Nomura Media Summit 2015 New York May 27, 2015 Robert Horler CEO Dentsu Aegis Network US Innovating The Way Brands Are Built
Agenda Dentsu Group overview & 2014 results highlights Global market context Our current position and recent performance in the US Our approach and future priority areas in the US Q&A
Dentsu Group overview & 2014 results highlights Innovating The Way Brands Are Built
Dentsu Group Overview No.1 in Japan and 80% larger than the No.2 player (1) No. 1 brand agency globally (2) and 3 rd largest media agency group in the world (3) 11,000+ clients globally, served by 42,000+ professionals 51% of gross profit now from outside of Japan (4) 30% of gross profit now from digital (including 43% at Dentsu Aegis Network) (4) Notes (1) Hakuhodo DY: Calculated using the combined total of net sales of Hakuhodo, Daiko Advertising and Yomiko Advertising in calendar year 2013. (2) Advertising Age (April 2014) (3) Based on Dentsu s non-consolidated media billings of JPY 968bn ($9.9bn) in calendar year 2013 and Dentsu Aegis Network's billings in RECMA overall activity rankings 2013. (4) Based on consolidated results in the first half of the fiscal year ended March 2015
Dentsu Group Structure Tadashi Ishii President & CEO Shoichi Nakamoto Senior EVP, CFO Yuzuru Kato Executive Vice President, Dentsu Inc. Tim Andree Executive Vice President, Dentsu Inc. Executive Chairman, Dentsu Aegis Network Jerry Buhlmann Executive Officer, Dentsu Inc. CEO, Dentsu Aegis Network JAPAN NETWORK GLOBAL NETWORK
Dentsu Group s FY2014 results highlights Continued outperformance of the peer group Group organic gross profit growth of 5.8%: 2.2% organic growth in Japan 10.3% organic growth globally, and 13.7% in Q1 2015 Group underlying operating margin was 19.5% (FY2013: 20.4%): Increased investment in global functions - peaked during the year Balance sheet remains strong, with clear capital utilisation strategy in place: Net Debt: EBITDA at 0.25x (from 0.78x in 2013) M&A remains the main priority for capital deployment 25 acquisitions in 2014 Annual dividend per share increased by 66.7% to 55 yen Share Repurchase of up to 20 billion yen
Dentsu Aegis Network Peer group outperformance: 2014 15% 10% 10.3% 5% Peer group average 5.7% 5.5% 5.1% 0% Dentsu Aegis Network 3.2% 2.0% WPP Publicis Omnicom IPG Havas Our 2014 organic revenue growth is 2.4x the peer group average
Dentsu Aegis Network Peer group outperformance: Q1 2015 15% 13.7% 10% 5% Peer group average 5.1% 5.7% 7.1% 0% Dentsu Aegis Network 2.5% 0.9% WPP Publicis Omnicom IPG Havas Our Q115 organic revenue growth is 3.1x the peer group average
Global market context Innovating The Way Brands Are Built
Global market context Convergence and globalisation POST DIGITAL IS CONVERGENT IS DISRUPTION NEEDS INNOVATION Digital economy is the story Social, mobile, transactional & transparent Rapid evolution of business models To differentiate, disrupt & access high growth
Driving point of engagement closer to point of transaction: Social, Mobile & Transactional The revolution accelerates. SMARTPHONES MOBILE ADS CONTENT DRIVES PERFORMANCE ecommerce Smartphone usage will double to 2.6bn handsets by 2019 Mobile adspend will increase 3x to $200bn by 2019 Video adspend will increase 4x to $36bn by 2018 Market will double in size to $2.5 trillion by 2018
Global Adspend Growth 2015 50.0% 4.6% Global 15.7% Digital Social, Mobile & Video
Dentsu Aegis Network Vision, strategy & objectives overview OFFER VISION OBJECTIVES Innovating The Way Brands Are Built 1. Increase exposure to growth markets and segments 2. Build capability in the digital economy 3. Broaden our services across clients 4. Grow international client base 5. Lead in top 20 markets USA and China 1st 6. Build a scalable organisation through innovation Strategy driven by culture & accelerated by acquisitions
The US & China: USA China key pillars of Global growth
Our current position and recent performance in the US Innovating The Way Brands Are Built
Operating Model and Agency Portfolio in the US HOLISTIC SPECIALIST INTEGRATED
2014 & 2015 New Business Performance in the US US new business billings = $1.5 billion
Our recent performance in the US revenues of $845m in 2014 US Revenue ($m) 900 850 800 750 700 650 600 550 500 450 400 350 300 12% 11% 2012 2013 2014
Continued focus on acquisitions
Innovative approach to social data
Our approach and future priority areas in the US Innovating The Way Brands Are Built
2015 Industry Growth in the US Television +2.0% Video +20.0% Cinema +3.5% Mobile +50% Newspaper -2.5% Outdoor +4.2% Digital +16.6% Total Industry Growth In 2015:+4.6%
The evolution of video Twitter YouTube 7th gen game console Netflix streaming Facebook Hulu+ Time shifted viewing Smart TV Tablet Satellite radio Instagram HD DVD & Blu-Ray Streaming radio DVR 8th gen game console 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 VCR Cable AOL DBS Satellite Yahoo Google Broadband HDTV VOD Apple TV Smartphone Roku Chromecast Amazon Prime Instant Video
A fundamental shift in planning is occurring Major implications for agencies and advertisers Siloed Connected TV Sales Paid activity Sales Search Sales Social Sales
Key priority areas for 2015 & beyond in the US Outperform Our Peer Group Integrated Specialisms Programmatic First Data At The Heart Of Everything Organisational Structure People
Nomura Media Summit 2015 New York May 27, 2015 Robert Horler CEO Dentsu Aegis Network US Innovating The Way Brands Are Built