Kathleen Tripp Felicia Alli Sadia Ahmed Jian Li Sangmin Leeab

ADVERTISING INDUSTRYCompany B

AGENDA

• Industry Overview

• Dentsu

• Publicis

• Havas

• Conclusion

ADVERTISING AGENCIES

• The Primary activities of this industry are: Creating advertising campaigns Providing media buying services Disseminating advertising campaigns through available

mediums Providing advertising services, including for indoor and

outdoor displays

• The major products and services in this industry are: Campaign planning and management Advertisement placement Creative services and production

INDUSTRY OVERVIEW

Global Advertising Agencies

• Total Industry Revenue = $271.5 billion

• Past 5 year Average Annual Revenue Growth = 4.7%

• Projected 5 year Average Annual Revenue Growth = 3.1%

• Estimated Revenue in 2020 = $317 billion

2010 2011 2012 2013 2014 20150.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00

Gloabl Advertising Agencies Industry Revenue(In Millions)

Global Revenue

GLOBAL AGENCIES

• Total Industry Revenue = $52.1 billion

• Past 5 year Average Annual Revenue Growth = 5.2 %

• Projected 5 year Average Annual Revenue Growth = 3.1%

• Estimated Revenue in 2020 = $60.8 billion

U.S. AGENCIES

2010 2011 2012 2013 2014 20150.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

Advertising Agencies US Revenue(In Millions)

US Revenue

U.S. AGENCIES

EXTERNAL ENVIRONMENTAL DRIVERS

• Global advertising expenditure

• Global per capita income

• GDP of the BRIC nations

• Global consumer spending

• Global investor confidence

INDUSTRY GROWTH

• Overall Global Advertising Agencies Industry = Mature

• 3 primary reasons for the industry being mature

• Industry Life Cycle: Mature = United States and Western Europe Rapid Growth = China, Latin America, Africa, the Middle East,

Russia, and India

TECHNOLOGICAL CHANGE: DIGITAL

• Consumer focus is on social media and the internet

• Opportunity in digital media advertising

• Digital Advertising Revenue 2010: 13%

• Digital Advertising Revenue 2015: 21.6%

EASE OF ENTRY

• The barriers to the industry = Medium • Little capital investment is required

• Assets = People

• No explicit governmental barriers to entry• Regulations on certain types of advertising in specific

countries

EASE OF ENTRY

• Acquisitions have created large global firms

• Difficult for entrants into the industry to compete for large clients

COMPETITIVE RIVALRY

• Competition = High

• Large number of firms ranging from fully-integrated, international entities to small, niche and local agencies

• Compete based on product differentiation or cost leadership

• Increased competition for the online advertising market

TV; 40.10%

Internet; 21.60%

Newspapers; 17.90%

Magazines; 8.30%

Radio; 4.60%

Outdoor; 6.40% Cinema; 0.50%

Estimated Share of ad spent in 2015

TVInternetNewspapersMagazinesRadioOutdoorCinema

COMPETITIVE SEGMENTS

SUPPLIER SEGMENT

• Supplier Power = Medium

• 4 major Supplier Industries

• Suppliers are industry independent

• Premium Ad space is limited• Supply is less than demand

• Forward integration

BUYER SEGMENT• Buyer Power = Medium

• 7 major Buyer Industries

• Buyers can switch advertising agencies easily

• Large buyers can demand concessions

• Market has many suppliers to choose from

• Backward integration

INDUSTRY FAVORABLENESS

• Barriers to Entry = Medium

• Competitive Rivalry = High

• Threat of Substitution = Low

• Supplier Power = Medium

• Buyer Power = Medium

OVERVIEW

• Dentsu an Advertising company founded in 1901. Based in Tokyo, Japan

• Dentsu offers Advertising, office rental, building maintenance, and fiduciary services

PRODUCTS & SERVICES

Marketing Design/ Strategic

Solutions

Communication Design Promotions Digital and

Social Media

CLIENTS

CORPORATE GOVERNANCE

Board of Director's

Executive Management Committee

Business Supervision Committee

Dentsu Ageis

CORPORATE PHILOS0PHY

Ideas that reach beyond the imaginable. Technology that crosses the bounds of possibilities. Entrepreneurship that surpasses the expected. Three sources of strength, driving our innovation bringing positive change to people and society.

Slogan: Good Innovation!

STRATEGY: DIVERSIFYING

• Diversifying the portfolio on a global basis.

• Organic growth rate of 10.3% that far exceeds their competitors. Nearly doubles the competitors growth rate.

STRATEGY: EXPANDING

• Evolving and expanding in the digital domain by aggressive M&As

• Total of 11 acquisitions in the 2014 fiscal year

STAKEHOLDERS

STOCK PERFORMANCE

MARKET SHARE

PROFITIABILTY PER ANAYLSIS

FINANCIAL STRENGTH

• Long-term debt: AA-• Short-term debt: A-1+

Ratings from Rating and Investment information. Inc. (R&I)

SWOT

Strengths Weaknesses

Opportunities Threats

• Strong recognition • Broad portfolio of services • Diversified end markets

• Geographic concentration

• Expansion through strategic acquisitions

• Digital/ social media growth

• Global competition • Regulations in advertising and

communications industry

Publicis Groupe is a French multinational advertising and public relations company, specializing in Marketing, Communications

and Business Transformation.

• Founded in 1926 by Marcel Bleustein-Blanchet• 3rd largest Global Advertising• Headquartered in Paris, France• Consists of 1,321 agencies throughout 6 regions• Operates 108 offices worldwide• 75,000 employees globally

OVERVIEW

Publicis Groupe Global Main Brands and Subsidiaries

Branding and Identity

Consumer Insights Design Digital Marketing

Public Relations

Media Planning

and Buying

Marketing Research

Relationship Marketing

PRODUCTS & SERVICES

CLIENTS

Publicis Groupe describes themselves as the global leader in marketing, communication and business

transformation.

To be the world leader in sustainable value creation through imaginative ideas and connections

that build business with empowered people everywhere

To move from a business leader to a business, marketing and

transformation leader

CORPORATE PHILOS0PHY

Mission Vision

Publicis Groupe Target by 2018

Increase Operating Margin to 17.3 to 19.3%

Digital and Technology

business to be 60% of revenue

Faster organic growth +200%

Current Operating Income 14.9%

Current Digital 51.9% Current Organic Growth 4%

STRATEGY

2015 Total Revenue 9M: Publicis Quarterly Review

REVENUE

2015 Total Revenue 9M:Publicis Quarterly Review

PRODUCT BREAKDOWN: REVENUE

2015 Total Revenue 9M: Publicis Quarterly ReviewBased on 2,854 Customers Representing 85% of the Customer base

REVENUE BREAKDOWN: SECTOR

Analog vs. Digital

Digital is leading the industry in growth and innovation globally

GROWTH BY REGION

STOCK PERFORMANCE

PUB Stock price closed at 59.70E, which is down from the 52 week of high of 60.23E

Earnings per share, minus costs of acquisitions

Dividend growth +9.1% in 2014

STOCK PERFORMANCE

FINANCIAL STRENGTH

Ratings from Rating and Investment information. Inc. (R&I)

Moody’s Credit Rating: BAA2

2015 YTD Revenue $9,334 $10,981 $7,3112015 YTD Operating Expenses $8,048 $9,556 $6,214

Profit Margin $1,286 $1,426 $1,096% of Profit Margin 13.7% 12.2% 14.9%

October 2010 Share Price $774.18 $44.03 $62.11October 2015 Share Price $1,544 $74.84 $84.53

% Change 99% 70% 36%

COMPETITION

Competitor Comparison: “MediaPalooza” Results

• In the last 6 months 20 clients were up for contract review with the worlds largest ad agencies

• With 25 Billion up for review, it was dubbed “MediaPalooza”

• With 60% of the reviews completed, Publicis Groups is performing above expectations

• Publicis Groupe has been able to gain new business due to it’s digital capabilities

COMPETITION

All of the firms stakeholders have a critical position in the health of Publicis Group and its future. The company has set up a large team of employees and

representatives to ensure the company’s health.

Shareholders Employees

Clients

STAKEHOLDERS

Supervisory Board

Committees

Management Board

Executive Committee

Strategic Leadership Committee

Group of individuals chosen by the stockholders to promote the best interests for the company through the governance of the company and to hire and supervise the executive directors and CEO

The Board has established various committees to assist in discharging its duties. These include an Audit, Compensation, Appointment, Strategy and Risk

Executive team and Directors of parent company, Publicis Group, including CEO, CFO COO

Executive team, including CEO, President of Publicis Groupe Subsidiaries (i.e. Saatchi and Saatchi

Company Leadership responsible for creating and executing strategic plans for company growth

STRUCTURE & COMPOSITION

Publicis Groupe prides itself on it’s beliefs and ideals and strives to live up to them everyday

Have Passion for the work

Believing in Mankind

Living the True Blue Way

Respect for the heritage the frames the future

Inspire people to do great things

BELIEFS & IDEALS

Transform into a business, marketing, communication transformation company

• Publicis Group’s digital revenue to over 50% by 2015 and guide the way to 2018 target of 60% of all revenues from digital

• The new platform of Publicis and Sapient creates a platform that is 22,000 strong• It creates a stronger and unique ability to handle global marketing campaigns• It will enhance the ability for Publicis to enter into strategic partnerships with

companies like Facebook, Yahoo and Google

This strategic move will position Publicis more competitively against it’s competition

STRATEGY

Publicis Acquisition of Sapient at the end of 2014 will create tremendous opportunity in the global advertising industry

• Publicis and French Telecom join forces with Irish Capital to create “Iris Next One”• Together, this will create a unique venture capital firm focused on investing in new

business opportunities that will generate future growth for Publicis

• Three strategies behind the joint venture• OP Ventures Growth will target established companies in France and Europe, providing

up to 15 million euros per project to support new digital and advertising projects • OP Ventures Global will invest in start-ups outside Europe, also with funds of up to 15

million euros per project. • OP Ventures Early Stage will provide seed-capital and early-stage investment of up to 3

million euros to young companies in France and Europe.

STRATEGY

• Recent acquisitions are strengthening Publicis position in the marketplace

• Making moves to focus on where the business is headed – Digital

• Working to fund new innovation through Iris Next One

• Smallest player out of the “Big Three”• Still working on expanding it’s reach

while top two are already there

• Significant changes to media landscape• Clients are cutting media investments• Boutique agencies that can do similar

work for less are becoming a trend

• Publicis exposure to Digital Expansion• Sapient opening opportunities with

Facebook, Yahoo and Google• Business expansion in India • Venture Capital new business opportunities

SWOT

Strengths Weaknesses

Opportunities Threats

• Havas was founded in 1835 and is headquartered in France

• Operating in over 100 countries

• Employing 16,000 people

OVERVIEW

To be the world’s best company at creatingmeaningful connections between people and brands

through creativity, media and innovation.

CORPORATE PHILOS0PHY

MISSION

The Havas group's six commitments to progress

• To reduce the environmental footprint of our operations

• To reduce the environmental impact of our communication campaigns

• To promote diversity and expand health insurance and employee benefits internationally

• To apply more exacting social and human rights criteria to ensure more responsible purchasing of products and services

• To promote transparency and ethics in our industry

• To promote a model of communications more conducive to sustainable development

.

VISION

STRATEGY

InnovationBuilding an extremely powerful offering in terms of technology, data,

performance measurement tools and content creation

External GrowthMaximizing value creation for the Group's clients, talents and shareholders.Looking in particular for agencies in order to meet the needs of its clients in

terms of knowhow or geographic coverage

Social Responsibility“Meaningful Brands”

Non-profit and non-governmental organizations in 2015

STRATEGY

• Revenue of €1,865 million in 2014, with an organic growth of 5.1%.

• Revenue for the first quarter of 2015 was € 469 millions with an organic growth of 7.1%

REVENUE

STOCK SHARE

OPERATIONAL EFFICIENCY

MAJOR COMPETITORS

MAJOR COMPETITORS

GOVERNANCE

SWOT

• Barriers of market entry• Domestic market• Skilled workforce

• Competitive market• R&D development• Interest rate, exchange risk on foreign

currencies• Future debt rating

• Growing economy• New acquisitions

• Increasing costs• Government regulations

Strengths Weaknesses

Opportunities Threats

CONCLUSION

All 3 companies are rated strongPoised to serve the emerging growing Digital Domain

Dentsu: “Good Innovation”

PUBLICIS: “Headed Digital”

HAVAS: “Meaningful Brand”

THANK YOU