Advertising in China

INDUSTRY PROFILE
Advertising in China
Reference Code: 0099-0420 Publication Date: October 2011
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China - Advertising
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EXECUTIVE SUMMARY
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 of 86.4% 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 large size intensifies competition.
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CONTENTS
TABLE OF CONTENTS
EXECUTIVE SUMMARY MARKET OVERVIEW Market definition Research highlights Market analysis MARKET VALUE MARKET SEGMENTATION I MARKET SEGMENTATION II COMPETITIVE LANDSCAPE LEADING COMPANIES Dentsu Inc. WPP Group plc Omnicom Group Inc. MARKET FORECASTS Market value forecast MACROECONOMIC INDICATORS APPENDIX Methodology Industry associations Related Datamonitor research Disclaimer ABOUT DATAMONITOR Premium Reports Summary Reports Datamonitor consulting 2 6 6 7 8 9 10 11 12 14 14 18 24 28 28 29 31 31 32 32 33 34 34 34 34
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CONTENTS
LIST OF TABLES
Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Table 10: Table 11: Table 12: Table 13: Table 14: Table 15: Table 16: Table 17: Table 18: Table 19: Table 20: Table 21: China advertising industry value: $ million, 200610 China advertising industry segmentation I:% share, by value, 2010 China advertising industry segmentation II: % share, by value, 2010 Dentsu Inc.: key facts Dentsu Inc.: key financials ($) Dentsu Inc.: key financials () Dentsu Inc.: key financial ratios WPP Group plc: key facts WPP Group plc: key financials ($) WPP Group plc: key financials () WPP Group plc: key financial ratios Omnicom Group Inc.: key facts Omnicom Group Inc.: key financials ($) Omnicom Group Inc.: key financial ratios China advertising industry value forecast: $ million, 201015 China size of population (million), 200610 China gdp (constant 2000 prices, $ billion), 200610 China gdp (current prices, $ billion), 200610 China inflation, 200610 China consumer price index (absolute), 200610 China exchange rate, 200610 9 10 11 14 15 16 16 18 21 21 22 24 26 26 28 29 29 29 30 30 30
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CONTENTS
LIST OF FIGURES
Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: China advertising industry value: $ million, 200610 China advertising industry segmentation I:% share, by value, 2010 China advertising industry segmentation II: % share, by value, 2010 Dentsu Inc.: revenues & profitability Dentsu Inc.: assets & liabilities WPP Group plc: revenues & profitability WPP Group plc: assets & liabilities Omnicom Group Inc.: revenues & profitability Omnicom Group Inc.: assets & liabilities China advertising industry value forecast: $ million, 201015 9 10 11 17 17 22 23 27 27 28
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MARKET OVERVIEW
MARKET OVERVIEW
Market definition
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 in the 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, New Zealand, Singapore, South Korea, Taiwan, and Thailand.
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MARKET OVERVIEW
Research highlights
The Chinese advertising industry had total revenue of $7,887.7 million in 2010, representing a compound annual 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 total revenue 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 fiveyear period 2010 - 2015, which is expected to drive the industry to a value of $14,704.2 million by the end of 2015.
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MARKET OVERVIEW
Market analysis
The Chinese advertising industry has grown strong over recent years, continuing with strong growth in 2010. The market is predicted to continue growing at a similar rate towards the end of the forecast period. The Chinese advertising industry had total revenue of $7,887.7 million in 2010, representing a compound annual growth rate (CAGR) of 9.8% between 2006 and 2010. In comparison, the Japanese industry declined with a compound annual rate of change (CARC) of -4.2%, and the Indian industry increased with a CAGR of 14.8%, over the same period, to reach respective values of $7,740.8 million and $2,922.1 million in 2010. The Food, Beverage & Personal/Healthcare segment was the industry's most lucrative in 2010, with total revenue of $2,962.6 million, equivalent to 37.6% of the industry's overall value. The Retailer segment contributed revenue of $846.2 million in 2010, equating to 10.7% of the industry's aggregate value. The performance of the industry is forecast to accelerate, with an anticipated CAGR of 13.3% for the fiveyear period 2010 - 2015, which is expected to drive the industry to a value of $14,704.2 million by the end of 2015. Comparatively, the Japanese industries will decline with a CARC of -0.2%, and the Indian industry will increase with a CAGR of 18.3%, over the same period, to reach respective values of $7,663.3 million and $6,760.4 million in 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: Year 2006 2007 2008 2009 2010 CAGR: 200610 Source: Datamonitor China advertising industry value: $ million, 200610 $ million 5,431.5 5,969.2 6,512.4 7,046.4 7,887.7 CNY million 36,818.5 40,463.5 44,145.7 47,765.7 53,468.7 million 4,090.7 4,495.7 4,904.8 5,307.0 5,940.6 % Growth 9.9% 9.1% 8.2% 11.9% 9.8% DATAMONITOR
Figure 1:
China advertising industry value: $ million, 200610
Source: Datamonitor
DATAMONITOR
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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: Category Food, Beverage & Personal/Healthcare Retailer Financial Services Automotive Media & Telecommunication Others Total Source: Datamonitor China advertising industry segmentation I:% share, by value, 2010 % Share 37.6% 10.7% 8.6% 5.2% 3.9% 34.0% 100% DATAMONITOR
Figure 2:
China advertising industry segmentation I:% share, by value, 2010
Source: Datamonitor
DATAMONITOR
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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: Category China Japan India South Korea Rest of Asia-Pacific Total Source: Datamonitor China advertising industry segmentation II: % share, by value, 2010 % Share 34.0% 33.4% 12.6% 1.6% 18.4% 100% DATAMONITOR
Figure 3:
China advertising industry segmentation II: % share, by value, 2010
Source: Datamonitor
DATAMONITOR
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COMPETITIVE LANDSCAPE
The advertising market will be analyzed taking advertising agencies as players. The key buyers will be taken as corporate clients, and information technology and commercial real estate providers as the key suppliers. The advertising market in China is dominated by Dentsu Inc, Omnicom and WPP Group and their large size intensifies competition. As target audiences are increasingly fragmented due to technological advancements and differing consumer habits, players in the advertising market must constantly innovate, market, adjust and improve their practices to ensure clients needs are met thoroughly. Government regulation of advertising content is important to recognize and take into consideration. This particularly affects age restricted products such as cigarettes and alcohol. Buyers range from small scale businesses to large multinational corporations. Today, advertising content is delivered in many formats through diverse channels ranging from sponsorship of sports events and teams to internet advertising campaigns. This can often mean that reaching mass audiences is complicated and often costly. For example, in the past, an advert during a prime time TV show would have certainly reached a large audience. Nowadays, with a plethora of entertainment media available such as TV, DVDs, the internet and games consoles, the audience is less concentrated and so advertising through all media formats must be considered. As a result, businesses are seeking advice from external advertising/marketing agencies in order to reduce expenditures. The ability of agencies to meet buyers individual needs allows strong differentiation between market players and agencies often provide bespoke campaigns. Accordingly, players can then attract new clients based on their niche expertise, 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 service providers, and owners of office space. Staff costs are also significant: success in the advertising business is 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 of staff to change employer. Furthermore, leading advertising agencies tend to be located in major cities such as London, Shanghai and New York, where demand for prime office space - and therefore rent - is high. Agencies must negotiate the purchase of advertising space from media companies such as magazine 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 to charge a flat-rate commission on their clients' media space purchases, although different models are becoming 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. This means 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 of different media, incurs costs in terms of time and money which raises entry barriers. Leading players have typically brought together many advertising and marketing functions under their well-known brands, and are therefore formidable competitors. Within the individual country markets, government regulation of certain kinds of advertising (e.g. tobacco or alcohol) may restrict the available revenues, and make them less attractive. This is the case with tobacco advertising in China which is now not allowed. Due to the latest 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 periodic basis. This presents a new segment of the advertising market for operators to enter, and interest from current players wanting to utilize this segment may result in increased rivalry. Overall, there is a moderate likelihood of new entrants. As an alternative to using services offered by market players, buyers can integrate backwards with the aim 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 suitably qualified team can prove problematic for companies. Most companies have now established an internet presence and can self-promote through this medium. Web designers are frequently distinct from advertising and marketing players, but can often give advice on raising their clients' web profile, for example, 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 large size intensifies competition. China, however, is dominated by other leading advertising agencies such as Beijing Dentsu Advertising, Dahe Media and Saatchi & Saatchi China (of Publicis). However, the dominance of these players means that there are fewer companies in the market overall, which tends to reduce 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 through factors 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 advertising industry provides plenty of scope for many players and so rivalry in China is less of an issue than in most other markets. Also strong market growth during 2010 would tend to further decrease rivalry. Overall, the degree of rivalry is considered to be moderate.
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LEADING COMPANIES
LEADING COMPANIES
Dentsu Inc.
Table 4: Dentsu Inc.: key facts 1-8-1, Higashi-Shimbashi, Minato-ku, Tokyo 105-7001, JPN 81 3 6216 5111 www.dentsu.com March 4324 Tokyo DATAMONITOR
Head office: Telephone: Website: Financial year-end: Ticker: Stock exchange: Source: company website
Dentsu ("the company") is a Japan-based advertising company. The company primarily provides traditional mass media advertising and related creative services, including the planning and production of advertising. It also offers promotional services; billboard, transit and other out-of-home (OOH) media advertising; advertising and related services encompassing interactive media, such as the internet and mobile phones, as well as satellite broadcasting; and other services, such as sports and entertainment marketing, event planning and execution, public relations, public affairs, direct marketing, market research and e-solution services. The company operates in Asia Pacific, Middle East, Europe, North America and South America. The company organized its services across three business divisions: advertising, information services and 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 with sales promotion, event marketing, interactive communications, brand management, sports and entertainment 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 involved primarily in the provision of IT solutions, such as information system configurations. The other business division provides clients with non-advertising services such as related consulting services.
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LEADING COMPANIES
Dentsu's services comprises of communications services, marketing services, e-solution services, and content business. The company's communications services include strategic planning, creative development and media services for advertising in television, newspapers, magazines and radio. Marketing services of the company include advertising related services such as sales promotion, market research, PR and event marketing. The company's e-solution services include system integration services, e-business consulting and customer relationship management (CRM) and e-promotions using the internet and mobile. The content 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, animated content, music and other forms of entertainment. The company's overseas operations include communications services to overseas clients through its network 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 of 5.7% 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: $ million
Dentsu Inc.: key financials ($) 2006 3,710.6 353.0 14,547.9 8,613.8 15,337 2007 3,966.7 349.4 14,437.7 8,121.4 16,224 2008 3,930.6 412.7 14,254.0 7,794.9 17,031 2009 3,580.5 (232.9) 12,439.5 7,286.6 17,921 2010 3,375.8 354.4 12,732.0 7,218.4 18,255
Revenues Net income (loss) Total assets Total liabilities Employees Source: company filings
DATAMONITOR
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LEADING COMPANIES
Table 6: million
Dentsu Inc.: key financials () 2010 325,896.0 348,391.0 345,222.0 314,474.0 296,490.0 31,002.0 30,688.0 36,246.0 (20,453.0) 31,130.0 1,277,722.0 1,268,049.0 1,251,912.0 1,092,543.0 1,118,236.0 756,542.0 713,289.0 684,619.0 639,975.0 633,986.0 DATAMONITOR 2006 2007 2008 2009
Revenues Net income (loss) Total assets Total liabilities Source: company filings
Table 7: Ratio
Dentsu Inc.: key financial ratios 2006 9.5% 2.5% 3.0% 1.1% 59.2% 2.5% $241,937 $23,015 2007 8.8% 6.9% (0.8%) (5.7%) 56.3% 2.4% $244,496 $21,536 2008 10.5% (0.9%) (1.3%) (4.0%) 54.7% 2.9% $230,792 $24,232 2009 (6.5%) (8.9%) (12.7%) (6.5%) 58.6% (1.7%) $199,795 ($12,994) 2010 10.5% (5.7%) 2.4% (0.9%) 56.7% 2.8% $184,923 $19,416
Profit margin Revenue growth Asset growth Liabilities growth Debt/asset ratio Return on assets Revenue per employee Profit per employee Source: company filings
DATAMONITOR
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LEADING COMPANIES
Figure 4:
Dentsu Inc.: revenues & profitability
Source: company filings
DATAMONITOR
Figure 5:
Dentsu Inc.: assets & liabilities
DATAMONITOR
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LEADING COMPANIES
WPP Group plc

Table 8: WPP Group plc: key facts 6 Ely Place, Dublin 2, IRL 353 1669 0333 353 1669 0334 31/F The Center, 989 Changle Road, Shanghai, CHN 86 21 2405 0685 86 21 2405 0685 www.wpp.com December WPPGY NASDAQ DATAMONITOR
Head office: Telephone: Fax: Local office: Telephone: Fax: Website: Financial year-end: Ticker: Stock exchange: Source: company website
WPP Group (WPP) is a global communication services conglomerate. The group operates through many subsidiaries and affiliates, offering a range of media and marketing services. The group operates companies 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 networks include Bates 141, The Brand Union, Burson-Marsteller, Cohn & Wolfe, CommonHealth, Fitch, G2, ghg, GroupM, Hill & Knowlton, JWT, Kantar, Landor Associates, Maxus, MediaCom, Millward Brown, Ogilvy Group, Sudler & Hennessey, TNS, and United Network. The group has 2,400 offices in 107 countries across North America, South America, Europe, Middle East, Africa and Asia Pacific. The group organizes its business operations across four segments: advertising and media investment management; consumer insight; branding and identity, healthcare and specialist communications; and public relations and public affairs. Each segment comprises several companies, operating independently of each other. The advertising and media investment management segment of the group comprises two divisions which include 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 design and production of advertisements for media such as television, cable, radio, magazines, newspapers and outdoor 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 company to agencies including MediaCom, MEC, Mindshare and Maxus. GroupM provides services in business science, consumer insight, communications and media planning implementation, interactions, content development, and sports and entertainment marketing. The consumer insight segment of the group operates through separate global research and strategic marketing consultancy businesses, which are managed on a centralized basis under the umbrella of the Kantar 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 satisfaction surveys, product development, international research and advanced modeling. The Kantar Group operates 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 of TNS 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 in business areas such as branding and identity; healthcare communications; direct digital, promotional and interactive marketing; and other specialist communications services. The branding and identity division, B to D Group, comprises Landor Associates (a Young & Rubicam Brands 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, an Edinburgh based architects and interior designers, which specialize in the design of commercial buildings and interiors; and BDGworkfutures, an international design consultancy, which focuses on strategy and design 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 & Mather Worldwide network) and ghg (part of Grey Group). In the direct, promotional and interactive marketing domain, the group has various operating businesses including A. Eicoff & Co, Smollan Group, Bridge Worldwide, EWA, G2, Headcount Worldwide Field Marketing, 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, technology marketing, sports marketing, and media and production services. This division includes various agencies for 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; MJM in 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 MRC in 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 and government 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 and marketing communications, business-to-business services, crisis management, employee relations and government relations. Hill & Knowlton is a public relations and public affairs firm and provides communications services. Ogilvy Public Relations Worldwide is a public relations and public affairs firm with 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 and marketing 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 services company, Deliver; and technology-led digital marketing company, 24/7 Real Media and investments. In addition, 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 the manufacturing segment, which operates through Wire and Plastic Products subsidiary. The division produces 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 increase of 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: $ million
WPP Group plc: key financials ($) 2006 9,123.5 745.3 22,695.0 12,484.2 77,686 2007 9,552.9 795.5 26,642.4 20,504.7 84,848 2008 11,546.6 793.6 37,778.8 28,880.2 97,438 2009 13,410.8 782.8 34,517.6 25,134.8 105,318 2010 14,409.9 1,020.8 37,596.3 27,329.9 101,387
DATAMONITOR
Table 10: million
WPP Group plc: key financials () 2006 5,907.8 482.6 14,695.9 8,084.0 2007 6,185.9 515.1 17,252.0 13,277.6 2008 7,476.9 513.9 24,463.3 18,701.1 2009 8,684.0 506.9 22,351.5 16,275.8 2010 9,331.0 661.0 24,345.1 17,697.2
Revenues Net income (loss) Total assets Total liabilities Source: company filings
DATAMONITOR
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LEADING COMPANIES
Table 11: Ratio
WPP Group plc: key financial ratios 2006 8.2% 9.9% 2.1% 8.8% 55.0% 3.3% $117,440 $9,594 2007 8.3% 4.7% 17.4% 64.2% 77.0% 3.2% $112,589 $9,375 2008 6.9% 20.9% 41.8% 40.8% 76.4% 2.5% $118,502 $8,145 2009 5.8% 16.1% (8.6%) (13.0%) 72.8% 2.2% $127,336 $7,433 2010 7.1% 7.5% 8.9% 8.7% 72.7% 2.8% $142,128 $10,068
DATAMONITOR
Figure 6:
WPP Group plc: revenues & profitability
DATAMONITOR
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LEADING COMPANIES
Figure 7:
WPP Group plc: assets & liabilities
DATAMONITOR
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LEADING COMPANIES
Omnicom Group Inc.

Table 12: Head office: Telephone: Fax: Local office: Telephone: Fax: Website: Financial year-end: Ticker: Stock exchange: Source: company website Omnicom Group Inc.: key facts 437 Madison Avenue, New York City, New York 10022, USA 1 212 415 3600 1 212 415 3530 3701, 1 Grand Gateway, No. 1 Hong Qiao Road, Xu Hui District, Shanghai 200030, P.R. CHN 81 3 6221 3300 81 3 6221 3310 www.omnicomgroup.com December OMC New York DATAMONITOR
Omnicom Group (Omnicom or "the company") is a global advertising, marketing and corporate communications 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 categorized into 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, media services, and marketing services which includes specialty communications, public relations and customer relationship management. The company's global advertising brands include three companies: BBDO, DDB Worldwide and TBWA\Worldwide. BBDO operates through 287 offices in 79 countries and creates and delivers the commercial content. DDB Worldwide has 200 offices in over 90 countries and offers creative business solutions. DDB Worldwide's client brands include Volkswagen to Philips, McDonald's, Clorox, ABInBev, Johnson & Johnson and ExxonMobil among others. TBWA Worldwide creates ideas expressed through media 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 proprietary strategies, products, content, experiences, environments and communication solutions; Element 79 which offers creative solutions; Goodby, Silverstein & Partners which is an advertising agency and works across all media including television, digital/interactive, print, radio and outdoor; GSD&M which is a full-service advertising 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-service advertising agency headquartered in New York; Roberts + Langer, a full-service creative agency, specializing in advertising premium positioned products in both mass and specialty distribution; and Zimmerman 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 specialist solutions (Icon International, Novus and OMG Outdoor Media Group); Resolution Media and Singer Direct. OMD is headquartered in New York, operates 140 offices in 80 countries and is a global media communications 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 East and Africa. Prometheus is a media services company headquartered in Chicago and operates offices in London and New York. Icon International is an asset barter company. Novus is the US media buying company, 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 customized business solutions through search marketing strategy and integration and Singer Direct is a provider of insert media buying and management services in the US. The marketing services encompass the Diversified Agency Services (DAS) division of Omnicom which is a global enterprise comprising marketing services and specialty communication companies. The division includes the customer relationship management services, include sports and event marketing, branding/consultants/design, direct/relationship marketing, promotional marketing, field marketing, nonprofit marketing and entertainment marketing. The companies providing these services are: sales promotion 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 in brand strategy, valuation, and naming. DAS also includes public relations, Fleishman-Hillard, Ketchum, and Porter Novelli, as well as specialist agencies including Clark & Weinstock, Cone, Kreab Gavin Anderson, and Chlopak, Schechter & Partners. Specialty communications encompass the operations of healthcare franchise, which includes five healthcare communications companies; Doremus, the premier business-to-business agency, and Dieste and 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 increase of 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: $ million
Omnicom Group Inc.: key financials ($) 2006 11,376.9 864.0 17,804.7 13,933.4 66,000 2007 12,694.0 975.7 19,271.7 15,180.0 70,000 2008 13,359.9 1,000.3 17,318.4 13,795.6 68,000 2009 11,720.7 793.0 17,920.7 13,467.9 63,000 2010 12,542.5 827.7 19,566.1 15,673.0 65,500
DATAMONITOR
Table 14: Ratio
Omnicom Group Inc.: key financial ratios 2006 7.6% 8.5% 11.8% 16.4% 78.3% 5.1% $172,377 $13,091 2007 7.7% 11.6% 8.2% 8.9% 78.8% 5.3% $181,343 $13,939 2008 7.5% 5.2% (10.1%) (9.1%) 79.7% 5.5% $196,469 $14,710 2009 6.8% (12.3%) 3.5% (2.4%) 75.2% 4.5% $186,043 $12,587 2010 6.6% 7.0% 9.2% 16.4% 80.1% 4.4% $191,489 $12,637
DATAMONITOR
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LEADING COMPANIES
Figure 8:
Omnicom Group Inc.: revenues & profitability
DATAMONITOR
Figure 9:
Omnicom Group Inc.: assets & liabilities
DATAMONITOR
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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 of 86.4% since 2010. The compound annual growth rate of the industry in the period 201015 is predicted to be 13.3%. Table 15: Year 2010 2011 2012 2013 2014 2015 CAGR: 201015 Source: Datamonitor China advertising industry value forecast: $ million, 201015 $ million 7,887.7 9,070.8 10,612.9 12,053.2 13,321.5 14,704.2 CNY million 53,468.7 61,489.0 71,942.1 81,705.7 90,302.9 99,676.2 million 5,940.6 6,831.7 7,993.1 9,077.9 10,033.1 11,074.5 % Growth 11.9% 15.0% 17.0% 13.6% 10.5% 10.4% 13.3% DATAMONITOR
Figure 10: China advertising industry value forecast: $ million, 201015
Source: Datamonitor
DATAMONITOR
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MACROECONOMIC INDICATORS
Table 16: Year 2006 2007 2008 2009 2010 Source: Datamonitor China size of population (million), 200610 Population (million) 1,311.0 1,317.9 1,324.7 1,331.4 1,338.0 % Growth 0.6% 0.5% 0.5% 0.5% 0.5% DATAMONITOR
Table 17: Year 2006 2007 2008 2009 2010
China gdp (constant 2000 prices, $ billion), 200610 Constant 2000 Prices, $ billion 2,407.2 2,822.5 3,148.9 3,440.2 3,794.5 % Growth 15.3% 17.3% 11.6% 9.3% 10.3% DATAMONITOR
Source: Datamonitor
Table 18: Year 2006 2007 2008 2009 2010
China gdp (current prices, $ billion), 200610 Current Prices, $ billion 2,712.9 3,494.2 4,520.0 4,987.6 5,734.6 % Growth 20.2% 28.8% 29.4% 10.3% 15.0% DATAMONITOR
Source: Datamonitor
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Table 19: Year 2006 2007 2008 2009 2010
China inflation, 200610 Inflation Rate (%) 1.5% 4.8% 5.9% (0.7%) 3.3% DATAMONITOR
Source: Datamonitor
Table 20: Year 2006 2007 2008 2009 2010
China consumer price index (absolute), 200610 Consumer Price Index (2000 = 100) 108.6 113.8 120.5 119.6 123.6 DATAMONITOR
Source: Datamonitor
Table 21: Year 2006 2007 2008 2009 2010
China exchange rate, 200610 Exchange rate ($/CNY) 7.9819 7.6172 6.9623 6.8409 6.7788 Exchange rate (/CNY) 10.0145 10.4228 10.1875 9.5123 9.0005 DATAMONITOR
Source: Datamonitor
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APPENDIX
APPENDIX
Methodology
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 surveys and 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, analyst commentary, company profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market overview Definitions Market definitions are standardized to allow comparison from country to country. The parameters of each definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the market and our clients Extensive secondary research activities ensure we are always fully up-to-date with the latest industry 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 quantitative and qualitative data to be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can then be refined according to specific competitive, regulatory and demand-related factors Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date
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APPENDIX
Industry associations
World Federation of Advertisers 120 Avenue Louise, 1050 Brussels, Belgium Tel.: 0032 2 502 5740 Fax: 32 2 502 5666 www.wfanet.org International Advertising Association IAA World Service Center, 275 Madison Avenue Suite 2102, New York, NY 10016, USA Tel.: 001 212 557 1133 Fax: 1 212 983 0455 www.iaaglobal.org Japan Advertising Agencies Association Dentsu Ginza Bldg., 4-17, Ginza 7-chome, Chuo-Ku, 104-0061 Tokyo, Japan Tel.: 0081 3 5568 0876 Fax: 81 3 5568 0889 www.jaaa.ne.jp
Related Datamonitor research

Industry Profile Global advertising Advertising in Europe Advertising in Asia-Pacific Advertising in Japan
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APPENDIX
Disclaimer
All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission 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 be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.
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ABOUT DATAMONITOR
ABOUT DATAMONITOR
The Datamonitor Group is a world-leading provider of premium global business information, delivering independent data, analysis and opinion across the Automotive, Consumer Markets, Energy & Utilities, Financial Services, Logistics & Express, Pharmaceutical & Healthcare, Retail, Technology and Telecoms industries. Combining our industry knowledge and experience, we assist over 6,000 of the worlds leading companies in making better strategic and operational decisions. Delivered online via our user-friendly web platforms, our market intelligence products and services ensure that you will achieve your desired commercial goals by giving you the insight you need to best respond to your competitive environment.
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Market value forecast

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China advertising industry value: $ million, 200610

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

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

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Dentsu Inc.: revenues & profitability

Source: company filings

Dentsu Inc.: assets & liabilities

Source: company filings

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WPP Group plc

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Table 10: million

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Table 11: Ratio

WPP Group plc: revenues & profitability

Source: company filings

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WPP Group plc: assets & liabilities

Source: company filings

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Omnicom Group Inc.

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Table 13: $ million

Table 14: Ratio

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Omnicom Group Inc.: revenues & profitability

Source: company filings

Omnicom Group Inc.: assets & liabilities

Source: company filings

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

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Table 17: Year 2006 2007 2008 2009 2010

Table 18: Year 2006 2007 2008 2009 2010

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Table 19: Year 2006 2007 2008 2009 2010

Table 20: Year 2006 2007 2008 2009 2010

Table 21: Year 2006 2007 2008 2009 2010

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Related Datamonitor research

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