[February 20, 2014]

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

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.

• 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.

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.

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

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