March 2017

Chinese Digital Advertising Trend

Cheil Pengtai Business Status

Vision and Growth Strategy

Contents

2

Chinese ad market is growing rapidly with digital marketing growth

< Chinese Ad Market Volume and Forecast (Unit : B USD, Portion %) >

429 43.2 42.1 40.0 38.1 37.4 37.1

11.4 16.0 22.2 28.7 36.8

45.1 52.3 (59%)

(55%)(49%)

(42%)

2012 2013 2014 2015 2016(e) 2017(e) 2018(e)

(41%)(45%)(51%)(58%)

ATL (CAGR -2%, ’12~’18)

68.674.8

82.589.4

(65%)(73%)(79%)

(35%)(27%)

64.359.2

54.2

※ CAGR : Compound annual growth rate from 2012 to 2018

(79%)42.9

(21%)

Digital Marketing is forecasted to grow by 29%(CAGR) annually and

take account for 59% of Chinese total ad market by 2018

Digital (CAGR 29%, ’12~’18)

3

0.7 1.22.0

2.9

4.65.7

7.38.3

9.8

2010 2011 2012 2013 2014 2015 2016 2017 2018

Source : iResearch, May 2016

Rapid growth of e-commerce is a growth driver of digital marketing

B2C Marketing is forecasted to grow by CAGR 20%(2015~2018) and

achieve volume of 980 B USD by 2018

< Chinese e-commerce B2C market volume and forecast (Unit : 100B USD) >

4

3rd generation

Branding 30%, E-commerce 70%

Mid-2010s ~ Future

Growth of major e-commerce

platforms including Alibaba and

Jingdong

Growing importance of e-commerce

for entry into and growth in China

Accelerating convergence of digital

marketing and e-commerce

(Advent of Bluefocus, &C, Baozun, etc)

Mid-2000s ~ Mid-2010s

Growing importance of social and

viral marketing due to increase in

consumer-to-consumer

communication

Strengthening branding through

improved communication with

consumers based on social

platform

Late 1990s ~ Mid-2000s

Led by person in charge of

corporate marketing

Mainly push marketing based on

banners on major platform

1st generation

Branding 100%

2nd generation

Branding 70%, E-commerce 30%

Convergence of branding

and e-commerce

Digital marketing focued on

branding enforcement

Through rapid growth of digital and e-commerce marketing

Entry into the 3rd generation (Digital marketing + E-commerce)

5

Major Trends

• Digital marketing is driving the growth of Chinese ad market

1. Change and Growth of Chinese Ad market with digital marketing

• Differentiate through securing digital market expertise and various integrated service

• Enhance internal competencies and make aggressive investments(M&A/Equity investment) in order to secure expertise

2. Accelerating advancement and specialization of digital marketing(Based on advanced Data, Tech)

• Global Agencies : Enhancing ATL base, accelerating digital capability expansion (CAGR 19%)

• Local Agencies : Fostering digital capability, Enhancing position as a digital agency

(CAGR 51.2%)

3. Rapid growth of local agencies with digital expertise

6

2000SINCE

CheilPengTaiCOMPANY

BeijingH/Q LOCATION

1,050 (As of March 2017)EMPLOYEE

Digital Marketing

Digital Strategy Consulting

E-commerce Marketing

BUSINESS

Cheil Pengtai Business Status

S e o u l

B e i j i n g | H E A D O F F I C E

S h a n g h a i

H o n g K o n g

G u a n g z h o u

T a i w a n

With 15 years

dedicated to China Digital Marketing

Expanded to 6 regions

7

TBO based Digital Marketing Solutions

T T H I N K

Marketing Insight &

Strategy Consulting

B B u i l d

Digital Marketing

O O p e r a t e

Online Sales

Operation Service

Offering integrated digital marketing/sales service

through converging digital strategy consulting, digital marketing and

e-commerce marketing

8

China Market

Digital Strategy Consulting

BusinessStrategy

Consumer

Research

Competitors

Benchmark

DistributionStrategy

Promoter

Training

•Analyze Consumers Life Style

•Analyze Market Feasibility

•Consumer Survey

•Promoters Training Strategy

•CS Trainer Training /

On-site Training

•Market Entry Strategy

•Marketing Strategy Consulting

•Omni-channel Strategy

•Retail Consulting

•Operate Channels

•Brand Strategy

•Go to market survey

•Mystery Shopper Survey

•Manage Channel KPI

•Build System

Marketing Insight & Strategy ConsultingT

Executed more than 1,300 consulting/research projects

9

Media

Service

SEM2

SNS

Campaign

Viral

Mobile

Web/App

PC Based

Platform

Digital

Offerings

Lineup

• Brand/Promot ion Website

• Brand/Promot ion App

• Dig i ta l Re ta i l S t ra tegy

• Onl ine Campaign

• O2O 3 Campaign

• Keyword Ad

• Brand zone ad

• Baidu ad network

• PR

• Pow er User / In f luencer

• Disp lay

• Video

• DSP 1

• Mobi le

• Operate Weibo

• Operate Weix inCampaign

Platform

Viral

SNS

Search

Media

Service

Digital MarketingBPlan/Execute integrated digital marketing with various digital channels

as a digital marketing partner for global, Chinese and Korean clients

* 1: DSP - Demand Side Platform 2: SEM – Search Engine Marketing 3: O2O – Online to Offline, Offline to Online10

Tmall

자사몰

Product/

Promotion

Distribution/

Shipping

Channel

Operation

Call Center

Operation

Contents

Operation

System

Channel

Selection

Distribution/

Shipping

Product

Purchase

AR

Collection

Product

Sales

Return/

A/S

• Key online channel with main platforms such as

Tmall and JD

• Expertise needed for each service

• Customized system connecting the whole process

Jingdong

Online Retail /

Online Shopping Mall OperationOnline Wholesale Operation

Jingdong Yihaodian Vipshop.comJumei

•Expansion of Sales Volume

•Capability to select channel based on product’s

Characteristics

• Importance of Partnership with Channels

Major

Channel

Major

Service

Major

Characteristics

Online Sales Operation ServiceO

Offer Online Retail/Wholesale Service as E-commerce Marketing Partner

11

Chinese Digital Agency Ranking (2011 ~ 2015)Source: Internet Weekly

2011 2012 2013 2014 2015

1 Hylink Ad(华扬联众) 1 Hylink Ad(华扬联众) 1 Hylink Ad(华扬联众) 1 Hylink Ad(华扬联众) 1 Hylink Ad(华扬联众)

2 Ogilvy(奥美世纪) 2 CIG(新意互动) 2 CIG(新意互动) 2 CIG(新意互动) 2 CIG(新意互动)

3 CIG(新意互动) 3 Ogilvy(奥美世纪) 3 Ogilvy(奥美世纪) 3 PengTai(Cheil鹏泰) 3 PengTai(Cheil鹏泰)

4 Allyes Adnetwork(好耶) 4 Allyes Adnetwork(好耶) 4 PengTai(Cheil鹏泰) 4 Catch Stone(科思世通) 4 Group M (群邑)

5 CatchStone(科思世通) 5 PengTai(Cheil鹏泰) 5 Catch Stone(科思世通) 5 Ogilvy(奥美世纪) 5 hdtMEDIA(互动通)

6 &c.(电众数码) 6 AdChina(易传媒) 6 Media V(聚胜万合） 6 Leo(利欧) 6 NIM DIGITAL(网迈)

7 PengTai(Cheil鹏泰) 7 Media V(聚胜万合） 7 Allyes Adnetwork(好耶) 7 &c.(电众数码) 7 &c.(电众数码)

8 AdChina(易传媒) 8 Catch Stone(科思世通) 8 &c.(电众数码) 8 Isobar(智世安索帕) 8 NMCG(新合传播)

9 Tensyn(腾信互动) 9 Aegis Media(安吉斯) 9 hdtMEDIA (互动通) 9 hdtMEDIA (互动通) 9 Tensyn(腾信互动)

10 Media V(聚胜万合） 10 GIMC(广东省广) 10 AdChina(易传媒) 10 NIM DIGITAL(网迈) 10 Allyes Adnetwork(好耶)

12

Agency Reputation

Positioned as “ Leading Digital Agency in China “ through various award wins

“Digital Agency of the Year2013, 2014, 2015“

CIAF (China International Ad Fest)

“Effectiveness Index Ranking 2016 Top 3 Agency Office”

Effie Greater China

“Best Creative Agency of the Year 2013, 2014, 2015”

ROI China Ad Fest

13

1 3 t h 1 5 t h 2 2 n d 2 7 t h 4 5 t h 5 4 t h

H K

Fortune Global 2015

Clients

14

Partners

Partnership with 180 partners such as video, portal,

vertical media and shopping mall

15

Opened Guangzhou Branch

2000 2010 20152005

100 B KRW

Revenue

Growth (2010~2015)Survival (2000∼2005)Preparation

(2006~2009)

Secured digital marketing value chain

Market Research/Strategy Consulting, Digital

Marketing, Web solution Biz, etc

Expanded network to

handle China business

• Developed non-Samsung clients

• Expanded new business of digital platform and digital media

• Enhanced E-commerce and Retail

Revenue

Opened Shanghai Branch

Established digital mkt,Opened Taiwan Branch

Founded retail and e-commerce dept

Joined

Cheil Newtork

Local client account wins(ICBC, Yili, etc)

2009

Growth History

Accelerating growth through business diversification and

non-Samsung client wins since acquired by Cheil Worldwide

16

Vision and Growth Strategy

* BD – Business Development17

• Brand eCommerce

• Mobile Ad Platform

• Owned Media Platform

• Digital Contents Production

• Data & Tech Driven Biz

Growth Strategy

A TOP-TIER DIGITAL MARKETING PARTNER BY 2020

Accelerate Localization through securing local clients

and local top talents

Enhance New Growth Engine through new business

(Data & Tech)

Expand Global Business through advanced digital marketing

Vision

• Secure Global Top Tier Production Capability

• Expand Business of ‘Marketing to China’ in Korea

• New Biz Test Bed for Cheil network

Aggressive Investment (M&A, Data & Technology, Top Talent Recruitment)

• Reinforce Local Leadership, professional BD1

• Capture New Local Clients in Auto and FMCG Industry

• Attract Non-SE eCommerce Brands

Enabler

18

Beyond Digital Campaign Agency,

Expand services of Digital Marketing Platform

Digital Contents Service

Brand eCommerce

Achieve Vision 20202 : “ A top-tier digital marketing partner by 2020 “

In Summary

Appendix

19

23

IoME (Internet of Marketing Experience)

22

SAMSUNG GALAXY TAB S

31

SAMSUNG GALAXY TAB S

31

BACKGROUNDTab S is Samsung flagship Tablet PC with the only one strong competitor : iPad. As Screen is the most Important feature for customers, we use SUMSUNG Super AMOLED screen to compete with iPad Retina screen, to attract customers from iPad and take back shrinking shares in the tablet pc market.

OBJECTIVEHow to change consumer’s awareness “Tablet=iPad”? How to increase Samsung Tablet PC ‘s reputation, while take away competitor’s target audience effectively?

SOLUTIONContinuous social buzz making, premium creative exposure, improve product recognition. Furthermore, using DSP big data (cookie, search history, IP, ID…) solution, directly push advertisement to the core target audience who are interested in iPad purchase.

RESULTSBaidu index(preference, purchase intention) continues to make breakthroughs and exceeds other competitors for the first time; Ranked in top 3 in various popular websites and sales record way more than expectations

SAMSUNG GALAXY TAB SDare you compete with GALAXY Tab S Campaign

BURNING CALORIES FOR LOVE

34

BURNING CALORIES FOR LOVE

34

BACKGROUNDEvery year HuaXia Bank make donation to sanitation workers and their children to help them achieve their dreams.

OBJECTIVEHow can we donate to sanitation workers when we enjoy running on the street? Our idea is based on the situations of daily life and turns them into meaningful activity. Calories records in HuaXia running app can be exchanged with real donation, as an easy and convenient way to participate in charity events.

SOLUTIONDaily exercise = donations! Burn your calories, make your dreams come true. Download the most popular App "plump movement". Users complete their work out with the APP, the APP calculates the calories consumed during the campaign. Burn calories, fulfill dreams for sanitation worker's children!

RESULTSWe have successfully helped over 200 sanitation worker's children to achieve their dreams. It also was received full attention and praise from the China Banking Regulatory Commission (CBRC). This digital campaign has helped Huaxia Bank successfully gained a positive public brand image.

Burning/Love Plan (2015)Burn your calories, Make your dreams come true

Thank you