Johnson & Johnson

Regional market reviewApril 2011

Regional markets continue to offer above average growth and ROI opportunities to J&J

• Affluent consumers that share the values and attitudes relevant to J&J

• Growth opportunities exist in regional for most J&J brands

• Case studies prove double rate of return from RTV investment

• FTA TV IS more dominant in regional and has grown its audience by 20% YOY

RTM EYEBALLS 60 sec video

Regional TV covers all areas outside capital

cities and reaches 36% of

populationQLD

NNSW

SNSW

TAS

VIC

REG. WA

DIARY

Regional TV coverage

includes large cities and fast

growing coastal suburbs

Newcastle & Central Coast

Gold Coast

Wollongong & Illawarra

Canberra

Diary markets: A diverse mix of urban and rural

Regional WA

Port Pirie/ Broken

Hill

Satellite

Griffith

Mildura

Darwin

Loxton/Mt Gambier

Populations of major regional TV markets are comparable with the metros

SydneyMelbourne

Reg NSWBrisbane

PerthReg QLDAdelaideReg VIC

DiaryWATAS

0m 1m 2m 3m 4m 5m

4,6354,528

3,4892,982

1,8561,764

1,4081,171

969585

510

People

Source: ATR & OZTAM 2011, Nielsen Media Research 2010

NNSW 2,079

SNSW 1,410

Population Increase: 2001 vs. 2011

Source: ATR & OZTAM 2011

Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas

MARYB

MACKA

YBRIS

NOR RIV

CAIRNS

TOW

NS

PERTH

ROCK

TOOW

CANB

GIPPS M

EL

TAM/T

AR

ALBURY

WOLL

BALLSY

DADEL

NEWC

HOBART

BEND

LAUNCE

SHEP

P

O/D/W

0%5%

10%15%20%25%30%35%40%45%

National average

QLD NSW VIC TAS METRO

Urbanisation and high population growth changing the profile of regional Australia

• Lower cost of living and lifestyle are main attractions

• Rural populations moving to regional hub towns

• Less than 4% of households depend on farming

Seachange…

… for baby boomers

…for families

“Typical” Seachanger

Ryan, 36. Wollongong NSW

Made the seachange from the “Shire” to the “Gong”. Owns a small business in building trade

Above average income & primary focus is kids and lifestyle.

Loves footy , cars and teaching kids surfing.

Source: Roy Morgan Single Source (12mths to Dec 2010)

% of people 25-54 Metro Regional

Employed Full Time 56% 53%

Employed Part Time 23% 22%

Household Income $80K+ 41% 42%

More than one income in household 64% 58%

Children in household 50% 52%

Own or Paying Off Home 59% 61%

Regional consumers have similar

demographic profile to metro

Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-100%

5%

10%

15%

20%

25%Metro Regional

People 18-54 with HHI $130k+ or Investments $500K+

Doubling in number of wealthy people living in regional Australia in past five years

Source: Roy Morgan Single Source (12mths to Sep 2010, 2009, 2008, 2007, 2006, 2005 )

Why has regional spending been more stable and the

outlook more positive?

• Lower cost of living – less debt• Huge investment in infrastructure • Population growth driving

development of local economies• Resources growth impacting

many parts of regional: NSW, QLD, WA, SA.

Culturally Australia is a divided nation: Regional is representative of the majority

ExperientialInternationalLibertarian

ExperientialInternationalLibertarian

PracticalCommunitarian

Self Reliant

PracticalCommunitarian

Self Reliant

Upwardly MobileMaterialist

Family Focused

Upwardly MobileMaterialist

Family Focused

PragmaticFunctionalPatriotic

PragmaticFunctionalPatriotic

YouthfulTechnological

Energetic

YouthfulTechnological

Energetic

ConservativeInstitutional

Self-Controlled

ConservativeInstitutional

Self-Controlled

InnerMetro23%

Outer Metro41%

Regional36%

www.regionaltvmarketing.com.au

According to David Chalke social

researcher….

Regional women start their family life younger and have more children

Women18-29 Metro Regional

Employed full/part time 64% 63%

Married/De facto 36% 43%

HHI $80k + 25% 29%

Children in the household 33% 45%

Have kids age 0-2 yrs 17% 29%

Have 2+ kids 14% 22%

Source: Roy Morgan Single Source (12mths to Dec 2010)

RTM case studies are an opportunity for OMD to demonstrate effective media strategy and improve client ROI

• Women’s Health (June 2009- May 2010)

• Listerine (Jan-Dec 2009)

• Skin Care (Sept 2007 – July 2008)

Examples

…RTM is open to discussing any regionally based research project

0%

2%

4%

6%

8%

10%

12%

$0.0m$0.2m$0.4m$0.6m$0.8m$1.0m$1.2m$1.4m$1.6m$1.8m$2.0m

Metro TV Regional TV Metro

Metro

Regional

Listerine Smart Rinse for Kids main driver of growth – Regional TV response higher

4 W/E Period

Listerine Smart Rinse for Kids share of total sales vs. TV Spend

Source: Scan Data (4 W/E 6/1/08 to 28/12/08) Coles /Woolworths/Bi Lo (Excludes NT)

40%of national Listerine sales

growth came from regional markets

Listerine sales additional sales post March 2008

Sales growth

Metro $4.4m

Regional $2.9m

RO 3Ix

Source: Aztec/Nielsen, Retail World , Adquest Jan - Dec 2008

Total Listerine ROI

Sales growth

TV $ ROI

Metro $4.4m $4.9m $0.89

Regional $2.9m $1.1m $2.63

Return from regional TV was positive by year end and 3 times rate of MTV

0%

10%

20%

30%

40%

50%

60%

70%

$0.0m$0.2m$0.4m$0.6m$0.8m$1.0m$1.2m$1.4m$1.6m$1.8m$2.0m

Metro TV Reg TV Metro Regional

Jan 2009 – May 2010Total TV: $968 kReg share: 20%

Share

TV

spend

Carefree liners share of Liners

Carefree Liners 2010: FTA TV had clear impact – regional response was as strong as metro

Carefree Liners 2010: FTA TV had clear impact – regional response was as strong as metro

NB: No data between Oct-Dec ‘09

Source: Scan Data (4W/E 25/1/09 – 30/5/10) Coles/ Woolworths/Bi Lo (EXCLUDES NT & TAS) NB: Tampons Excludes Coles data,

AdQuest Millennium Jan-May 2010

2010 Jan - MayTotal TV: $973kReg share: 21%

Carefree share of liners grew in every regional market YOY by 4% on average

SYD MEL BRI ADE PER NNSW SNSW VIC QLD TAS WA/SA

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Carefree share point gain of liners YOYSource: Scan Data (4W/E 7/2/10 - 30/5/10) compared with (4 W/E 25/1/09 - 17/5/09)

Coles/ Woolworths/Bi Lo (EXCLUDES NT & TAS)

RO 1.5IxRate of return on investment from regional TV was 1.5 times rate of MTV

Source: Scan Data (4W/E 7/2/10 - 30/5/10) Coles/ Woolworths/Bi Lo (EXCLUDES NT & TAS), AdQuest Millennium Jan-May 2010

Jan- May 2011

Carefree liners sales

TV $ Jan – May 10

ROI

Metro $4.02m $771k $5.21

Regional $1.55m $197k $7.87

Reg. TV CPM is 45% below metro TV average and delivers double the cost efficiency and ROI

SYD MEL BRI ADE PER NNSWSNSW VIC QLD TAS40

60

80

100

120

140

160

180164

104

98

7989

71 70

5361

70

Ind

ex

TV market CPM indicesNational average CPM P18+ = 100

Source: Regional TV Agency Survey 2010

SYD19%

MEL19%

BRI12%

ADE6%

PER8%

Reg36%

SYD34%

MEL21%

BRI12%

ADE5%

PER7%

Reg23%

Share of national population

Share of national TV budget

Higher cost efficiency of regional TV means more can be invested to refine and target communications

Regional share of J&J TV budget has grown and is at upper range of competitive set – but not at full capacity

Aveeno

Benadryl

Codral

J&J Baby

Carefree

Compeed

Reach

Stayfree

Listerine

Neutrogena

Nicorette

Sudafed

Grand Total

19%

18%

17%

17%

13%

20%

13%

20%

18%

17%

20%

21%

18%

MTV% RTV%Total TV $

$2.8m

$858k

$1.9m

$1.5m

$1.5m

$1.6m

$1.2m

$1.5m

$3.8m

$4.2m

$1.5m

$991k

$23.3m

Source: AdQuest MillenniumJanuary – December 2010

Regional consumers more likely to watch FTA TV but otherwise have same media habits as metro

Women aged 18-39 Metro Reg

Watch 2hrs+ TV per day 49% 60%Listened to any commercial radio

weekday 65% 66%

Accessed the internet 85% 86%

Watch daytime TV 71% 74%

Own digital TV at home 85% 90%

Whether subscribe to Pay TV* 24% 23%

Source: Roy Morgan Single Source 12 months to Dec 2010, *AGB NMR Panorama 12 mths to Dec 2010

13/06/2010

27/06/2010

11/07/2010

25/07/2010

8/08/2010

22/08/2010

5/09/2010

19/09/2010

3/10/2010

17/10/2010

31/10/2010

14/11/2010

28/11/2010

12/12/2010

26/12/2010

9/01/2011

23/01/2011

6/02/2011

20/02/2011

6/03/2011

20/03/20110%

5%

10%

15%

20%

25%

Metro Regional

Launch week of 7mate &

Gem

Launch week of Eleven

Audience share of the new commercial “digital” channels has more than tripled since June 2010

Source: Mediaweek, Metro data from OzTAM and Regional data from Regoional TAM. All People 18:00 - 23:59

June 2010 Sept 2010 Dec 2010 March 2011

• Subscription TV audiences are down in all key dayparts for the Survey Year to Date• FTA viewing is up & commercial TV even more

Source: Regional TAM; Survey 1-2, 2011 vs. 2010; Consolidated Data

New commercial channels driving Free to air TV audiences up in 2011

Audience Year on Year % Change; Combined Agg Markets (QLD, NNSW, SNSW, VIC & TAS)

Total People; Sun-Sat; Survey 1-2, 2011 vs. 2010

• News & current affairs• Local TV ads• Promotions • Community sponsorships

Regional TV is part of the community… “We live here

too”

…means greater engagement

www.regionaltvmarketing.com.au

Local content reel…

Regional markets will continue to offer J&J higher growth and ROI from proportional share of TV spend

• Affluent consumers• Responsive to TV• Interested in brands and new ideas• Most cost efficient mass medium

available to Johnson & Johnson