L’Oreal Regional TV Effectiveness Review June 2011

L’OrealRegional TV Effectiveness Review

June 2011

www.regionaltvmarketing.com.au

RTM is the marketing bureau for Regional free to air TV

http://www.regionaltvmarketing.com.au/regional-tv/home

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

• Seachange: Baby boomers and young families

• 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.

Regional consumers can be main growth driver for L’Oreal during next 12-18 months

• Two years of sales and advertising response prove regional can contribute up to 40% of growth

• Relatively small realignments of TV spend to regional have made a positive impact for L’Oreal and key rivals

• Regional consumer spending is leading the recovery – greater affluence in regional – 40yrs + key growth demo

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

Regional willingness to spend been very consistent through GFC and in 2011 still positive vs. national downward trend

2006 2007 2008 2009 2010 20110

50

100

150

200

250

300

350

Dollars allocated for spending from discretionary $1000

$ S

pent

per

$1000

Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey

Regional

Metro

+9% YOY

-12% YOY

The important Profligate Spender group has increased since late 2010 in regional while declining in metro

2006 2007 2008 2009 2010 20110%

5%

10%

15%

20%

25%

% Pop. who are profligate spenders

% o

f Po

p.

Profligate spenders are people both willing and able to spend

Regional

Metro

Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey

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 divide nation: Regional is representative of the dominant suburban lifestyle

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….

http://www.regionaltvmarketing.com.au/regional-tv/planning/demographics

33%of all Skincare sales are from

regional consumers

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

Total Skin care sales for Sept 2007 to July 2008 – Regional is 33%+ of national sales

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0m $10.0m $20.0m $30.0m $40.0m

Total Skin Care category sales: Sept 2007 to July 2008


21%

19%

15%

5%

8%

14%

5%

8%

2%

4%

Metro Regional0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20% 20%

18% 17%

12% 12%

8% 9%7% 8%6% 6%6% 5%6% 5%5% 5%3% 4%9% 9% Other

BrandsVaselineClean&ClearJohnson'sNeutrogenaClearasilGarnierDoveL'OrealNivea BrandOlay

Brand shares of total category sales: Sept 2007 to July 2008

During FYR ‘08 L’Oreal had same market share in regional as metro


Metro Regional0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19% 18%

17% 16%

12% 13%

8% 8%7% 8%7% 6%6% 5%5% 6%5% 5%

14% 15% OTHERCLEAN & CLEARCLEARASILNEUTROGENAJOHNSON'SGARNIERDOVEL'OREALNIVEAOLAY

Brand shares of total category sales: Sept 2006 to Aug 2007

In the prior year (’07) L’Oreal had higher share in regional – Olay main beneficiary

Source: Scan Data (4 W/E 3/09/06-02/09/07) Coles /Woolworths/Bi Lo (excluding NT)

33%of national

L’Oreal sales are to Regional

women


L’Oreal DE regional sales are 33% of national but Reg. NSW bigger than Brisbane

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0m $1.0m $2.0m $3.0m $4.0m $5.0m

Total L’Oreal Dermo Expertise Skin Care sales: Sept 2007 to July 2008


L’Oreal BDI in Regional NSW is 11% above national average – growth opportunity in QLD

L’Oreal Dermo Expertise share of total skin care category sales:

Sept 2007 to July 2008Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

SYD

MEL BR

IAD

EPE

R

NNSWSN

SW VIC

QLD TAS

DIARY

0%

2%

4%

6%

8%

10%

12%

14%

19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

$0.0m

$0.2m

$0.4m

$0.6m

$0.8m

$1.0m

$1.2m

Metro TV Regional TV Metro

4 W/C Period

Dermo Expertise share of total sales vs. TV Spend


2007 Jul-DecTotal TV: $2.4mReg share: 11%

2008 Jan-JunTotal TV: $2.0mReg share: 14%

L’Oreal Dermo Exp.regional BDI is very sensitive to relative weight of TV investment

RO 3Ix

Source: Aztec/Nielsen, Sept 07 – July 08 Grocery channel

L’Oreal DE skincare

Annual sales*

TV Spend

ROI

Metro $13.8m $3.8m $3.63

Regional $6.5m $544k $11.90

Cost efficiency and ROI from L’Oreal regional TV is 3 times better than metro TV

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$0.0m

$0.2m

$0.4m

$0.6m

$0.8m

$1.0m

$1.2m


Olay market share in regional lagged metro until Nov ‘07 when regional share of TV budget grew

4 W/C Period

Olay share of total sales vs. TV Spend Source: Scan Data (4 W/E 16/9/07 to 22/06/08) Coles /Woolworths/Bi Lo (Excludes NT)and NMR

Adquest Millenium

Jan-Oct 2007 TV Spend: $5.8mRTV share: est. 4%

Nov ‘07 –Jun ‘08 TV Spend: $2.7mRTV share: est. 16%

TV spend p/month

Category share by

value

%4Based on 4pt growth to June 2008 in RTV markets and 3pt growth in metro markets for 12 months sales of Olay brand Sources: Aztec/Nielsen, Retail World , Adquest Nov 07 – June 2008

Incremental Olay sales*

TV $ Nov 07-June 08

ROI

Metro $3.9m $2.7m $1.44

Regional $2.5m $0.43m $5.81

Of Olay national sales growth came from realignment of TV budget to regional … and 3 times rate of ROI

0

Regional women 30+ more likely to

have children but still very involved

with skincare

Source: Roy Morgan Single Source (12mths to December 2008)

Women aged 25-39: Met Reg

Children in Household62% 74%

I have favourite brands for most things I buy

69% 70%

Sun Protection Factor (important criteria for skin care)

38% 37%

Moisturising Benefits (important criteria for skin care)

45% 43%

Purchased skincare P6M76% 74%

19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

$0.0m

$0.2m

$0.4m

$0.6m

$0.8m

$1.0m

$1.2m


Wrinkle Decrease regional BDI grew relative to metro in ‘08 with RTV share

4 W/C Period

L’Oreal Total Wrinkle Decrease share of total sales vs. TV Spend



2008 Jan-JunTotal TV: $335kReg share: 17%

19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

$0.0m

$0.2m

$0.4m

$0.6m

$0.8m

$1.0m

$1.2m

Collagen Definer product highly responsive to TV and RTV share of budget

4 W/C Period

L’Oreal Collagen Definer share of total sales vs. TV Spend



2008 Jan-JunTotal TV: $335kReg share: 17%

Total Wrinkle Decrease sales for Sept 2007 to July 2008. Regional is 33% of total

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0

m

$0.1

m

$0.2

m

$0.3

m

$0.4

m

$0.5

m

$0.6

m

$0.7

m

$0.8

m

$0.9

m

L’Oreal total Wrinkle Decrease skin care sales: Sept 2007 to July 2008


Australian women 40+ have

same profile regardless of

location


Women aged 40-54: Met Reg

Household income $50k+ 58% 59%

Children in Household 48% 46%

Favourite brands for most things I buy 69% 72%

Moisturising Benefits (criteria for skin care) 47% 46%

Purchased skincare P6M 77% 77%

DE Revitalift sales show skew to regional equal 35% + of national value

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0m $0.2m $0.4m $0.6m $0.8m $1.0m $1.2m

Dermo Expertise total Revitalift skin care sales: Sept 2007 to July 2008


19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

$0.0m

$0.2m

$0.4m

$0.6m

$0.8m

$1.0m

$1.2m


Regional women very responsive to Revitalift TV

4 W/C Period

L’Oreal Total Revitalift share of total sales vs. TV Spend


2007 Jul-DecTotal TV: $911kReg share: 12%

2008 Jan-JunTotal TV: $694Reg share: 15%

Regional women 55+ are affluent consumers and just as engaged

with skincare


Women aged 55+ Met Reg

Investments $500k+ 9% 9%

Bought new car P12M 4% 4%

Own home outright 74% 74%

Favourite brands for most things 68% 68%

Moisturising Benefits 47% 47%

Purchased skincare P6M 68% 67%

19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

$0.0m

$0.2m

$0.4m

$0.6m

$0.8m

$1.0m

$1.2m


Regional women highly responsive to Perfect and Re-Perfect TVC’s

4 W/C Period

L’Oreal Age Perfect & Re-Perfect share of total sales vs. TV Spend



Total Age Perfect & Re-Perfect sales. Regional is 36%+ of total

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0m $0.2m $0.4m $0.6m $0.8m $1.0m $1.2m $1.4m


L’OrealTotal Age Perfect & Re-Perfect skin care sales: Sept 2007 to July 2008

Regional sales in the growing 55+ segment are 40%+ of national value

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0m $0.2m $0.4m $0.6m $0.8m $1.0m $1.2m $1.4m


L’OrealTotal Age Perfect & Re-Perfect skin care sales: Sept 2007 to July 2008

Reg. NSW was no.1 market by value in FYR ‘07 for Re-Perfect

Garnier Re-Density: Reg. NSW is No. 1 market and total Reg. almost 40% of national

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

DIARY

$0.0m $0.1m $0.1m

Garnier Re-density sales: Sept 2007 to July 2008


18%

17%

14%

6%

8%

18%

5%

9%

2%

4%

19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

$0.0m$0.1m$0.2m$0.3m$0.4m$0.5m$0.6m$0.7m$0.8m$0.9m$1.0m


Garnier: Grew YOY & higher regional BDI shows long term RTV investment (15%+ avg.)

4 W/C Period

Garnier share of total sales vs. TV Spend


TV spend:$2.7mRTV share: 15%

19/08/2007

16/09/2007

14/10/2007

11/11/2007

9/12/2007

6/01/2008

3/02/2008

2/03/2008

30/03/2008

27/04/2008

25/05/2008

22/06/2008

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

$0k$10k$20k$30k$40k$50k$60k$70k$80k$90k$100k

NNSW TV SNSW TV QLD TV NNSW SNSW QLD

STV test for Neutrogena in Reg. QLD generated minimal response vs. Free RTV

4 W/C Period

Neutrogena Rapid Clear share of total sales vs. TV Spend


QLD STV Only

Category: Food (Dairy & Dairy Substitutes) & Beverages (Milk)

Guthy Renker

Olay

L'Oreal

Nivea

Neutrogena

Garnier

J&J

Vaseline

Roc Skincare

Grand Total

40%

14%

15%

10%

14%

14%

15%

18%

13%

19%

Series1 Series2

Regional share of skin care category TV grew in FYR ‘08 Regional share of skin care category TV grew in FYR ‘08

Source: Nielsen Media Research AdExCategory: Skin Care - All

Period: Jan to Dec 2008

Total TV Spend

$4.1m

$4.8m

$683k

$2.0m

$820k

$1.0m

$1.6m

$3.3m

$1.3m

$2.0

$3.4m

$27.4m

Regional TV CPM rates are half metro equivalent – guarantees higher ROI

SYD MEL BRI ADE PER NNSWSNSW VIC QLD TAS40

60

80

100

120

140

160

180162

111105

7991

60 6655

62 61

Ind

ex

TV market CPM indicesNational average CPM P18+ = 100

Source: Regional TV Agency Survey 2008

A relatively small realignment of TV $ to regional - circa 20% share will deliver higher growth and ROI

• Regional NSW and QLD are clear opportunities for growth

• L’Oreal mature age brands should be returning 40% of sales from regional women

• Ideal time to target regional as consumers increase discretionary spending

Documents

L’Oreal Regional TV Effectiveness Review June 2011