advertising in china

8/13/2019 Advertising in China

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EXECUTIVE SUMMARY

China - Advertising 0099 - 0420 - 2010

Datamonitor. This profile is a licensed product and is not to be photocopied Page 2

EXECUTIVE SUMMARY

Market value

The Chinese advertising industry grew by 11.9% in 2010 to reach a value of $7,887.7 million.

Market value forecast

In 2015, the Chinese advertising industry is forecast to have a value of $14,704.2 million, an increase of86.4% since 2010.

Market segmentation I

Food, Beverage & Personal/Healthcare is the largest segment of the advertising industry in China,accounting for 37.6% of the industry's total value.

Market segmentation II

China accounts for 34% of the Asia-Pacific advertising industry value.Market rivalry

The advertising market in China is dominated by Dentsu Inc, Omnicom and WPP Group and their largesize intensifies competition.


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CONTENTS



TABLE OF CONTENTS

EXECUTIVE SUMMARY 2

MARKET OVERVIEW 6

Market definition 6

Research highlights 7

Market analysis 8

MARKET VALUE 9

MARKET SEGMENTATION I 10

MARKET SEGMENTATION II 11

COMPETITIVE LANDSCAPE 12

LEADING COMPANIES 14

Dentsu Inc. 14

WPP Group plc 18

Omnicom Group Inc. 24

MARKET FORECASTS 28

Market value forecast 28

MACROECONOMIC INDICATORS 29

APPENDIX 31 Methodology 31

Industry associations 32

Related Datamonitor research 32

Disclaimer 33

ABOUT DATAMONITOR 34

Premium Reports 34

Summary Reports 34

Datamonitor consulting 34


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CONTENTS



LIST OF TABLES

Table 1: China advertising industry value: $ million, 200610 9

Table 2: China advertising industry segmentation I:% share, by value, 2010 10

Table 3: China advertising industry segmentation II: % share, by value, 2010 11

Table 4: Dentsu Inc.: key facts 14

Table 5: Dentsu Inc.: key financials ($) 15

Table 6: Dentsu Inc.: key financials () 16

Table 7: Dentsu Inc.: key financial ratios 16

Table 8: WPP Group plc: key facts 18

Table 9: WPP Group plc: key financials ($) 21

Table 10:

WPP Group plc: key financials () 21

Table 11: WPP Group plc: key financial ratios 22

Table 12: Omnicom Group Inc.: key facts 24

Table 13: Omnicom Group Inc.: key financials ($) 26

Table 14: Omnicom Group Inc.: key financial ratios 26

Table 15: China advertising industry value forecast: $ million, 201015 28

Table 16: China size of population (million), 200610 29

Table 17: China gdp (constant 2000 prices, $ billion), 200610 29

Table 18: China gdp (current prices, $ billion), 200610 29 Table 19: China inflation, 200610 30

Table 20: China consumer price index (absolute), 200610 30

Table 21: China exchange rate, 200610 30


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CONTENTS



LIST OF FIGURES

Figure 1: China advertising industry value: $ million, 200610 9

Figure 2: China advertising industry segmentation I:% share, by value, 2010 10

Figure 3: China advertising industry segmentation II: % share, by value, 2010 11

Figure 4: Dentsu Inc.: revenues & profitability 17

Figure 5: Dentsu Inc.: assets & liabilities 17

Figure 6: WPP Group plc: revenues & profitability 22

Figure 7: WPP Group plc: assets & liabilities 23

Figure 8: Omnicom Group Inc.: revenues & profitability 27

Figure 9: Omnicom Group Inc.: assets & liabilities 27

Figure 10:

China advertising industry value forecast: $ million, 201015 28


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MARKET OVERVIEW



MARKET OVERVIEW

Market def in i t ion

The advertising industry consists of agencies providing advertising including display advertising services.The industry value reflects income of the agencies from such services. Any currency conversions used inthe creation of this report have been calculated using constant 2010 annual average exchange rates.

For the purposes of this report, Asia-Pacific comprises Australia, China, India, Indonesia, Japan, NewZealand, Singapore, South Korea, Taiwan, and Thailand.


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MARKET OVERVIEW



Research h igh l ights

The Chinese advertising industry had total revenue of $7,887.7 million in 2010, representing a compoundannual growth rate (CAGR) of 9.8% between 2006 and 2010.

The Food, Beverage & Personal/Healthcare segment was the industry's most lucrative in 2010, with totalrevenue of $2,962.6 million, equivalent to 37.6% of the industry's overall value.

The performance of the industry is forecast to accelerate, with an anticipated CAGR of 13.3% for the five-year period 2010 - 2015, which is expected to drive the industry to a value of $14,704.2 million by the endof 2015.


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MARKET VALUE



MARKET VALUE

The Chinese advertising industry grew by 11.9% in 2010 to reach a value of $7,887.7 million.

The compound annual growth rate of the industry in the period 200610 was 9.8%.

Table 1: China advertising industry value: $ million, 200610

Year $ million CNY million million % Growth2006 5,431.5 36,818.5 4,090.72007 5,969.2 40,463.5 4,495.7 9.9%2008 6,512.4 44,145.7 4,904.8 9.1%2009 7,046.4 47,765.7 5,307.0 8.2%2010 7,887.7 53,468.7 5,940.6 11.9%

CAGR: 200610 9.8%

Source: Datamonitor D A T A M O N I T O R

Figure 1: China advertising industry value: $ million, 200610



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MARKET SEGMENTATION I



MARKET SEGMENTATION I

Food, Beverage & Personal/Healthcare is the largest segment of the advertising industry in China,accounting for 37.6% of the industry's total value.

The retailer segment accounts for a further 10.7% of the industry.

Table 2: China advertising industry segmentation I:% share, by value, 2010

Category % ShareFood, Beverage & Personal/Healthcare 37.6%Retailer 10.7%Financial Services 8.6%

Automotive 5.2%Media & Telecommunication 3.9%

Others 34.0%

Total 100%


Figure 2: China advertising industry segmentation I:% share, by value, 2010



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MARKET SEGMENTATION II



MARKET SEGMENTATION II

China accounts for 34% of the Asia-Pacific advertising industry value.

Japan accounts for a further 33.4% of the Asia-Pacific industry.

Table 3: China advertising industry segmentation II: % share, by value, 2010

Category % ShareChina 34.0%Japan 33.4%India 12.6%South Korea 1.6%Rest of Asia-Pacific 18.4%

Total 100%


Figure 3: China advertising industry segmentation II: % share, by value, 2010



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COMPETITIVE LANDSCAPE




The advertising market will be analyzed taking advertising agencies as players. The key buyers will betaken as corporate clients, and information technology and commercial real estate providers as the keysuppliers.

The advertising market in China is dominated by Dentsu Inc, Omnicom and WPP Group and their largesize intensifies competition.

As target audiences are increasingly fragmented due to technological advancements and differingconsumer habits, players in the advertising market must constantly innovate, market, adjust and improvetheir practices to ensure clients needs are met thoroughly. Government regulation of advertising contentis important to recognize and take into consideration. This particularly affects age restricted products suchas cigarettes and alcohol.

Buyers range from small scale businesses to large multinational corporations. Today, advertising contentis delivered in many formats through diverse channels ranging from sponsorship of sports events andteams to internet advertising campaigns. This can often mean that reaching mass audiences iscomplicated and often costly. For example, in the past, an advert during a prime time TV show wouldhave certainly reached a large audience. Nowadays, with a plethora of entertainment media availablesuch as TV, DVDs, the internet and games consoles, the audience is less concentrated and soadvertising through all media formats must be considered. As a result, businesses are seeking advicefrom external advertising/marketing agencies in order to reduce expenditures. The ability of agencies tomeet buyers individual needs allows strong differentiation between market players and agencies oftenprovide bespoke campaigns. Accordingly, players can then attract new clients based on their nicheexpertise, reputation for innovative campaigns and so on. Overall, buyer power in the advertising market

is considered to be moderate.

Suppliers to advertising agencies include IT and office equipment manufacturers, internet serviceproviders, and owners of office space. Staff costs are also significant: success in the advertising businessis strongly influenced by the creativity and expertise of employees, and remuneration must reflect this.Different countries will pay their employees at different rates, which will affect overall profit margins.However, the degree of consolidation in the advertising market in most countries may restrict the ability ofstaff to change employer. Furthermore, leading advertising agencies tend to be located in major citiessuch as London, Shanghai and New York, where demand for prime office space - and therefore rent - ishigh. Agencies must negotiate the purchase of advertising space from media companies such asmagazine publishers and TV companies; however, these are not considered as suppliers, as agencies

can pass on the expense to their clients. In fact, the traditional business model for agencies was tocharge a flat-rate commission on their clients' media space purchases, although different models arebecoming more common today. Overall, supplier power is considered to be moderate.

An advertising agency is generally physical asset-light, but highly reliant on knowledge and creativity. Thismeans that in principle it should be possible to enter the market with relatively low capital outlay.


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However, the need to build up knowledge of consumers demand patterns and the potentialities ofdifferent media, incurs costs in terms of time and money which raises entry barriers. Leading players havetypically brought together many advertising and marketing functions under their well-known brands, andare therefore formidable competitors. Within the individual country markets, government regulation ofcertain kinds of advertising (e.g. tobacco or alcohol) may restrict the available revenues, and make themless attractive. This is the case with tobacco advertising in China which is now not allowed. Due to thelatest technological developments, especially with respect to the high level of internet activity,videogames can be constantly updated by downloading new brand names or products on a periodicbasis. This presents a new segment of the advertising market for operators to enter, and interest fromcurrent players wanting to utilize this segment may result in increased rivalry. Overall, there is a moderatelikelihood of new entrants.

As an alternative to using services offered by market players, buyers can integrate backwards with theaim of reducing the costs implied with using external agencies: this approach would not require massive

capital expenditure, which could pose a threat to players. However, being able to establish a suitablyqualified team can prove problematic for companies. Most companies have now established an internetpresence and can self-promote through this medium. Web designers are frequently distinct fromadvertising and marketing players, but can often give advice on raising their clients' web profile, forexample, through appropriate site design. Overall, the threat of substitutes is considered to be weak.

The advertising market in China is dominated by Dentsu Inc, Omnicom and WPP Group and their largesize intensifies competition. China, however, is dominated by other leading advertising agencies such asBeijing Dentsu Advertising, Dahe Media and Saatchi & Saatchi China (of Publicis). However, thedominance of these players means that there are fewer companies in the market overall, which tends toreduce rivalry somewhat. The leading players, though diversified in their operations, are similar and so

often offer the same basic service, although they can differentiate themselves to some extent throughfactors such as their prestigious client list, campaign record, and also by the range of services offered,which may weaken rivalry by making clients unwilling to switch agencies. Chinas burgeoning advertisingindustry provides plenty of scope for many players and so rivalry in China is less of an issue than in mostother markets. Also strong market growth during 2010 would tend to further decrease rivalry. Overall, thedegree of rivalry is considered to be moderate.


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LEADING COMPANIES



LEADING COMPANIES

Dentsu Inc.

Table 4: Dentsu Inc.: key facts

Head office: 1-8-1, Higashi-Shimbashi, Minato-ku, Tokyo 105-7001, JPNTelephone: 81 3 6216 5111Website: www.dentsu.comFinancial year-end: MarchTicker: 4324Stock exchange: Tokyo

Source: company website D A T A M O N I T O R

Dentsu ("the company") is a Japan-based advertising company. The company primarily providestraditional mass media advertising and related creative services, including the planning and production ofadvertising. It also offers promotional services; billboard, transit and other out-of-home (OOH) mediaadvertising; advertising and related services encompassing interactive media, such as the internet andmobile phones, as well as satellite broadcasting; and other services, such as sports and entertainmentmarketing, event planning and execution, public relations, public affairs, direct marketing, market researchand e-solution services. The company operates in Asia Pacific, Middle East, Europe, North America andSouth America.

The company organized its services across three business divisions: advertising, information servicesand other business.

The advertising division provides clients with advertising strategy planning and related creative services,and with assistance in the placement of advertisements in various media, such as television, newspapers,magazines, radio, trains and buses, billboards and the internet. The division also provides clients withsales promotion, event marketing, interactive communications, brand management, sports andentertainment marketing, public relations, direct marketing, market research and e-solution services.

The information division offers clients with information services, such as information technology

management. This segment focuses on Information Services International-Dentsu, which is involvedprimarily in the provision of IT solutions, such as information system configurations.

The other business division provides clients with non-advertising services such as related consultingservices.


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LEADING COMPANIES



Dentsu's services comprises of communications services, marketing services, e-solution services, andcontent business.

The company's communications services include strategic planning, creative development and mediaservices for advertising in television, newspapers, magazines and radio. Marketing services of thecompany include advertising related services such as sales promotion, market research, PR and eventmarketing. The company's e-solution services include system integration services, e-business consultingand customer relationship management (CRM) and e-promotions using the internet and mobile. Thecontent business services of the company include sales of sponsorship, broadcasting and other rights;and the production and marketing of media and content as sporting events, films, TV programs, animatedcontent, music and other forms of entertainment.

The company's overseas operations include communications services to overseas clients through itsnetwork and through its alliance with Publicis Groupe.

Key Metrics

The company recorded revenues of $3,376 million in the fiscal year ending March 2010, a decrease of5.7% compared to fiscal 2009. Its net income was $354 million in fiscal 2010, compared to a net loss of$233 million in the preceding year.

Table 5: Dentsu Inc.: key financials ($)

$ million 2006 2007 2008 2009 2010Revenues 3,710.6 3,966.7 3,930.6 3,580.5 3,375.8Net income (loss) 353.0 349.4 412.7 (232.9) 354.4Total assets 14,547.9 14,437.7 14,254.0 12,439.5 12,732.0Total liabilities 8,613.8 8,121.4 7,794.9 7,286.6 7,218.4Employees 15,337 16,224 17,031 17,921 18,255 Source: company filings D A T A M O N I T O R


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LEADING COMPANIES



Table 6: Dentsu Inc.: key financials ()

million 2006 2007 2008 2009 2010

Revenues 325,896.0 348,391.0 345,222.0 314,474.0 296,490.0Net income (loss) 31,002.0 30,688.0 36,246.0 (20,453.0) 31,130.0Total assets 1,277,722.0 1,268,049.0 1,251,912.0 1,092,543.0 1,118,236.0Total liabilities 756,542.0 713,289.0 684,619.0 639,975.0 633,986.0 Source: company filings D A T A M O N I T O R

Table 7: Dentsu Inc.: key financial ratios

Ratio 2006 2007 2008 2009 2010

Profit margin 9.5% 8.8% 10.5% (6.5%) 10.5%Revenue growth 2.5% 6.9% (0.9%) (8.9%) (5.7%)

Asset growth 3.0% (0.8%) (1.3%) (12.7%) 2.4%Liabilities growth 1.1% (5.7%) (4.0%) (6.5%) (0.9%)Debt/asset ratio 59.2% 56.3% 54.7% 58.6% 56.7%Return on assets 2.5% 2.4% 2.9% (1.7%) 2.8%Revenue per employee $241,937 $244,496 $230,792 $199,795 $184,923Profit per employee $23,015 $21,536 $24,232 ($12,994) $19,416 Source: company filings D A T A M O N I T O R


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LEADING COMPANIES



Figure 4: Dentsu Inc.: revenues & profitability

Source: company filings D A T A M O N I T O R

Figure 5: Dentsu Inc.: assets & liabilities



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LEADING COMPANIES



WPP Group plc

Table 8: WPP Group plc: key facts

Head office: 6 Ely Place, Dublin 2, IRLTelephone: 353 1669 0333Fax: 353 1669 0334Local office: 31/F The Center, 989 Changle Road, Shanghai, CHNTelephone: 86 21 2405 0685Fax: 86 21 2405 0685Website: www.wpp.comFinancial year-end: DecemberTicker: WPPGYStock exchange: NASDAQ


WPP Group (WPP) is a global communication services conglomerate. The group operates through manysubsidiaries and affiliates, offering a range of media and marketing services. The group operatescompanies in various domains including advertising; media investment management; consumer insight;public relations and public affairs; branding and identity; healthcare communications; direct, digital,promotion and relationship marketing specialist communications. Some of the group's major networksinclude Bates 141, The Brand Union, Burson-Marsteller, Cohn & Wolfe, CommonHealth, Fitch, G2, ghg,GroupM, Hill & Knowlton, JWT, Kantar, Landor Associates, Maxus, MediaCom, Millward Brown, OgilvyGroup, Sudler & Hennessey, TNS, and United Network. The group has 2,400 offices in 107 countriesacross North America, South America, Europe, Middle East, Africa and Asia Pacific.

The group organizes its business operations across four segments: advertising and media investmentmanagement; consumer insight; branding and identity, healthcare and specialist communications; andpublic relations and public affairs. Each segment comprises several companies, operating independentlyof each other.

The advertising and media investment management segment of the group comprises two divisions whichinclude the advertising division and media investment management division. The advertising division of

the group is engaged in the planning and creation of marketing and branding campaigns and the designand production of advertisements for media such as television, cable, radio, magazines, newspapers andoutdoor locations such as billboards. The group's advertising agencies include Ogilvy & Mather, JWT,Y&R, Grey, United Network and Bates 141. It also owns interests in Asatsu-DK (24.3%), CHI & Partners(49.9%), The Jupiter Drawing Room & Partners (49%) and GIIR (20%).


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LEADING COMPANIES



The media investment management division operates as GroupM, which serves as the parent companyto agencies including MediaCom, MEC, Mindshare and Maxus. GroupM provides services in businessscience, consumer insight, communications and media planning implementation, interactions, contentdevelopment, and sports and entertainment marketing.

The consumer insight segment of the group operates through separate global research and strategicmarketing consultancy businesses, which are managed on a centralized basis under the umbrella of theKantar Group. The principal interests comprising the Kantar Group are TNS, a custom research company,which specializes in strategic market studies, brand positioning and equity research, customer satisfactionsurveys, product development, international research and advanced modeling. The Kantar Groupoperates through four vertical sector units: Kantar Media, which includes Kantar Media Intelligence,Kantar Audience Measurement, TGI Global and Kantar Media US; Kantar Healthcare, which comprises ofTNS Healthcare, Ziment Group and Mattson Jack Group; Kantar Retail, which includes Glendinning,Cannondale Associates, Management Ventures, Retail Forward and Red Dot Square; Kantar Worldpanel,

a grouping of former TNS Worldpanel companies. The Kantar Group also comprises of Millward Brown,which is engaged in advertising research including pre-testing, tracking and sales modeling.

The branding and identity, healthcare and specialist communications segment include the operations inbusiness areas such as branding and identity; healthcare communications; direct digital, promotional andinteractive marketing; and other specialist communications services.

The branding and identity division, B to D Group, comprises Landor Associates (a Young & RubicamBrands company), The Brand Union (formerly Enterprise IG), VBAT, Addison Corporate Marketing,Lambie-Nairn, The Partners, PeclersParis, and Fitch. In addition, it also includes BDG McColl, anEdinburgh based architects and interior designers, which specialize in the design of commercial buildingsand interiors; and BDGworkfutures, an international design consultancy, which focuses on strategy anddesign for working environments.

The healthcare communications division includes the global networks of CommonHealth, Sudler &Hennessey (a Young & Rubicam Brands company), Ogilvy Healthworld (part of the Ogilvy & MatherWorldwide network) and ghg (part of Grey Group).

In the direct, promotional and interactive marketing domain, the group has various operating businessesincluding A. Eicoff & Co, Smollan Group, Bridge Worldwide, EWA, G2, Headcount Worldwide FieldMarketing, KnowledgeBase Marketing, Mando Brand, OgilvyOne Worldwide, VML, OgilvyAction and

Wunderman.

Specialist communication services include custom media, corporate/B2B, demographic marketing,event/face-to-face marketing, foodservice marketing, youth marketing, real estate marketing, technologymarketing, sports marketing, and media and production services. This division includes various agenciesfor each discipline including Forward and Spafax in custom media; Ogilvy Primary Contact in


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LEADING COMPANIES



Corporate/B2B; The Bravo Group, MosaicaMD, Kang & Lee and WING in demographic marketing; MJMin event/face-to-face marketing; The Geppetto Group in youth marketing; Pace in real estate marketing;The Food Group in foodservice marketing; Banner in technology marketing; OgilvyAction Sports &Entertainment Marketing and PRISM Group in sports marketing; Metro Group, The Farm Group and MRCin media and production services.

The public relations and public affairs segment activities include national and international corporate,financial and marketing communications, crisis management, reputation management, public affairs andgovernment lobbying. The group's largest businesses in this area are Burson-Marsteller, Hill & Knowlton,Ogilvy Public Relations Worldwide and Cohn & Wolfe. Burson-Marsteller specializes in corporate andmarketing communications, business-to-business services, crisis management, employee relations andgovernment relations. Hill & Knowlton is a public relations and public affairs firm and providescommunications services. Ogilvy Public Relations Worldwide is a public relations and public affairs firmwith practice areas in marketing, health and medical, corporate public affairs and technology, and social

marketing. Cohn & Wolfe is an international public relations agency, which provides business results andmarketing communications solutions.

WPP Digital makes acquisitions and strategic investments in companies to enhance its digital services.WPP Digital comprises interactive agencies such as Schematic, BLUE and Quasar, production servicescompany, Deliver; and technology-led digital marketing company, 24/7 Real Media and investments. Inaddition, WPP Digital holds minority investments in businesses providing creative services, analytics,mobile marketing, in-game advertising, video and social networking services.

The group's original business (manufacture of wire and plastic products) is carried out by themanufacturing segment, which operates through Wire and Plastic Products subsidiary. The divisionproduces products for commercial, industrial and retail applications.


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LEADING COMPANIES



Key Metrics

The company recorded revenues of $14,410 million in the fiscal year ending December 2010, an increaseof 7.5% compared to fiscal 2009. Its net income was $1,021 million in fiscal 2010, compared to a net

income of $783 million in the preceding year.

Table 9: WPP Group plc: key financials ($)

$ million 2006 2007 2008 2009 2010Revenues 9,123.5 9,552.9 11,546.6 13,410.8 14,409.9Net income (loss) 745.3 795.5 793.6 782.8 1,020.8Total assets 22,695.0 26,642.4 37,778.8 34,517.6 37,596.3Total liabilities 12,484.2 20,504.7 28,880.2 25,134.8 27,329.9

Employees 77,686 84,848 97,438 105,318 101,387 Source: company filings D A T A M O N I T O R

Table 10: WPP Group plc: key financials ()

million 2006 2007 2008 2009 2010Revenues 5,907.8 6,185.9 7,476.9 8,684.0 9,331.0Net income (loss) 482.6 515.1 513.9 506.9 661.0Total assets 14,695.9 17,252.0 24,463.3 22,351.5 24,345.1Total liabilities 8,084.0 13,277.6 18,701.1 16,275.8 17,697.2 Source: company filings D A T A M O N I T O R


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LEADING COMPANIES



Table 11: WPP Group plc: key financial ratios

Ratio 2006 2007 2008 2009 2010

Profit margin 8.2% 8.3% 6.9% 5.8% 7.1%Revenue growth 9.9% 4.7% 20.9% 16.1% 7.5% Asset growth 2.1% 17.4% 41.8% (8.6%) 8.9%Liabilities growth 8.8% 64.2% 40.8% (13.0%) 8.7%Debt/asset ratio 55.0% 77.0% 76.4% 72.8% 72.7%Return on assets 3.3% 3.2% 2.5% 2.2% 2.8%Revenue per employee $117,440 $112,589 $118,502 $127,336 $142,128Profit per employee $9,594 $9,375 $8,145 $7,433 $10,068 Source: company filings D A T A M O N I T O R

Figure 6: WPP Group plc: revenues & profitability



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LEADING COMPANIES



Figure 7: WPP Group plc: assets & liabilities



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LEADING COMPANIES



Omnicom Group Inc .

Table 12: Omnicom Group Inc.: key facts

Head office: 437 Madison Avenue, New York City, New York 10022, USATelephone: 1 212 415 3600Fax: 1 212 415 3530Local office: 3701, 1 Grand Gateway, No. 1 Hong Qiao Road, Xu Hui District,

Shanghai 200030, P.R. CHNTelephone: 81 3 6221 3300Fax: 81 3 6221 3310Website: www.omnicomgroup.comFinancial year-end: DecemberTicker: OMCStock exchange: New York


Omnicom Group (Omnicom or "the company") is a global advertising, marketing and corporatecommunications organization. It operates through a number of international and national and subsidiaries.The company operates in the Americas, Europe, the Middle East, Africa, Asia and Australia.

The company's operations are organized under one reporting segment which operates in the advertising,marketing and corporate communications services industry. Omnicom operates through various agencies,

which provide various ranges of services in all major markets of world. These services are categorizedinto four fundamental disciplines: traditional media advertising, customer relationship management(CRM), public relations, and specialty communications.

Omnicom's operations span across: global advertising brands, national advertising agencies, mediaservices, and marketing services which includes specialty communications, public relations and customerrelationship management.

The company's global advertising brands include three companies: BBDO, DDB Worldwide andTBWA\Worldwide. BBDO operates through 287 offices in 79 countries and creates and delivers thecommercial content. DDB Worldwide has 200 offices in over 90 countries and offers creative businesssolutions. DDB Worldwide's client brands include Volkswagen to Philips, McDonald's, Clorox, ABInBev,Johnson & Johnson and ExxonMobil among others. TBWA Worldwide creates ideas expressed throughmedia arts for global clients, including ABSOLUT, adidas, Apple, Beiersdorf, GSK, Henkel, Infiniti, Mars,McDonald's, Michelin, Nissan, Pernod Ricard, Samsonite, Standard Chartered Bank, Singapore Airlines,Sony PlayStation and Visa. TBWA Worldwide operates through 267 offices in 77 countries.


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LEADING COMPANIES



The national advertising agencies include: Arnell which specializes in designing and fulfilling proprietarystrategies, products, content, experiences, environments and communication solutions; Element 79 whichoffers creative solutions; Goodby, Silverstein & Partners which is an advertising agency and works acrossall media including television, digital/interactive, print, radio and outdoor; GSD&M which is a full-serviceadvertising agency based in Austin, Texas and also operates an office in Chicago; Martin Williams,another full service agency headquartered in Minneapolis; Merkley + Partners which is also a full-serviceadvertising agency headquartered in New York; Roberts + Langer, a full-service creative agency,specializing in advertising premium positioned products in both mass and specialty distribution; andZimmerman Advertising, operating in southeastern states in the US and is a retail specialist.

Media services include core media services companies (OMD, PHD and Prometheus); media specialistsolutions (Icon International, Novus and OMG Outdoor Media Group); Resolution Media and SingerDirect.

OMD is headquartered in New York, operates 140 offices in 80 countries and is a global mediacommunications company. PHD which was originally a media services company in the UK and North

America has expanded further and now has presence in Asia Pacific, continental Europe, the Middle Eastand Africa. Prometheus is a media services company headquartered in Chicago and operates offices inLondon and New York. Icon International is an asset barter company. Novus is the US media buyingcompany, specializing in campaigns that utilize print and online media both individually and together.Outdoor Media Group is an outdoor media specialist in the US. Resolution Media delivers customizedbusiness solutions through search marketing strategy and integration and Singer Direct is a provider ofinsert media buying and management services in the US.

The marketing services encompass the Diversified Agency Services (DAS) division of Omnicom which isa global enterprise comprising marketing services and specialty communication companies. The divisionincludes the customer relationship management services, include sports and event marketing,branding/consultants/design, direct/relationship marketing, promotional marketing, field marketing, non-profit marketing and entertainment marketing. The companies providing these services are: salespromotion companies which include Integer, GMR Marketing, The Marketing Arm and TracyLocke; RAPP,a leading global direct marketing company; and Interbrand, one of the world's leading consultancies inbrand strategy, valuation, and naming.

DAS also includes public relations, Fleishman-Hillard, Ketchum, and Porter Novelli, as well as specialistagencies including Clark & Weinstock, Cone, Kreab Gavin Anderson, and Chlopak, Schechter & Partners.

Specialty communications encompass the operations of healthcare franchise, which includes fivehealthcare communications companies; Doremus, the premier business-to-business agency, and Diesteand LatinWorks, the multicultural agencies.


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LEADING COMPANIES



Key Metrics

The company recorded revenues of $12,543 million in the fiscal year ending December 2010, an increaseof 7.0% compared to fiscal 2009. Its net income was $828 million in fiscal 2010, compared to a net

income of $793 million in the preceding year.

Table 13: Omnicom Group Inc.: key financials ($)

$ million 2006 2007 2008 2009 2010Revenues 11,376.9 12,694.0 13,359.9 11,720.7 12,542.5Net income (loss) 864.0 975.7 1,000.3 793.0 827.7Total assets 17,804.7 19,271.7 17,318.4 17,920.7 19,566.1Total liabilities 13,933.4 15,180.0 13,795.6 13,467.9 15,673.0

Employees 66,000 70,000 68,000 63,000 65,500 Source: company filings D A T A M O N I T O R

Table 14: Omnicom Group Inc.: key financial ratios

Ratio 2006 2007 2008 2009 2010Profit margin 7.6% 7.7% 7.5% 6.8% 6.6%Revenue growth 8.5% 11.6% 5.2% (12.3%) 7.0%

Asset growth 11.8% 8.2% (10.1%) 3.5% 9.2%Liabilities growth 16.4% 8.9% (9.1%) (2.4%) 16.4%Debt/asset ratio 78.3% 78.8% 79.7% 75.2% 80.1%Return on assets 5.1% 5.3% 5.5% 4.5% 4.4%Revenue per employee $172,377 $181,343 $196,469 $186,043 $191,489Profit per employee $13,091 $13,939 $14,710 $12,587 $12,637 Source: company filings D A T A M O N I T O R


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LEADING COMPANIES



Figure 8: Omnicom Group Inc.: revenues & profitability


Figure 9: Omnicom Group Inc.: assets & liabilities



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MARKET FORECASTS



MARKET FORECASTS

Market value forecast

In 2015, the Chinese advertising industry is forecast to have a value of $14,704.2 million, an increase of86.4% since 2010.

The compound annual growth rate of the industry in the period 201015 is predicted to be 13.3%.

Table 15: China advertising industry value forecast: $ million, 201015

Year $ million CNY million million % Growth2010 7,887.7 53,468.7 5,940.6 11.9%2011 9,070.8 61,489.0 6,831.7 15.0%2012 10,612.9 71,942.1 7,993.1 17.0%2013 12,053.2 81,705.7 9,077.9 13.6%2014 13,321.5 90,302.9 10,033.1 10.5%2015 14,704.2 99,676.2 11,074.5 10.4%

CAGR: 201015 13.3%


Figure 10: China advertising industry value forecast: $ million, 201015



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MACROECONOMIC INDICATORS




Table 16: China size of population (million), 200610

Year Population (million) % Growth2006 1,311.0 0.6%2007 1,317.9 0.5%2008 1,324.7 0.5%2009 1,331.4 0.5%2010 1,338.0 0.5%


Table 17: China gdp (constant 2000 prices, $ billion), 200610

Year Constant 2000 Prices, $ billion % Growth2006 2,407.2 15.3%2007 2,822.5 17.3%2008 3,148.9 11.6%2009 3,440.2 9.3%2010 3,794.5 10.3%


Table 18: China gdp (current prices, $ billion), 200610

Year Current Prices, $ billion % Growth2006 2,712.9 20.2%2007 3,494.2 28.8%2008 4,520.0 29.4%2009 4,987.6 10.3%2010 5,734.6 15.0%



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Table 19: China inflation, 200610

Year Inflation Rate (%)

2006 1.5%2007 4.8%2008 5.9%2009 (0.7%)2010 3.3%


Table 20: China consumer price index (absolute), 200610

Year Consumer Price Index (2000 = 100)2006 108.62007 113.82008 120.52009 119.62010 123.6


Table 21: China exchange rate, 200610

Year Exchange rate ($/CNY) Exchange rate (/CNY)2006 7.9819 10.01452007 7.6172 10.42282008 6.9623 10.18752009 6.8409 9.51232010 6.7788 9.0005



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APPENDIX



APPENDIX

Methodo logy

Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated,analyzed, cross-checked and presented in a consistent and accessible style.

Review of in-house databases Created using 250,000+ industry interviews and consumer surveysand supported by analysis from industry experts using highly complex modeling & forecasting tools,Datamonitors in-house databases provide the foundation for all related industry profiles

Preparatory research We also maintain extensive in-house databases of news, analystcommentary, company profiles and macroeconomic & demographic information, which enable ourresearchers to build an accurate market overview

Definitions Market definitions are standardized to allow comparison from country to country. Theparameters of each definition are carefully reviewed at the start of the research process to ensure theymatch the requirements of both the market and our clients

Extensive secondary research activities ensure we are always fully up-to-date with the latestindustry events and trends

Datamonitor aggregates and analyzes a number of secondary information sources, including:- National/Governmental statistics- International data (official international sources)- National and International trade associations- Broker and analyst reports- Company Annual Reports- Business information libraries and databases

Modeling & forecasting tools Datamonitor has developed powerful tools that allow quantitativeand qualitative data to be combined with related macroeconomic and demographic drivers to createmarket models and forecasts, which can then be refined according to specific competitive, regulatoryand demand-related factors

Continuous quality control ensures that our processes and profiles remain focused, accurate andup-to-date


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APPENDIX



Indu st ry associa t ions

World Federation of Advertisers

120 Avenue Louise, 1050 Brussels, BelgiumTel.: 0032 2 502 5740Fax: 32 2 502 5666www.wfanet.org

International Advertising Association

IAA World Service Center, 275 Madison Avenue Suite 2102, New York, NY 10016, USATel.: 001 212 557 1133Fax: 1 212 983 0455www.iaaglobal.org

Japan Advertising Agencies Association

Dentsu Ginza Bldg., 4-17, Ginza 7-chome, Chuo-Ku, 104-0061 Tokyo, JapanTel.: 0081 3 5568 0876Fax: 81 3 5568 0889www.jaaa.ne.jp

Related Datamo nito r research

Industry Profile

Global advertising

Advertising in Europe

Advertising in Asia-Pacific

Advertising in Japan


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APPENDIX



Disclaimer

All Rights Reserved.

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by any means, electronic, mechanical, photocopying, recording or otherwise, without the priorpermission of the publisher, Datamonitor plc.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.Please note that the findings, conclusions and recommendations that Datamonitor delivers will bebased on information gathered in good faith from both primary and secondary sources, whoseaccuracy we are not always in a position to guarantee. As such Datamonitor can accept no liabilitywhatever for actions taken based on any information that may subsequently prove to be incorrect.


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ABOUT DATAMONITOR


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