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Mobile ecosystem Presentation Transcript

  • 1. ConfidentialToward Ubiquity in a Consumer Inspired Mobile World Gridley’s Mobile Industry Roadmap April 2012
  • 2. OverviewMobile finally arrived in 2011 because smartphone penetration increased dramatically and reached 48% at the end of the year. Highsmartphone penetration has been the critical element needed to transform the mobile ecosystem. High smartphone penetration wasnecessary for mobile to really take off because smartphones offer consumers a fundamentally different experience that includes true24/7 convenience, hyper-local and targeted applications, and significantly enhanced connected functionality.One important thing to note is that consumers, not businesses, have been leading the charge. This is the first time in history that amajor technological shift has been led by the consumer, and its advent has several major implications. Consumers are now roughly18 months ahead of businesses. As businesses begin to catch-up with consumers, we expect to see notable growth in several keyareas including mobile advertising and point of sale applications. Other notable trends we saw in 2011 include: • Mobile advertising really took off in 2011 due to increasing smartphone penetration, mobile Web use and related increases in ad inventory. Mobile advertising is now recognized as an opportunity for brands to engage consumers in a targeted manner, thereby improving returns; • Smartphones are changing consumer shopping behavior and the in-store consumer experience because mobile phones are offering more pricing transparency, greater convenience, and product information. As of 3Q 2011, 49% of mobile consumers said they frequently used their smartphones while shopping; • The ability to pinpoint a shopper’s location and engage real-time on a mobile device provides vast opportunities for retailers to convert shoppers; • Large technology companies such as Google, Verizon, Apple, and eBay are trying to build integrated payment and marketing systems and will be a real threat to traditional payment and marketing leaders; • The growing popularity of smartphones has led to a dramatic rise in mobile video. While 23 million mobile subscribers viewed video on their phones in 2010, 31 million used mobile video in 3Q2011, a 35% increase; and • Social networking is becoming increasing popular on mobile devices and accelerating the growth of mobile. Android and iPhone users spend more time on Facebook than any other mobile application.Source: Nielsen, (March 2012). 2
  • 3. OverviewWhile 2011 was a banner year for mobile, the rate of change will continue to accelerate in 2012. Falling hardware prices willcontinue to make smartphones and related applications more accessible to more people. By the end of 2012, over 60% of mobilephones will be smartphones. Mobile’s inherently geo-local uses should also foster the creation of a whole host of innovative newapplications, and the media and commerce landscapes will continue to undergo profound changes.Gridleys Mobile Industry Roadmap is a brief 10 page report focused on four major areas we think will offer the best near termopportunities: content, marketing and advertising services, m-commerce / services, and payments. The four areas have been chosenfor different reasons, but all four have shown promise and we expect all will continue to drive value for the consumer.We hope you enjoy this mobile roadmap and our perspectives. Please give us a call to discuss the content of this presentation. Linda Gridley President & CEO linda.gridley@gridleyco.com 212-400-9710 Pratik Patel Peg Jackson Director Managing Director pratik.patel@gridleyco.com peg.jackson@gridleyco.com 212-400-9712 212-400-9709Source: Nielsen, (March 2012). 3
  • 4. Globally, Mobile Penetration is Significantly Higherthan Penetration of Landline Phones or the Internet Mobile Cellular Subscriptions Penetration Rates 160% Mobile phone penetration increased in the Americas from 52% in 2005 to 103% in 2011… 140% 143% 120% 120% 103% 100% 92% 97% 80% 74% 60% 60% 52% 53% 40% 27% 20% 23% 12% 0% 2005 2006 2007 2008 2009 2010 2011 Africa Arab States Asia & Pacific CIS Europe The Americas Fixed Telephone Lines Penetration Rates Internet User Penetration Rates …while landline phone penetration decreased 3%.. . .. and Internet penetration increased to 56% or ~half 50% 80% mobile 74% 45% 46% 70% 40% 39% 60% 35% 56% 33% 50% 30% 29% 46% 48% 25% 26% 40% 23% 36% 20% 30% 29% 15% 27% 15% 13% 20% 10% 10% 9% 10% 9% 13% 10% 8% 5% 2% 1% 2% 0% 0% 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 Africa Arab States Asia & Pacific Africa Arab States Asia & Pacific CIS Europe The Americas CIS Europe The AmericasSource: International Telecommunication Union, 2011 4
  • 5. Conversion from Feature Phones to Smartphones HasBeen Accelerating Over the Past Few Quarters……This trend is likely to continue as hardware costs continue to fall. By 2015, over 80% of USmobile users are expected to have smartphones, up from 48% at the end of 2011 US Smartphone Penetration(1) % of US Users with Smartphones(2) 77% 81% Feature Phone Smartphone 71% 64% 48% 90% 87% 86% 84% 83% 81% 79% 77% 75% 72% 50/50 66% 62% 2011 2012 2013 2014 2015 58% 56% 52% 50% % of US Users with Tablets (3) 48% wth 25% 25% r Gro 44% ting Use 41% era 20% Accel 37% 35% 15% 28% 2-7% 25% 21% 23% 19% 8% 16% 17% 13% 14% 10% 1-3%2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Feb 12 2011 2012 2013 2014 2015(1) Source: The Nielsen Company.(2) Source: Goldman Sachs (June 2011).(3) Source: Forrester Research (2010). 5
  • 6. The More Developed Japanese Market Gives a Hintof What To Expect in the US in the Next Few YearsIn the future, US consumers will probably spend more time viewing videos and TV, searching,and accessing financial news and traffic reports using their mobile devices Mobile Activities in the U.S., EU5, and Japan by % Share of Total Mobile Users 32% Poised for Growth 26% 25% 25% 23% 23% Poised for 21% Growth 20% 18% 18% 17% 17% 16% 17% 16% 16% 16% 15% 14% 14% 13% 13% 12% 10% 10% 10% 8% 8% 9% 7% 7% 7% 7% 5% 6% 6% 5% 4% 5% 4% 4% 3% Games Search Capture Maps Instant Sports Info Music Financial Restaurant Traffic Classifieds Online Retail TV / Video Travel Video Messaging News / Stock Info Reports Service Quotes U.S. EU5 JapanSource: comScore MobiLens, 3 month average ending December 2010, Japan data for December 2010 only 6
  • 7. Mobile Ads Are More Targeted, Making them MoreEffective and Compelling Than Other Media Relative Efficacy of Mobile vs. Other Advertising Media (1) Reach Targeting Engagement Viral Transaction Mobile 100 90 70 80 80 Internet 50 50 80 40 60 1 TV 50 30 90 0 20 1 1 1 Print 40 0 20 0 0 1 1 Radio 60 0 40 0 US Mobile Ad Spending ($MM)(2) Breakdown of US Mobile Ad Spending ($MM)(2) 9 0 % $5,000 79% $4,396 8 0 % $4,500 65% $396 7 0 % $4,000 $3,381 $3,500 6 0 % 47% $3,000 $1,767 $2,523 5 0 % $2,500 4 0 % $1,802 $2,000 40% 3 0 % $1,226 34% $1,500 $1,600 30% $743 $1,000 2 0 % $500 1 0 % $633 0 % $0 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Messaging Display Search VideoSources: (1) Chetan Sharma (January 2011), (2) eMarketer (September 2011) 7
  • 8. Mobile Phones Are Creating New In-StorePurchasing Behavior and Transforming Payments Reasons for In-Store Purchase Abandonment Among US Smartphone Users 52% 51% 34% 21% 17% 7% 1% Found it online for a Found it at another Saw a negative review Bought a similar item It was not available in- No longer needed item Nove of the above better price store for a better price about the item instead storeSource: comScore, US Smartphone User Survey (July 2011). Consider Mobile Payments Mainstream % of Age Group Interested in Mobile Transactions 9% consider mobile payments mainstream 24% 24% globally today 21% 18% 12% 10% 9% 3% 1% 83% believe mobile payments will be mainstream 13-15 16-17 18-19 20-24 25-34 35-44 45-54 55-64 65+ globally within the next four yearsSource: KPMG. Source: Yankee Group. 8
  • 9. Large Companies Are Trying to Build IntegratedPayment and Marketing SystemsIt is currently unclear who will ultimately develop the most successful integrated payment andmarketing system, however, it is clear that someone will succeed Total Global Payments Revenue Growth ($BN) Location of Mobile Wallet Purchases in Japan (MM) 7.6 2011 $240 billion 3.2 2.7 2.6 1.5 2015 $670 billion Retail or convenience Vending machine Public transportation Grocery store RestaurantSource: Juniper Research (July 2011). store(1)Includes mobile payments for digital and physical goods, money transfers and NFC. Source: comScore MobiLens (December 2010). Most Trusted Brands in Mobile Payment 39.6% 35.9% 35.8% 34.3% 24.6% 22.9% 22.3% 19.5% 17.0% 15.5% 12.1% Visa MasterCard American Express PayPal US Postal Service Apple Microsoft Google Motorola eBay FacebookSource: Ogilvy and Mather (2011). 9
  • 10. Electronics, Clothing, and Food CurrentlyDominate M-commerceThe ability to pinpoint a shopper’s location and engage real-time on a mobile device providesvast opportunities for retailers to convert shoppers Total U.S. Mobile Commerce Revenue Growth ($BN) mCommerce Items Purchased 31% 29% $31.0 26% 21% 21% 21% 19% 19% 17% $23.7 15% 14% $17.2 $11.6 $6.7 s l) s ets ts s s ls od cs l ri e ia er ay es ita ta ke ni $3.5 Fo ck str ow tn St so en ig ic tro Ti Fi du es -D t/T rR Fl el ec ts/ In cc ne ot on en Ca El or o/ H /A la N m Sp ut irp ng s( in s/A A hi rta ok 2010 2011 2012 2013 2014 2015 ot ol Bo te Cl To EnSource: eMarketer (November 2011). Source: ComScore/Millennial Media Mobile Retail Study (2010). Company • Mobile commerce • In 2011, people purchased • Launched Goggle Wallet • Dipped its toe into Recent makes up more than $1 $5 billion of goods on eBay mobile payments by Moves billion in sales using their mobile devices introducing EasyPay • Tapping into 80% of the • In 2012, eBay projects this • Using Google Wallet to • Could easily introduce retail market that is not will rise to $8 billion gain meaningful traction its own digital wallet Future online by going mobile • PayPal expects to see $7 • Captive share of search Trends billion in mobile payment and mobile reach has volume in 2012 high leverage potential 10
  • 11. Key M&A Themes2005 – 2006 • Wireless infrastructure driven • One off application acquisitions 2007– 2008 • M&A at some scale • Early marketing related transactions • Beginning to expand beyond 2009– Today marketing oriented services • More focused on marketing networks 11
  • 12. Mobile Ecosystem Marketing and Advertising Services Content M-Commerce / Services Payments Marketing Services Content e-Commerce Mobilizers Integrated Systems Payments Video Gaming M-Commerce Tech Mobile Ad Networks Bar Code Scanners Mobile Discovery Mobile Coupons Social Services DSPs Exchanges Analytics Rewards / CLOs Digital Inventory 12
  • 13. Gridley Overview
  • 14. Gridley OverviewGridley & Company, a New York-based boutique investment bank, provides advisoryservices to companies in the Information Services industry Gridley & Company Leading Boutique • Sharp focus provides clients with valuable strategic insights and perspectives • Specialize in Internet Services, Digital Media & Marketing Services, Data Services, Financial Technology, and SaaS & Outsourcing Services • Founded in 2001 • Headquartered in New York, NY Strong Reputation • Strong industry reputation on assignments led by senior bankers • Experienced, bulge-bracket trained M&A bankers – The “A” Team Trusted Advisor • Thoughtful ideas – not just logical combinations • Deliver value to buyers, sellers, and investors alike • Broad industry network developed over 25+ years with industry leaders, emerging growth companies, and senior investors 14
  • 15. Gridley’s Differentiated Strategic ApproachOur broad network allows us to discern important trends early in their development, adviseclients on the best strategies to profit from those trends, and execute successful transactions INDEPENDENT ADVICE INDEPENDENT ADVICE Well-Known Thought Leadership Strong Network of Relationships• Often hired by public company leaders to • Split time 1/3, 1/3, 1/3 between strategics, advise them on major growth initiatives VC/PE firms, and private company CEOs• Approximately 25% of business is retained, • Built our business by visiting over 400 strategic buy-side work for industry leaders companies a year annually for 10 years and selected PE investors • Have set up over 1,000 one-on-one “meet• Use industry overviews to effectively guide and greet” meetings at our annual January strategic buyers and PE investors conference INTEGRITY Ability to Strategically Position Companies INTEGRITY Impressive Track Record• Spend more time than our competitors on • Over 25 year history of successfully the strategic positioning of our clients completing transactions• Work together to optimize market • Clients like us and the job we do positioning • Goal is 100% referencable clients• Offer strategic insights based on our • “No client gets left behind” understanding and perspective of the industry 15
  • 16. Strategic Thought Leadership is Well Known Quarterly Newsletter: Industry Frequent Gridley Hosted The Compass Guides Industry Speaker Events • Business Insider: • Digital NY IGNITION • January Conference • OMMA Display • Mobile in May • Capital RoundTable • Annual Golf Outing • SIIA Midmarket Growth • AdTech Cocktail Conference Party • IAB Marketplace: Mobile • Highly respected quarterly newsletter • OMMA Mobile about industry trends and corporate • Upstream Seller Forum finance/M&A activity • Digital Hollywood NYC: • Received by over 2,200 Media Disruption industry CEOs and • ad:tech NYC 2010 CFOs, investors, and financial sponsors 16
  • 17. Our Team is Experienced, Focused, and Trained forSuccess• Gridley’s bankers are experienced, bulge-bracket trained bankers – The “A” Team• Recent additional hires add execution capability and further outreachTeam Member BackgroundLinda Gridley • 25+ years relevant banking experiencePresident & CEO • Prior firm experience at Lehman Brothers, Furman Selz, and ING Barings • In depth knowledge of marketing services sector – Successful sale transactions with KBM, M/A/R/C Group, PRIMIS, Communifx, and Digitaria • Frequent industry conferences circuit speakerPeg Jackson • Extensive knowledge and experience in digital media and technology sectors as venture capitalistManaging Director • Managing Director at NeoCarta Ventures. Served on boards including Data Synapse (Acquired by Tibco), Silverpop, and Zoom Systems • Vice President of Business Development at NBC. Responsible for investments including Tivo, Preview Travel (acquired by Microsoft), Whowhere (acquired by Lycos), Wink (acquired by Liberty)Pratik Patel • 9 years banking experience, 5 years covering software and digital media sectorsDirector • Prior firm experience at JPMorganMaura O’Neill • 7 years banking experience, extensively working with media and marketing services companiesVice President • Prior firm experience at Lehman Brothers and CDG GroupMichael Lambe • 7 years transaction experience, executing transactions for leading private equity firmsVice President • Prior firm experience at Harris Williams & Co.Feng Hong • 3 years tech banking experienceAssociate • Prior firm experience at Credit Suisse 17
  • 18. Selected Recent Gridley TransactionsGridley clients include industry leaders and premier emerging growth companies Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed $20,500,000 Undisclosed Acquired by Acquired by Acquired by Acquired by Acquired by Acquired by Acquired by Acquired by SAS GfK Channel Intelligence, Inc. Minicom Digital Signage Oversee.net TeleTech Holdings The Dolan Company WPP Group plc Advisor Advisor Advisor Advisor Advisor Advisor Advisor Advisor Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed $20,000,000 $367,000,000 $157,000,000 Acquired Acquired Acquired by Acquired Acquired Investment by Acquired by Acquired FetchBack Inc. M3 Mobile Marketing MDC Partners Inc. Pepperjam Silverlign Group Inc. TZP Group LLC Roper Industries, Inc. e-Dialog, Inc. Advisor Advisor Advisor Advisor Advisor Placement Agent Advisor Advisor Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed $113,189,337 $17,450,000 Undisclosed Email Business of Ad Serving Business of PrePay Intelligent Network Solutions Business Unit of Acquired by Acquired by Acquired by Sold to Sold to Sold to Secondary Offering Acquired by Verisign Schulman, Ronca, & WPP Group plc Quest Software One to One Interactive, Inc. Aegis plc Parthenon Capital LLC Bucuvalas, Inc. . Advisor Advisor Advisor Advisor Advisor Co-Manager Issued Fairness Opinion Advisor Undisclosed $138,000,000 Undisclosed $58,000,000 Undisclosed $55,200,000 Undisclosed Undisclosed Advisory Communications Marketing One to One, Inc. Systems, Inc. (ACS) d/b/a d/b/a Acquired by Acquired Acquired by Acquired Acquired by Acquired by Acquired by Valassis Follow-On Offering Carlson Marketing GroupISIS Equity Partners, Inc. Modem Media, Inc. Performics, Inc. ARAG Group Alliance Data Systems, Inc. Communications, Inc. Advisor Advisor Advisor Advisor Advisor Co-Manager Advisor Advisor 18
  • 19. 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