Dentsu: Advertising Expenditures in Japan Totaled 6,152.2 Billion Yen in 2014, Up 2.9% from 2013

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 2014 calendar year, including an estimated breakdown by medium and industry.

According to this report, Japan’s advertising expenditures in 2014 totaled 6,152.2 billion yen, an increase of 2.9% over the previous year. Despite the effects of an increase in the consumption tax, overall spending on advertising posted year-on-year gains for a third straight year.

Overview of Advertising Expenditures during 2014

1. Advertising expenditures in 2014 were boosted by last-minute demand before the consumption tax increase in April and by spending related to the Sochi 2014 Olympic Games. Expenditures fell in response to the tax increase, but still maintained modest growth, thanks in part to the 2014 FIFA World Cup Brazil™. Expenditures for the year totaled 6,152.2 billion yen, marking the first time in seven years that Japan’s advertising market had surpassed the 6,000 billion yen level.
2. Broken down by medium, expenditures fell slightly in Newspapers (down 1.8%) and were unchanged in Magazines, but rose in Radio (up 2.3%) and Television* (up 2.8%; including both Terrestrial Television and Satellite Media-Related spending). As a result, overall spending in the traditional media posted a gain of 1.6%. The Internet advertising market (up 12.1%) reached the 1,000 billion yen level for the first time ever, driven by growth in smartphone and video ads, and ads using new advertising technologies. Moreover, Promotional Media (up 0.8%) also contributed to overall growth, expanding for the third year in a row.
   * Starting in 2014, the Television category has been revised to include spending on both Terrestrial Television and Satellite Media-Related advertising.
3. By industry category (for the traditional media, but excluding Satellite Media-Related spending), year-on-year spending rose in 14 of the 21 industry categories, and fell in 7 categories.
   Major categories posting gains included Information/Communications (up 7.2% on increased placements related to satellite broadcasts, mobile phone rates and services, and smartphone-related services); Home Electric Appliances/AV Equipment (up 7.1% on growth in ads for electric vacuum cleaners, refrigerators and LCD televisions); Cosmetics/Toiletries (up 5.6% on placements related to shampoos and conditioners, and direct-marketed cosmetic lines for women); Automobiles/Related Products (up 3.4% on a rise in ads for wagons and imported SUVs); and Beverages/Cigarettes (up 2.0% on growth in advertising for domestic beer and happo-shu (low-malt beers)).
   Expenditures fell in 7 of the 21 industry categories, including Hobbies/Sporting Goods (down 7.9% on weak demand for game and audio software ads); Education/Medical Services/Religion (down 4.4% on cutbacks in ads for vocational and other educational institutions, and correspondence education); Foodstuffs (down 3.2% on lowered spending in the areas of health foods, instant noodles and snack foods); Apparel/Fashion, Accessories/Personal Items (down 3.0% on reduced placements for women’s clothing, and men’s and women’s shoes).

• Outline of Advertising Expenditures by Medium
Advertising expenditures in the traditional media (including Satellite Media-Related spending) in the 2014 calendar year totaled 2,939.3 billion yen, up 1.6% from the previous year. Spending in Television (including both Terrestrial Television and Satellite Media-Related advertising) grew 2.8%.
Spending on Internet advertising reached 1,051.9 billion yen (up 12.1%) and held firm throughout the year. Promotional Media also posted gains for a third straight year, up 0.8% to 2,161 billion yen.

• Quarterly Breakdown of Growth in Advertising Expenditures in the Traditional Media in 2014
A quarterly breakdown of advertising expenditures in the traditional media (including Satellite Media-Related spending) showed that growth rates were rather weak from April onward, but spending nevertheless remained positive throughout the year.

• Outline of Advertising Expenditures by Industry (21 Categories, Traditional Media Only, Excluding Satellite Media-Related Spending)
Advertising expenditures increased in 14 of the 21 industry categories surveyed during 2014, and declined in 7 categories. (Expenditures were higher in 8 of the 21 industry categories, but lower in 13 categories in 2013.)

Categories posting gains were Precision Instruments/Office Supplies (up 7.6%) on increased placements for wristwatches; Government/Organizations (up 7.3%) which saw higher spending by advertising-related organizations; Information/Communications (up 7.2%), helped by strong demand related to satellite broadcasts, mobile phone rates and services, and smartphone services; Home Electric Appliances/AV Equipment (up 7.1%) due to an increase in ads for electric vacuum cleaners, refrigerators and LCD televisions; Cosmetics/Toiletries (up 5.6%) on growth in ads for shampoos and conditioners, and direct-marketed cosmetic lines for women); Household Products (up 5.6%) on a rise in placements for measuring instruments for home use and specialized mattresses; Automobiles/Related Products (up 3.4%) on campaigns related to wagons and imported SUVs; Energy/Materials/Machinery (up 2.8%) on stronger demand for petroleum product and electricity ads; Real Estate/Housing Facilities (up 2.6%) on higher spending on ads for rental housing and home renovation; Beverages/Cigarettes (up 2.0%) helped by a rise in ads for domestic beer and happo-shu (low-malt beers); Food Services/Other Services (up 1.9%) on higher spending by law firms, and door-to-door delivery and moving services; Pharmaceuticals/Medical Supplies (up 1.7%) on ads for general health supplements and health drinks; Transportation/Leisure (up 0.9%) on spending related to theme parks and various events; and Distribution/Retailing (up 0.5%) on spending by direct marketing businesses.

Expenditures fell in the following 7 industry categories: Hobbies/Sporting Goods (down 7.9%) on weak demand for game and audio software ads; Classified Ads/Others (down 7.3%) on decreased demand for classified and ad-hoc ads; Education/Medical Services/Religion (down 4.4%) on cutbacks related to vocational and other educational institutions, and correspondence education); Foodstuffs (down 3.2%) on lowered spending in the areas of health foods, instant noodles and snack foods); Apparel/Fashion, Accessories/Personal Items (down 3.0%) on reduced placements for women’s clothing, and men’s and women’s shoes; Publications (down 2.4%) which saw fewer placements related to women’s and home magazines, and language study materials; and Finance/Insurance (down 1.9%) which slipped due to reduced placements related to direct-marketed insurance products and housing loans.

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 113 years of innovation, the Dentsu Group provides a comprehensive range of client-centric brand, integrated communications, media and digital services through its eight global network brands—Carat, Dentsu, Dentsu media, iProspect, Isobar, mcgarrybowen, Posterscope and Vizeum—as well as through its specialist/multi-market brands including Amnet, Amplifi, Data2Decisions, Mitchell Communications (PR), psLIVE and 360i.

The Dentsu Group has a strong presence in 124 countries across five continents, and employs around 40,000 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

The full text of 2014 Advertising Expenditures in Japan is currently being compiled and will be available on Dentsu’s website at the end of March 2015. For reference, please refer to the tables on the following pages.

Notes:

• The above figures for GDP are taken from the Cabinet Office’s ‘Annual Report on National Accounts’ and ‘Quarterly Estimates of GDP’.

• All the above figures are for the calendar year.

Note:

• Advertising expenditures in Television were redefined in 2014, retroactive to 2012, to include spending on both Terrestrial Television and Satellite Media-Related advertising.