Dentsu Inc. (President: Yutaka Narita; Head Office: Tokyo; Capital: 58,967.1 million yen) announced 2001 advertising expenditures in Japan, including a breakdown by medium and industry on February 18.

According to the report, total expenditures for the 2001 calendar year amounted to 6,058 billion yen. After a year of increase in 2000, expenditures fell 0.9% from the previous year's total. After two years of decline, total expenditures grew in 2000 as a result of a rise in advertising spending across a wide range of industries including Information/Communications and Finance/Insurance, as the Japanese economy began to exhibit signs of recovery while the IT boom continued. The 2001 figure slipped and failed to reach the 2000 level, which can be attributed to a sharp curtailment that took place in the latter half of the year. However, expenditures in 2001 were still above the 6 trillion yen mark, which was second after the previous year's record high.

The following characteristics were discerned in advertising expenditures in 2001:

1. Advertising expenditures in 2001 were impacted by a further downturn of the Japanese economy as characterized by the slowing IT demand, deteriorating corporate business results and the uncertain employment and income outlook. They were further exacerbated by the terrorist attacks in the United States. These developments prompted a number of corporations, including those in the Information/Communications and Finance/Insurance industries, which were active users of advertising in 2000, to cut down on their spending. Additionally, the year 2001 suffered a setback in reaction to the strong spending of the previous year, which was buoyed by the Sydney Olympics, the Lower House election campaign and the launch of the Long-Term Care Insurance Plan. As a result, total advertising expenditures declined on a year-on-year basis after a year of growth.

2. Broken down by medium, spending in all four mass media turned downward after a year of increase, with Television advertising expenditures showing a year-on-year decline of 0.5% and Newspaper advertising dwindling 3.6% year on year. Elsewhere, Direct Mail, Transit and Flyers posted increases, while Outdoor continued to decline. As a result, Sales Promotion expenditures failed to reach the previous year's level. Robust growth (up 77.1%) continued in Satellite Media-Related advertising, aided by BS digital broadcasting, while Internet advertising spending, which grew successively until 2000, slowed down sharply, posting an increase of only 24.6% over 2000.

3. By major industry, spending by the Automobiles/Related Products category rose for the first time in four years, while spending by Finance/Insurance and Pharmaceuticals/Medical Supplies continued to grow. Of the 21 categories, declines were observed in 12 categories. The Information/Communications category, which drove the overall increase until 2000, recorded a sharp decline in 2001, and this sector along with Cosmetics/Toiletries stunted overall growth.

–Breakdown of Advertising Expenditures by Medium
Spending in the four major media dropped 2.1% year on year after an increase posted in 2000. Outside of the four major media, Sales Promotion showed a decline of 0.2%. Of the subcategories belonging to Sales Promotion, Direct Mail posted an increase for the third year in a row, while Outdoor and Exhibitions/Screen Displays, among others, recorded a decline. Satellite Media-Related advertising surged 77.1% year on year and continued its course of robust growth, while growth in Internet advertising, which had continued to double until the previous year, slowed significantly, posting an increase of 24.6% year on year.

–Breakdown of Advertising Expenditures by Industry (21 Categories, Four Major Media Only)
Twelve of the 21 categories surveyed decreased their spending on advertising in 2001, and the nine categories that boosted their spending did so in single-digit increases. (In 2000, 17 categories increased their advertising spending, with six of them showing two-digit increases.)

Increases were observed in Energy/Materials/Machinery (up 6.8%), where stronger impetus came from an increase in gasoline advertising, and Automobiles/Related Products (up 6.6%), whose spending grew as domestic automakers increased their spending after three years of lackluster performance. Strength was also felt in Government/Organizations (up 4.6%) where political parties and a variety of organizations produced announcements and event-related notices. Finance/Insurance (up 3.4%), was mixed with securities firms tightening their spending and consumer finance and insurance companies increasing their spending on a continual basis. Pharmaceuticals/Medical Supplies (up 3.0%) ran more ads seeking volunteers for clinical trials in addition to ads for medications.

Among the categories that slashed their spending, the largest reduction took place in Information/Communications (down 11.3%, the first decline in eight years), with significantly lower levels of spending by personal computer and Internet-related companies while My Line and cellular phones remained strong. The decrease in Education/Medical Services/Religion (down 8.7%) is attributable to the setback in reaction to an increase in advertising spending for long-term care insurance that took place in 2000. Cosmetics/Toiletries too suffered a reversal (down 8.4%) in reaction to a surge in advertising activities in 2000. In terms of monetary value, Information/Communications and Cosmetics/Toiletries had the largest impact on overall advertising spending.

–(Reference) Quarterly Breakdown of Growth in Advertising Spending in the Four Major Media
A quarterly breakdown of advertising spending in the four major media reveals that spending in the January-March quarter increased in 2001 but turned negative in the subsequent months.

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–Outlook for 2002 Advertising Expenditures (Four Major Media)
Advertising expenditures in the four major media in calendar 2002 are forecast to decrease 3.2% compared to 2001. Continued weakening of Japan's economy, corporate restructuring, the deteriorating employment and income environment and the hazy economic outlook are expected to cast a dark shadow on spending in the first half of the year. The FIFA World Cup™ in June, along with the expected pickup in the nation's economy induced by the U.S. economic upturn, should slow the decline in advertising expenditures toward the year-end.

Although many industrial sectors will continue their austere policy vis-a-vis advertising spending, industry-wide restructuring and competition will force companies in Finance/Insurance to step up their advertising, as will companies in Automobiles/Related Products, which faces fierce market competition. Meanwhile, Pharmaceuticals/Medical Supplies, which is noted for its aggressive use of advertising to seek volunteers for clinical trials and to boost its corporate image, and Information/Communications with next-generation cellular telephones and broadband communications as growth drivers are also expected to intensify advertising activity.

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Note: The forecast for 2002 is based on a comprehensive analysis that takes into account Japan's economic outlook, developments in advertising media, and advertising trends in major industrial sectors.

Note: The full text of the report discussed in this news release is currently being compiled and will be available in both hard copy and on Dentsu's website in mid-March.