MEDIA LANDSCAPE BULGARIA 2017 Introduction to Media Overview The analyses and trends outlined in this media overview present Media Club’s reading of all available data and are largely based on the agency’s experience as a direct media buyer, our know-how, and our perception of the current frame of mind of both clients and media. Despite the overall confusion stemming from the various data sources, several trends are confirmed by both gross and net data: The media Ad market shows stable growth, with ad investments shifting to channels that provide for effective and efficient media campaigns that can be measured and evaluated. Media consolidation facilitates multi-channel deals and execution of cross-platform campaigns that tackle the changing pattern of media consumption. The following pages aim at providing businesses with a glimpse of what we do and a snapshot of the media landscape we all navigate through. We hope you enjoy reading it. Source: Media Club Strategic Insights 2017, Bulgaria CONTENT 1. General Information ▪ Key Facts ▪ Advertising Investments ▪ Media Usage 2. TV 3. Online 4. Radio 5. Print 6. Cinema KEY FACTS Sociodemographic & Economic Facts Gross Domestic Product Population Age Structure absolute and in % Total per capita €48 128 mln. € 6 777 2016 2016 Under 15 15-24 25-34 35-44 45-54 55-64 65-74 75 + 1001 K 660 K 947 K 1 056 K 983 K 982 K 861 K 611 K 14% 9% 13% 15% 14% 14% 12% 9% Comparative Population Gross Value Added by Economic Sector Consumer Private Household Spending by Sector in million population in million € in % Foods and non-alcoholic beverages Germany 82 Arts entertainment and recreation… 945 England 66 Others (incl. saving deposits, debt paid Construction 1 626 France 65 etc.) 4%3% Housing, water, electricity, gas and Italy 59 Agriculture forestry and fishing 1 952 4% other fuels 4% Transport Spain 46 Information and communication 2 566 29% Romania 20 5% Social insurance contributions Professional scientific and technical… 2 603 Portugal 10 5% Health Hungary 10 Financial and insurance activities 3 000 Serbia 9 Taxes Real estate activities 3 976 5% Austria 9 Recreation, culture and education Bulgaria 7 Public administration and defence;… 5 541 6% Communication Slovakia 5 Adjustments (taxes less subsidies… 6 602 16% 6% Croatia 4 Alcoholic beverages and tobacco Wholesale and retail trade; repair of… Lithuania 3 9 188 13% Furnishing and maintenance of the Latvia 2 Mining and quarrying;… 10 130 house Estonia 1 Clothing and footwear Source: National Statistic Institute of Bulgaria; Eurostat 2016 Sociodemographic & Economic Development Population Development in Bulgaria Development of the Age Structure of the Population Development of Consumer Spending by Industry in % in € ,average by capita under 10 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+ 800 100% 2011 2016 600 80% 400 60% 200 0 7 928 901 7 928 40% 7 364 570 7 364 7 204 687 7 204 7 186 893 7 186 7 101 859 7 101 7 037 935 7 037 6 981 642 6 981 20% Taxes Health saving… footwear Transport (incl. Others culture and… culture Alcoholic alcoholic… goods and… goods 0% Recreation, beverages and… beverages Clothing andClothing contributions maintenance of… maintenance Miscellaneous 2001 2009 2011 2012 2013 2015 2016 2010 2011 2012 2013 2014 2015 2016 gas… electricity, Furnishing andFurnishing Social insurance Social Communication Foods non- and Housing, water,Housing, Development of the Gross Domestic Product Key Economic Sectors – Distribution and Change in million € (GDP) and € (GDP per capita) in million €, change in % GDP GDP per Capita 12 000 2015 2016 Change 30% 50 000 8 000 10 000 25% 45 000 20% 7 000 8 000 40 000 15% 6 000 6 000 10% 35 000 4 000 5% 30 000 5 000 0% 2 000 25 000 4 000 -5% 0 -10% 20 000 3 000 15 000 2 000 10 000 5 000 1 000 0 0 2011 2012 2013 2014 2015 2016 Source: National Statistic Institute of Bulgaria 2001-2016 ADVERTISING INVESTMENT The top 10 industries account for 93% of total ad investments for 2017 Gross Media Mix € Total Advertising Market Gross Advertising Investment of the Top 10 Industries in % and million €, 2017 in million € , 2017, TV + Print data PHARMACEUTICALS 127 FOODS 98 COSMETICS 90 RETAIL OUTLETS 89 DRINKS 73 TV Print *Internet *Radio *OOH *Cinema TELECOMMUNICATION 69 HOBBY. FASHION. SPORT 46 78% 5% 7% 4% 6% - FINANCIAL SERVICES 37 HOUSEHOLD CHEMISTRY 28 691 € 42 € 60 € 33 € 55 € 1.3 € MOTORING 24 0 20 40 60 80 100 120 140 *Estimated Net Media Mix € Total Advertising Market Gross Advertising Investment by Industry in % and million €, 2017 2017 in %. TV+ Print data Cum. ad expenditures - Top 10 industries Cum. ad expenditures - remaining industries TV Print Internet Radio OOH Cinema 93% 7% 63% 4% 17% 5% 11% - 207 € 12.6 € 54 € 16.5 € 36 € 0.9 € 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Nielsen AdMosphere; IAB Bulgaria, *Agency Estimations 2017 Advertising investments are increasing steadily Development of Gross Advertising Investment Development of Media Mix Total Advertising Market Development of Industry Investment Top 10 Industries in million € in % in million €, 2014-2017, TV + Print data TV PRINT ONLINE RADIO OOH 130 1 000 100% 120 110 900 90% PHARMACEUTICALS 100 FOODS 800 80% 90 COSMETICS 700 70% 80 RETAIL OUTLETS 600 60% 70 DRINKS 500 50% 60 TELECOMMUNICATION 50 HOBBY. FASHION. 400 40% SPORT 40 FINANCIAL SERVICES 300 30% 30 HOUSEHOLD CHEMISTRY 200 20% 20 MOTORING 10% 100 10 0 0% 0 2012 2013 2014 2015 2016 2017 2013 2015 2017 2014 2015 2016 2017 Source: Nielsen AdMosphere; IAB Bulgaria; Agency Estimations 2014-2017 The National Lottery in the Hobby. Fashion. Sport category is the largest ad investor for 2017 Top 5 Advertisers in Bulgaria by Industry in million €, 2017, TV + Print data Tele- Hobby. Fashion. Household 25 Pharmacy Foods Cosmetics Retail Outlets Beverages communication Sport Finance Chemistry Automotive 20 15 10 5 0 Source: Nielsen AdMosphere 2017 MEDIA USAGE Different media is suitable for different KPIs Reach Efficiency Intensity of Use Brand Building Activation Selectability Source: own illustration TV IN BULGARIA AGENDA TV IN BULGARIA 1. TV Ad Investments 2. TV Landscape and Market Share 3. TV Usage TV AD INVESTMENTS The dynamics of the total TV investments outlines a 14% increase in value and increase in share Gross TV Advertising Investments 2006 - 2017 in million € and in % Ad investments in million € Ad market share in % 100% 800 90% 691 700 80% 608 600 70% 531 509 484 500 60% 404 410 50% 359 400 331 331 316 40% 300 244 30% 200 20% 100 10% 0% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Nielsen AdMosphere 2006-2017 Gross Ad investments increase with 14% year-on- year according to Nielsen Gross Advertising Investment by TV Groups Number of Spots TRP’s 30 in million € in ‘000 2017, TG: All 18-49 18% 12% 1% 450 2 500 1 400 000 2306 400 385 € 1 150 902 2052 1 200 000 1 140 664 2 000 350 325 € 14% 1 000 000 -4% 300 279 € 1 500 245 € 800 000 250 696 430 6% 665 797 200 962 600 000 1 000 909 -17% 150 633 400 000 -27% 523 100 500 -22% 200 000 37 € 50 27 € 75 446 58 502 0 0 0 NBG BMG remaining channels NBG BMG remaining channels NBG BMG remaining channels 2016 2017 2016 2017 2016 2017 Source: Nielsen AdMosphere 2017 Gross Ad investments increase with 14% year-on- year according to GARB Gross Advertising Investment by TV Groups Number of Spots TRP’s 30 in million € in ‘000 2017, TG: All 18-49 450 20% 2 500 1 400 000 8% 400 382 € 0% 2047 1 200 000 13% 2 000 350 1887 -1% 318 € 962 006 962 424 297 € 1 000 000 300 835 224 264 € 824 161 1 500 250 2% 800 000 200 959 978 600 000 1 000 -22% 150 400 000 -26% 574 100 -6% 500 447 200 000 50 37 € 68 721 27 € 64 473 0 0 0 NBG BMG remaining channels NBG BMG remaining channels NBG BMG remaining channels 2016 2017 2016 2017 2016 2017 Source: GARB 2017 The top 10 industries account for 94,5% of TV market share in 2017 Total TV Ad Investments 2017 - 691 million € Competition Share - Top 10 Industries in %, 2017 Cum. ad expenditures - Top 10 industries Top 10 Industries TV, 2017 Cum. ad expenditures - remaining industries in million € and in % of total ad investments 94.5% 5.5% Pharmacy 122 17.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Foods 97 14.1% Competition Share - Top 5 Companies Cosmetics 87 12.6% in million € / company count, 2017 Top 5 companies (cum.) Retail Outlets 83 12.0% Remaining industry (cum.) 140 Count companies 250 120 Beverages 72 10.5% 200 100 Tele-communication 66 9.5% 80 150 60 100 Hobby. Fashion. Sport 42 6.1% 40 50 20 Finance 35 5.1% 0 0 Household Chemistry 28 4.0% Automotive 21 3.0% Source: Nielsen AdMosphere 2017 The largest ad investor is in Hobby. Fashion. Sport. with more than 80% share in the category Top 5 Advertisers of Top 10 Industries in million €, 2017 25 Tele- Hobby. Fashion. Household Retail Outlets Pharmacy Foods Cosmetics Beverages communication Sport Finance Chemistry Automotive 20 15 10 5 0 Source: Nielsen AdMosphere 2017 TV LANDSCAPE AND MARKET SHARE Two media groups dominate the TV landscape with 96% market share in 2017 Overview TV Landscape and Largest Media Groups Market Share of Media Groups (Gross ad revenues) in % bTV Media Nova Broadcasting Media Groups BNT Others 1% Group Group 2% 3% BNT 4% bTV 13% bTV Niche 32% Third Party Channels Nova Portfolio Nova Niche FOX Channels Third Party Channels 8% Others 37% 0% # of channels*: 44 Total ad revenues TV in 2017: 691 million € *Nickelodeon moved to NBG in the end of the year ; Discovery Group moved out of NBG in Oct 2017 Source: Nielsen AdMosphere 2017 Two TV stations account for 69% market share in 2017 Market Share – Main