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Dentsu: Advertising Expenditures in Japan Totaled 5,891.3 Billion Yen in 2012, Up 3.2% from 2011

Dentsu Inc. (TOKYO:4324)(ISIN:JP3551520004)(President & CEO: Tadashi Ishii; Head Office: Tokyo; Capital: 58,967.1 million yen) released today its annual report of advertising expenditures in Japan for the 2012 calendar year, including an estimated breakdown by medium and industry.

According to this report, Japan's advertising expenditures in 2012 totaled 5,891.3 billion yen, an increase of 3.2% over the previous year. Overall spending on advertising began to fall in 2008 (down 4.7%) as a result of the simultaneous global recession precipitated by the financial crisis in the United States. Yearly spending continued to decline in 2009 (down 11.5%), 2010 (down 1.3%), and 2011 (down 2.3%), but bounced back in 2012 (up 3.2%), benefiting from a resumption in spending that had been delayed or postponed after the Great East Japan Earthquake and Tsunami. Japan's advertising expenditures increased in 2012 for the first time in five years.

Overview of Advertising Expenditures during 2012

  1. Ad placements recovered strongly during the second half of 2011 on reconstruction-related demand after the Great East Japan Earthquake and Tsunami, and this trend carried over through the first half of 2012. After the London 2012 Olympic Games, however, a slowdown in the overall economy depressed advertising expenditures. This was caused by a number of factors, including a fall in consumer spending after the discontinuance of the tax reduction and subsidy program for eco-car purchases, the high value of the yen, economic stagnation in Europe, and a decline in exports. Nevertheless, for the year as a whole advertising expenditures totaled 5,891.3 billion yen, a gain of 3.2% from the previous year; this was the first annual increase in five years. A strong recovery in ad placements pushed spending in the traditional media to 2,779.6 billion yen, exceeding the level achieved in 2010 before the Great East Japan Earthquake and Tsunami.
  2. Broken down by medium, expenditures were higher in Television (up 3.0%), Newspapers (up 4.2%), and Magazines (up 0.4%), and held steady in Radio (down 0.1%). Overall spending in the traditional media was up 2.9%. Advertising in Promotional Media also grew (up 1.4%). Satellite Media-Related spending posted double-digit growth (up 13.7%) for a third straight year, boosted by placements related to the London 2012 Olympic Games. Internet advertising again posted solid gains (up 7.7%).
  3. By industry category (for the traditional media), expenditures grew in 16 of the 21 industry categories, including Automobiles/Related Products (up 26.9% on increased placements for K-cars [engine displacement up to 660cc] and 2-box vehicles), Information/Communications (up 10.5% on expenditures related to smartphone services, satellite broadcasting, and web content advertising), and Beverages/Cigarettes (up 7.0 % on expenditures related to beauty and energy drinks, lactic acid drinks, and carbonated beverages). In contrast, expenditures fell in 5 of the 21 industry categories, including Government/Organizations, where spending fell dramatically (down 69.4%) compared with 2011, which had seen a massive increase in public service placements by advertising organizations after the Great East Japan Earthquake and Tsunami; and Classified Ads/Others (down 19.8% on declines in placements by corporate groups as well as the movie and theater industry).

• Outline of Advertising Expenditures by Medium
Advertising expenditures in the traditional media grew 2.9% compared with the previous year, reaching a total of 2,779.6 billion yen. Spending rose not only in Television (up 3.0%), but also in Newspapers and Magazines. Promotional Media advertising also posted gains (up 1.4%). Satellite Media-Related advertising expenditures were up 13.7%, boosted by demand related to the London 2012 Olympic Games. Internet advertising showed solid gains, up 7.7% year on year.

• Quarterly Breakdown of Growth in Advertising Expenditures in the Traditional Media in 2012
A quarterly breakdown of advertising expenditures for the traditional media in the 2012 calendar year showed that spending rose steadily during the first half of the year, but fell below previous-year levels during the last six months as the overall economy weakened.

 

(Year-on-year, %)

   

2012
(Full
Year)

 

Jan.–
Jun.

  Jul.–
Dec.
  Jan.–
Mar.
  Apr.–
Jun.
  Jul.–
Sep.
  Oct.–
Dec.

Advertising
Expenditures in the
Traditional Media

  102.9   107.8   98.3   105.2   110.6   98.8   97.8
       

• Outline of Advertising Expenditures by Industry (21 Categories, Traditional Media Only)
Advertising expenditures increased in 16 of the 21 industry categories surveyed during 2012, and declined in 5 categories.

Two industry categories posted double-digit gains: Automobiles/Related Products (up 26.9%) on increased placements for K-cars and 2-box vehicles, and Information/Communications (up 10.5%) on expenditures related to smartphone services, satellite broadcasting, and web content advertising. Expenditures also rose in Precision Instruments/Office Supplies (up 9.7%), aided by growth in placements for digital SLR cameras and wristwatches; Distribution/Retailing (up 8.6%), which saw stronger demand for general merchandise store and direct marketing advertising; Transportation/Leisure (up 8.2%) on a recovery in outlays by travel agencies, hotels and inns; Apparel/Fashion, Accessories/Personal Items (up 7.6%), due to increased spending on ads for women's clothing and shoes; Beverages/Cigarettes (up 7.0%) on expenditures related to beauty and energy drinks, lactic acid drinks, and carbonated beverages; Foodstuffs (up 6.4%), led by health foods and beauty-related food products; Food Services/Other Services (up 4.4%), which saw increased placements for ladies' wigs and aesthetic salons; Real Estate/Housing Facilities (up 4.1%) on an upsurge in demand for household fixtures and condominium advertising; Cosmetics/Toiletries (up 4.0%), boosted by growth in ads for skin toners and emulsions; Pharmaceuticals/Medical Supplies (up 3.4%), helped by a rise in corporate advertising by pharmaceutical companies, and in placements related to eyeglasses; Education/Medical Services/Religion (up 3.2%), which recorded increased spending on ads for English conversation and language schools, preparatory and tutoring schools, and correspondence education; Publications (up 3.0%) on higher placements for hardcover books, corporate advertising by publishers, and ads for hobby-related magazines; Finance/Insurance (up 2.7%) on the strength of corporate advertising by insurance companies, and ads for credit card loans; and Household Products (up 1.2%), led by placements for furniture and kitchen accessories.

Advertising expenditures fell in five industry categories, most notably in Government/Organizations (down 69.4%). This category saw a massive increase in public service ad placements by advertising organizations in 2011 after the Great East Japan Earthquake and Tsunami, but spending dropped back significantly in 2012; Classified Ads/Others (down 19.8%) on declines in placements by corporate groups as well as the movie and theater industry; Energy/Materials/Machinery (down 3.7%) on cutbacks by electric power and gas companies; Hobbies/Sporting Goods (down 1.9%), hurt by weakness in the areas of video software, pachinko machines and "pachi-slo" slot machines, and game software; and Home Electric Appliances/AV Equipment (down 0.7%), which saw a fall in demand for placements related to LCD televisions and Blu-ray disc recorders.

The full text of 2012 Advertising Expenditures in Japan is currently being compiled and will be available on Dentsu's website at the end of March 2013. For reference, please refer to the tables on the following pages.

 

TABLE 1

Japan's GDP and Advertising Expenditures (2008−2012)

Year   Gross Domestic Product (B)   Advertising Expenditures (A)  

A / B
(%)

GDP
(¥ billion)

 

Compared
to Previous
Year (%)

Advertising
Expenditures
(¥ billion)

 

Compared
to Previous
Year (%)

2008 501,209.3 97.7 6,692.6 95.3 1.34
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 470,623.2 97.6 5,709.6 97.7 1.21
2012   475,729.0   101.1   5,891.3   103.2  

1.24

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 (2010−2012)

Media  

Advertising Expenditures
(¥ billion)

 

YoY Comparison
Ratio (%)

 

Component Ratio
(%)

2010   2011   2012 2011   2012 2010   2011   2012
Traditional Media
Newspapers 639.6 599.0 624.2 93.7 104.2 11.0 10.5 10.6
Magazines 273.3 254.2 255.1 93.0 100.4 4.7 4.4 4.3
Radio 129.9 124.7 124.6 96.0 99.9 2.2 2.2 2.1
Television 1,732.1   1,723.7   1,775.7 99.5   103.0 29.6   30.2   30.2

Subtotal

2,774.9   2,701.6   2,779.6 97.4   102.9 47.5   47.3   47.2
Satellite Media-Related 78.4   89.1   101.3 113.6   113.7 1.3   1.6   1.7
Internet
(Advertising placement) 607.7 618.9 662.9 101.8 107.1 10.4 10.8 11.2
(Advertising production) 167.0   187.3   205.1 112.2   109.5 2.9   3.3   3.5
Subtotal 774.7   806.2   868.0 104.1   107.7 13.3   14.1   14.7
Promotional Media
Outdoor 309.5 288.5 299.5 93.2 103.8 5.3 5.1 5.1
Transit 192.2 190.0 197.5 98.9 103.9 3.3 3.3 3.4
Flyers 527.9 506.1 516.5 95.9 102.1 9.0 8.9 8.8
Direct Mail 407.5 391.0 396.0 96.0 101.3 7.0 6.8 6.7
Free Newspapers /

Free Magazines

264.0

255.0

236.7

96.6

92.8

4.5

4.5

4.0

POP 184.0 183.2 184.2 99.6 100.5 3.2 3.2 3.1
Telephone Directories 66.2 58.3 51.4 88.1 88.2 1.1 1.0 0.9
Exhibitions /

Screen Displays

263.4

 

240.6

 

260.6

91.3

 

108.3

4.5

 

4.2

 

4.4

Subtotal 2,214.7   2,112.7   2,142.4 95.4   101.4 37.9   37.0   36.4
Total   5,842.7   5,709.6   5,891.3   97.7   103.2   100.0   100.0   100.0
 
 

TABLE 3

Advertising Expenditures by Industry in the Traditional Media

(2011−2012)

(Unit: ¥10 million)

 

Media

 

Newspapers

 

Magazines

  Radio   Television  

Total

Industry 2011   2012  

Comparison
Ratio
(%)

2011  

2012

 

Comparison
Ratio
(%)

2011   2012  

Comparison
Ratio
(%)

2011  

2012

 

Comparison
Ratio
(%)

2011   2012  

Comparison
Ratio
(%)

Energy / Materials /
Machinery

551 640 116.2

166

126

75.9

241

283 117.4 1,766 1,575 89.2 2,724 2,624 96.3
 

Foodstuffs

5,222 5,561 106.5 1,421 1,553 109.3 1,154 1,163 100.8 18,822 20,052 106.5 26,619 28,329 106.4
 

Beverages /
Cigarettes

2,019 2,344 116.1 1,212 1,386 114.4 577 532 92.2 15,813 16,725 105.8 19,621 20,987 107.0
 

Pharmaceuticals /
Medical Supplies

1,762

1,700

96.5

708 836 118.1 993 1,039 104.6 10,891 11,272 103.5 14,354 14,847 103.4
 

Cosmetics /
Toiletries

2,726 3,130 114.8 3,350 3,353 100.1 467 411 88.0 21,144 21,889 103.5 27,687 28,783 104.0
 

Apparel / Fashion,
Accessories /
Personal Items

1,641 1,675 102.1 6,200 6,483 104.6 68 66 97.1 2,909 3,421 117.6 10,818 11,645 107.6
 

Precision
Instruments /
Office Supplies

479 530 110.6 828 914 110.4 35 52 148.6 1,288 1,390 107.9 2,630 2,886 109.7
 

Home Electric
Appliances /
AV Equipment

747 687 92.0 758 646 85.2 176 163 92.6 3,768 3,916 103.9 5,449 5,412 99.3
 

Automobiles /
Related Products

1,403

1,444 102.9 831 866 104.2 777 852 109.7 9,970 13,311 133.5 12,981 16,473 126.9
 

Household Products

1,017 1,149 113.0 467 471 100.9 174 183 105.2 4,763 4,693 98.5 6,421 6,496 101.2
 

Hobbies /
Sporting Goods

1,295 1,279 98.8 1,455 1,486 102.1 306 314 102.6 8,005 7,774 97.1 11,061 10,853 98.1
 

Real Estate /
Housing Facilities

2,853 2,917 102.2 826 749 90.7 446 502 112.6 6,320 6,701 106.0 10,445 10,869 104.1
 

Publications

5,696 5,702 100.1 306 297 97.1 670 606 90.4 2,277 2,611 114.7 8,949 9,216 103.0
 

Information /
Communications

3,831 3,903 101.9 1,584 1,346 85.0 782 847 108.3 16,003 18,429 115.2 22,200 24,525 110.5
 

Distribution /
Retailing

6,943 7,563 108.9 1,044 996 95.4 816 876 107.4 9,891 10,862 109.8 18,694 20,297 108.6
 

Finance / Insurance

2,310 2,105 91.1 754 600 79.6 946 937 99.0 10,111 10,857 107.4 14,121 14,499 102.7
 

Transportation /
Leisure

9,678 10,219

105.6

1,524 1,491 97.8 953 1,023 107.3 7,372 8,390 113.8 19,527 21,123 108.2
 

Food Services /
Other Services

1,988

1,942 97.7 679 625 92.0 1,178 1,261 107.0 8,511 9,068 106.5 12,356 12,896 104.4
 

Government /
Organizations

1,265 1,450 114.6 209 212 101.4 1,204 882 73.3 8,195 783 9.6 10,873 3,327 30.6
 

Education / Medical
Services / Religion

2,785 2,891 103.8 1,048 1,022

97.5

479 445 92.9 3,267 3,465 106.1 7,579 7,823 103.2
 

Classified Ads /
Others

 

3,689

 

 

3,589

 

 

97.3

 

50

 

 

52

 

 

104.0

 

28

 

 

23

 

 

82.1

 

1,284

 

 

386

 

 

30.1

 

5,051

 

 

4,050

 

 

80.2

Total   59,900   62,420   104.2   25,420   25,510   100.4   12,470   12,460   99.9   172,370   177,570   103.0   270,160   277,960   102.9
 

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

 

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 Dentsu Inc.
Founded in 1901, Dentsu Inc. has held the position of the world's largest single-brand agency for 40 years. Through its unique "Integrated Communication Design" approach, Dentsu offers multinational clients the most comprehensive range of advertising and marketing services in the industry. While continuing to pursue innovation in the digital arena, Dentsu is active in the production and marketing of sports, movies, anime and other entertainment content on a global scale. The Dentsu Group has more than 6,000 clients and around 22,000 employees worldwide.
Dentsu News: http://www.dentsu.com/news/index.html
Dentsu Inc.: http://www.dentsu.com/index.html

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