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Advertising Expenditures in Japan Totaled 6,288.0 Billion Yen in 2016, Up 1.9% Compared with 2015

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February 23, 2017

-- Total Expenditures Posted Year-on-Year Growth for the Fifth Consecutive Year; Expenditures on Internet Advertising Media (Excluding Production Expenses) Exceeded One Trillion Yen for the First Time --

Dentsu Inc. (Tokyo: 4324; ISIN: JP3551520004; President & CEO: Toshihiro Yamamoto; Head Office: Tokyo; Capital: 74,609.81 million yen) today released its calendar year 2016 annual report on advertising expenditures in Japan, including an estimated breakdown by medium and industry.

Based on Dentsu's survey, Japan's advertising expenditures for 2016 totaled 6,288.0 billion yen, an increase of 1.9% compared with the previous year's figure. The gradual expansion of Japan's economy in calendar 2016 saw overall spending on advertising post year-on-year gains for a fifth consecutive year.

Overview of Advertising Expenditures during 2016
1. Factors that had been expected to have a positive impact on advertising expenditures in 2016 include gradual growth in the Japanese economy; the 2016 Summer Olympic and Paralympic Games in Rio de Janeiro; the G7 2016 Ise-Shima Summit; and an upswing in marketing activities, in particular driven by the expansion of Internet advertising. However, expectations were dampened by such factors as weak domestic demand, thought to have been caused by natural disasters, uncertainty concerning the future, and other factors; a slackening in corporate performance accompanying appreciation of the yen and falling stock prices; as well as the emergence of such risk factors as terrorism and a protectionist climate worldwide. Together, these factors contributed to advertising expenditure growth of 1.9% for the full calendar year.

2. Broken down by medium, advertising expenditures fell in Newspapers (down 4.4%), Magazines (down 9.0%), Radio (up 2.5%), and Television (up 1.7%; including both Terrestrial Television and Satellite Media-related spending). As a result, overall spending in the traditional media posted a slight decline of 0.4%. In the Internet advertising market (up 13.0%), ads directed at smartphones, as well as video ads and ads using new advertising technologies and data applications continued to expand. Thus growth in the Internet medium remained the key driver for advertising expenditures overall. Although spending on Promotional Media decreased (down 1.1%), and so continued the 2015 slide, growth was recorded for Outdoor as well as Exhibitions/Screen Displays and other sub-categories.

3. By industry category (for traditional media, but excluding Satellite Media-Related spending), year-on-year spending rose in 9 of the 21 industry categories.
Major categories posting gains included Energy/Materials/Machinery (up 41.0% on campaigns for electric power companies (new market entrants) and gas companies); Home Electric Appliances/AV Equipment (up 9.7% on increased advertising for hair styling and beauty appliances, refrigerators and 4K televisions); Real Estate/Housing Facilities (up 6.7% on increased placements for general housing and kitchen units); Pharmaceuticals/Medical Supplies (up 4.2% on increased advertising for general health supplements, contact lenses and general gastrointestinal medicines); and Foodstuffs (up 3.5% on increased placements for direct-marketed dietary supplements, health foods and chocolate).
Major categories posting declines included Precision Instruments/Office Supplies (down 13.8% on decreased placements for wristwatches and digital cameras); Apparel/Fashion, Accessories/Personal Items (down 10.0% on decreased advertising for women's clothing and casual wear); Automobiles/Related Products (down 6.0% on weaker advertising for K-cars (engine displacement up to 660 cc), imported station wagons/hatchbacks, and station wagons); Education/Medical Services/Religion (down 5.5% on fewer placements for correspondence education programs and schools); and Beverages/Cigarettes (down 5.3% on lower placements for beer-like alcoholic beverages).

Outline of Advertising Expenditures by Medium
Advertising expenditures in the traditional media (including Satellite Media-Related spending) during the 2016 calendar year totaled 2,859.6 billion yen, down 0.4% compared with the previous year. Spending in Television (including both Terrestrial Television and Satellite Media-Related advertising) increased 1.7%.
Spending on Internet advertising reached 1,310.0 billion yen (up 13.0%). Internet advertising media spending (excluding production expenses) surpassed one trillion yen for the first time, reaching 1,037.8 billion yen (up 12.9%). Promotional Media recorded a 1.1% spending decrease compared with the previous year's amount, to 2,118.4 billion yen.

Quarterly Breakdown of Growth in Advertising Expenditures in the Traditional Media in 2016
A quarterly breakdown of advertising expenditures in the traditional media (including Satellite Media-Related spending) shows that the January-March quarter recorded an 0.9% increase in expenditure, while slight year-on-year declines marked each of the year's remaining quarters.

                                                                                                                       (Year-on-year, %)
Advertising Expenditures in the Traditional Media (including Satellite Media-Related Spending)
(2015 Full Year)    Jan.-Jun.    Jul.-Dec.    Jan.-Mar.    Apr.-Jun.    Jul.-Sep.    Oct.-Dec.
      97.6                    96.7           98.6            96.4             97.0            98.7           98.6

(2016 Full Year)    Jan.-Jun.    Jul.-Dec.    Jan.-Mar.    Apr.-Jun.    Jul.-Sep.    Oct.-Dec.
      99.6                   100.2          99.1           100.9           99.4            98.9            99.3

Outline of Advertising Expenditures by Industry (21 Categories, Traditional Media Only, Excluding Satellite Media-Related Spending)
Advertising expenditures increased in 9 of the 21 industry categories surveyed during 2016, and declined in 12 categories. (The 2015 survey shows that expenditures were higher in 6 of the 21 industry categories, but lower in 15 categories.)
Categories posting gains were Energy/Materials/Machinery (up 41.0%) on strong demand for campaigns related to liberalization of the electricity market; Home Electric Appliances/AV Equipment (up 9.7%) on increases in ads for hair styling and beauty appliances, refrigerators and 4K televisions; Real Estate/Housing Facilities (up 6.7%) on increased placements for general housing and kitchen units; Pharmaceuticals/Medical Supplies (up 4.2%) on increased advertising for general health supplements, contact lenses and general gastrointestinal medicines; Foodstuffs (up 3.5%) on increased placements for direct-marketed products (dietary supplements and health foods), and chocolate; Information/Communications (up 3.5%), driven by ad placements for web content and mobile communication services; Cosmetics/Toiletries (up 1.5%) on increased ads for fabric softeners, skin lotions and laundry detergents; Government/Organizations (up 0.9%) on increased ad placements by local governments, political parties and political organizations; and Hobbies/Sporting Goods (up 0.2%) on a rise in placements for cat food and fitness goods.
Expenditures declined in the following 15 industry categories: Precision Instruments/Office Supplies (down 13.8%) on a fall in placements for wristwatches and digital cameras; Apparel/Fashion, Accessories/Personal Items (down 10.0% on decreased advertising for women's clothing and casual wear; Automobiles/Related Products (down 6.0% on weaker advertising for K-cars (engine displacement up to 660 cc), imported station wagons/hatchbacks, and station wagons); Education/Medical Services/Religion (down 5.5% on fewer placements for correspondence education programs and schools); Beverages/Cigarettes (down 5.3%) on lower placements for beer-like alcoholic beverages; Publications (down 4.8%) on fewer placements related to general newspapers and specialist hobby magazines; Distribution/Retailing (down 4.5%) on decreased placements for general supermarkets and large mass retailers; Transportation/Leisure (down 3.9%) on decreased advertising for membership sports clubs, and placements for railways and overseas airlines; Household Products (down 3.8%) on decreased placements for household scales and room deodorizers; Classified Ads/Others (down 3.6%) on decreased demand for classified ads; Food Services/Other Services (down 1.7%) on lower placements for aesthetic salons, male hair pieces and other services; and Finance/Insurance (down 1.3%) on lower placements related to direct-marketed health insurance products (medical/cancer insurance), and lotteries.


About the Dentsu Group
Dentsu is the world's largest advertising agency brand. Led by Dentsu Inc. (Tokyo: 4324; ISIN: JP3551520004), a company with a history of 116 years of innovation, the Dentsu Group provides a comprehensive range of client-centric brand, integrated communications, media and digital services through its ten global network brands--Carat, Dentsu, Dentsu media, iProspect, Isobar, mcgarrybowen, Merkle, MKTG, Posterscope and Vizeum--as well as through its specialist/multi-market brands including Amnet, Amplifi, Data2Decisions, Mitchell (PR) and 360i.
The Dentsu Group has a strong presence in over 140 countries across five continents, and employs more than 50,000 dedicated professionals. Dentsu Aegis Network Ltd., its global business headquarters in London, oversees Dentsu's agency operations outside of Japan. The Group is also active in the production and marketing of sports and entertainment content on a global scale. www.dentsu.com


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The full text of 2016 Advertising Expenditures in Japan is currently being compiled and will be available on Dentsu's website at the end of April 2017. For reference, please refer to the tables on the attached PDF.

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