Dentsu: Advertising Expenditures in Japan Totaled 5,976.2 Billion Yen in 2013, Up 1.4% from 2012

  Dentsu: Advertising Expenditures in Japan Totaled 5,976.2 Billion Yen in
  2013, Up 1.4% from 2012

   —Expenditures Back on Growth Track, Rising for a Second Straight Year on
   Strong Demand for Television Spot, Outdoor, Transit and POP Advertising—

Business Wire

TOKYO -- February 20, 2014

Dentsu Inc. (TOKYO:4324) (ISIN:JP3551520004) (President & CEO: Tadashi Ishii;
Head Office: Tokyo; Capital: 74,609.81 million yen) released today its annual
report of advertising expenditures in Japan for the 2013 calendar year,
including an estimated breakdown by medium and industry.

According to this report, Japan’s advertising expenditures in 2013 totaled
5,976.2 billion yen, an increase of 1.4% over the previous year. Overall
spending on advertising posted year-on-year gains for a second straight year
thanks to the sustained economic recovery brought about by “Abenomics,” and a
late surge in demand ahead of the consumption tax increase scheduled to take
effect in April 2014.

Overview of Advertising Expenditures during 2013

1.Advertising expenditures held firm in 2013 as a result of the sustained
    economic recovery achieved by “Abenomics,” and a strong surge in demand
    during the second half of the year which was related to the consumption
    tax increase scheduled to take effect in April 2014. The first half of
    2013 saw higher sales of expensive goods, reflecting an improvement in
    Japan’s economy, but this recovery was not strong enough to boost overall
    spending on advertising. Expenditures for the year totaled 5,976.2 billion
    yen, a gain of 1.4% over the previous year, and spending was up for the
    second year in a row.
2.Broken down by medium, expenditures were modestly higher in Television (up
    0.9%), fell slightly in Newspapers (down 1.2%) and Magazines (down 2.0%),
    and held steady in Radio (down 0.2%). As a result, overall spending in the
    traditional media rose 0.1%. Advertising in Promotional Media grew by the
    same amount (up 0.1%), exceeding previous-year levels for a second
    straight year. Satellite Media-Related spending has taken firm root, and
    spending in this component remained quite strong (up 9.6%), along with
    Internet advertising (up 8.1%), which saw robust growth in demand for
    performance-based advertising.
3.By industry category (for the traditional media), expenditures were higher
    in 8 of the 21 industry categories, including Finance/Insurance (up 15.6%
    due to strong growth in advertising for direct-marketed insurance products
    and the Nippon Individual Savings Account (NISA) program); Food
    Services/Other Services (up 10.3%, helped by growth in placements for
    legal services); Real Estate/Housing Facilities (up 5.8% on placements for
    residential housing); Household Products (up 5.5%, boosted by increased
    spending on ads for beds); and Education/Medical Services/Religion (up
    3.1% on ads for preparatory and tutoring schools, hospitals and medical
    services).
    By contrast, expenditures fell in 13 of the 21 industry categories,
    including Hobbies/Sporting Goods (down 5.8%, hurt by a fall in placements
    for audio software, dolls and toys); Government/Organizations (down 5.4%
    on lower demand from political parties and political organizations);
    Energy/Materials/Machinery (down 5.1% on cutbacks by electric power and
    gas companies); and Distribution/Retailing (down 5.0% on reductions in
    spending by large, high volume retail stores).

• Outline of Advertising Expenditures by Medium
Advertising expenditures in the traditional media totaled 2,782.5 billion yen,
up 0.1% compared with the previous year. Spending in Television posted a
modest gain (up 0.9%). Promotional Media advertising was also up 0.1%.
Spending remained strong in both Satellite Media-Related (up 9.6%), and
Internet advertising (up 8.1% year on year).

• Quarterly Breakdown of Growth in Advertising Expenditures in the Traditional
Media in 2013
A quarterly breakdown of advertising expenditures for the traditional media in
the 2013 calendar year showed that spending trended lower during the first six
months, but recovered during the second half of the year.


(Year-on-year, %)
                      2013    Jan.–   Jul.–   Jan.–   Apr.–   Jul.–   Oct.–
                    (Full  Jun.   Dec.   Mar.   Jun.   Sep.   Dec.
                      Year)
Advertising
Expenditures in the  100.1  98.8   101.4  98.5   99.2   101.9  100.9
Traditional Media


• Outline of Advertising Expenditures by Industry (21 Categories, Traditional
Media Only)
Advertising expenditures increased in 8 of the 21 industry categories surveyed
during 2013, and declined in 13 categories.

Two industry categories posted double-digit gains: Finance/Insurance (up
15.6%) on expenditures related to direct-marketed insurance products and the
Nippon Individual Savings Account (NISA) program, and Food Services/Other
Services (up 10.3%), which saw firm growth in placements for legal services as
well as for ladies’ wigs. Expenditures also rose for Real Estate/Housing
Facilities (up 5.8%) due to strong demand related to residential housing and
house exhibition sites; Household Products (up 5.5%) on increased placements
for beds and deodorizers; Education/Medical Services/Religion (up 3.1%) on
spending on ads for preparatory and tutoring schools, hospitals and medical
services, and language schools; and Automobiles/Related Products (up 1.4%) on
increased placements for K-cars (engine displacement up to 660 cc), sedans and
SUVs.

By contrast, expenditures fell in 13 of the 21 industry categories, including
Hobbies/Sporting Goods (down 5.8%), hurt by cutbacks in advertising for audio
software, dolls and toys; Government/Organizations (down 5.4%) as a result of
reduced spending by political parties and political organizations;
Energy/Materials/Machinery (down 5.1%) on fewer placements by electric power
and gas companies; Distribution/Retailing (down 5.0%) on lower demand from
large-scale general merchandise stores; and Foodstuffs (down 4.0%), where
expenditures fell in the areas of health foods and beauty-related food
products.

The full text of 2013 Advertising Expenditures in Japan is currently being
compiled and will be available on Dentsu’s website at the end of March 2014.
For reference, please refer to the tables on the following pages.


TABLE 1
Japan’s GDP and Advertising Expenditures (2009−2013)
      Gross Domestic Product (B)  Advertising Expenditures (A) 
Year   GDP            Compared      Advertising      Compared      A / B
       (¥ billion)   to Previous   Expenditures    to Previous   (%)
                      Year (%)      (¥ billion)      Year (%)
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   471,310.8      97.7          5,709.6          97.7          1.21
2012   473,777.1      100.5         5,891.3          103.2         1.24
2013  478,447.7     101.0        5,976.2         101.4        1.25

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 (2011−2013)
                Advertising Expenditures      YoY             Component Ratio
Media          (¥ billion)                  Comparison     (%)
                                              Ratio (%)
                2011     2012     2013      2012   2013    2011   2012   2013
Traditional
Media
Newspapers      599.0     624.2     617.0     104.2   98.8    10.5    10.6    10.3
Magazines       254.2     255.1     249.9     100.4   98.0    4.4     4.3     4.2
Radio           124.7     124.6     124.3     99.9    99.8    2.2     2.1     2.1
Television      1,723.7   1,775.7   1,791.3   103.0   100.9   30.2    30.2    30.0
Subtotal        2,701.6   2,779.6   2,782.5   102.9   100.1   47.3    47.2    46.6
Satellite       89.1      101.3     111.0     113.7   109.6   1.6     1.7     1.8
Media-Related
Internet
(Advertising    618.9     662.9     720.3     107.1   108.7   10.8    11.2    12.1
placement)
(Advertising    187.3     205.1     217.8     109.5   106.2   3.3     3.5     3.6
production)
Subtotal        806.2     868.0     938.1     107.7   108.1   14.1    14.7    15.7
Promotional
Media
Outdoor         288.5     299.5     307.1     103.8   102.5   5.1     5.1     5.1
Transit         190.0     197.5     200.4     103.9   101.5   3.3     3.4     3.4
Flyers          506.1     516.5     510.3     102.1   98.8    8.9     8.8     8.5
Direct Mail     391.0     396.0     389.3     101.3   98.3    6.8     6.7     6.5
Free
Newspapers /
                255.0     236.7     228.9     92.8    96.7    4.5     4.0     3.8
Free
Magazines
POP             183.2     184.2     195.3     100.5   106.0   3.2     3.1     3.3
Telephone       58.3      51.4      45.3      88.2    88.1    1.0     0.9     0.8
Directories
Exhibitions /
                240.6     260.6     268.0     108.3   102.8   4.2     4.4     4.5
Screen
Displays
Subtotal        2,112.7  2,142.4  2,144.6   101.4  100.1   37.0   36.4   35.9
Total          5,709.6  5,891.3  5,976.2  103.2  101.4  100.0  100.0  100.0


TABLE 3
Advertising Expenditures by Industry in the Traditional Media (2012−2013)
(Unit: ¥10 million)
     Media     Newspapers                    Magazines                     Radio                         Television                      Total
                                    Comparison                     Comparison                     Comparison                       Comparison                       Comparison
Industry          2012    2013    Ratio        2012    2013    Ratio        2012    2013    Ratio        2012     2013     Ratio        2012     2013     Ratio
                                    (%)                            (%)                            (%)                              (%)                              (%)
Energy /
Materials /       640      628      98.1         126      126      100.0        283      274      96.8         1,575     1,462     92.8         2,624     2,490     94.9

Machinery
                                                                                                                                                                    
Foodstuffs        5,561    5,528    99.4         1,553    1,410    90.8         1,163    999      85.9         20,052    19,272    96.1         28,329    27,209    96.0
                                                                                                                                                                    
Beverages /       2,344    2,099    89.5         1,386    1,380    99.6         532      514      96.6         16,725    16,695    99.8         20,987    20,688    98.6
Cigarettes
                                                                                                                                                                    
Pharmaceuticals
/
                  1,700    1,694    99.6         836      743      88.9         1,039    1,078    103.8        11,272    11,230    99.6         14,847    14,745    99.3
Medical
Supplies
                                                                                                                                                                    
Cosmetics /       3,130    3,450    110.2        3,353    3,071    91.6         411      452      110.0        21,889    21,012    96.0         28,783    27,985    97.2
Toiletries
                                                                                                                                                                    
Apparel /
Fashion,          1,675    1,627    97.1         6,483    6,568    101.3        66       65       98.5         3,421     3,472     101.5        11,645    11,732    100.7
Accessories /
Personal Items
                                                                                                                                                                    
Precision
Instruments /     530      600      113.2        914      915      100.1        52       55       105.8        1,390     1,264     90.9         2,886     2,834     98.2

Office Supplies
                                                                                                                                                                    
Home Electric
Appliances /      687      608      88.5         646      685      106.0        163      152      93.3         3,916     4,088     104.4        5,412     5,533     102.2

AV Equipment
                                                                                                                                                                    
Automobiles /
Related           1,444    1,662    115.1        866      849      98.0         852      933      109.5        13,311    13,266    99.7         16,473    16,710    101.4
Products
                                                                                                                                                                    
Household         1,149    1,163    101.2        471      555      117.8        183      202      110.4        4,693     4,936     105.2        6,496     6,856     105.5
Products
                                                                                                                                                                    
Hobbies /         1,279    1,174    91.8         1,486    1,420    95.6         314      274      87.3         7,774     7,359     94.7         10,853    10,227    94.2
Sporting Goods
                                                                                                                                                                    
Real Estate /
Housing           2,917    2,846    97.6         749      802      107.1        502      587      116.9        6,701     7,268     108.5        10,869    11,503    105.8
Facilities
                                                                                                                                                                    
Publications      5,702    5,647    99.0         297      300      101.0        606      664      109.6        2,611     2,377     91.0         9,216     8,988     97.5
                                                                                                                                                                    
Information /     3,903    3,570    91.5         1,346    1,096    81.4         847      725      85.6         18,429    18,941    102.8        24,525    24,332    99.2
Communications
                                                                                                                                                                    
Distribution /    7,563    7,439    98.4         996      946      95.0         876      877      100.1        10,862    10,011    92.2         20,297    19,273    95.0
Retailing
                                                                                                                                                                    
Finance /         2,105    2,304    109.5        600      630      105.0        937      934      99.7         10,857    12,894    118.8        14,499    16,762    115.6
Insurance
                                                                                                                                                                    
Transportation
/                 10,219   9,991    97.8         1,491    1,647    110.5        1,023    980      95.8         8,390     8,358     99.6         21,123    20,976    99.3

Leisure
                                                                                                                                                                    
Food Services /   1,942    2,125    109.4        625      599      95.8         1,261    1,335    105.9        9,068     10,170    112.2        12,896    14,229    110.3
Other Services
                                                                                                                                                                    
Government /      1,450    1,327    91.5         212      229      108.0        882      849      96.3         783       744       95.0         3,327     3,149     94.6
Organizations
                                                                                                                                                                    
Education /
Medical           2,891    2,820    97.5         1,022    965      94.4         445      439      98.7         3,465     3,845     111.0        7,823     8,069     103.1
Services /
Religion
                                                                                                                                                                    
Classified Ads                                                                                                                                        
/ Others                                                                                                                                                 
                  3,589    3,398    94.7         52       54       103.8        23       42       182.6        386       466       120.7        4,050     3,960     97.8
Total            62,420  61,700  98.8        25,510  24,990  98.0        12,460  12,430  99.8        177,570  179,130  100.9       277,960  278,250  100.1


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

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 the Dentsu Group
Dentsu is the world’s largest advertising agency brand. Led by Dentsu Inc.
(TOKYO:4324) (ISIN:JP3551520004), a company with a history of 112 years of
innovation, the Dentsu Group provides a comprehensive range of client-centric
brand, integrated communications, media and digital services through its seven
global network brands—Carat, Dentsu, Dentsu media, iProspect, Isobar,
Posterscope and Vizeum—as well as through its specialist brands including
360i, Amnet, Amplifi, Data2Decisions, mcgarrybowen, Mitchell Communications
(PR) and psLive.

The Dentsu Group has a strong presence in 110 countries across five
continents, and employs more than 37,000 dedicated professionals. Dentsu Aegis
Network Ltd., its global business headquarters in London, oversees Dentsu’s
agency operations outside of Japan. The Group is also active in the production
and marketing of sports and entertainment content on a global scale.
www.dentsu.com

Contact:

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