Nomura Global Media Investor Trip to Asia. Beijing, March 15, 2011

Transcription

1 Nomura Global Media Investor Trip to Asia Beijing, March 15, 2011

2 Disclaimer This presentation contains forward-looking statements. The use of the words "aim(s)," "expect(s)," "feel(s)," "will," "may," "believe(s)," "anticipate(s)" and similar expressions in this presentation are intended to identify those statements as forward looking. Forwardlooking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation release. Other than in connection with applicable securities laws, Publicis Groupe undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. Publicis Groupe urges you to review and consider the various disclosures it made concerning the factors that may affect its business carefully, including the disclosures made to the French financial markets authority (AMF). 2

3 2010 Publicis Groupe 3 rd World Communications Group Publicis Groupe: best assets combination to meet local and global client needs Present in 104 countries on the 5 continents, Publicis Groupe employs close to 49, 000 people Digital and interactive communications world leader (28,0% of revenue in 2010) Number 1 in creativity since 2004 (Gunn Report) 3

4 CHINA : AN OPPORTUNITY FOR PUBLICIS GROUPE 4

5 China Economy: Today s environment 2011 will be the first year of the 12th 5-year plan 2011 will be a year of reflation The 5-year plan mandates a 8% GDP for 2011, but actual GDP likely to run to 9.5% Tackling inflation will an overarching policy priority Primary risk to this outlook is change of government in 2012 Strong push for Social Housing Program in 2011 Wealth redistribution and economic rebalancing are keys to stability 5

6 China Economy: Chinese economy through 2020 will be a golden age for consumption Decelerating growth, but economic rebalancing Labor supply abundant There are eight drivers: 1. Economic growth 2. Development of service industries 3. Wage increases 4. Public expenditure 5. Income redistribution 6. Aging population 7. Level of economic development 8. Urbanization 6

7 China Economy: Chinese economy through 2020 will be a golden age for consumption 7

8 China is now 2nd largest market, accounting for 1/5 of the global adspend measured by Nielsen, up from #7 in 2004 Adspend H1, 2010 Global Ranking Market US$ Million 1 USA 53,505 2 China 47,693 3 Japan 21,748 4 Germany 16,151 5 France 15,821 Source : Nielsen Global Adview - Pulse Report

9 China Advertising Landscape 2010 China overall traditional media advertising reached 13% yoy growth 2011 is forecast to grow at 15% Digital media is surely to outpace traditional media by a huge margin 9

10 Strong growth of lower-tier cities Adspend Share Of Voice Top 10 Provinces MARKET * National 9.90% 10.10% 11.20% 12.40% 11.70% 13.41% Guangdong 12.70% 12.90% 12.70% 12.00% 11.40% 11.48% Shanghai 7.40% 7.10% 7.40% 6.80% 6.30% 6.58% Jiangsu 6.20% 6.80% 6.20% 5.90% 5.90% 6.11% Zhejiang 5.70% 5.80% 5.50% 4.70% 4.80% 4.80% Beijing 5.50% 5.20% 4.40% 4.50% 3.90% 4.54% Hunan 3.50% 4.00% 4.20% 4.70% 5.20% 4.19% Shandong 3.60% 4.10% 3.70% 3.80% 3.70% 3.94% Hubei 4.00% 3.80% 3.60% 3.90% 3.50% 3.79% Liaoning 3.70% 3.80% 4.00% 3.10% 3.80% 3.58% Others 37.70% 36.30% 37.20% 38.20% 39.70% 37.56% Total Spending 315, , , , , ,304 Data source: Nielsen AIS database including TV/newspapers/magazine. 10

11 Double digit growth YOY, mainly driven by Internet and Radio All Media TV Currency: RMB billion % +15% +24% +14% +5% % +16% +18% +14% +11% Y2005 Y2006 Y2007 Y2008 Y2009 Y Y2005 Y2006 Y2007 Y2008 Y2009 Y All media includes TV, newspapers, magazine, radio, internet and OOH. Outdoor +24% +14% % Newspapers +7% +12% +18% +9% Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 * Radio +15% +26% 20 Y2008 Y2009 Y2010 Y2008 Y2009 Y2010 * Data source: TV/NP/MG/Radio/Internet from Nielsen AIS database; OOH from CODC. *2010 spending was forecasted based on the FY 2009 and Q1-Q Internet +31% +19% Y2005 Y2006 Y2007 Y2008 Y2009 Y % Magazines +18% +20% +16% +17% Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 SARFT regulation slowed down pace of growth of TV advertising but still contributed over 75% of the revenue on the measured media 11

12 Fragmented TV scene 15 Channels (1/3 of all TV revenue*) National coverage, higher rate card Around 200 Channels Provincial coverage CCTV Satellite TV Provincial TV Local TV 30+ Provincial Satellite Channels National Coverage Local Channels Focus on local market * Source: China Statistical Yearbook, not based on the current Nielsen coverage 12

13 Regulations from SARFT causing the inflation of TV advertising Advertising is growing quickly China Central TV (CCTV) dominates TV Ordinance to regulate advertising airtime on TV Advertising airtime cannot exceed 20% of each broadcasting hour 18 minutes is the maximum commercial airtime from 19:00 to 21:00 Only 1 minute of commercials is allowed in each episode of Drama program from 19:00 to 20:00 2x1.5 minutes commercial breaks in each episode of Drama program 12 commercial of alcoholic drinks is allowed each day with 2 from 19:00 to 21:00 Marketers need to be more innovative in planning their advertising dollars 13

14 Top 10 TV channels are all CCTV and Satellite in 2010 Top 10 TV Channels Type Adspend (RMB Million) 1 CCTV 1 National 13, % 2 HUNAN SATELLITE TV Satellite 9, % 3 JIANGSU SATELLITE TV Satellite 8, % 4 ANHUI SATELLITE TV Satellite 7, % 5 ZHEJIANG SATELLITE TV National 7, % 6 CCTV 8 Satellite 7, % 7 DRAGON TV Satellite 6, % 8 CCTV5-SPORTS National 6, % 9 CCTV 3 National 5, % 10 CHINA CENTRAL TV - NEWS National 5, % SOS Total 77, % Data source: Nielsen AIS database 14

15 China Media Landscape Digital China internet market is growing Mini blog (weibo) is on huge uptake E-commerce is becoming a way of life for young shoppers Social media, mobile and mini blogs will be top 3 highest growth digital media forces Content is king in digital; internet video companies will pay for content 15

16 Digital Market Landscape The largest users of Internet in the world E-commerce is years behind the west, But The big embrace to Social and Search 457 million internet users (34.3% penetration rate) 3G 13 million 161 million internet users are buyers (48.6% growth vs last year) Revenues are expected to exceed RMB 1.8 trillion by 2015 Over 130 million internet users have joined Social Media 370 million people have used search engines Mobile: 800 million users, 37.8% of mobile subscribers effectively use mobile Internet (303 million mobile netizens) Source: 27 th Statistical Survey Report on the Internet Development in China (Jan. 2011), CNNIC 16

17 China Chinese population Digital Trend In 2010, Chinese netizen population has reached 457mio, with a penetration over 34% of total population. While the internet usage and penetration are very high in key cities, there are still large potential growth in tier-2 & 3 cities. 17

18 China Digital Advertising Trend Total online ad spending is estimated at around USD 3.7 billion. While we are confident on the growth of overall online ad spending, we believe display media will be relative less important in the future mix, while social media and mobile will take a leading role in the coming years China Online Ad Spending Display 1890 Paid Search 1701 Social Media 162 Millions / USD Mobile

19 E-Commerce Market in China Growing at an average of 85% in the coming 3 years Source: 1. China e-business Research Center and CNZZ Data Center 2. Analysys International Jan CNNIC Jul

20 Mobile Usage in China 1. In 2010, China has over 300 million mobile internet users, a 60 mio increase vs (CNNIC) 2. Instant messaging (QQ), news, and search are still the top 3 mobile data usage in China. 3. 3G has gradually gaining momentum, with 13 mio 3G subscribers, China Mobile (TD-SCDMA): 5.51 million China Telecom (CDMA2000 1x EV-DO): 4.81 million China Unicom (WCDMA): 2.74 million 4. The successful launch of iphone by Apple in Q and Android later further push the application of mobile. 5. There are no accurate figure on Mobile advertising size, but it is estimated around USD200mio to USD300mio. Up to now, China mobile advertising industry is not transparent, as all the China mobile providers are government owned. 20

21 Snapshot 1 multi-screen convergence TV HH 341 Million+ subscriber (Penetration = 83%) China Digital Media Market Is Booming Mobile Internet 277 Million Mobile Internet Users (21% of total mobile users) Cable TV HH 174 Million+ Subscribers 51% of total TV HHs Digital TV HH 77 Million+ Subscribers 23% of total TV HHs Internet 420 Million Internet Users (Penetration = 32%) 364 Million Broadband Users 86% of total Internet Users Mobile 755 Million Mobile Phone Subscriptions (Penetration = 58%) Mobile Video 56 Million (8% of total mobile users ) Mobile 3G 28 Million (4% of total mobile users) 21

22 Tracking the Digital Media Consumer TV still dominates, but it has changed Mobile phones are becoming all-purpose devices Internet use is also changing - Online video - Social media 22

23 Next Generation Broadcasting (NGB) Upgrade broadcasting network for 200MM Chinese HHs in 10 Years One unified national cable TV network Convert analog to digital signal Upgrade one-way broadcast network to bi-directional on demand cable broadcast From Watch TV to Use TV television sets become an easy-touse information and entertainment terminal 23

24 China will be the world s largest consumer market Already 2 nd largest luxury goods market in the world (25%). By 2015, it s expected to be the largest (32%) overtaking Japan. 60% of luxury consumers are in their 30 s, the youngest in the world. In 2010, car sales in China surpassed that of the USA, with 15 million units. No.1 in number of mobile phone users and have the largest telecom company of the world. No.1 in number of internet users. Have the world s top 3 banks: ICBC, CCB and BOC s total value is more than US$528 billion Market for food, apparel, household and personal products to grow from 1.9 trillion RMB in 2006 to 7.7 trillion in the year of

25 But what s really changing is the people In the past three decades, every 10 years is a different generation with enormous differences in values and beliefs 25

26 70s 80s 90s The first generation that witnessed the opening of China and the economic reform that unleashed the desire for change The first one-child policy generation that was born into a better-off China and loaded with expectations The first digital generation that was born into an open world and a strong China at the world center stage 26

27 70s is the self-made generation who strives hard, values success and shoulders family responsibility 27

28 80s are constantly struggling between what is expected of them and what they really want to be. 28

29 90s is simply the self-centered child who wants to stay that way, rather than being dragged down by the adult world. 29

30 Beliefs What they are for What they are against 70s Hard work is the path to success. Lack of will and ambition to achieve more. 80s Knowledge/learning is power. Anything that restricts them from having it all and living beyond their means. 90s Originality is the currency. Everything in the adult world that conspires to making them unhappy. 30

31 Career Work Motivation Boss 70s Workaholic. Job is everything. Boss rules. 80s No OT. Show me the money. I'm equal to my boss. 90s Don't want to work at all. Money is not important, I need to have fun doing it. Otherwise forget it. I'm the boss. 31

32 Interest What they talk about everyday What they do over the weekend 70s Work, stock market, property prices. Taking clients out for dinner and family gatherings. 80s Premium League, WOW. Outing with friends or playing sports. 90s QQ grade (grading based on level of activeness on QQ), my Avatar (virtual character). Every day is weekend... doing whatever I want. 32

33 Money Money Luxury 70s I have savings. Possessions I can show off. 80s I have my credit card. Experience I can brag about. 90s I have my Dad. I-phone 4 that I don t have to pay for. 33

34 Implications Geographical segmentation between urban and rural is not enough. Know who you are talking to people from 20 to 40 years is not a valid description of the target Invest to understand who they are 50% of the on-line language that a youngster uses cannot be found in the dictionary Recognize the enormous differences in beliefs, values and motivations even though the age difference is just a couple of years Expect more changes to come quicker than you could ever imagine 34

35 35

36 36

37 37

38 38

39 Our Baseline Scenario What if the next 20 years are like the last 20 years? 39

40 GDP to

41 GDP per capita to

42 Comparison of Chinese Provinces to Nations

43 43

44 44

45 45

46 46

47 47

48 TOMORROW : PUBLICIS GROUPE IN CHINA 48

49 Sustainable Performance China: Build a strong organizational foundation Expand relationships with global clients Wider geographical coverage expanding to Tier-2, 3 & 4 cities Integrated communications Grow organically faster than market with the Chinese corporations Acquisitions in digital, public relations, healthcare OBJECTIVE: DOUBLE SIZE OVER THE NEXT 3 YEARS 49

50 WINNING STRATEGY and SUSTAINABLE PERFORMANCE 50

51 THANK YOU! 51