Adspend Projections for 2002 Speaker : Mr. Simon Lai, Director, Business Development Marketing Decision Research (Pacific) Ltd Sponsored by:

Adspend Projections for Marketing Decision Research (Pacific) Ltd RESEARCH OBJECTIVES 1.To understand the change in total advertising expenditure in 2002 over that of 2001 among the top advertisers 2.To study the change in advertising budget allocation in 2002 over that of To study the latest pattern of agency usage and remuneration methods

Adspend Projections for Marketing Decision Research (Pacific) Ltd Sample Composition and Sample Size A total of 201 completed self-administered questionnaires was received from top advertisers in terms of monitored media spending in year 2001 Target Respondents Person-in-charge of advertising budget decision and allocation in selected companies Fieldwork Period 4 January - 8 February 2002 RESEARCH METHODOLOGY

Adspend Projections for Marketing Decision Research (Pacific) Ltd 1.This is probably the first survey of its kind in the industry and there is no benchmark or trend data available for comparison. 2.The survey aims to provide a reasonable projection of the likely change in level of commercial advertising expenditure in 2002 over that of Accordingly, non-commercial advertisers (such as government APIs, charity organizations, etc.) are excluded from the sample. 3.The data provided are not directly comparable to monitored media expenditure reports because of the following key differences: IMPORTANT NOTES TO INTERPRETATION OF RESULTS Adspend Projections for 2002 Results based on sample of 201 advertisers Covers all related ad expenditures including production and below-the- line activities Respondents report on their actual media expenditure which already reflects media discounts Monitored Media Expenditure Results based on monitored spending of all advertisers Covers media expenditure only All based on top rates without consideration of discounts

Adspend Projections for Marketing Decision Research (Pacific) Ltd 1.Consumer Services (such as banking, insurance, telecom, etc.) and Packaged Consumer Goods seem to dominate in numbers, accounting for 77% of all respondents. 2.In 2001, Above-the-line Activities on average accounted for about 75% of total adspend, followed by Below-the-line Activities (18%). Media production only represented an average of 6% of total adspend. 3.Print media represented about 32% of adspend while TV stood at 31%. Online media only accounted for about 1% of total adspend. 4.Only 44% of the respondents invested in media production, possibly reflecting a slow year for the industry with less new campaigns being produced. KEY OBSERVATIONS - 1

Adspend Projections for Marketing Decision Research (Pacific) Ltd 5.Print media enjoyed the highest penetration among top advertisers with 94% reporting some spending. Online media had the lowest penetration with only 21% of top advertisers reporting any expenditure. However, as a relatively new advertising vehicle, achieving 21% penetration in a few years is probably indicative of a fast emerging trend. 6.46% of the respondents expected their budget for 2002 to remain unchanged. Only 17% projected an increase in adspend in 2002 while 34% expected a decrease. The mean percentage change is -4%, clearly suggesting a general cut in adspend for Media adspend allocation in 2002 is likely to remain fairly stable compared to KEY OBSERVATIONS - 2

Adspend Projections for Marketing Decision Research (Pacific) Ltd 8.Online media is poised to enjoy much stronger penetration compared to Of TV advertisers in 2001, 37% had actually used English channels. 10.Of print advertisers in 2001, 46% had actually used English print media % of top advertisers had made changes in their agency relationships in 2001, reflecting a highly dynamic and competitive environment for agencies. 12.Over half (52%) of the respondents reported themselves as using full service agencies % of the respondents are using one or more 4A agencies. KEY OBSERVATIONS - 3

Adspend Projections for Marketing Decision Research (Pacific) Ltd 14.Among those advertisers who are using their main agencies for media services, 64% are still remunerating the agencies by commission. 15.Among those advertisers who are using their main agencies for creative services, fees based on man hours (32%) is the most popular remuneration method, followed closely by commission (30%). KEY OBSERVATIONS - 4

KEY FINDINGS

Adspend Projections for Marketing Decision Research (Pacific) Ltd EMPLOYMENT SIZE OF RESPONDENT COMPANIES

Adspend Projections for Marketing Decision Research (Pacific) Ltd INDUSTRY CLASSIFICATION OF RESPONDENT COMPANIES SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.14

Adspend Projections for Marketing Decision Research (Pacific) Ltd JOB TITLE OF RESPONDENTS SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.13

Adspend Projections for Marketing Decision Research (Pacific) Ltd TOTAL LOCAL ADVERTISING EXPENDITURE IN 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd AVERAGE SPLIT OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN 2001 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.3

Adspend Projections for Marketing Decision Research (Pacific) Ltd AVERAGE SPLIT OF MEDIA ADVERTISING EXPENDITURE IN 2001 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.3

Adspend Projections for Marketing Decision Research (Pacific) Ltd ILLUSTRATION Advertising ExpenditureSplit of Expenditure Advertiser AHK$200 million80% TV 20% others Advertiser BHK$10 million30% TV 70% others Percentage of actual expenditure on TV= = 77.6% Mean of percentage spending on TV= = 55% 200M x 80% + 10M x 30% 200M + 10M x 100% 80% + 30% 2

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON DIFFERENT ITEMS IN

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET FOR 2002 MEAN OF PERCENTAGE CHANGE : -4% SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.2

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE INCREASE IN LOCAL ADVERTISING BUDGET FOR 2002 MEAN OF PERCENTAGE CHANGE : -4% SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.2 % PER CENT PER CENT PER CENT5 OVER 30 PER CENT3 NOT YET CONFIRMED1

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE DECREASE IN LOCAL ADVERTISING BUDGET FOR 2002 MEAN OF PERCENTAGE CHANGE : -4% SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.2 % PER CENT PER CENT PER CENT 6 OVER 30 PER CENT 7 NOT YET CONFIRMED7

Adspend Projections for Marketing Decision Research (Pacific) Ltd MEDIA ADVERTISING EXPENDITURE ALLOCATION 2002 VS 2001 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.4 Expenditure in 2002 Above-the-line74% Below-the-line20% Media production6% Expenditure in 2001 Above-the-line75% Below-the-line18% Media production6%

Adspend Projections for Marketing Decision Research (Pacific) Ltd RELATIVE PENETRATION OF MEDIA TYPES AMONG TOP ADVERTISERS SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.3, Q.4 INTERNET / ONLINE ADVERTISING RADIOOUTDOOR MEDIA TVPRINT MEDIA HAS NOT YET CONFIRMED WHETHER WILL SPEND ON THE ITEM IN 2002 WILL SPEND ON THE ITEM IN 2002 HAS SPENT ON THE ITEM IN 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS IN 2002 VS 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE CHANGE IN LOCAL ADVERTISING BUDGET ON DIFFERENT ITEMS FOR 2002

Adspend Projections for Marketing Decision Research (Pacific) Ltd SPLIT OF TV ADVERTISING EXPENDITURE ON ENGLISH CHANNELS IN 2001 MEAN OF SPLIT: 6% SAMPLE SIZE : (154) BASE : TOP ADVERTISERS WHO HAD CONDUCTED TV ADVERTISING IN 2001 REF. : Q.5

Adspend Projections for Marketing Decision Research (Pacific) Ltd SPLIT OF PRINT MEDIA ADVERTISING EXPENDITURE ON ENGLISH MEDIA IN 2001 SAMPLE SIZE : (191) BASE : TOP ADVERTISERS WHO HAD CONDUCTED PRINT MEDIA ADVERTISING IN 2001 REF. : Q.5

Adspend Projections for Marketing Decision Research (Pacific) Ltd THE MEDIA WHICH THE COMPANY / DIVISION BOUGHT ADVERTISEMENTS DIRECTLY IN 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd PERCENTAGE OF LOCAL ADVERTISING EXPENDITURE ON BUYING ADVERTISEMENTS DIRECTLY FROM THE MEDIA IN 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd EMPLOYMENT STATUS OF ADVERTISING AGENCY(IES) BY THE COMPANY / DIVISION IN 2001

Adspend Projections for Marketing Decision Research (Pacific) Ltd NUMBER OF ADVERTISING AGENCIES CURRENTLY USING MEAN NUMBER OF AD AGENCIES CURRENTLY USING: 2.0 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.9

Adspend Projections for Marketing Decision Research (Pacific) Ltd NUMBER OF FULL SERVICE ADVERTISING AGENCIES CURRENTLY USING FOR BOTH MEDIA AND CREATIVE SERVICES MEAN NUMBER OF AD AGENCIES CURRENTLY USING : 0.8 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.9

Adspend Projections for Marketing Decision Research (Pacific) Ltd NUMBER OF ADVERTISING AGENCIES CURRENTLY USING FOR MEDIA SERVICES ONLY (INCLUDING BOTH MEDIA PLANNING AND BUYING) Media planning and buying Media buying only MEAN NUMBER OF AD AGENCIES CURRENTLY USING : 0.2 / 0.1 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.9

Adspend Projections for Marketing Decision Research (Pacific) Ltd NUMBER OF ADVERTISING AGENCIES CURRENTLY USING FOR CREATIVE SERVICES ONLY MEAN NUMBER OF AD AGENCIES CURRENTLY USING : 0.4 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.9

Adspend Projections for Marketing Decision Research (Pacific) Ltd NUMBER OF ADVERTISING AGENCIES CURRENTLY USING FOR INTEGRATED OR BELOW-THE-LINE SERVICES MEAN NUMBER OF AD AGENCIES CURRENTLY USING : 0.3 SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.9

Adspend Projections for Marketing Decision Research (Pacific) Ltd SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.10 USE OF MEMBER AGENCIES OF THE 4A'S

Adspend Projections for Marketing Decision Research (Pacific) Ltd REMUNERATION METHODS CURRENTLY ADOPTED FOR PAYING THE CURRENT MAIN ADVERTISING AGENCIES IN DIFFERENT ASPECTS

Adspend Projections for Marketing Decision Research (Pacific) Ltd LIKELIHOOD OF EMPLOYING NEW MAIN ADVERTISING AGENCY(IES) IN 2002 FOR DIFFERENT ASPECTS DEFINITELY WOULD EMPLOY MAY OR MAY NOT EMPLOY16%25%31% VERY UNLIKELY WOULD EMPLOY DEFINITELY WOULD NOT EMPLOY VERY LIKELY WOULD EMPLOY SAMPLE SIZE : (201) BASE : TOP ADVERTISERS IN 2001 REF. : Q.12

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