Target Regional TV Effectiveness Review August 2011.

Target

Regional TV Effectiveness Review

August 2011

www.regionaltvmarketing.com.au

RTM is the marketing bureau for Regional free to air TV

Regional consumers are a key element in Target long term success

• Regional consumers have significantly higher purchasing in most Target product segments

• 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

populationQLD

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

SydneyMelbourne

Reg NSWBrisbane

PerthReg QLDAdelaideReg VIC

DiaryWATAS

0m 1m 2m 3m 4m 5m

4,6354,528

3,4892,982

1,8561,764

1,4081,171

969585

510

People

Source: ATR & OZTAM 2011, Nielsen Media Research 2010

NNSW 2,079

SNSW 1,410

Population Increase: 2001 vs. 2011

Source: ATR & OZTAM 2011

Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas

MARYB

MACKA

YBRIS

NOR RIV

CAIRNS

TOW

NS

PERTH

ROCK

TOOW

CANB

GIPPS M

EL

TAM/T

AR

ALBURY

WOLL

BALLSY

DADEL

NEWC

HOBART

BEND

LAUNCE

SHEP

P

O/D/W

0%5%

10%15%20%25%30%35%40%45%

National average

QLD NSW VIC TAS METRO

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

3 %7live in Regional TV markets

Source: OzTam AGB Nielsen 2011

1,573,000

Australian teens age 13-17

3 %8live in Regional TV markets

Source: OzTam AGB Nielsen 2011

1,547,000 Australian GB’s with children

5-12

3 %8Source: OzTam AGB Nielsen 2011

3,141,000

Australian 55+

live in Regional TV markets

Savings are at an all time high in both regional and metro markets

2006 2007 2008 2009 2010 20110

100

200

300

400

500

Metro Regional

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

2006 2007 2008 2009 2010 20110

100

200

300

400

500

Metro Regional

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

2006 2007 2008 2009 2010 20110

50

100

150

200

250

300

350

Metro

Spending per discretionary $1000

Home price to income ratio is significantly lower in regional TV markets

Sydney Melbourne

Brisbane Adelaide

Perth

5.6 5.6 4.2 4.3 4.3

NNSW SNSW Reg. VIC Reg. QLD Tasmania Rural

4.2 3.9 3.1 3.7 3.8 2.8

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

Regional Metro

NNSW $89,690 Sydney $112,380

SNSW $102,500 Melbourne $101,840

Victoria $84,470 Brisbane $104,970

Queensland $95,080 Adelaide $91,530

Tasmania $84,170 Perth $119,600

Rural $106,690

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

Metro National Regional Rural0%

20%

40%

60%

80%

+38% +42% +48%+63%

Average household income growth since 2004 (P25-54)

Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 )

2005 2006 2007 2008 2009 2010 20110%

5%

10%

15%

20%

25%

Metro Regional

Rapid growth in the number of affluent consumers in regional Australia

Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 )

People 18-64 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.

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.

Regional is perfectly representative of Australian culture: Suburban with middle of the road values

ExperientialInternationalLibertarian

ExperientialInternationalLibertarian

PracticalCommunitarian

Self Reliant

PracticalCommunitarian

Self Reliant

Upwardly MobileMaterialist

Family Focused

Upwardly MobileMaterialist

Family Focused

PragmaticFunctionalPatriotic

PragmaticFunctionalPatriotic

YouthfulTechnological

Energetic

YouthfulTechnological

Energetic

ConservativeInstitutional

Self-Controlled

ConservativeInstitutional

Self-Controlled

InnerMetro23%

Outer Metro41%

Regional36%

www.regionaltvmarketing.com.au

According to David Chalke social

researcher….

Source: Roy Morgan Single Source (12mths to March 2011), * Filter – Bought Clothing in past 4 weeks

Regional women have the same rate of

clothing purchase as metro women

% of Women 25-54*Clothing items bought P4W… Metro Region

al

Underwear / Sleepwear 31% 33%

Socks / Hosiery 18% 17%

Women's underwear / sleepwear 27% 28%

Men's underwear / sleepwear 9% 10%

Clothes 72% 72%

Source: Roy Morgan Single Source (12mths to March 2011), * Filter – Bought Clothing in past 4 weeks

% of Women 25-54*Items bought P4W… Metro Regiona

l

Games or Toys 13% 17%

CD’s/DVD’s 16% 22%

Small Electrical Goods 9% 11%

Perfume/Cosmetics 14% 17%

Regional women have the higher rate of purchase in

other Target product segments

Source: Roy Morgan Single Source (12mths to March 2011)

Regional Women share attitudes to brands but

appreciate value and Aussie made

% of Women 25-54 Metro Regnl.

Have favourite brands for most things I buy 69% 69%

Buy more store's own products than well known brands 42% 47%

Try to buy Australian made products as often as possible 70% 73%

Source: Roy Morgan Single Source (12mths to March 2011), * Filter – Bought Clothing in past 4 weeks

Target is only mass retailer brand with

lower usage in regional markets

% of Women 25-54*Stores bought anything from

P4W…Metro Regiona

l

Department stores 31% 16%

Big W 51% 55%

Best & Less 20% 27%

Kmart 48% 49%

Target 53% 47%

Target has opportunity to increase the number of women shopping at its regional stores

SYD MEL BRI ADE PER NNSW SNSW VIC QLD TAS Diary0%

10%

20%

30%

40%

50%

60%

% of W25-54 who purchased anything from Target in the L4W

-4..3% -0.4% +3% +1.6% -3.2% +1.2% +2% -5% +1.3%+14.5

%-3.8%

Source: Roy Morgan Single Source (12mths to March 2011 vs. 2010)

2004 2005 2006 2007 2008 2009 2010 20110%

10%

20%

30%

40%

50%

60%

Metro Regional

Target has successfully grown in regional markets over past 5 years -

% of W25-54 who purchased anything from Target L4W since 2004

Source: Roy Morgan Single Source 12 months to March 2004-2011

Target is biggest RTV advertiser in category but allocates a lower share to Regional than competitors

Target

Kmart

Best & Less

19%

25%

23%

Total TV Spend

$26.6m

$11m

$6.3m

TV spend: July 2010 – Jun 2011

Source: Adquest Millennium (July 2010 – Jun 2011)

SYD

MEL

BRI

ADE

PER

NSW

VIC

QLD

TAS

Diary

0k 100k 200k 300k 400k 500k 600k

552

501

370

139

177

315

100

169

49

153

Regional represents 31% of Target regular shoppers – potential would be up to 40%

000s of W25-54 who purchased anything from Target in the L4W

Source: Roy Morgan Single Source (12mths to March 2011 vs. 2010)

Media landscape in regional markets is broadly similar to capital cities

People 25-54 Metro Reg

Watch 2hrs+ TV per day 50% 58%Listened to any commercial radio

weekday 66% 62%

Accessed the internet 87% 85%

Watch daytime TV 71% 76%

Own digital TV at home 74% 79%

Whether subscribe to Pay TV 28% 27%

Saw outdoor 51% 26%

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

13/06/2010

27/06/2010

11/07/2010

25/07/2010

8/08/2010

22/08/2010

5/09/2010

19/09/2010

3/10/2010

17/10/2010

31/10/2010

14/11/2010

28/11/2010

12/12/2010

26/12/2010

9/01/2011

23/01/2011

6/02/2011

20/02/2011

6/03/2011

20/03/20110%

5%

10%

15%

20%

25%

Metro Regional

Launch week of 7mate &

Gem

Launch week of Eleven

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 18:00 - 23:59

June 2010 Sept 2010 Dec 2010 March 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

SYD MEL BRI ADE PER NNSWSNSW VIC QLD TAS40

60

80

100

120

140

160

180164

104

98

7989

71 70

5361

70

Ind

ex

TV market CPM indicesNational average CPM P18+ = 100

Source: Regional TV Agency Survey 2010

SYD19%

MEL19%

BRI12%

ADE6%

PER8%

Reg36%

SYD34%

MEL21%

BRI12%

ADE5%

PER7%

Reg23%

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 Target improved growth and ROI on every level

• Higher category consumption• Greater brand growth potential• Improved advertising driven

growth and ROI