison     (%)
                                              Ratio (%)
                2010     2011     2012      2011   2012    2010   2011   2012
Traditional
Media
Newspapers      639.6     599.0     624.2     93.7    104.2   11.0    10.5    10.6
Magazines       273.3     254.2     255.1     93.0    100.4   4.7     4.4     4.3
Radio           129.9     124.7     124.6     96.0    99.9    2.2     2.2     2.1
Television      1,732.1  1,723.7  1,775.7   99.5   103.0   29.6   30.2   30.2
Subtotal        2,774.9  2,701.6  2,779.6   97.4   102.9   47.5   47.3   47.2
Satellite       78.4     89.1     101.3     113.6  113.7   1.3    1.6    1.7
Media-Related
Internet
(Advertising    607.7     618.9     662.9     101.8   107.1   10.4    10.8    11.2
placement)
(Advertising    167.0    187.3    205.1     112.2  109.5   2.9    3.3    3.5
production)
Subtotal        774.7    806.2    868.0     104.1  107.7   13.3   14.1   14.7
Promotional
Media
Outdoor         309.5     288.5     299.5     93.2    103.8   5.3     5.1     5.1
Transit         192.2     190.0     197.5     98.9    103.9   3.3     3.3     3.4
Flyers          527.9     506.1     516.5     95.9    102.1   9.0     8.9     8.8
Direct Mail     407.5     391.0     396.0     96.0    101.3   7.0     6.8     6.7
Free
Newspapers /
                264.0     255.0     236.7     96.6    92.8    4.5     4.5     4.0
Free
Magazines
POP             184.0     183.2     184.2     99.6    100.5   3.2     3.2     3.1
Telephone       66.2      58.3      51.4      88.1    88.2    1.1     1.0     0.9
Directories
Exhibitions /
                263.4    240.6    260.6     91.3   108.3   4.5    4.2    4.4
Screen
Displays
Subtotal        2,214.7  2,112.7  2,142.4   95.4   101.4   37.9   37.0   36.4
Total          5,842.7  5,709.6  5,891.3  97.7   103.2  100.0  100.0  100.0
                                                                              


TABLE 3
Advertising Expenditures by Industry in the Traditional Media
(2011−2012)
(Unit: ¥10 million)
      Media     Newspapers                    Magazines                     Radio                         Television                      Total
                                    Comparison                     Comparison                     Comparison                       Comparison                       Comparison
Industry          2011    2012    Ratio        2011    2012    Ratio        2011    2012    Ratio        2011     2012     Ratio        2011     2012     Ratio
                                    (%)                            (%)                            (%)                              (%)                              (%)
Energy /
Materials /       551      640      116.2        166      126      75.9         241      283      117.4        1,766     1,575     89.2         2,724     2,624     96.3
Machinery
                                                                                                                                                                    
Foodstuffs        5,222    5,561    106.5        1,421    1,553    109.3        1,154    1,163    100.8        18,822    20,052    106.5        26,619    28,329    106.4
                                                                                                                                                                    
Beverages /       2,019    2,344    116.1        1,212    1,386    114.4        577      532      92.2         15,813    16,725    105.8        19,621    20,987    107.0
Cigarettes
                                                                                                                                                                    
Pharmaceuticals
/                 1,762    1,700    96.5         708      836      118.1        993      1,039    104.6        10,891    11,272    103.5        14,354    14,847    103.4
Medical
Supplies
                                                                                                                                                                    
Cosmetics /       2,726    3,130    114.8        3,350    3,353    100.1        467      411      88.0         21,144    21,889    103.5        27,687    28,783    104.0
Toiletries
                                                                                                                                                                    
Apparel /
Fashion,          1,641    1,675    102.1        6,200    6,483    104.6        68       66       97.1         2,909     3,421     117.6        10,818    11,645    107.6
Accessories /
Personal Items
                                                                                                                                                                    
Precision
Instruments /     479      530      110.6        828      914      110.4        35       52       148.6        1,288     1,390     107.9        2,630     2,886     109.7
Office Supplies
                                                                                                                                                                    
Home Electric
Appliances /      747      687      92.0         758      646      85.2         176      163      92.6         3,768     3,916     103.9        5,449     5,412     99.3
AV Equipment
                                                                                                                                                                    
Automobiles /
Related           1,403    1,444    102.9        831      866      104.2        777      852      109.7        9,970     13,311    133.5        12,981    16,473    126.9
Products
                                                                                                                                                                    
Household         1,017    1,149    113.0        467      471      100.9        174      183      105.2        4,763     4,693     98.5         6,421     6,496     101.2
Products
                                                                                                                                                                    
Hobbies /         1,295    1,279    98.8         1,455    1,486    102.1        306      314      102.6        8,005     7,774     97.1         11,061    10,853    98.1
Sporting Goods
                                                                                                                                                                    
Real Estate /
Housing           2,853    2,917    102.2        826      749      90.7         446      502      112.6        6,320     6,701     106.0        10,445    10,869    104.1
Facilities
                                                                                                                                                                    
Publications      5,696    5,702    100.1        306      297      97.1         670      606      90.4         2,277     2,611     114.7        8,949     9,216     103.0
                                                                                                                                                                    
Information /     3,831    3,903    101.9        1,584    1,346    85.0         782      847      108.3        16,003    18,429    115.2        22,200    24,525    110.5
Communications
                                                                                                                                                                    
Distribution /    6,943    7,563    108.9        1,044    996      95.4         816      876      107.4        9,891     10,862    109.8        18,694    20,297    108.6
Retailing
                                                                                                                                                                    
Finance /         2,310    2,105    91.1         754      600      79.6         946      937      99.0         10,111    10,857    107.4        14,121    14,499    102.7
Insurance
                                                                                                                                                                    
Transportation
/                 9,678    10,219   105.6        1,524    1,491    97.8         953      1,023    107.3        7,372     8,390     113.8        19,527    21,123    108.2
Leisure
                                                                                                                                                                    
Food Services /   1,988    1,942    97.7         679      625      92.0         1,178    1,261    107.0        8,511     9,068     106.5        12,356    12,896    104.4
Other Services
                                                                                                                                                                    
Government /      1,265    1,450    114.6        209      212      101.4        1,204    882      73.3         8,195     783       9.6          10,873    3,327     30.6
Organizations
                                                                                                                                                                    
Education /
Medical           2,785    2,891    103.8        1,048    1,022    97.5         479      445      92.9         3,267     3,465     106.1        7,579     7,823     103.2
Services /
Religion
                                                                                                                                                                    
Classified Ads                                                                                                                                        
/                                                                                                                                                        
Others            3,689    3,589    97.3         50       52       104.0        28       23       82.1         1,284     386       30.1         5,051     4,050     80.2
Total            59,900  62,420  104.2       25,420  25,510  100.4       12,470  12,460  99.9        172,370  177,570  103.0       270,160  277,960  102.9
                                                                                                                                                                    

TABLE 4
Sources of Media Expenditures

Traditional Media: Advertising expenditures spent in the traditional media of
newspapers, magazines, radio and television.
Newspapers: Advertising rates of national daily and trade newspapers, and
advertising production costs.
Magazines: Advertising rates of national monthly, weekly and specialized
magazines, and advertising production costs.
Radio: Time rates and production costs of private broadcasting stations
nationwide and commercial production costs (but not including event-related
costs).
Television: Time rates and production costs of private broadcasting stations
nationwide and commercial production costs (but not including event-related
costs).

Satellite Media-Related: Advertising expenditures for satellite broadcasts,
CATV and teletext (placement and production costs).

Internet: Placement and production costs for Internet site and mobile in-app
advertising (includes production costs for banner ads as well as website
set-up costs related to products, services and ad campaigns).

Promotional Media: Advertising expenditures for sales promotion-related media.
Outdoor: Production and placement costs for billboards, neon signs, outdoor
video screens, etc.
Transit: Placement costs for transit advertisements.
Flyers: Insertion costs for flyers in newspapers nationwide.
Direct Mail: Postage and private delivery costs spent on direct mail.
Free Newspapers/Free Magazines: Advertising costs in free newspapers and
magazines.
POP: Production costs for point-of-purchase (POP) displays.
Telephone Directories: Placement costs for advertisements in telephone
directories.
Exhibitions/Screen Displays: Production costs for exhibitions, expositions and
PR centers; production and screening costs for promotional films and videos,
etc.


About Dentsu Inc.
Founded in 1901, Dentsu Inc. has held the position of the world's largest
single-brand agency for 40 years. Through its unique "Integrated Communication
Design" approach, Dentsu offers multinational clients the most comprehensive
range of advertising and marketing services in the industry. While continuing
to pursue innovation in the digital arena, Dentsu is active in the production
and marketing of sports, movies, anime and other entertainment content on a
global scale. The Dentsu Group has more than 6,000 clients and around 22,000
employees worldwide.
Dentsu News: http://www.dentsu.com/news/index.html
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Contact:

Dentsu Inc.
Shusaku Kannan, (813) 6216-8042
Senior Manager
Corporate Communications Division
s.kannan@dentsu.co.jp