群邑：2023年中國廣告市場展望

CHINA

SPOTLIGHT

AReportFromGroupM,WPP’sMediaInvestmentGroup

FEBRUARY2023

2

FEBRUARY2023?CHINASPOTLIGHTITABLEOFCONTENTS

TABLEOFCONTENTS

04

05

07

09

11

13

14

15

MARKETPERSPECTIVE

ANECONOMICREBOUND

MEDIA&ENTERTAINMENT

AUTOMOTIVESALES

LUXURYSALES

LOOKINGAHEAD

MARKETERTAKEAWAYS

CONTACT

YEAR2023OFTHE

RABBIT

FEBRUARY2023?CHINASPOTLIGHTIMARKETPERSPECTIVE

MARKETPERSPECTIVE

Thelastthreeyearshavebeensomeofthemostchallengingand

inspiringofmycareer.Throughoutthesuccessivepandemic-related

lockdownsandresultingshiftsineconomicactivityandhumanbehavior,

GroupManditsclientshaveadaptedandinvestedtocomeoutstronger

andbetterpreparedfortheyearsahead.

ThisagilityandvibrancyhavebeenamazingtowatchasourGroupM

peoplehavereboundedfromaverydifficultDecemberwhenmany

peoplepersonallyexperiencedtheimpactsofalargewaveofCOVID-19

infections.InJanuary,I,alongwithmycolleaguesandhundredsof

millionsofotherChinese,traveledtocelebratetheChineseNewYear

(CNY),usheringinanewyearofprosperityandrevitalization.Inasign

ofhowquicklyChinaisreturningtolifebeyondthezero-COVIDpolicy,

theMinistryofCultureandTourismreportedthatthenumberoftrips

during2023CNYincreasedby23.1%over2022andrevenuefrom

domestictourismincreasedby30%.

Nowbackinouroffices,wearelookingforwardtoayearofgrowth.

GroupM’sadvertisingforecastforChinacallsfor6.3%growthin2023

withfurther6.4%growthin2024.Thoseincreaseswillbeespeciallyfelt

inperformancemarketing,e-commerceandsocial,includingsocial

commercewherewecontinuetoinvestinstrengtheningourtalentand

capabilitiesinserviceofourclients.Lastyearweaddedmorethan3,000

certificatesfrompartnerplatformssuchasByteDance,Baidu,Alibaba

andTencent,anincreaseof56%over2021.Expertiseintheseplatforms

ispivotalasallfourrankamongthetop10globalsellersofadvertising.

Morethanever,ourworkwiththesepartnersandourclientsrevolves

arounddataandtechnology,acapabilityGroupMhasstrengthened

throughthelaunchofChoreographinChina.Thetalentandbest

practicesavailabletoclientsthroughChoreographarebeingputtowork

forlocalandinternationalclientsinChina,includingaspartofrecently

renewedrelationshipswithNike,Xiaomi,DysonandPernodRicard.

Ilookforwardtocontinuingourworktomakeadvertisingbetterfor

peoplein2023.

Thankyou,

PatrickXu

PATRICKXU

GROUPMGREATERCHINACEO&

WPPGREATERCHINACEO

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FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

ANECONOMIC

REBOUND

Emergingfromsignificantuncertaintyduringthetailendof2022,theUNandIMFraisedexpectationsforChina’seconomyinJanuary.TheIMFnowpredictsChina’seconomywillgrow

5.2%

in2023,

rebounding

frommore

muted

2.9%

growthin2022.

ChinaGDPGrowth

Source:ChinaNationalBureauOfStatistics

SomelargeinternationalfinancialinstitutionshavealsoliftedtheirestimatesonChina'seconomicgrowthin2023.MorganStanleyincreaseditsChinaratingfrom5%to5.7%,whileGoldmanSachsGroupincreaseditsratingfrom4.5%to5.5%.AccordingtotheSecuritiesTimes,January

achievedarecord-breaking$20.8billionUSDnetinflowofforeigncapitalintoChina'sAshares,makingitboththegreatestnetinflowmonthsince2014andthefirstmonthlynetinflowtoexceed$14.7billionUSD.

Incontrastwithmostmarkets,consumerexpendituremakesupasmallerpercentageoftotaleconomicactivityinChina;however,afterlowerconsumptionin2022(0.2%declinefrom2021)andasolidbuild-upofhouseholdsavings(up80%over2021accordingtothePeople'sBankofChina),consumerexpenditurewillbeakeyfactorin

China’srecovery.

5

FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

ChinaRetailandE-commerceSales

Source:NationalBureauofStatistics,GroupM?

IncludesAutomotivesales,ExcludesCatering

Belowwelookattherecentandexpectedperformanceofanumberofproductandservicecategoriestoparsewhat2023islikelytobring.

AUTOMOTIVESALES

LUXURY

SALES

MEDIA&

ENTERTAINMENT

6

2.4%

OtherGoodsandServices

5.8%

HouseholdFacilities,

ArticlesandServices

5.6%

Clothing

13%

Transportationand

Telecommunication

24%

10.1%

Education,Culture&Recreation

8.6%

HealthCareandMedicalServices

30.5%

FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

MEDIA&ENTERTAINMENT

Whilesuccessiveyearsofpandemic-relatedinterruptionstofilmproductionhaveyettoplayoutfully,therearepositivesignsintherecentperformanceoftheChineseboxofficeaspeoplereturntoactivitiesoutsidethehome.TheNationalFilmBureaureporteda2023CNYboxofficeincreaseof11.4%overlastyear’sfigures.The2023performancerankedsecondonlyto2021’sholidayperformanceintermsofboxofficerevenue.ForthemonthofJanuary,boxofficereceiptsexceeded￥10billion($1.5billion)accordingtotheChinaFilmAdministration.

TheCNYboxofficeincludedinternationalhitssuchasAvatar:TheWayofWater,whichhassurpassed￥1.4billion($200million)intotalrevenue,andthelong-awaitedChineseprequelTheWanderingEarthII,whichhasearnedmorethan￥3.5billion($500million)sinceitslaunch,includingreleasesintheU.K.andU.S.

ChinaBoxOffice

Source:MaoyanPiaofang

Percapita,Chineseconsumersspent10.1%oftotalexpenditureoneducation,cultureandrecreationin2022,downfrom11.7%in2019pertheNationalBureauofStatistics,suggestingthereisroomforcontinuedrecovery.

China2022PerCapita

Expenditure

Chinese

consumers

spent

%

10.1

oftotal

expenditureon

education,culture

andrecreation

in2022,downfrom

11.7

%

Residence

Source:NationalBureauofStatistics

Food,TobaccoandLiquor

in2019.

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FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

TheChineseboxofficeisback.Onlytwomonthsinto2023,IMAXhasdeliveredrecord-breakingresultswithitsChineseNewYearslateandastrongperformanceinChinafor'Avatar:TheWayofWater'”

–RICHGELFONDCEOIMAX

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FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

AUTOMOTIVESALES

Autosales(aswellassalesofotherbig-ticketpurchaseslikeproperty)werehinderedbyCOVID-19lockdownsduring2020and2022.DataforautosalesinDecemberof2022(asmeasuredintotalYuan)showthatsalesreachedtheirhighestpointofthelastfouryearstotaling￥5.1billion($762million),up8.1%overthe2019Decemberfigure.However,somesalesmayhavebeenpulledforwardintoDecemberaheadofexpiringtaxcutsforcombustionvehiclesandsubsidiesforelectricvehicle(EV)purchases(whichlapsedonthefirstofJanuary2023).EVsalesinChina,whichhadgrown90%in2022accordingtotheChinaPassengerCarAssociation(CPCA),fell6.3%inJanuaryof2023.

ChinaAutoSales

Source:NationalBureauofStatistics

December

autosalesup

8.1%

overthe

December

2019figure

WhileTeslaisperhapsthebest-knownmakerofEVsoutsideofChina,itfacesconsiderablecompetitionfromChineseEVmanufacturers,suchasBYD,nodoubtafactorinitspricediscountingstrategyinrecentmonths.In2022,lessthanaquarterofTesla’s￥573billion($81.4billion)inrevenuecamefromChinaandfewerthan56,000vehiclesweresoldinChinainDecember,accordingtotheCPCA.BYDsoldnearlytwicethatnumberofpureelectricvehicles,111,900,aswellas122,700plug-inhybridvehicles.

Ford,forwhomChinaisthesecondlargestmarketaftertheU.S.,sawadeclineinsalesin2022.TotalretailsalesinChina(includingallvehicletypes)fellto0.5millionunitsfrom0.6millionin2021,representinga2.1%shareofthetotalChinesemarket(perFord’sestimates).FordspokeinarecentearningscallabouttakingafocusedapproachtotheChinesemarket,focusingontheLincolnbrand,andprioritizingatransitiontoEVs.

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FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

ChinesedomesticbrandssuchasBYD,Geely,ChanganandSAICmakeupmorethan40%ofthemarketaccordingtoCPCA,whileGermanandJapanesebrandseachmakeuproughlyafifthofthemarket.BMWsold199,112vehiclesinChinainthefourthquarterof2022,a12.7%increaseoverthepreviousyear.Toyotaunitssold,acrossitsToyotaandLexusbrands,weredown8.8%inthefourthquarterof2023,butupmodestly

at1.7%fortheApriltoDecemberperiod.

Assupplychainissuesandchipshortageseaseamidthepandemicrecovery,automotivesales(andadvertising)arewidelyexpectedtopickbackupthroughout2023.ForChineseautobuyers,whohavebeenshiftingtopurchasemoreSUVsratherthansedans,EVsareexpectedtomaintaintheirappeal.Acrossallcitytiers,householdshaveshownawillingnesstospendonautomobilesaccordingtorecentresearchfromGroupMKnowledge,withhouseholdsinTier7-10citiesspendinganaverageof16.5months'incomeonanautoversusanaverageof14.7monthsthoseinTier4-6citiesand13.1monthsforTier1-3cities.

Theresearchalsoshowedagreaterwillingnessamongtheyoungtochoosemoreexpensiveautomobilesthanmiddle-agedbuyers.

WeseeAsiaastheregionwiththegreatestgrowthprospectsinthemediumterm.ParticularlyinChina[where]wewillopenanewchapterwithourMercedes-Benzheavy-dutytruck,madeinChinaforChina.”

–KARLDEPPEN

President&CEO,DaimlerTruck

10

10

FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

LUXURYSALES

Chinahaslongbeenasourceofluxurysales;however,pre-pandemic,manyofthosesalesoccurredinFranceandEuropemorebroadlyasChinesetravelersvisitedretailstoresthere.WithtravelcurbedbothinChinaandacrossmanyinternationaldestinationsforluxuryshoppers,brandsshiftedtosupplyingdemanddomestically,with

manymaisonsopeningretailoutletsinTier1citiesorlocalshoppingdestinationssuchasHainan,whereChineseconsumershaveflockedsincetheendofthegovernment'szero-COVIDpolicy.Goingforward,luxurybrandsareanticipatingareturntoEuropeantravel(recentlybuoyedbyAmericanbuyerstakingadvantageofastrongU.S.dollar),albeitwithanexpectationthattheChinesedomesticmarketwillremainalargersourceofrevenueversus

pre-pandemic.

It’san encouraging startoftheyearinChina.”

–JEAN-MARCDUPLAIX,KeringCFO

LVMHspokeinitsendofyearearningscallaboutthe

sharpdeclineinChinainDecemberleadingtoasurplus

ofinventory,butalsosaiditsaw“greenshoots”in

Chinafortheyearaheadandwouldcontinueinvesting.

BernardArnault,LVMH’sChairmanandCEO,noted

thatstoresinMacauwerequitefullandthatthe

companywaspreparedforthereturnofcustomersto

storesworldwide,includinginFrance.Andwhileitwill

takesometimeforinternationalrevenuefromChinese

touriststoreach2019levelsagain,thedomestic

demandishelpingbridgethegapwithArnaultsaying

itsChinesemarketisbiggernowthanin2019.

Wehaveevery

reasonto[be]

optimisticon

theChinese

market.”

–BERNARDARNAULT,

LVMHChairman&CEO

11

FEBRUARY2023?CHINASPOTLIGHTIANECONOMICREBOUND

KeringnotedthatlockdownsinChinaduringthefourthquartercontributedtoGucci’ssalesdeclineof14%indirectlyoperatedstores.SalesforallbrandsinAsiaPacificweredown30%inthequarter.Thecompanyalsonotedthat2023fourthquartertourisminWesternEuropewasstill20%belowpre-pandemiclevels.However,thecompanystruckapositivenoteonanearningscallregardingtrendsemergingfromthebeginningof2023,sayingthatperformancehasbeen“betterthanexpectedinitially,andweclearlyobserved...astrongreboundofpurchasesinGreaterChina”aswellasfromlocaldestinationsopentoChinesetourists.Whileitisdifficulttoextrapolatefromonemonthtotherestoftheyear,thereadinessofconsumersandgovernmentauthoritiestoreturntogreaterlevelsofluxuryconsumptionisbeingtoutedbyluxurycompaniesasareasontobeoptimistic.

AsiaPacificLuxurySales

Source:CompanyFilings,GroupM

Hermes,whichopenedorrenovatedstoresinZhengzhou,ShanghaiQiantanandHongKongin2022,notedstrongsecondquarterandfourthquartersales(thelatterdespitelockdownsacrossChinainNovember).Partoftheexperiencedandexpectedgrowth,accordingtoHermesCEOAxelDumas,istheascendancyofayoungerandmoreaffluentChinesemiddleclass.

Finally,Richemontcommentedintheirrecentearningsnoteonaconsiderablefourthquarterimpact(-24%)onsalesinChinaasaresultofCOVID-19casesandstaffunavailabilityleadingtothetemporaryclosuresofsomeboutiquesattheendof2022.Richemont,likeitspeers,hassaidtheyareseeingastrongretailreboundearlyin2023.

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13

FEBRUARY2023?CHINASPOTLIGHTILOOKINGAHEAD

LOOKING

AHEAD

Chineseadrevenuegrowthof

6.3%

isexpectedin2023,

asharpaccelerationfromadeclineof

-0.6%

in2022

Thepandemichaschangedthework,personallivesandmediabehaviors

ofconsumers,aswellasthestrategicprioritiesandwaysofworkingfor

companies.Now,itiscrucialthatallthesechangesareincorporatedinto

corporatebrandingandmarketingstrategies.Thosestrategiesareshifting

fromlastyear’smindsetofprotectingthebottomlinetoanembraceof

theeconomy’srejuvenationandanopportunitytotakemarketshare.

GroupMKnowledgerecentlyconductedaMarketingConfidencesurvey,

theresultofwhichfoundthatover80%ofbrandsinChinawillmaintain

orincreasetheirmarketingbudgetfor2023.

ChinaAdRevenueGrowth

Source:GroupM

Businesssentimentistakingitscuesfromagovernmentfocusedongrowthandeconomicdynamism.Chinahastakenseveralmeasurestoimprovetheliquidityofpropertydevelopers,asectorweighingonconsumerconfidenceoverthelastyear.Inaddition,thegovernmenthassignaledaneasingofregulatoryscrutinyandfinesforitshomegrowntechgiantsandareturntograntingvideogamelicenses,allsignsofincreasingeconomicboosterism.

ItisimportanttonotethattheglobaleconomicstageisnotunimpactedbyongoingtensionsduetothewarinUkraineandU.S./Chinarelations.Thereareanumberofproductcategories,includingsemiconductors,telecommunicationsandaerospace,amongothers,thatwillremainchallenged.Thatsaid,thecurrentenvironmentappearssettofosterbusinessgrowth.

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FEBRUARY20232??CHINASSPOTLIGHTTIMARKETERTAKEAWAYSEND-OF-YEARFORECAST

INTRODUCTIONTHESTATEOFRETAILMARKETGROWTHGEOGRAPHICTRENDS

MARKETER

TAKEAWAYS

Chineseconsumersareemergingoutofthecountry’szero-COVIDpolicywithnewmediahabitsandachangedoutlookonhowtheyexperiencetheworldaroundthem,includinghowtheyengagewithbrands.Giventhephysicalandmentalstrainbroughtonbythepandemicandthesubsequentexcitementthatre-openingscaninspire,it’sessentialformarketerstopresentpositivityand

optimismateachconsumertouchpoint.

Publishershaveseenaninfluxofinvestmentfromlocalbrandslookingtoreconnectwiththeirlocalaudiences.Internationalbrandsshouldbeequallyproactiveiftheydon’twanttobesqueezedout.

Clientsshouldworkcloselywiththeiragencypartnerstounderstandhowconsumersentimentischangingaslifemovesforward.Consumerdemandsareevolvingandprioritiesareshifting,sotheassumptionsthatunderliecurrentmediaplansmayneedtoberethought.

1

2

3

4

OOHmediaisstillrecoveringtopre-pandemiclevels,andtheincreaseddigitizationofthemediummeansnewopportunitiesfor

cross-channelmeasurementandengagement.OpportunitiesarepresentingthemselvestoexecuteinnovativeOOHcampaignsinareaswhereeagerconsumersaresettospend.

Retailmediaexplodedduringthepandemicandisheretostay.Nowisthetimetoevaluatehowemergingchannelsfitintoyourmediamixandfindtherightbalancebetweenbrandandperformancegoals.

GroupMChinaAdRevenueForecast

inUSDmillions

2019

2020

2021

2022

2023E

2024E

2025E

2026E

2027E

TV

$11,686.8

$6,357.7

$6,764.7

$6,400.4

$6,213.1

$6,443.2

$6,491.8

$6,561.1

$6,681.7

?Growth

-4.7%

-45.6%

6.4%

-5.4%

-2.9%

3.7%

0.8%

1.1%

1.8%

?Share

10.6%

5.5%

4.9%

4.6%

4.2%

4.1%

3.9%

3.8%

3.6%

Audio

1,831.4

715.2

732.9

709.7

682.8

688.5

693

689.2

685.2

?Growth

-8.2%

-61.0%

2.5%

-3.2%

-3.8%

0.8%

0.7%

-0.6%

-0.6%

?Share

1.7%

0.6%

0.5%

0.5%

0.5%

0.4%

0.4%

0.4%

0.4%

Newspapers

796.5

585.8

532.1

484.5

446.3

443.5

414

384.4

354.9

?Growth

-10.4%

-26.5%

-9.2%

-8.9%

-7.9%

-0.6%

-6.7%

-7.1%

-7.7%

?Share

0.7%

0.5%

0.4%

0.4%

0.3%

0.3%

0.3%

0.2%

0.2%

Magazines

432.3

325.2

315.3

303.2

296.3

289.7

287.7

285.7

283.8

?Growth

-5.9%

-24.8%

-3.1%

-3.8%

-2.3%

-2.3%

-0.7%

-0.7%

-0.7%

?Share

0.4%

0.3%

0.2%

0.2%

0.2%

0.2%

0.2%

0.2%

0.2%

Outdoor+Cinema

9,067.9

7,484.0

9,490.7

6,238.6

6,238.0

6,858.5

7,467.2

8,075.4

8,714.4

?Growth

-11.4%

-17.5%

26.8%

-34.3%

0.0%

9.9%

8.9%

8.