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Gridley2011 ignitionpresentation

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    Gridley2011 ignitionpresentation Gridley2011 ignitionpresentation Presentation Transcript

    • TAKING A DIGITAL BITE OUT OF THE BIG APPLENovember 30, 2011
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 2
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 3
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 4
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 5
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 6
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 7
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 8
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 9
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 10
    • Traditional Industry Leaders are Highly Vulnerable© 2011 Gridley & Company LLC 11
    • Media Time Spent vs. Ad Spend is Out of Whack…Creating huge opportunities for internet and mobile companies and more potentialdownside for print media companies US Time Spent vs. Advertising Spending (2010) Traditional Media TV Internet + Mobile 43% 43% 27% 25% 19% 16% 11% 8% 8% 1% Print Radio TV Internet Mobile Time Spent Ad SpendNote: Print includes newspapers and magazinesSources: KPCB and eMarketer, March 2011© 2011 Gridley & Company LLC 12
    • Better Technology Driving Fundamental Shifts inConsumer Behavior Social Networking Creating ~8x Growth in Introduction of Information at Scale US E-Commerce the Smartphone ($ in billions) $164.6 23% 61% CAGR = CAGR = 50.1% 20.4% $25.8 8% 0% 2005 2010 2000 2010 2001 2010 Source: Pew Research Source: US Census Bureau Source: comScore© 2011 Gridley & Company LLC 13
    • Convergence of CapabilitiesBusiness models have begun to converge because disruptive technologies anddifferent marketplaces are springing up and growing fast Converging Companies Key Themes • Becoming hard to determine who is competitive as separate disciplines converge • E-commerce is converging with Content content and social to create strong audience relationships and enable sophisticated audience segmentation and targeting Users • Convergence has major M&A implications Community Commerce© 2011 Gridley & Company LLC 14
    • Tremendous Promise with Mobile Given UniqueCharacteristics Converging Companies Key Themes Newspapers, Watch Magazines, Books • Global mobile internet ecosystem Camera expected to grow to at a 17% Computer CAGR to $509 billion by 2013 • Mobile online advertising expected GPS, Maps, Snail Mail to be fastest growing segment at Compass 50% CAGR Video • U.S. mobile internet revenue trails Camera the rest of the world, but is PDA positioned to catch up fast Range • The mobile sector has seen heavy Telephone Finder investment in the past five years • Recent investments reinvigorate Game and legitimize the mobile sector Credit Console Cards Alarm Music Clock PlayerSources: eMarketer and Morgan Stanley Research, Mobile Internet Report, December 2009© 2011 Gridley & Company LLC 15
    • Innovative New Companies EmployingUnprecedented Change Agents Open Source Open Architecture Cloud Computing New Business Models© 2011 Gridley & Company LLC 16
    • Unprecedented Value Being Created Company Year Founded Current Valuation IPO Status 2002 $6.2 Billion IPO in May 2011 2004 $73.0 Billion Not Filed Yet 2006 $7.1 Billion Not Filed Yet 2007 $1.1 Billion Not Filed Yet 2007 $6.0 Billion Not Filed Yet 2007 $11.7 Billion Filed July 2011 2008 $10.7 Billion IPO in November 2011Sources: Second Market and CapIQ as of November 25, 2011© 2011 Gridley & Company LLC 17
    • Emerging Innovators vs. Traditional Leaders Comparative Equity Values ($ in billions) Legend Traditional Leaders $70 Emerging Innovators $40.1 $73.0 $30Equity Value $32.4 $20 $11.9 $10.7 $11.7 $7.1 $9.4 $6.2 $3.2 $2.7 $6.0 $1.1 $0 0.0x 7.5x 15.0x 22.5x 50.0x 57.5x $1.0Sources: Second Market and CapIQ as of November 25, 2011. Revenue Multiple© 2011 Gridley & Company LLC 18
    • Enter Digital NYNote: Gridley’s Guide to Digital New York can be found at: http://www.gridleyco.com/digitalny/© 2011 Gridley & Company LLC 19
    • Gridley’s Guide to Digital NY • $4 billion of capital invested in digital NY companies since 2006 • 145 private companies have raised at least $5 million • 120 VC/PE investors with a focused interest in digital NY • TONS of innovation and disruptionNote: Gridley’s Guide to Digital New York can be found at: http://www.gridleyco.com/digitalny/© 2011 Gridley & Company LLC 20
    • Digital Sector Categorizations (295) Digital Digital Content Marketing Social E-Commerce Mobile (80) (110) (30) (48) (34) Content Enabling Audio & Video Commerce Brand Storefront Content Advertising Family & Content Curation Daily Deals E-Commerce Education Digital Agencies Dating E-Commerce Marketing Finance & Display Infrastructure Professional Advertising Enterprise Social Social Marketplace Games Email Advertising Funding Private Sales Health & Fitness Lead Generation Local Third Party Lifestyle Local Advertising Social Network Retailer Music Search Other Other Advertising Tech Social Marketing Video & Images ManagementNote: Several companies have distinct business units that place them in multiple categories© 2011 Gridley & Company LLC 21
    • NY Area Private Digital Companies by EquityRaised (143) $5M-$10M 41 $10M-$20M 36 $20M-$30M 24 $30-$50 $30M-$50M 24 $50-$100 $50M-$100M 13 Electric Sheep >$100M 5 FashionStakeSources: Capital IQ and TechCrunch, September 2011© 2011 Gridley & Company LLC 22
    • NY’s Emergence as a Tech HubNew York City has become a true digital media innovation center 1H2011 Internet VC Funding by Top Cities 1H2011 Internet VC Deals by Top CitiesTotal = $3,431 billion Total = 289 Boston, 9 Los Angeles Washington, Boston 3% Los Angeles, 13 D.C., 1 6% San Francisco Chicago, 18Washington, D.C. 21% 12% San Francisco, 103 Bay Area Palo Alto $1,534 bn Bay Area Chicago 11% 167 New York, 81 17% Redwood City 6% Palo Alto, 29 M ountain View San M ateo, 7 New York M ountain View, San M ateo 4% Redwood City, 9 19 18% 2%Source: CB Insights “Venture Capital Activity Report”© 2011 Gridley & Company LLC 23
    • Over 300 NY Digital Start-Ups Founded in the LastFew Years… Digital Start-Ups Founded in NY 80 71 62 53 55 2007 2008 2009 2010 YTD2011Sources: CapIQ and Gridley estimates© 2011 Gridley & Company LLC 24
    • NY Ecosystem has Very Different Roots and GrowthOpportunities than Silicon Valley Internet Services Wall Street Leadership Talent Operational Engineering Data Services Efficiencies Talent Advertising Key Creative Customers Talent Strategic Strategic Acquirers Partnerships Fashion Business Media Development© 2011 Gridley & Company LLC 25
    • Recently Announced Digital NY M&A Deals EV/Revenue Acquirer Target Price Multiple Comment • Brings strong technology to help $80MM1 NA monetize long-tail consumer products • Improves Yahoo!’s data story for $264MM 2.0x media management • Shows Disney’s continued digital $40MM1 5.0x expansion into niche verticals • Expands U.S. footprint and adds $40MM 1.6x social media capabilities • Improves Google’s positioning $400MM1 NA and monetization capabilities with Tier 1 publishers • Represents industry consolidation $5MM 1 NA of companies offering premium services • Adds market leading data $58MM1 NA management capabilities to Adobe’s publishing tool-set1Rumored market value.© 2011 Gridley & Company LLC 26
    • Key Disruptive Trends / Issues in Digital NY Advertising • Traditional creativity vs. performance-driven ad tech Media • Change in content creation and consumption Retail • Change in consumer purchase behavior, increasing availability of data, and mobile’s growing impact Big Data • Cloud-based services and new data sources© 2011 Gridley & Company LLC 27
    • II. Advertising
    • Traditional Ad Agencies vs. Performance-BasedMarketing Comparative Equity Values ($ in billions) Legend Traditional Ad Agencies Performance Based Marketing $200 Emerging ThreatsEquity Values $70 $208.7 $182.3 $30 $73.0 $12.7 $8.0 $11.0 $4.7 $10.7 $3.9 $0.6 $0.8 $0.9 $0.4 $0 0.0x $2.2 5.0x 10.0x 20.0x $0.4 $1.2 $0.5 $1.6 $0.4 Revenue MultipleSources: Second Market and CapIQ as of November 25, 2011© 2011 Gridley & Company LLC 29
    • Traditional Ad Agencies vs. Performance-BasedMarketing Comparative M&A Activity (2009-2011YTD) Notable Acquisitions over $100MM by Notable Acquisitions over $100MM by Traditional Ad Agencies Performance Based Marketing Co.’s $575MM $1.6BN $750MM $530MM NA $390MM $420MM $400MM $345MM $348MM & $200MM $275MMSource: CapIQ and Gridley estimates© 2011 Gridley & Company LLC 30
    • The Rapid Growth in Online Advertising Has CreatedVarious Measurement Complexities and Opportunities On Social On Site Platforms Transaction Brand How are users behaving? How Data Suppliers effective are my ads? Data Providers / Data Exchanges Creative Optimization Advertiser Ad Server Publisher Ad Server Ad Networks DSPs Verification Verification Retargeting Supply Side $$ Tools Publishers Platforms Media Ad Exchanges Agencies Analytics Audit How do I measure Data Mgmt. safety and Workflow effectiveness in blind Direct environments?© 2011 Gridley & Company LLC 31
    • Advertising Disruptors & Innovators Digital Disruptors & Marketing (110) Innovators Power of RTB Helping brands to speak directly to consumers via social networks Performance-driven, next generation ad agency Growing importance of video vs. TV Open Table for doctors appointments© 2011 Gridley & Company LLC 32
    • III. Media
    • Traditional Media vs. Social Networks Comparative Equity Values ($ in billions) $90 Legend Traditional Media Social Networks $60.2 $60 $57.1 $73.0 Equity Value $40.1 $32.4 $15.4 $23.4 $30 $4.0 $11.7 $9.1 $7.1 $2.7 $6.0 $1.0 $6.2 $1.2 $0 0.0x 2.5x 5.0x 15.0x 35.0x 55.0x $2.5 Revenue Multiple $0.1Sources: Second Market and CapIQ as of November 25, 2011.© 2011 Gridley & Company LLC 34
    • Content Consumption Model is Quite a Bit Different Today Than Old Model of Browse and Consume Drivers of Influence Content Enlightenment Acknowledgment The Network Science Converse Play Tweet Tag Curation Opine Watch “Like” Check-in Incentives Review Read Location Rank Revenue Acclaim Loyalty Intelligence© 2011 Gridley & Company LLC 35
    • Media Disruptors & Innovators Digital Disruptors & Content (80) Innovators Brings multi-new media concepts such as community, interactivity and multi- channel content into a single platform Combines content and commerce into an integrated user experience Brings historically siloed content channels into an integrated platform Brings over-the-air television to the home New form of interactive entertainment Electric Sheep Content marketplace for monetization and user traffic for publishers Re-imagined news publisher© 2011 Gridley & Company LLC 36
    • IV. Retail
    • Traditional Retail vs. E-Commerce Comparative Equity Values ($ in billions) Legend $200 Traditional Retail $196.1 E-Commerce $82.9Equity Values $100 $50 $35.0 $36.4 $34.4 $9.0 $6.4 $3.6 $6.2 $3.5 $1.1 $0.4 $0 0.0x 4.0x 8.0x 14.0x $0.2 $0.9 $0.5 Revenue Multiple Sources: Second Market and CapIQ as of November 25, 2011.© 2011 Gridley & Company LLC 38
    • Traditional Retail vs. E-Commerce Comparative M&A Activity (2009-2011YTD) Top Acquisitions by Top Acquisitions by Traditional Retail Companies E-Commerce Companies $2.2BN $2.4BN $1.8BN $1.2BN * $560MM $895MM $300MM $545MM $270MM $350MMSource: CapIQ and Gridley estimates* Represents Target acquiring Zellers’ 220 retail locations in Canada© 2011 Gridley & Company LLC 39
    • E-Commerce is Growing at 5x Traditional Retail • Online sales are expected to overtake traditional sales in less than 10 years • The US was the 2010 leader in global e-commerce sales at 27% of worldwide volume • US e-commerce retail sales totaled about $177 billion in 2010, up an average of 13% from 2009 E-Commerce Sales vs. Traditional Retail Sales ($ in millions) $3,526 $3,585 $3,640 $3,405 $3,466 $3,279 $3,343 $3,151 $3,215 $3,022 $3,086 $556 $624 $384 $437 $494 $216 $252 $292 $336 $151 $182 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E E-Commerce Total Retail - E-CommerceSource: Goldman Sachs Research and International Data Corporation estimates© 2011 Gridley & Company LLC 40
    • Disruptive New Business Models Daily Deals / Private Sales Social Mobile Local E-Commerce Model E-Commerce E-Commerce• Collective • Exclusivity and • Rapid growth due • M-commerce to bargaining power word-of-mouth to popularity of reach $31bn by• Minimum threshold marketing social networking 2016, 7% of total e- of subscribers • Successful due to sites commerce (1) needed urgency, • 56% of online • Increase in• Subscribers driven consumers’ herd shoppers follow a smartphone use will to share deals with mentality, and retailer on a social lead to new wave of friends online loyalty media site m-commerce development Source: Forrester Research (6/17/2011).© 2011 Gridley & Company LLC 41
    • Retail Disruptors & Innovators E-Commerce Disruptors & (48) Innovators Transforming how retailers get in FashionStake front of users Developing a new model for retail clothing Using technology to make a previously difficult category online-effective Recreating the consumer and business model for food ordering Removing significant barriers to enjoying artwork Developing a new model for how brands acquire new users© 2011 Gridley & Company LLC 42
    • V. Big Data
    • Publicly Traded Data Companies Comparative Equity Values ($ in billions) Legend $200 Traditional Leaders $208.7 Emerging Innovators $45 $44.6Equity Value $12 $12.1 $10.2 $9.4 $4.7 $6 $4.1 $3.2 $0.9 $1.5 $0 $0.5 $0.6 0.0x 1.0x 2.0x 3.0x 4.0xSources: Second Market and CapIQ as of November 25, 2011. 2011 Revenue Multiple© 2011 Gridley & Company LLC 44
    • M&A Activity by Big Data Companies M&A Activity (2007-2011YTD) $4.0BN $345MM $1.4BN $240MM $1.2BN $208MM $205MM D&B Australasia $534MM Pty Limited $387MM NASource: CapIQ and Gridley estimates© 2011 Gridley & Company LLC 45
    • Big Data Disruptors & Innovators Digital Digital Social (30) Content (80) Marketing (110) Ingests millions of data feeds to develop credible expert network on a broad range of topics Provides tools around large data sets to evaluate commercial real estate SpotOn Reads and reacts to complex event data in real time Provides real time verification and protection Electric Sheep to advertisers in ad markets Organizes large community information© 2011 Gridley & Company LLC 46
    • VI. Closing Thoughts
    • Disruption Can Lead to Significant ValuationDestruction……and has lead to a significant number of bankruptcies and restructurings of traditionalmedia companies Newspapers Print Media Radio© 2011 Gridley & Company LLC 48
    • Future NY Leaders Landscape© 2011 Gridley & Company LLC 49
    • Interested in Other Gridley Reports?Available at www.gridleyco.com/what-we-think/resources/ Recent Conference Presentations Comprehensive Industry Overviews Quarterly Newsletter© 2011 Gridley & Company LLC 50
    • Linda Gridley President & CEO 212.400.9710linda.gridley@gridleyco.com Gridley & Company LLC10 East 53rd Street, 24th Floor New York, NY 10022 212.400.9720 tel 212.400.9717 fax Twitter: @gridleyco www.gridleyco.com