Dentsu Group Growth Strategies for the Interactive Business
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1 0 DENTSU INC. Dentsu Group Growth Strategies for the Interactive Business September 7, 2006 Ryuichi Mori Managing Director, Dentsu Inc.
2 1 DENTSU INC. Contents 1. Rapidly Expanding Internet Advertising Expenditures 2. Strong Ongoing Growth Forecast for Internet Advertising 3. Internet Moves into Second Media Position, behind Television 4. Internet Expands Ad Business Domain 5. New Revenue Opportunities from Partnerships with Excellent Companies 6. The Dentsu Group s Growing Interactive Business 7. The Dentsu Group s Interactive Business to Generate High Added Value 8. Internet Expansion Driving Changes in Ad Business Structure
3 2 DENTSU INC. Rapidly Expanding Internet Advertising Expenditures Advertising Expenditures in Japan by Medium 0% 100% Percentage spent on Internet advertising % % % % % % % ,037.7 billion 2,041.1 billion 1,981.9 billion billion billion billion billion Newspapers Magazines Radio Television Sales promotion Satellite media Internet 4.7% Source: 2005 Advertising Expenditures in Japan
4 3 DENTSU INC. Strong Ongoing Growth Forecast for Internet Advertising Forecast Changes in the Internet and Mobile Advertising Markets (Billions of yen) % +18% % Mobile advertising advertising Contextual advertising Search advertising Web advertising Source: Dentsu Communication Institute (July 2005)
5 4 DENTSU INC. Internet Moves into Second Media Position, behind Television Amount of Media Contact at Home ( Minutes/Day ) From AIDMA to AISAS 0 minutes 300 minutes AIDMA Attention Interest Desire Memory Action AISAS R Attention Interest Search Action Share Newspapers Magazines Radio Television Internet (includes PC and mobile phone) Source: Video Research MCR (Tokyo region) total for all individuals
6 5 DENTSU INC. Internet Expands Ad Business Domain Advertising Business Expansion and Issues Facing the Dentsu Group Shift toward long-tail advertising business Client source expansion Advertising media expansion Ad expenditures Reach Major national clients Direct response and other midsized clients Retail stores and other micro-clients Client expansion Traditional mass media Leading portals, etc. SEM advertising, affiliate advertising, blogs, SNS and other CGMs Advertising media expansion Solution services Internet Media services Propose to leading clients Dentsu s own cross-media options that use the Internet Propose solutions to midsized clients Take advantage of new advertising opportunities afforded by the Internet Create operating structure to make micro-media more efficient and effective
7 6 DENTSU INC. New Revenue Opportunities from Partnerships with Excellent Companies Dentsu Group Structure in Interactive Business (Subsidiaries, Affiliates, filiates, Investees) Internet media Campaign production Marketing services Solutions Drill
8 7 DENTSU INC. The Dentsu Group s s Growing Interactive Business Dentsu Group Net Sales from Interactive Business (Billions of yen) Solutions (production, system configuration, marketing-related) Internet media (Internet and mobile related media) FY 2003 FY 2004 FY 2005 Note: These figures are simple totals of net sales from external customers of Group companies.
9 8 DENTSU INC. The Dentsu Group s s Interactive Business to Generate High Added Value Dentsu Group s s Interactive Business Service Structure Dentsu Group Clients Ad services Dentsu, Group companies that provide advertising services Media services cci, D2 communications, 24-7 Search etc. Solution services Campaign production DENTSU e-link DENTSU TEC DIGITAL PALETTE Marketing Dentsu e-marketing One Wunderman Dentsu etc. Provide high-valueadded services throughout the Group Ensure low-cost operations and move production in-house
10 Internet Expansion Driving Changes in Ad Business Structure Flow of Activity in the Internet Media Business Google Dentsu, Group companies that provide advertising services ROI optimization through SEM spanning Google and Overture Adwords, AdSense Overture SEM ads Yahoo! SEM ads Banner ads Video ads Clients Integrated planning Interactive media planning Media reps, ad network Other portals Banner ads Video ads Mid-sized, small media Banner ads, etc. CGM Text ads, etc Mobile marketing planning Media reps Development of CGM advertising and marketing Buzz marketing Public career sites Banner ads e-promotion Mass media Real promotion OOH 9 DENTSU INC.
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