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Innovating The Way Brands Are Built
Nomura Media Summit 2015 New York
May 27, 2015 Robert Horler CEO Dentsu Aegis Network US
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
Innovating The Way Brands Are Built
Dentsu Group overview & 2014 results highlights
Dentsu Group Overview
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
No.1 in Japan and 80% larger than the No.2 player (1) No. 1 brand agency globally (2)
and 3rd largest media agency group in the world (3)
30% of gross profit now from digital (including 43% at Dentsu Aegis Network) (4) 51% of gross profit now from
outside of Japan (4)
11,000+ clients globally, served by 42,000+ professionals
GLOBAL NETWORK
Dentsu Group Structure
JAPAN NETWORK
Shoichi Nakamoto Senior EVP, CFO
Tadashi Ishii President & CEO
Yuzuru Kato Executive Vice President, Dentsu Inc.
Jerry Buhlmann Executive Officer, Dentsu Inc. CEO, Dentsu Aegis Network
Tim Andree Executive Vice President,
Dentsu Inc. Executive Chairman,
Dentsu Aegis Network
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 Group’s FY2014 results – highlights Continued outperformance of the peer group
Dentsu Aegis Network Peer group outperformance: 2014
Our 2014 organic revenue growth is 2.4x the peer group average
10.3%
3.2% 2.0%
5.7% 5.5% 5.1%
0%
5%
10%
15%
Dentsu Aegis Network
WPP Publicis Omnicom IPG Havas
Peer group average
Dentsu Aegis Network Peer group outperformance: Q1 2015
Our Q115 organic revenue growth is 3.1x the peer group average
13.7%
2.5% 0.9%
5.1% 5.7% 7.1%
0%
5%
10%
15%
Dentsu Aegis Network
WPP Publicis Omnicom IPG Havas
Peer group average
Innovating The Way Brands Are Built
Global market context
Global market context Convergence and globalisation
Digital economy is ‘the story’
POST DIGITAL
Social, mobile, transactional &
transparent
IS CONVERGENT
Rapid evolution of business
models
IS DISRUPTION
To differentiate, disrupt & access
high growth
NEEDS INNOVATION
The revolution accelerates….
SMARTPHONES
Smartphone usage will double to
2.6bn handsets by 2019
MOBILE ADS CONTENT DRIVES PERFORMANCE
eCOMMERCE
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
Driving point of engagement closer to point of transaction: Social, Mobile & Transactional
4.6% 15.7%
50.0%
Global Digital Social, Mobile & Video
Global Adspend Growth 2015
Dentsu Aegis Network Vision, strategy & objectives – overview
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
OFFER
The US & China:
key pillars of Global growth
USA China
Innovating The Way Brands Are Built
Our current position and recent performance in the US
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 $845m in 2014
300 350 400 450 500 550 600 650 700 750 800 850 900
2012 2013 2014
US Revenue ($m)
12%
11%
Continued focus on acquisitions
Innovative approach to social data
Innovating The Way Brands Are Built
Our approach and future priority areas in the US
2015 Industry Growth in the US
Total Industry Growth In 2015:+4.6%
Television +2.0%
Video +20.0%
Cinema +3.5%
Mobile +50%
Newspaper -2.5%
Outdoor +4.2%
Digital +16.6%
1965
Cable
AOL
DBS Satellite
Yahoo Google
Broadband
HDTV
VOD
Apple TV
Roku Amazon Prime Instant Video
Chromecast
DVR
HD DVD & Blu-Ray
Time – shifted viewing
7th gen game console YouTube
Netflix streaming Hulu+
Smart TV
Tablet Instagram
Streaming radio
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
VCR
Smartphone
Satellite radio
The evolution of video
8th gen game console
A fundamental shift in planning is occurring Major implications for agencies and advertisers
Social
TV
Search
£ Sales
Siloed
£ Sales
£ Sales
Connected
Paid activity £
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
Innovating The Way Brands Are Built
Nomura Media Summit 2015 New York
May 27, 2015 Robert Horler CEO Dentsu Aegis Network US
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