1. MBA665: B2B Marketing Case Presentation
Presented by: Henry G. Lam; Perry Lee; and Desmond Ho
Date: 29 November 2008

2. A First Glance on JCDecaux
Source:

3. Agenda Overview JC Decaux’s Business Existing Risks for JC Decaux
What’s Next?
Q & A

4. Overview
Jean Francois Decaux, CEO

5. Corporate Overview
In 1964, Jean-Claude Decaux invented the concept of “Street Furniture”
JCDecaux is the only global “pure play” outdoor advertising company with a leading position in the sector’s three core areas:
Street Furniture
Billboard
Transport Advertising

6. Geographical Coverage
No. 1 worldwide in Street Furniture: 351,000 advertising panels Bus shelters, automatic public toilets, multi-service columns, recycling bins, self-service bicycles… For 40 years JCDecaux has been offering solutions that combine urban development and the provision of public services in more than 1,500 cities in 40 countries.
No. 1 in Europe in Billboards: 215,000 advertising panels Advertisers want to be in the right place at the right time and that is what JCDecaux’s Billboard networks strive to deliver. The company has the best sites in the best locations in around 3,000 cities in 28 countries.

7. Geographical Coverage (Con’t)
No. 1 worldwide in Transport Advertising: 386,000 advertising panels Airports, undergrounds, buses, trains, trams… JCDecaux is present in more than 300 transport networks and 145 airports worldwide. JCDecaux has the ability to reach more than 2.4 million transport passengers every day. 
JCDecaux is focusing in North American market penetration.

8. The Operations in North America
JV with Viacom Outdoor (a subsidiary of Viacom inc.)  Viacom Decaux.
20-year agreement signed with City of Los Angeles for the installation of 2,500 bus shelters, 700 Kiosks and Columns, and 150 Public Toilet, and represents estimated revenues of €900 million. LA is the largest outdoor advertising market in the U.S.
20-year agreement signed with City of Chicago for the installation of 2,000 bus shelters and more than 200 other pieces of street furniture and represents estimated revenues of €850 million. City of Chicago is the 3rd largest city in the U.S.

9. The Operations in North America (Con’t)
In Canada, teaming up with Viacom Outdoor, JC Decaux won street furniture tender with City of Vancouver, Canada’s 3rd largest city.
This 20-year agreement, which was signed in Dec. 2002, provides for the installation of 900 bus shelters, 235 bicycle racks, 100 newspaper distributors, 210 city map distributors, and more than 1,400 waste bins. It represents an estimated revenues of €150 million.

10. The Outdoor Advertising Market
A rapidly growing market.
There are 3 main segments:
Advertising on billboards (“Billboard”). This segment accounted for 48% of worldwide outdoor advertising expenditures.
Advertising on and in public transportation vehicles and stations (“Transport”). This segment accounted for approximately 26% of worldwide transport expenditures.
Advertising on street furniture (“Street Furniture”). This segment accounted for 18% of worldwide street furniture expenditures.

11. Competitive Environment
The outdoor advertising market is highly competitive.
The firm’s principle competitors in substantially all of its activities and regions are:
Clear Channel
Viacom Inc.

12. JCDecaux’s Business

13. Street Furniture Market Share and Positioning
Accounted for 53.3% of JC Decaux’s sales (€1.58B in 2002)
Has concessions in 34 countries & 1,400 cities with 285,000 advertising faces
64% share of global Street Furniture revenues

14. Street Furniture Sustain To Growth Concession least 4 months ~ 5 years
13.3% will come up for renewal in next 3 years
Renewal retention 83%
Win in new public bids 86%
Market genetic growth 5%
Expected renewal loss 2.26%
New concession forecast 4.3%
The growth in total 2.04% in share every year

15. Street Furniture Growth on New Market Market Development
Existing Market – European countries
New Market – US , Canada, Asia-Pacific, Latin America.
Market Development
Technology advancement by quantitative & qualitative Info to target audience.
Volume discount for the large media buyer.
Packaging with special events such as World Cup, Olympic Games.

16. Billboard Market Share and Positioning
Accounted for 28% of JCDecaux’s sales (€1.58B in 2002).
Has 192,000 display in 23 European countries.
Has billboard display in 2 Asia countries.
Has 1,762 display in Paris occupied 1/3 market share of the city.

17. Billboard Sustain To Growth
Technology advancement – premium illuminated billboard can increase 40% of audience.
Scrolling Panels increase the number of face to display more sponsors, such as time sharing.

18. Billboard Growth on New Market Sponsor & Audience matching.
Strong relationship with media buyers in France.
Short term (7~15 days) Al hor advertising campaigns.
Long term 2-year Brand building campaign.
Quick response in 24 hours to post nationwide campaign in France.
Discount rate thru “Yield Management” system to maximize profit & win the deal.

19. Billboard Market Development
Time sharing and remote control technology allow JC displays can more effectively show to the target audience group.
“Chameleon” Display broad enables JC to divide the day & night target group and generate more sales.

20. Transportation & Misc. Market Share and Positioning
Accounted for 18.7% of JCDecaux’s sales (€1.58B in 2002).
Airport 63% ; Public Transportation 32% & Misc. 5%
30% of worldwide Airport traffic.
Has concessions in
90 airport in Europe
1 in Asia (HK)
47 in N. American
9 in Mexico
Has concessions with 150 public transportation contracts.

21. Transportation & Misc. Sustain To Growth
Concession at least 5 ~ 10 years.
Profit sharing with airport.
Airport user growth 5% represent the target audience the same growth.
Reserve the resource in profitable segment and give up the low profit spot.

22. Transportation & Misc. Growth on New Market Market Development
Capture the genetic growth (5%) on Airport users by matching the airport display to the target audience by using the audience characteristic analysis.
Market Development
Over size custom-made structure model for sponsor’s need.
Innovative system “RADAR” to deploy the advertising to target group by socio- demographic characteristics.
Make use of the network and global coverage to multi deploy an image in the journey.

23. Existing Risks for JCDecaux

24. Expiring Contracts
From 2003 to 2005, 13.3% of its Street Furniture concessions will expire and 35.1% of its Transport advertising concessions will expire.
In order to bid for renewal of existing contracts, the company will have to invest a lot in the making of its offers. Such extra costs will be added in its advertising prices.
If the company does not succeed in making up these increased costs for its customers, its earnings could be affected.

25. Risks Related to Key Accounts
If JCDecaux lost the concessions in the key cities, it might not attract the same quality of famous advertisers in each country that are ready to pay a high price for the premium quality products delivered by the company.

26. Risks Related to Contracts with Government Bodies
Complex bidding process in France: Contracts are renewed by local state representatives in accordance with French administrative law.
Some JCDecaux’s competitors challenged the validity of JCDecaux’s contracts that all the procedures have not always been followed.
Possibilities of cancellation of contracts and suspension of participation in public tender process for at least 3 years if JCDecaux was found guilty in breaching the procedures.
Government authorities can terminate the current contracts for public interest reason and the compensation will not cover the investments of JCDecaux or its loss of future profits.

27. Risks Related to Regulation of Competition
An important element of JCDecaux’s development involves the acquisition of additional outdoor advertising companies and properties, which might require pre-approval of national and European competition authorities.
Both UK and France authorities either prevent JCDecaux from completing acquisitions (antitrust) or impose restrictions upon the firm’s external growth.

28. Risks Related to Economic Conditions
Advertising spending is highly dependent on the economy condition.
In 2001/02, many customers of JCDecaux cut their advertising budgets that affected JCDecaux’s operating profit and the net income seriously.

29. Risks Related to Application Regulations
In Europe and the United States, frequent and unpredictable changes in laws and regulations affected the operation of JCDecaux.
Termination of restrictions on TV advertising by large retailers  the directive “Cross-Border Television” broadcasts will allow the large European retailers to advertise on TV.
It has a negative impact to JCDecaux because 4.1% of its consolidated revenues come from advertising on billboards for large retailers.
Directives concerning the prohibition of Tobacco Advertising and the Alcoholic Beverage Advertising also represent an obstacle for JCDecaux.

30. What’s Next? international expansion is the direction.
Supported by strong organic growth and an active policy of partnerships and acquisitions, JCDecaux has concluded an agreement with the Austrian group Gewista and has become the leader in Italy by incorporating the external communication activities of IGP.
It has also made strategic acquisitions in Scandinavia and taken significant shareholdings in Spain and in Germany, which notably manages street furniture contracts for the cities of Berlin, Düsseldorf, Moscow, Istanbul and Boston.
Lastly, JCDecaux has increased its presence in South Korea, Japan and China.

31. What’s Next? (Cont’d) In China, JCDecaux is:
No. 1 Outdoor Media Company
The Largest Metro Advertising Network
The Largest Nationwide Bus Advertising Network
No. 1 in Greater China in Airport Advertising
The Leading Campus Advertising Network

32. Thank You!! Any Questions?