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EuroMedia Trends 2005

Marketers’ Perspective from 14 European Countries

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Study background

• The media landscape is changing fast and becoming highly fragmented

• Consumers’ media consumption habits have entered a new era with the introduction of new communication technologies leading to more connection opportunities

BACKGROUNDBACKGROUND

QUESTIONSQUESTIONS• Does the allocation of marketers’ media

budgets reflect these new media and message consumption patterns?

• Which media do marketers perceive as being the most effective at meeting different marketing objectives?

• What is the role of different media in integrated marketing campaigns?

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EuroMedia Trends 2005 - European study of marketers conducted by Millward Brown on:

TRENDSTRENDS

PERCEPTIONPERCEPTION

FORECASTINGFORECASTING

• Marketing and media decision-making

• Media and marketing spending

• Marketing and media effectiveness

• Marketing/media trends in Europe (with a focus on Western Europe)

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EuropeWestern Central EasternGermany, France, Croatia, Czech Rep., Italy, Spain, Portugal, Hungary, Greece, UK Poland, Romania,

Russia, Turkey

A robust multi country and cross industry study on trends, and perceived media effectiveness

COUNTRIESCOUNTRIES

SAMPLESAMPLE

INDUSTRIESINDUSTRIES

704 interviews with marketing decision makers in key industries

Automotive, Beauty/Toiletries, Entertainment, Financial Services, Food/Beverage, Media, Pharmaceutical, Retail, Travel/Transportation, Telecom, Technology

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'

• In Europe, marketers favor traditional media channels to achieve diverse marketing objectives, while in the US “trial and repeat” has already switched to online

• European marketers seem to focus more on short term sales building, risking sacrificing longer term brand equity building

• Online marketing in Europe is becoming more popular (mostly in new customer acquisition and by offering measurable ROI) but is still at a level below the US (c.f. penetration issues)

Main findings

• Biggest budget cuts are expected in leading W countries. Many big spenders are cautious, while CE marketers are more optimistic about their budget growth expectations

BUDGETBUDGET

MEDIAMEDIA

IMCIMC• In W integrated marketing campaigns are less

widespread than in CE

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About Those Budgets…

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Only around 1/3 of the Italian decision makers are optimistic about growing their budgets in

2005, in line with the rest of W. CE marketers are most optimistic.

Increase expected for 2005

40% 40%

37% 37%

58% 58%

From other studies conducted in the US we know that there, optimism amongst marketers is above the European average.

From other studies conducted in the US we know that there, optimism amongst marketers is above the European average.

ITALY: 30%

QE3. How does your total 2005 marketing/media budget compare to the budget for 2004?

EU

W

CE

Biggest spenders in Western Europe are comparatively the least optimistic – the picture

is more consistent in CE

Biggest spenders in Western Europe are comparatively the least optimistic – the picture

is more consistent in CE

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‘Most positive’ markets going into 2005: RO and RU. ‘Least optimistic’: DE and FR

80

70

58

57

57

54

52

50

46

46

43

40

39

37

32

32

30

Romania

Russia

CE Average

Czech

Croatia

Greece

Hungary

Turkey

Poland

Spain

UK

EU Average

Portugal

W Average

Germany

France

Italy

QE3. How does your total 2005 marketing/media budget compare to the budget for 2004?

% marketers plan increase

0

2

4

6

7

9

12

13

14

14

14

14

14

16

18

18

6

Russia

Spain

Romania

Poland

Turkey

CE Average

Italy

Greece

EU Average

W Average

Croatia

Hungary

Portugal

UK

Czech

France

Germany

% marketers plan decrease

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Marketers grow spending on media linked to short term sales building

Of all media that increased in 2004, Magazines are getting the biggest increase in Europe,

driven also by Italy

QF2. How does your 2004 marketing/media budget compare to your 2003 marketing/media budget for the following media? QF3. How does your 2005 marketing/media budget compare to your 2004 marketing/media budget for the following media?

EU US

2004 vs.

2003

2005 vs.

2004

2004 vs.

2003

2005 vs.

2004

Online 28 26 57 54

Magazines 25 22 34 30

Direct Mail 20 21 38 34

Newspaper 19 15 28 28

Outdoor 15 15 23 19

Radio 13 11 27 25

TV 12 10 37 33

Online, Magazines, Direct Mail – perceived to offer better targeting and ROI

% of Marketers said they would grow their particular media budget

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Growth expected for the next 5 years for Web Advertising:

60-70% Croatia, Russia, Romania

50-59% Turkey

40-49% Germany, Portugal, Greece, Czech Republic

30-39% Hungary

20-29% Italy, France, UK, Poland

19% or less Spain

Q.F7 What is the one area within your company’s online marketing budget that you feel will grow most over the next five years?

Amongst on-line users, web advertising will grow most over the next 5 years in EU

There are growth expectations also for E-Mail Marketing in Italy

(in %) Europe Italy

Online Promotions

25 20

E-Mail Marketing

25 32

Web Advertising

35 28

% of Marketers naming the one online application that will grow the most over the next 5 years.

Growth expectations for Web Advertising highest for CE countries

Base: Usage of online marketing

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European computer and online penetration is growing fast

June 2002: 9,57 %

January 1996: 0,73 %

2001 to 2003US: 62.44 65.98 Europe: 19.08 22.43

Growth rates (2000-2005):European Union 131,6% Rest of Europe 341,9%Italy 116,7%US 110,7%

CE countries grow at double digit rates since 2000. The highest: Romania from 6% (2002) to 23% (2003)

Global internet penetration

Global internet penetration

of world population

PC’s per 100 inhabitantsPC’s per 100 inhabitants

Internet penetrationInternet penetration

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Internet usage growth rates (2000-2005) go through the roof. Particularly in the CE countries,

where base internet penetration is still behind WInternet penetration (% Population)User Growth (2000-2005)

US Internet penetration 2005: 67% (of the population)User Growth (2000-2005): 110%

200%

619%

400%

279%327%

44%

171%

280% 253%192%

117%

1059%

93%128%8%

16%19%

28%30%

34% 34% 34% 35%

41%

49%52%

56%59%

0%

200%

400%

600%

800%

1000%

1200%

Turk

ey

Russia

Roman

ia

Poland

Hunga

ry

Portu

gal

Spain

Greec

e

Czech

Fran

ceI ta

ly

Croat

ia

Germ

any

UK

0%

10%

20%

30%

40%

50%

60%

70%

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Marketers' Opinions AboutMedia Effectiveness

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Media Effectiveness Evaluation

6 ATTRIBUTES EVALUATED

Building Brand Equity

New Customer Acquisition

Providing Measurable ROI

Ability to Retain Customers

Ability to Reach Target Audience

Offering Efficiency

We asked marketers to give their opinions on media effectiveness for selected media.

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6 ATTRIBUTES EVALUATED

Building Brand Equity

New Customer Acquisition

Providing Measurable ROI

Ability to Retain Customers

Ability to Reach Target Audience

Offering Efficiency

TV leads in building brand equity…

But based on those companies which use TV within their media mix

TV RADIO

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6 ATTRIBUTES EVALUATED

Building Brand Equity

New Customer Acquisition

Providing Measurable ROI

Ability to Retain Customers

Ability to Reach Target Audience

Offering Efficiency

Media that deliver short term ROI are rated highest in reaching diverse marketing objectives

Promotion

Direct mailMagazines

Direct mail

Promotion

PromotionDirect mail Magazines

Direct mail Magazines Promotion

Direct mail Promotion Magazines

Online is becoming recognized across attributes…

Online

25

Continued Importance of Online Media..

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Compared to

Q.D2: Do you have a centralized online marketing group at your company?

Online is becoming a specialism within European marketing departments, particularly among the biggest spenders…

Europe

US

In Western Europe 44% of respondents said they have centralised online marketing groups (54% among the biggest spenders) while in CE this ratio was 28%

42 % 73 %

Having a centralized online marketing group at the company

The US data represent learning from different studies conducted by Millward Brown

ITALY: 37%

27Q.D4: Does your company work with a separate agency for your online marketing/media efforts?

Working with separate agency for online support

…Leading to half of European marketers using a specialist external agency for online supportOnly 1/3 of the Italian Companies works with an external agency

EuropeUS

64%46%

W CE

61 %44 %

Base: total

The US data represent learning from different studies conducted by Millward Brown ITALY: 33%

Biggest spenders: 51%

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How Media is Being Usedto Meet Marketing Objectives

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Awareness

Consideration

Trial & Repeat

Purchases

What objectives are brand marketers trying to meet: definitions.

AwarenessCreating awareness of new product

AwarenessKeeping established product top of mind

ConsiderationExpanding the brand'sconsideration

ConsiderationCommunicating thebrand's position

Trial & RepeatRetaining customersand increasingloyalty

Trial & RepeatEncouraging trial

Trial & RepeatAcquiring newcustomers

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TV and Magazines were named most effective for “creating awareness” and keeping established products “top of mind”

Awareness

AwarenessCreating awareness of new product

AwarenessKeeping established product top of mind

OutdoorMagazines

Magazines

TV

TV Outdoor

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Consideration

ConsiderationExpanding the brand'sconsideration

ConsiderationCommunicating thebrand's position

Traditional media still have highest confidence of European marketers in boosting consideration

TV NewspapersMagazines

32

Trial & Repeat

Purchases

Trial & RepeatRetaining customersand increasingloyalty

Trial & RepeatEncouraging trial

Trial & RepeatAcquiring new customers

While in Europe marketers vote for traditional media channels to increase trial and loyalty, in the US Online channels excel on response-based efforts

Magazines

Direct mail

Direct mail Magazines TV

TV

TV

Newspapers

Newspapers

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Integrated Marketing Campaigns

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59% of European marketers claim that they develop Integrated Marketing Campaigns Italian marketers seem to use quite less Integrated Marketing Campaigns in comparison to the W average level

Europe US

QD5. Does your company execute integrated marketing campaigns?

89 %59 %

78 %56 %

W CE

ITALY: 43%

But there is no universal definition!

All marketers use different words to describe integrated marketing campaigns…The US data represent learning from different studies conducted by Millward Brown

No strong differences in W on the basis of the companies' media budget availability

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Integrated Marketing Campaigns are becoming more widespread.The majority of the Companies has been using IMC for more than 3 years

QD5a. When did your company start doing integrated marketing campaigns?QD5b. For this year, out of all the marketing campaigns that you are aware of, how many are integrated marketing campaigns?

Base: using Integrated Marketing Campaigns

% of Integrated Campaigns in total

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38

34All

Most

Some

6% DK/ no answer

IT: 10% IT: 30%

IT: 55%

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Opportunities and Conclusions

BUDGETBUDGET• In W there is a cautious optimism about marketing

budget increases far below the US or CE expectations.

• Marketers with medium size budget are the most optimistic about their budget growth, while big spenders stay very conservative

MEDIAMEDIA

IMCIMC

• European marketers still apply traditional approach to planning media budgets giving preference to media channels supporting short term sales

• Online marketing/web advertising is starting to become more important in the marketing mix in both Western European and CE countries.

• Almost half of W marketers are not yet converted to integrated marketing campaigns that take advantage of the strengths of each medium in a holistic way

• From the other research we do, we know that consumers are using multiple media in multiple ways and are available to be reached beyond traditional communication channels