Display Advertising 2.
0:
New Perspectives on a Changing Landscape July 18, 2011
Joshua Wepman
GCA Savvian Advisors
Where We Are Today
Agencies Media Buying Desks DSPs Ad Exchanges Ad Networks Sharing Data/ Social Tools
A D V E R T I S E R S
Ad Servers
Video / Rich Media SSPs
Vertical Custom
Creative Optimization
Media Planning and Attribution
DMPs and Data Aggregators
Targeted Networks / AMPs
Publisher Tools
Performance
P U B L I S H E R S
A U D I E N C E
Retargeting
Measurement and Analytics Verification
Ad Servers Data Suppliers Mobile
Media Mgmt Systems
Ad Operations
Landscape Observations
Agencies Media Buying Platforms DSPs Ad Exchanges Ad Networks Horizontal Sharing Data / Social Tools
Trading Desk
A D V E R T I S E R S
Ad Servers
Video / Rich Media
Yield Optimization
Vertical
Targeted Creative Optimization Data Optimization Data Exchanges / Aggregators Performance
Publisher Tools
P U B L I S H E R S
A U D I E N C E
Ad Servers Verification / Attribution
Analytics
Data Suppliers
Mobile
Ad Ops / Infrastructure
Online Advertising Accelerating
Q1 2011 Was Highest Q1 Ever
$8 $7 $6 $5 ($Bn) $4 $3 $2 $1 $0
$7.3 Bn
The display advertising market is forecast to grow over 30% more than the overall online advertising market from 2009 to 2014
Notes: Source: Interactive Advertising Bureau (IAB).
But Exchange-Based Buying is Still a Small Market
Agencies Media Buying Desks DSPs Ad Exchanges Ad Networks Sharing Data/ Social Tools
Exchange-Based Buying Market
A D V E R T I S E R S
$14.0 $12.3 $12.0 $10.0 ($ ($Bn) $8.0
Vertical Custom Video / Rich Media
$10.0
Yield Optimization
$6.0 Creative
Optimization
$4.0 $2.0 $0.0
Retargeting
Media Planning and Attribution
DMPs and Data Aggregators
Targeted Networks / AMPs
Publisher Tools
$0.7
Performance
$1.4
P U B L I S H E R S
A U D I E N C E
2010A
Measurement Display Advertising and Analytics Verification Data Suppliers
2011E Exchange-Based Buying
Mobile Ad Servers
Ad Servers
Despite doubling YoY, exchange-based ad buying is expected to continue to be a small part of the overall display ad market
Media Mgmt Systems Ad Operations
Notable Trends
Brands increasingly moving their ad spend online The rise of private exchanges, proprietary data sets and premium ad networks Brands fully embrace digital video and social Google (and others) continue to march across the display advertising landscape Agencies and ad networks recognize the challenges and respond Appearance of comprehensive marketing solutions providers
6
Brands Moving Online
DRIVERS: High impact formats (video, rich media and new, engaging formats) Increasing transparency and sense of brand safety Following the audience (time spent) Real ROI
But There Are Challenges
Which metrics are most valuable for brand-building campaigns?
60% 50% 40% 30% 20% 10% 0%
Percent of Respondents
What brand marketers want
What brand marketers get
Notes: Source: Bain & Company
Brands Care About the Top of the Funnel
Brands focused here Brand Awareness Favorability
Awareness
Opinion Current metrics and new technologies focused here Clickthrough Time spent Interaction Conversion / sales
Consideration
Intention
Sales
The metrics that brands care about correspond to top of funnel activities rather than conversion and click throughs
9
Brands Care About Inventory Quality
By buying on longer tail sites, audience targeting exposes brands to the potential to advertise against questionable content
10
Brand-Oriented Solutions Offer Quality and Safety
Premium Networks High quality properties Brand-safe inventory Engaging formats
Video Networks Professional video content In-stream ad units Access to inventory at scale
Private Exchanges Leading publishers and advertisers RTB capabilities Proprietary, differentiated data
11
The Rise of Private Exchanges
Premium publisher inventory & data Optimized Pricing
Category 5 Private Exchange
Real time biddable inventory Transparent
Private exchanges enable brands to buy safe, targeted inventory while enabling publishers to enter RTB market and protect CPMs
12
Video is Growing and Outpacing Other Formats
US Online Video Ad Spending ($Bn) (1) $8.0 $7.1
US Online Ad Spending Growth by Format (1)
Format 2010 Ad Spend ($Bn) $12.0 6.2 2015 Ad Spend ($Bn) $21.5 11.7 2010 ~ 2015 CAGR 12% 14%
Search
$6.0
$5.6
Banner Ads Classifieds and Directories
2.6
4.3
11%
$4.2 $4.0 $3.1 $2.2 $2.0 $1.4
Sponsorships Email 0.7 0.2 $26.0 1.5 0.2 $49.5 15% 2% 14% Rich Media Video Lead Generation 1.5 1.4 1.3 1.7 7.1 1.5 2% 38% 3%
$0.0 2010 2011 2012 2013 2014 2015
Total
Notes: Source: Wall Street Research.
13
Video Value Chain Fragmented Like Display
Delivery / Content Management Aggregation / Portals
Content Creators
Publishing Tools
Enablers
Monetization
Like display, there are several areas across the video value chain that will benefit from the growth in online brand advertising
14
Online Video Growth Drivers
vs.
Audience viewing habits changing; moving to timeshifted media consumption Video streaming represents 32% of time spent online Online video advertising more engaging than TV Video advertising promotes greater brand recall Beginning to draw from TV budgets Improved targeting technology
15
Impact of Social Media
Social media is altering the purchase funnel and creating a closed loop between awareness & branding Data from Facebook, Twitter, reviews, comments and other social platforms being used by marketers to drive branding and conversion Building a social presence is of increasing importance to brands
Awareness
Sales
Social is a key component of online brand advertising campaigns
16
Agencies Recognizing the Challenges
17
Google Gets It
Agencies Media Buying Desks DSPs Ad Exchanges Ad Networks Sharing Data/ Social Tools
A D V E R T I S E R S
Ad Servers
Video / Rich Media SSPs
Vertical Custom
Creative Optimization
Media Planning and Attribution
DMPs and Data Aggregators
Targeted Networks / AMPs
Publisher Tools
Performance
P U B L I S H E R S
A U D I E N C E
Retargeting
Measurement and Analytics Verification
Ad Servers Data Suppliers Mobile
Media Mgmt Systems
Ad Operations
18
So Do Ad Networks
Networks creating new offerings, pivoting or acquiring businesses that bring desired capabilities
Ad Networks
Video / Rich Media
Some ad networks have attempted to transform their core business models to address new needs
Vertical Custom
Targeted Networks / AMPs
Others have acquired desired capabilities
Performance
Mobile
Networks need to evolve to survive and succeed
Media Mgmt Systems
19
Who Else is Meeting the Needs of Brands?
20
The Quest for Integrated Solutions
CMO
Display Ad Tech Point Providers Creative Optimization Vendors Data Management Platforms
RTB
Retargeting
Integrated Display Advertising Optimization Solution Provider
While the landscape is full of point providers, todays CMO is looking for comprehensive solutions providers that can drive efficiencies
21
Decade of the CMO
Focus has moved from CTOs office to CMOs office in quest to grow business while maximizing ROI Ever increasing options for the CMO across multiple channels (TV, radio, print, online display, digital video, search, etc.) Increasing complexity and proliferation of technologies designed to drive efficiency Ever-evolving landscape with alphabet soup of vendors In todays constrained environment, the CMO is tasked with finding creative ways to grow top line while maximizing bottom line
22
CMO
Consolidation is Inevitable
Digital Media M&A Transactions
$8,000 Digital Media Deal Value ($ MM) (1)
Marketers are demanding comprehensive solutions to managing their online marketing spend
$6,000
Current landscape is too fragmented and confusing
$4,000
$2,000
New entrants, such as large cap enterprise software providers and ad networks, are becoming more active in ad tech M&A
$0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2009 2010 2011
Large technology companies have record amount of cash on balance sheet and are looking to deploy it for growth
Notes: (1) GCAS database.
23
Strategic M&A and Investment Activity
24
Private-to-Private Transactions Increasing
Recently, there has been an up-tick in private-to-private M&A deal activity Larger private companies using M&A to:
Increase scale in advance of IPO or other event Broaden suite of product offerings to meet needs of advertisers Evolve business Take advantage of price capitulation
Acquired
Acquired
Acquired
Acquired
Acquired
July 2011
April 2011
February 2011
February 2011
December 2010
Acquired
Acquired
Acquired
Acquired
Acquired
November 2010
November 2010
November 2010
October 2010
October 2010
25
Return Formula More Important Now
Billions invested in ad tech landscape over last few years Focus on investment returns may drive near-term consolidation Time is important element of determining investment returns
Return
n(
1 t-1
26
Diverse Strategic Interest in Ad Tech Innovators
Marketing Agency Targets
Technology Network / Data
Ad Networks
27
Diverse Strategic Interest in Demand-Side Ad Tech
Strategic Fit
Ability / Willingness to Pay
28
Key Takeaways
Exchange-based buying will be an important component of display but only a component Real revenue will continue come from direct buys and brandoriented solutions Private exchanges and programmatic premium buys will continue to proliferate and grow Video and social will become dominant branding markets Maybe agencies and networks will be okay The CMO needs help and comprehensive solutions This will continue to be a strategically important market Thank You
29
GCA Savvians Digital Media Advisory Business
TOKYO SAN FRANCISCO MENLO PARK CHICAGO NEW YORK LONDON MUMBAI SHANGHAI
Leading investment banking firm with over 200 professionals worldwide Services include advice on mergers and acquisitions, private capital finance and restructurings Advised on over $70 billion in transactions since 2006 Leading advisor to media companies new and old
30
Leading Global Independent Advisory Firm
Selected Cross-Border Transactions
Acquisition of Divestiture of U.S. Venture Portfolio
Acquired by
Acquired by
Acquired by
Formation of JV with
Tender Offer
Semiconductor Business
$150MM
$522MM
$5.9Bn
Preferred Equity Investment and Credit Facility
$9Bn
Acquired by Sold Stake in to
TOB of Common Stock of
Acquired by
Acquired by
Acquired by
$448MM
$75MM $500MM
$10.8Bn
$747MM
$300MM
$493MM
$1.3Bn
Acquisition of Formation of JV with Acquisition of
GmB H Automotive ATE Operations
Acquired by
Acquisition of
Acquisition of
Acquisition of
Next Gen. Mobile Comm. Systems Assets
Acquisition of
Yamakawa Trading Co.
$690MM
$1.6Bn
$400MM
PVOH Business
$125MM
Acquisition of
Acquired by
Acquired by
Over 50 successful cross-border transactions representing nearly 15 different countries
Acquisition of
Select OP-1 Assets & Manufacturing Facility
$1.1Bn
Offices in San Francisco, Menlo Park, Chicago, New York, London, Mumbai, Shanghai and Tokyo
31
Proven Leadership in Digital Media Transactions
Acquired By
Acquired By
Sale of Subscription Music Service to
Acquisition of JV from Mogae Consultants
Sale of Business Unit Six Apart KK to
Secondary Sale
Preferred Stock
Acquired by
Acquisition of
We Advised the Seller May 2011
We Advised the Seller April 2011
We Advised the Seller
We Advised the Buyer
We Advised the Seller
We Advised the Founders
Financial Advisor
We Advised the Seller
We Advised the Buyer
March 2011
January 2011
January 2011
January 2011
December 2010
December 2010
November 2010
Preferred Stock
Acquired by
Acquisition of
Preferred Stock
Acquired by
Acquired by
Acquired by
Acquired by
Acquired by
Financial Adviser
We advised the seller
We Advised the Buyer
Financial Advisor
We Advised the Seller
We Advised the Seller
We Advised the Seller
We Advised the Seller
We Advised the Seller
October 2010
October 2010
October 2010
August 2010
July 2010
June 2010
June 2010
June 2010
January 2010
1UP Digital Netw ork
Sold Stake in Preferred Stock Acquired by
a Subsidiary of
Preferred Stock
Preferred Stock
Acquired by
Minority Preferred Investment in
Preferred Stock
to
Preferred Stock
Financial Advisor
We Advised the Seller
Financial Advisor
Financial Advisor
We Advised the Seller
Financial Advisor
Financial Advisor
We Advised the Seller
Financial Advisor
October 2009
April 2009
February 2009
January 2009
January 2009
November 2008
November 2008
October 2008
August 2008
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Acquired by
Preferred Stock
Preferred Stock & Recapitalization
Acquisition of
Financial Advisor
Financial Advisor
Financial Advisor
Placement Agent
Financial Advisor
We Advised the Seller
Placement Agent
Placem ent Agent
Mobile Services Business We Advised the Buyer
July 2008
July 2008
June 2008
April 2008
March 2008
February 2008
January 2008
January 2008
December 2007
Acquired by
Acquired by
Acquired by
Acquisition of
Acquired by
Senior Credit Facility
Preferred Stock
Merger with
Minority Investment in
FRONTLINE MANAGEMENT
We Advised the Seller
We Advised the Seller
We Advised the Seller
We Advised the Buyer
We Advised the Seller
Financial Advisor
Placement Agent
We Advised INTAC
Financial Advisor
December 2007
December 2007
December 2007
October 2007
October 2007
October 2007
October 2007
October 2007
August 2007
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