2017 Advertising Expenditures in Japan - dentsu.com

1 H1 Advertising Expendituresin of Advertising Expenditures in Japan for Advertising Expenditures Classified by Advertising Expenditures Classified by Industry (Traditional Media Only, Excluding Satellite Media-Related Spending) 16 AppendicesAPPENDIX 1 Advertising Expenditures and Japan s GDP (1991 2017) 21 APPENDIX 2 Advertising Expenditures by Medium (1991 2017) 22 APPENDIX 3 Breakdown of Advertising Expenditures for Internet-Related Spending (1999 2017) 24 APPENDIX 4 Advertising Expenditures by Industry (2015 2017) 26 APPENDIX 5 Advertising Expenditures by Industry in the Traditional Media (2016 2017) 27 APPENDIX 6 component Ratio of Media Expenditures by Industry and Industry Expenditures by Medium for 2017 28 APPENDIX 7 Eleven-Year Trends in Advertising Expenditures by Industry (2007 2017) 29 APPENDIX 8 Sources of Media Expenditures 30 APPENDIX 9 Breakdown of Industry Categories 31 About Dentsu s Advertising Expenditures in JapanDentsu s annual report on Advertising Expenditures in Japan is an estimate of Advertising spending in Japan during the calendar year (January to December), representing the Advertising media fees and production costs for the traditional media (newspapers, magazines, radio and television)

2 , along with those for the Internet and promotional media categories. It is prepared in cooperation with media companies and production companies. Advertising Expenditures in the traditional media are also broken down into estimates for 21 industry had used the same methods and category scope in its estimate of Expenditures from 1947 through 1986, but in 1987 the scope of the report was expanded beyond the four traditional media, and figures were revised retroactively to 1985. The scope of estimates was revised again in the 2007 report, with figures revised retroactively to 2005. After Japan switched from analog to terrestrial digital broadcasting in 2011, televisions capable of receiving both terrestrial and satellite broadcasts became the norm.

3 Therefore, starting in 2014, Advertising Expenditures in Television were redefined to include Expenditures in both Terrestrial Television and Satellite Media-Related Advertising . H21I. Overview of Advertising Expenditures in Japan for 2017 Total Advertising Expenditures rose , to 6, billionJapan s Advertising Expenditures for calendar 2017 totaled 6, billion, an increase of compared with the previous year s figure. Overall Advertising expenditure increased for a sixth consecutive year, as the nation experienced the second-longest period of continuous post-war economic The full-year growth rate for overall Advertising Expenditures in 2017 was underpinnedby sustained, gradual expansion in the Japanese economy, which benefitted from theconvergence of an array of positive factors.

4 These include recovery in the global economy,rising corporate earnings, an improvement in the employment environment, weakening of theyen exchange rate, and a vigorous stock market. In particular, robust spending in Internetadvertising drove overall expenditure growth. Across the Advertising market as a whole, thetransformation to digital Advertising media advanced on a range of fronts, as integratedcommunication platforms that leveraged the particular characteristics of each mediumbecame more Broken down by medium, Advertising Expenditures fell in Newspapers (down ),Magazines (down ), and Television (down ; including both Terrestrial Television andSatellite Media-Related spending), and rose in Radio (up ).

5 As a result, overall spendingin the traditional media posted a decline of In Internet Advertising Expenditures (up ), growth of performance-based ads and video ads directed at users of mobiledevices was particularly strong. Hence, growth in the Internet medium remained the keydriver for Advertising Expenditures overall. Although spending on Promotional Mediadecreased (down ), growth was recorded for Outdoor, POP, and Exhibitions/ScreenDisplays and other By industry category (for the traditional media, but excluding Satellite Media-Relatedspending), year-on-year spending rose in 6 of the 21 industry categories posting gains were Real Estate/Housing Facilities (up on increased placements for general housing); Energy/Materials/Machinery (up on placements for ads related to gas market liberalization); Information/Communications (up on increased placements for web content and smartphones).

6 And Automobiles/Related Products (up on stronger Advertising for station wagons/hatchbacks, K-cars (engine displacement up to 660 cc) and SUVs).Major categories posting declines included Home Electric Appliances/AV Equipment (down on decreased Advertising for vacuum cleaners, and hair styling and beauty appliances); Precision Instruments/Office Supplies (down on decreased placements for wristwatches and digital cameras); Distribution/Retailing (down on decreased placements for general merchandise stores and convenience stores); Government/Organizations (down on fewer placements for Advertising industry organizations and foreign/Japanese government and public agencies); Apparel/Fashion, and Accessories/Personal Items (down on decreased Advertising for casual wear).

7 In calendar 2017, Japan s nominal gross domestic product (GDP) grew Advertising expenditure for the year amounted to of nominal GDP, unchanged from the corresponding figure for 2016. General Characteristics of Advertising Expenditures during Calendar Economy Maintains Gradual Pace of GrowthIn calendar 2017, the Japanese economy continued to grow at a modest pace. By year s end,real GDP had grown for eight consecutive quarters. The economy expanded ( onan annualized basis) in the January March quarter, ( annualized) in the April Junequarter, ( annualized) in the July September quarter, and ( annualized) inthe October December quarter. As a result, real GDP grew at an annual rate of ,recording the sixth consecutive year of positive growth.

8 The main drivers of economic growthwere capital investment and exports. Capital investment remained robust, posting fiveconsecutive quarters of expansion through the final quarter of 2017. Exports were strong,underpinned by recovery in the global economy and depreciation of the yen, leading to thesixth consecutive quarter of growth in exports through the end of 2017. Although consumersentiment recovered as conditions in the labor market improved, the impact of unseasonableweather meant consumer spending remained soft. Investment in housing declined year onyear, for two consecutive quarters beginning with the July September quarter, reflecting theimpact of a peaking in new housing starts centering on housing units for rent.

9 Investment inpublic works for the October December quarter recorded a year-on-year decline, markingthe end of the boost that had resulted from the supplementary budget implemented by thegovernment in with the previous year, real GDP grew and nominal GDP increased during calendar 2017 (according to preliminary GDP quarterly data released on February 14, 2018).Corporate Earnings Favorable; Full-term Net Profits Forecast to Reach Record HighFor listed companies as a whole, 2017 saw a favorable earnings environment, supported by depreciation of the yen and US tax reform. During the first nine months of Japan s fiscal 2017 (April December), the revenues of listed companies rose across all industries (financial sector not included), ordinary profits increased , and net profits jumped Aggregate net profits for all listed companies amounted to 23, billion, which was a record for the April December period.

10 Bolstered by the weakening of the yen, the manufacturing sector performed particularly strongly, while the non-manufacturing sector also put in a sound performance. Based on the April December performance, analysts are forecasting that, for Japan s full fiscal year ending March 31, 2018, total revenues for listed companies in all industries will rise compared with the previous fiscal year, while ordinary profit will increase , and net profit year on year. Aggregate net profit is expected to reach 28, billion, an all-time high. (These forecasts were published by Nikkei Inc. on February 16, 2018.)Ongoing Improvement in Employment ConditionsEmployment conditions continued to improve.