Bunnings Regional TV Effectiveness Review August 2011

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 population QLD 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 People Source: ATR & OZTAM 2011, Nielsen Media Research 2010 NNSW 2,079SNSW 1,410

Population Increase: 2001 vs Source: ATR & OZTAM 2011 Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas National average QLDNSWVICTASMETRO

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 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 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 Spending per discretionary $1000

Home price to income ratio is significantly lower in regional TV markets 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 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 Average household income growth since 2004 (P25-54) Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 )

Rapid growth in the number of affluent consumers in regional Australia Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 ) People 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

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

Regional represents 34% of Bunnings sales YOY Growth +26% +4% +16% +2% -21% +28% -13% +31% -26% +21% 000s of P25-54 who purchased hardware/gardening products at Bunnings L4W Source: Roy Morgan Single Source (12mths to March 2011 vs. 2010)

Bunnings dominant in most markets – growth opportunity in regional VIC and TAS % 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)

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

Regional represents 57% of Mitre 10 sales YOY Growth +33% +3% -8% -14% -23% +27% -4% 0% -31% -15% 000s of P25-54 who purchased hardware/gardening products at Mitre 10 L4W Source: Roy Morgan Single Source (12mths to March 2011 vs. 2010)

Bunnings TV Spend by market 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 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 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

Regional TV delivers higher engagement through… RTV sizzle reel

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: :59 June 2010 Sept 2010 Dec 2010March 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 Index TV market CPM indices National average CPM P18+ = 100 Source: Regional TV Agency Survey 2010

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