Consumer Confidence and the Media Market

Overview and AnalysisPrepared by GT Media

Sources include: Amarach, Behaviour Attitudes, Nielsen, TNS

Consumer Sentiment

The Economic Backdrop

CONSUMER CONFIDENCE IS LOWThe Irish public are more pessimistic than other nations about our future prospects

• 95% think our economy is getting worse

• 48% think that the economy will disimprove over the next 6 months

• 57% worry about losing their jobs

• 78% feel that the Government is not doing enough

• 56% of Irish Adults do not think our economic crisis will be sorted within 2 years

36% globally and 40% UK & USA

• 25-34 year olds seem most unnerved by the crisis and lack the coping skills at present to deal with it

Depressed Consumers.. Global Economic Confidence Study –IRELAND

Spooked Consumers...

Source::ERSI

Consumer sentiment is worse than the economic reality. Negative media

reporting is creating public gloom

med

ia g

ap

Real Fears..

58%

There are significant fears about job security and the threat of unemployment

is top of mind for many

Wrong Way..

Source::CSO

Unemployment is rising and this has a direct and significant effect on

consumer sentiment

400,000 now on live register100% increase in 12 months

PROJECTED TO RISE TO 500,000

Good Times..Bad Times

Source::CSO

As unemployment grows consumer sentiment shrinks– we are now at a 20

year low

Happy Days

Dark Days

All Together..There is a general acceptance amongst the public that the recession is affecting

them in a similar fashion

Not Looking Forward..

83% expectto be effected

The Irish population are expecting that the economic downturn will continue to

impact negatively in the future

Tough Going..Whilst personal economic consumption is forecast to decline the paradox is that

personal savings will rise this year

Will there by cash reservesavailable when confidence returns

Back to the Future..

Retail activity is falling to 2003-2004 levels

The volume and the value of retail activity is plunging to 2004 levels and

the fear is that they will continue to fall to 2001 values

Retail Slump.. The fall in consumer spending is reflected across all categories

Furniture & Lighting down 42.8%

Food, Beverages, Tobacco down 3.5%

Electrical Goodsdown 25.9%

Clothing, Footwear & Textiles down 20%

Department Stores down 14.6%

Source : CSO Seasonally Adjusted Retail Sales Index - preliminary estimates April 2009

Motor Tradesdown 51.9%

Media Market Review

Media Market Summary

• Effects of recession are more severe than predicted– The advertising media market was down by >30% in Q1– Apr/May/June was down by an estimated 40% against last year– No signs of a pick up in sight at present

• Media costs have fallen as the market contracts – Those with budgets are increasing value in all media– Media ‘share of budget’ is now king as volumes fall– Price volatility due to short term bookings– Opportunists can ‘beat the market’

• Market lacks price transparency– Falling costs means access to low prices for all– Larger volume no longer means cheapest price– Difficult to benchmark value

• Media are re-evaluating sales strategies to stem loss of yield– RTE to adopt a ‘fixed price’ system based on 11%-15% discounts vs 2008 costs

• This will help stabilise the TV market which is important from an industry perspective– Other media will find it difficult to stem the freefall in pricing

Media Market Dynamics

Media in Crisis

Will Independent News & Media Survive in its present form?

In receivership

Local Press in Freefall‘papers closing down

TV3 sufferingwill investors stay?

RTE is insolvent€68M losses

Media OverviewThe effects of the recession have opened uptremendous opportunities for advertisers who are in a position to invest in media at present

For Example

Offer Example

June 1st – June 14th 150 NATIONAL 48 SHEET POSTERS

€141,600 Ratecard Value

We could have bought this for €60,000- and gotten the poster printed for free

Overview

• The economy has been is sharp decline since March-April ’08• Consumer confidence began to decline in mid–2007 picking up

rapid pace during 2008 and is now at a record low• Consumer sentiment is extremely negative both from a

personal and an Ireland Inc perspective• Consumer spending has fallen across all markets• Markets are shrinking & sales are harder to win• A new consumer is emerging – value is king• Advertising investment has fallen by almost 40% • Exceptional media value is now available• A good time to gain increased brand traction and SOV

Our Perspective

Not the end.. just a new beginning

Everything changed in the space of a few weeks last Autumn. There is nothing safeor settled about the economy anymore.

From each past crisis have come newindustries, new ways of doing businessand new way of earning a living.

Chances are it will be the same this time around.

It is clear that our economic circumstanceshave in many cases put the finance department in the ascendancy and – but by eliminating marketinginvestment they risk strangling the business.

Cost cutting measures are crucial tothe survival of business but marketing isits engine for growth.

Marketing activity is key for thosewho hope to survive and prosper inthe present difficult business environment

Marketing is the key..

“It is vital that marketing and finance work jointly to demonstrate the real value of marketing to the bottom line”- Return on Ideas report from Institute of Marketing & Institute of Management accountants,

Brands will die..

The slowdown in economic activityhas led to a significant declinein advertising activity and brandsupport during 2009 –across all sectors.

As companies look for cost savingmeasures the advertising budgetbecomes a soft target and is still viewed by many as a cost ratherthan an investment. This, in spiteof all the evidence that those whocontinue to promote during recession fare significantlybetter than those who do not.

Clear Evidence..

Proof positive

In a study of 600 companies McGraw-Hill research foundthat sales of aggressive recessionadvertisers (those who maintained or increased spend)

had risen by –

Our View.. It’s easy to say but..

It is time to stop looking backwards.Companies must begin to accept that we are now ina new reality and that it is actually irrelevant what size the market used to be and start asking;‘What size is the market now’ and how can I growmy share of it? There are still sales to be fought forand consumers will continue to be attracted to visiblebrands. It is easier to stand out in a quieter environment.

Innovation is the future.Only by embracing the reality of change cancompanies and brands move forward. Acknowledge that markets have changedand that consumers are now demanding more.New and innovative communication strategieswill reward those who are wise enough and braveenough to adapt. They will survive the current downturn better than their competitors and havea far better chance of prospering in the future.

Thinking Big Takes Audi FromObscure to AwesomeStrategy to Stand Out While OthersScale Back Delivers Big for Brand

Brave companies are forging ahead

In the US Audi's brand awareness, brandopinion and buyer consideration are all up substantially in the past two years.

"We want to send the message that thisis a brand that's moving forward and is active,why would we go backwards now when theindustry is generally locking the brakes andcutting spending?" Scott Keough CMO Audi

He said the brand will spend 15% more on marketing this year than 2008, including events, online and media.

From the second quarter of 2006 throughthe third quarter of 2008, Audi's brand awareness increased from 62% to 71%.In the same period, brand opinion rose by from 65% to 78% and brand consideration jumped from 35% to 52%.

Fast forward to a new reality

“It is not necessarily easier to start new businesses during recession, but it isimportant to note that innovation andentrepreneurship do not stop during downturns in the business cycle ,even though it is commonly assumed that they do. Great business can emergeeven in the worst of times.”-Tom Nicholas – Harvard University.

Change in the business landscape can create great opportunity for those willing and able to adapt to the new market circumstances

- can we be quicker to react and more adaptable than our competitors?

Never a better time to invest...

One of the clearest effects of recession has been the reductionin the cost of advertising caused by the drop in demand from advertisers.Just as consumer markets arefalling to 2003-2004 levels sotoo are advertising prices.

Substantial additional discountsand added value offers are currentlyavailable to advertisers who areactive in the media.

It has never been more affordableto increase presence and share of voice