Bunnings
Regional TV Effectiveness Review
August 2011
www.regionaltvmarketing.com.au
RTM is the marketing bureau for Regional free to air TV
Regional consumers are a key element in Bunnings long term success
• Regional consumers have significantly higher purchasing of hardware
• Case studies prove regional can contribute over 40% of sales growth
• Regional markets deliver double the rate of return on ad investment at existing investment levels
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: 19% of total regional population
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.
Savings are at an all time high in both regional and metro markets
2006 2007 2008 2009 2010 20110
100
200
300
400
500
Metro Regional
Saving per discretionary $1000
Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey
The need to pay debt continues to decline in regional but is growing in metro markets
Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey
2006 2007 2008 2009 2010 20110
100
200
300
400
500
Metro Regional
Loan Repayment per discretionary $1000
Regional consumers’ willingness to spend grew this year by 9% – against national trend
Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey
2006 2007 2008 2009 2010 20110
50
100
150
200
250
300
350
Metro
Spending per discretionary $1000
Home price to income ratio is significantly lower in regional TV markets
Sydney Melbourne
Brisbane Adelaide
Perth
5.6 5.6 4.2 4.3 4.3
NNSW SNSW Reg. VIC Reg. QLD Tasmania Rural
4.2 3.9 3.1 3.7 3.8 2.8
House price vs. income multiple
Source: Residex median house *(includes apartment price) Jan – Jun 2011 & Roy Morgan Single Source 12 mths to March 2011
Average household incomes in regional TV markets are within 10% of national average
Regional Metro
NNSW $89,690 Sydney $112,380
SNSW $102,500 Melbourne $101,840
Victoria $84,470 Brisbane $104,970
Queensland $95,080 Adelaide $91,530
Tasmania $84,170 Perth $119,600
Rural $106,690
Source: Roy Morgan Single Source (12mths to Mar 2011 )
P25-54: Average household Income
20%
of regional consumers are willing and able to spend
20%+13% YOY
of regional consumers are willing and able to spend
Incomes in regional and rural Australia are growing well above the national average
Metro National Regional Rural0%
20%
40%
60%
80%
+38% +42% +48%+63%
Average household income growth since 2004 (P25-54)
Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 )
2005 2006 2007 2008 2009 2010 20110%
5%
10%
15%
20%
25%
Metro Regional
Rapid growth in the number of affluent consumers in regional Australia
Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 )
People 18-64 with HHI $130k+ or Investments $500K+
Regional consumers are more optimistic about their current financial outlook…
…and are more likely to spend on discretionary items over the coming year.
Source: Roy Morgan Single Source (12mths to March 2011)
Regional people are more likely to be renovating, gardening and buying hardware
People 25-54 Metro Regional
Went to a hardware store L3M 68% 72%
Bought Hardware/Gardening Products L4W
28% 32%
Spent $5,000+ renovating home L12M 13% 14%
Made repairs/alterations around home L12M
36% 38%
Redecorated/refurbished home L12M 19% 21%
Own or paying off home 62% 63%
Source: Roy Morgan Single Source (12mths to March 2011), *Went to hardware store L3M
Shopping at Bunnings by regional hardware buyers is slightly lower in regional reflecting store distribution
People 25-54: stores purchased
hardware/gardening products L4W*
Metro Regional
Bunnings 29% 27%
Mitre 10 3% 7%
Home Timber and Hardware 1% 3%
Kmart/ Big W/ Target 1% 1%
Nursery 2% 2%
SYD
MEL
BRI
ADE
PER
NSW
VIC
QLD
TAS
Diary
0k 50k 100k 150k 200k 250k 300k 350k 400k 450k
426
394
333
127
146
346
59
162
17
110
Regional represents 34% of Bunnings sales
YOY Growt
h+26%
+4%
+16%
+2%
-21%
+28%
-13%
+31%
-26%
+21%
000s of P25-54 who purchased hardware/gardening products at Bunnings L4WSource: Roy Morgan Single Source (12mths to March 2011 vs. 2010)
Bunnings dominant in most markets – growth opportunity in regional VIC and TAS
SYD MEL BRI ADE PER NNSW SNSW VIC QLD TAS Diary0%
5%
10%
15%
20%
25%
30%
% of P25-54 who purchased hardware/gardening products at Bunnings L4W
+3.12%
-0.38%+2.65
%+0.01
%-2.09%
+7.23%
+2.07%
-3.14%+4.82
%-3.15%
+2.68%
Source: Roy Morgan Single Source (12mths to March 2011 vs. 2010)
2004 2005 2006 2007 2008 2009 2010 20110%
5%
10%
15%
20%
25%
Metro Regional
Regional markets have been a key business growth driver for Bunnings over past 5 years
% of P25-54 who purchased hardware/gardening products at Bunnings L4W since 2004
Source: Roy Morgan Single Source 12 months to March 2004-2011
SYD
MEL
BRI
ADE
PER
NSW
VIC
QLD
TAS
Diary
0k 10k 20k 30k 40k 50k 60k
36
36
49
30
10
52
25
42
27
45
Regional represents 57% of Mitre 10 sales
YOY Growt
h+33%
+3%
-8%
-14%
-23%
+27%
-4%
0%
-31%
-15%
000s of P25-54 who purchased hardware/gardening products at Mitre 10 L4WSource: Roy Morgan Single Source (12mths to March 2011 vs. 2010)
Bunnings TV Spend by market
SYD31%
MEL 24%
BRI11%
ADE6%
PER8%
NSW8%
VIC3%
QLD4%
WA2%
TAS1%
NT0.4%
SYD
MEL
BRI
ADE
PER
NSW
VIC
QLD
WA
TAS
NT
TV spend: Jan – Jun 2011
Source: Adquest Millennium (Jan – Jun 2011)
Bunnings is biggest RTV single advertiser in category but is outspent by many small local stores
Bunnings
Mitre 10
Home Timber & Hardware
Total Category
19%
24%
27%
32%
Total TV Spend
$10.4m
$4m
$2.2m
$37.5m
TV spend: Jan – Jun 2011
Source: Adquest Millennium (Jan – Jun 2011)
Media landscape in regional markets is broadly similar to capital cities
People 25-54 Metro Reg
Watch 2hrs+ TV per day 50% 58%Listened to any commercial radio
weekday 66% 62%
Accessed the internet 87% 85%
Watch daytime TV 71% 76%
Own digital TV at home 74% 79%
Whether subscribe to Pay TV 28% 27%
Saw outdoor 51% 26%
Source: Roy Morgan Single Source 12 months to March 2011, *AGB NMR Panorama 12 mths to May 2011
• 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
Regional TV delivers higher engagement
through…
RTV sizzle reel
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
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
Proportional investment in RTV for all markets is approximately 23% of national TV budget
Regional markets offer Bunnings improved growth and ROI on every level
• Higher category consumption• Greater brand growth potential• Improved advertising driven growth
and ROI