Contents. Special Feature. T h e. D e n t. C a. t y C r e a. t e. v a l u e. 014 Dentsu Integrated Report 2016

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1 T h D n t s u C a p a G b r i o l u i p t ' s y C r a t t o v a l u s 014 Dntsu Intgratd Rport 2016

2 OUTPUT Th Dntsu Group s Capability to Crat Valus Valu cration Th Dntsu Group s Valu Crating Procss Dntsu s strngths Th succss of clints businsss INPUT Sourc of valu cration Businss modl Contribution to an afflunt lif through communication Social issus and businss challngs Good Innovation. Global ntwork Enhancing our valu-crating ability On P&L Ralization of a sustainabl socity Dvlopmnt of rsilint infrastructur and promotion of innovation Capabilitis by businss domain Digital shift in markting activitis of clints Formulation of sustainabl consumption and production pattrns Changs in consumr bhavior, divrsifid consumr nds, markting communications, th impact of th activitis on consumrs, managmnt of th social impact of th supply chain Businss domain Prsonnl dvlopmnt Mdium-trm managmnt plan P Climat chang and mitigation of its impact, tc. Rduction of th nvironmntal burdns of businss activitis Eradication of povrty and hungr, and limination of domstic and intrstat disparitis Expansion of th community to dvlop businss activitis on a global scal Intgratd communication dsign Corporat govrnanc P Mdium-trm CSR stratgy 2020 P.049 Dntsu Intgratd Rport

3 It is th Dntsu Group s social mission to dvlop and implmnt a varity of solutions gard to th succss of our clints businss. Howvr, w ar rsponsibl for th succss of not only thir businss, but also of th social dvlopmnt and innovation of socity as a whol. Undr th mdium-trm managmnt plan Dntsu 2017 and Byond, and by strngthning its comptitivnss in th digital domain, th Group has takn on challngs that go byond th rquirmnts of th traditional businss framwork. Th Group is also honing its intgratd problmsolving and rvnu-gnrating capabilitis, with a viw to crating nw social valu. Undr th Dntsu Group Mdium-Trm CSR Stratgy 2020, formulatd in Dcmbr 2015, w provid rsponsibl markting communications srvics and ngag in a wid rang of CSR activitis in collaboration with our businss partnrs in th supply chain. By improving our nvironmntal, social, and govrnanc valu in conjunction with our businss activitis, w ar pursuing th ralization of a bttr socity. 016 Dntsu Intgratd Rport 2016

4 Valu Cration: A Solid Businss Foundation in Japan Comptitivnss in th Japans Markt Th Dntsu Group s lading position in Japan drivs from succss in combining our crativ and xcution capabilitis with th cration of innovativ solutions. Th global platform has furthr strngthnd th businss foundation of th Group by capturing th untappd nds of major Japans companis. Ths not only ar Dntsu Inc. s principal clints, but thy ar looking to xpand abroad. Furthr, th Group is driving businss acumn by fulfilling th rquirmnts of major global companis, thos principal DAN clints that ar sking to ntr th Japans markt. In addition to taking advantag of th imptus and activity rlatd to sports vnts taking plac around Japan, w continu to sk growth opportunitis in our Japan businss by contributing to th rvitalization of th nation. Futur movmnts, actions, and sports vnts taking plac around Japan and Byond Sophistication of various srvics toward 2020 brought by acclratd advancmnt of intllignc in ICT in futur socity Movmnts and actions rlatd to TOKYO 2020 and digital socity Social infrastructur improvmnt toward th Tokyo 2020 Olympic and Paralympic Gams Expansion of contnt distribution on th Intrnt (sports and ntrtainmnt, tc.) Olympic and Paralympic Gams Rio (Summr) Host for 2024 will b chosn Pyonchang (Wintr) Asian Gams Sapporo (Wintr) Jakarta (Summr) Host for 2026 will b chosn Tokyo (Summr) Bijing (Wintr 2022) Hangzhou (Summr 2022) World Sports Evnts FIFA World Cup Russia Franc (Womn s) Qatar (2022) FIFA Club World Cup Japan UAE UAE World Championships in Athltics London Doha Orgon (2021) World Aquatics Championships Budapst Gwangju Fukuoka (2021) FIVB Vollyball World Championship Japan (Womn s) Rugby World Cup Japan Othr major vnts insid and outsid Japan G7 Is-Shima Summit EXPO Astana 2017 (Kazakhstan) Commncmnt of practical broadcasting for 4K/8K ultra-highdfinition tlvisions EXPO 2020 Dubai World Mastrs Gams Kansai (2021) Dntsu Intgratd Rport

5 In Japan, th Dntsu Group sks not only to incras clints corporat valu, but to dissminat it from Japan around th world. Yoshio Takada Dirctor and Excutiv Vic Prsidnt Th Dntsu Group has an xtraordinary businss modl; it is nithr a brand agncy nor a mdia agncy. W dlivr solutions to th myriad challngs clints fac a businss modl so distinctiv that it might b calld Dntsu businss. Through this modl, w hav fostrd trusting rlationships with mor than 6,000 clints in Japan, built a solid businss foundation, and mad th Japans markt into a vry comptitiv stag. By making full us of idas and digital tchnology, th Group rcntly gaind th ability to dlivr solutions with gratr valu. Th following ar just a fw xampls. Dpr digital connctions btwn clints and consumrs who njoy th clints contnt, as wll as nw xprincs and contnt Th provision of optimal contnt and advrtismnts for consumrs by lvraging tchnologis, such as artificial intllignc Digital connctions btwn clints and individuals, bfor th lattr st off on a trip to Japan In 2014, Dntsu was dsignatd th xclusiv markting agncy for th Tokyo Organising Committ of th Olympic and Paralympic Gams (Tokyo 2020). In connction with th Gams, numrous nationwid initiativs including thos rlatd to sports, cultur, urban dvlopmnt and tchnology ar plannd to bgin in th fall of By making positiv commitmnts to clints businss activitis not only as th xclusiv markting agncy, but also as a lading solution providr in Japan w continu to addrss social challngs in Japan, thrby furthr nhancing th undrpinnings of our businss and incrasing our comptitivnss. W aim to xtnd to th Group s global offics th solutions w hon in Japan through our businss in connction with th 2020 Gams. In this way, w will furthr incras our corporat valu, whil at th sam tim dissminating Japan s nw valu around th world. 018 Dntsu Intgratd Rport 2016

6 Boosting Valu in our Japan Businss: Digital Evolution of Digital Markting in Japan Amid th acclration of th shift toward utilizing digital solutions in clints markting activitis, nds in th advrtising industry s digital domain ar bcoming mor divrsifid and sophisticatd. Th Group continus to work to improv its capabilitis and quality of srvic as th rols of agncis continu to xpand, ncompassing th following functions. Programmatic trading in th mdia buying domain Provision of digital solutions, including crativ and contnt-rlatd srvics Data analysis for businss dcisions and consumr ngagmnt stratgis Manwhil, th intgration of ths functions is growing in importanc. Whil advancs in digitalization and th volution of various tchnologis ar transforming pattrns of consumr bhavior, th xcution of intgratd digital markting which organically links ach markting procss and individual stp that, until now, functiond sparatly is bcoming th most crucial issu for corporat markting. Thus, markting srvics agncis such as th Dntsu Group ar xpctd to provid intgratd and spcializd support srvics. Rsponding to th changing nvironmnt, Dntsu rstructurd its digital-rlatd functions and, in January 2016, stablishd th Digital Markting Cntr. In July 2016, w stablishd Dntsu Digital Inc., a nw spcialist digital markting company, by way of th Digital Markting Cntr absorbing Dntsu -markting On Inc. and Nxtag Dntsu Inc. Dntsu -markting On Inc. spcializd in advrtismnt planning in th digital domain and businss modl support srvics; Nxtag Dntsu Inc. mainly providd digital prformanc markting srvics, such as prformanc-basd advrtising, to xpand th businss of its clints. Dntsu Digital, in collaboration with othr Group companis, will focus on acclrating th captur of dmand for digital markting in both th xisting and xpanding advrtising markts. Spcifically, Dntsu Digital provids a wid rang of srvics, including consulting, to improv clints rturns on invstmnt. It utilizs digital markting and intgratd srvics that covr all facts of businss, from dvlopmnt to opration, in th filds of customr rlationship managmnt (CRM), ownd mdia managmnt, and -commrc support. For major clints, w tak advantag of th Group s ovrall strngth as w dlivr consistnt srvics, ranging from stratgic planning to implmntation. Businss domains of Dntsu Digital Inc. - 3 faturs - Consulting Provid advic to th clint and support formulation of stratgic altrnativs Dvlopmnt and implmntation Managmnt Social mdia Data analysis Mass publishing Acquisition masurs Audinc Data of sit visits Markting platform Social Evnt participants Prospctiv customrs Ownd mdia EC sit Purchasing Customrs CRM Establishmnt of systms and incorporation of nw functions and spcifications Continuously carry out and support implmntation of advrtismnt managmnt, PDCA cycl, contnts markting and othrs Dntsu Intgratd Rport

7 Aiming to bcom a lading digital markting company Toshiya Oyama Excutiv Officr, Dntsu Inc. CEO, Dntsu Digital Inc. Th volution of digital tchnology and dvics has significantly changd consumr bhavior, givn that all things and information ar connctd to th Intrnt, as rprsntd by th Intrnt of Things. Undr such unprcdntd nvironmntal chang, clints that prviously focusd on individual markting procsss hav startd to focus on linking thm organically at ach stag, in an ffort to maximiz ffctivnss and fficincy. Manwhil, th Intrnt s mainly prformanc-basd advrtising has dvlopd into mdia that now is scond only to tlvision. At th sam tim, thr has bn a major xpansion in digital marktrlatd spnding outsid th traditional advrtising markt such as on businss and IT consulting, Big Data analytics, as wll as on support for markting automation and -commrc. Givn th circumstancs, Dntsu Inc. stablishd Dntsu Digital Inc., a digital company that provids on-stop digital markting solutions. Dntsu Digital Inc. provids such functions as consulting, dvlopmnt and implmntation of markting initiativs, and oprational and xcution support for clint companis pursuing digital transformation. It also dvlops intgratd customr journy solutions discovry of potntial customrs, customr acquisition, customr rlationship managmnt and build platforms to support thm. Furthr, Dntsu Inc. strivs to provid solutions on a global scal in collaboration with DAN by acclrating tchnology dvlopmnt and acquisition. In addition to invstmnt activitis and tchnological dvlopmnt to maintain stat-of-th art capabilitis, Dntsu Digital acquirs and dvlops digital markting profssionals with th right xprinc and skills. By closly coordinating th xprinc and skills with Dntsu s distinctiv capabilitis in markting, crativity, and mdia capabilitis that compting consulting firms and IT companis cannot offr w aim to bcom a lading digital markting company in both nam and rality. 020 Dntsu Intgratd Rport 2016

8 Boosting Valu in our Japan Businss: Sports Markting Crating Imptus in Japans Socity Our many yars of xprinc and achivmnts in th ara of sports markting ar significant factors in th Group s valu cration. W bliv this accomplishmnt is undrpinnd by our highly stmd, distinctiv approach as an advrtising agncy that crats major imptus, cntrd on xcitmnt inspird by sports. W will continu to strngthn our activitis and incras our outrach to socity through sports. Sports markting that Dntsu Group is ngagd in: Tokyo Marathon Foundation Dntsu Intgratd Rport 2016 JFA National match against Afghanistan, starting mmbrs, March 24,

9 W will contribut to clints businss succss and furthr th dvlopmnt of sports through sportsrlatd solutions Kiyoshi Nakamura Excutiv Officr Th Group is involvd in a wid varity of sports vnts, from world-hadlining vnts such as th Olympic Gams, FIFA World Cup, and World Championships in Athltics to national vnts such as th Tokyo Marathon. W maintain good long-trm rlationships with intrnational sports govrning bodis, including th Intrnational Olympic Committ (IOC), Intrnational Paralympic Committ (IPC), Fédération Intrnational d Football Association (FIFA), Intrnational Association of Athltics Fdrations (IAAF), and Fédération Intrnational d Natation (FINA). Ths rlationships hav givn us accss to an assortmnt of rights, such as broadcasting and markting rights. In rcnt yars, Dntsu has continud to xpand its sports-rlatd businss, mainly through our succssful fforts to scur broadcasting rights from th IOC to sll to our clints in som parts of Asia and Cntral Asia, and through vnt production for th FIFA Club World Cup in th Middl East and Africa. In Japan, w ar involvd in th dvlopmnt and sal of broadcasting and markting rights for many sports organizations, including thos of th Japans Olympic Committ (JOC), with which w njoy a long rlationship. With rgard to football, w acquird not only th sponsorship packag for Japan s national tam, but also xclusiv rights to sll th broadcasting and markting rights for J. Lagu profssional football gams. Dntsu lvrags its clos businss rlationships with sports associations and fdrations in Japan and globally to offr clints xcptional, powrful solutions utilizing sports. As th Tokyo 2020 Olympic and Paralympic Gams xclusiv markting agnt, Dntsu Inc. has takn on th major rsponsibility of contributing to th succss of th Gams. It is providing support in various aras, including th formulation of a markting plan and conducting sponsorship sals. W will mak vry ffort to crat a lgacy, so that th bnfits of th Gams liv on aftr 2020, and striv to improv th significanc of sports in this country. For th Dntsu Group, th Paralympic Gams ar just th start of concrtd fforts to contribut to th dvlopmnt of sports involving challngd playrs. Th Rugby World Cup will b hld in Japan in 2019, and th World Swimming Championships will b hld in Fukuoka, Japan, in Th Group has a rcord of managing numrous intrnational sports vnts, as wll as th associatd know-how. Bringing togthr th abundant xprinc w hav accumulatd thus far, w will support sports organizations and sponsor companis in ordr to nsur th succss of sporting vnts. 022 Dntsu Intgratd Rport 2016