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Investor Presentation

Investor Presentation. “Korea’s First Marketing Communication Group”. June, 2005. NOTICE.

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Investor Presentation

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  1. Investor Presentation “Korea’s First Marketing Communication Group” June, 2005

  2. NOTICE This publication is produced and distributed for private circulation by GIIR Inc. All information is based on GIIR’s internal market expectation studies, management account figures and/or outside sources GIIR believes to be reliable. GIIR accepts no legal responsibility for the reliability of information contained herein. Please note that unexpected changes in the market situation may lead to changes in GIIR views, with or without prior notice. It should also be noted that GIIR’s business results may not be in line with current estimates included in this publication. This publication should not be construed as an offer or a solicitation of an offer to buy or sell securities or other financial instruments.

  3. GIIR At a glance

  4. 2005 2004 2002 2001 1999 1997 1996 1995 1991 1984 Mexico Office Panama Office On N Off BCC 20/20 Corporate Division GIIR & LG Ad WTL Re-Birth as a member of WPP Listed on the Korea Stock Exchange (3500 KS) Dubai Office New York Office Busan Office Beijing Office Tokyo Office Established GIIR Chronology

  5. LG Ad LG Ad USA (WTL) Wunderman Korea Alchemedia Brand Connection Company 20/20 GIIR Today GIIR On N Off

  6. Strategy

  7. Two Growth Options for GIIR • Single ad agency • Slowdown of growth in domestic ad market • Decrease in LG clients loyalty • Difficulty of managing account conflicts • Marketing communication group • Maintain strong relationship with LG clients and develop new relationship with Non-LG clients • Clear role and responsibility • Finance / IR / HR / Training / Procurement – GIIR • Business operations of advertising agency – Operating companies • Economies of scale • Synergy effect from partnership w/ independent agencies • Establish new disciplines and create expert organization

  8. GIIR Growth Strategy • Criteria of business creation : Integration, growth potential, synergy • Acquisition • Acquisition of ad agencies and media agencies • On N Off • Strong client relationship and key talent • Establish new entities • Leverage supporting functions of GIIR(e.g finance) • Combination of key client relationship • Niche based agencies focusing on specific categories or demographic targets • Brand Connection Company & 20/20 • New business • Market research, CRM, Branding & Identity, Star Management, etc. • JVs with WPP companies

  9. GIIR Today & Tomorrow • LG Ad vs. other OCs • LG vs. Non-LG • Advertising vs. Marketing Others Others Tomorrow LG Ad LG Ad Non-LG Clients Non-LG Clients Tomorrow LG Clients LG Clients Marketing Marketing Tomorrow Advertising Advertising

  10. WPP Brands & Resources General Agency General Agency Niche Agency Niche Agency Media Agency Mkt’g Agency Specialist Comm. New Business Star CRM Mobile Internet …. Synergy Synergy GIIR (Supporting & Coordinating) GIIR Future Direction

  11. LG Ad Growth Strategy • Domestic business • Minimize business loss by maintaining the relationship with existing clients • New business wins • Substitute client losses with better clients from same categories • Win new clients with bigger growth potential • Global business • Increase the share of LGE global adex • 70% of total LGE Global by 2007 (40% as of Dec. 2004) • Different tactics in consideration of the level of ad market maturity in different regions • Form equity based JVs between GIIR(LG Ad) and WPP companies to establish “LG Ad Global” in key strategic markets

  12. Options for Surplus Cash • Current cash position • KRW 58.1bn(GIIR) and KRW 12.0bn(LG Ad) as of end of 1Q 2005 * before dividend payout (April 2005) • 3 options for surplus cash • Maintain healthy dividend • Considering DPS, payout ratio and dividend yield • Acquisition and investment • Stock buyback / cancellation program • Dividend history

  13. Appendix : Business Splits

  14. Appendix : Business Wins/Losses • Major business win/loss in 2005 YTD

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