• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Creative product strategy_-_10-14-08
 

Creative product strategy_-_10-14-08

on

  • 368 views

 

Statistics

Views

Total Views
368
Views on SlideShare
368
Embed Views
0

Actions

Likes
0
Downloads
2
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • PointRoll works with 60% of Y!’s targeted Smart Ads Retail advertisers (source Retail category team)~50%(???) of creative on Y! provided by external creative mgmt, e.g. DoubleClickPointRoll acquired ShopLocal, our only Retail listings partner

Creative product strategy_-_10-14-08 Creative product strategy_-_10-14-08 Presentation Transcript

  • Advanced Ads & Creative Management Platform Creative Product Strategy Creative & Advanced Ads Recommendation Oct 14, 2008
  • Advanced Ads & Creative Management Platform VIDEO ADS
  • Advanced Ads & Creative Management Platform Agenda 1. Market environment and opportunity for video 2. Strategic/competitive positioning overview 3. Sizing the video opportunity for Y! -- market potential 4. Requirements for Y! to compete and succeed in video
  • Advanced Ads & Creative Management Platform Video Landscape – Executive Summary 10 Truths About Online Video 1. Video is one of the fastest growing segments of the online ad marketplace. Ad spending is growing > 50% per year CAGR. 2. Video is strategic -- it enables Y! to compete for a portion of the $74B annual TV ad market and helps broaden display buys. 3. Despite being one of the largest video publishers, Y! is underperforming the market in revenue and market share growth. 4. Major video advertisers want to advertise alongside professionally produced, relevant and ―brand- safe‖ content 5. Major content providers want to distribute their content on Y! but only if they can sell ads and share revenue (―You Sell‖). 6. As with display, video advertisers make buys based on scale and efficiency of reach, targeting and ROI measurement 7. YouTube owns 41% of video streams viewed on the web. Several ad networks have grown significantly and are now offering major agencies and advertisers more efficient buys—increasing competitive pressure for Y! 8. Major publishers are interested in having Yahoo sell and serve video ads on their sites (―we sell‖), but only if we can monetize their content more efficiently than our competitors 9. Advertisers and publishers expect innovative and effective ad formats—overlay formats in particular have gained traction. 10.Accelerating the shift of TV dollars to the web requires a simple, end-to-end creative management solution—our competitors are doing this for free.
  • Advanced Ads & Creative Management Platform What Makes Video Ads Different? Ability to “Tell a Story” and Connect Emotionally • 45% of online video viewers report taking action after viewing ad¹ • Higher unaided recall scores versus print • Higher intent to purchase scores • Higher preference scores “In-Player” Video “In-Banner” Video (aka “In-Stream”) (Rich Media Display Ads) Video Ad Demo page (use videoads/yahoodemo to log in)
  • Advanced Ads & Creative Management Platform What Makes Video Ads Different? “In-Player” vs “In-Banner” Video Ads • Online video ads as discussed in this deck refers to video ads played in a video player around content “In-Player” Video “In-Banner” Video (aka “In-Stream”) (Rich Media Display Ads) Where its played In a video player, typically prior to the In a display banner ad. No video content. content to draw user interest. Full Sight, Sound & Motion? Yes. Ad is shown prior to content Only when user initiates ad play Skipable? No. Ad plays prior to content and not Yes. Ad is not played unless user skipable. initiates it. Typical CPMs $25-$45 on Y! properties. $1-$7 on Y! properties. Can be higher on premium sites like WSJ.com ¹ Source: Online Publishers Association and OTX, June 2007
  • Advanced Ads & Creative Management Platform Target: The $74 Billion US TV Ad Market Top 100 Largest US TV Advertisers (2006) 2500 $17 B Revenue ($ Millions) 2000 $18 B 1500 1000 500 0 W om nc p H . p ts g-P ll s al W e oo ve r Te gh ol San B p is ner t C ser IB i ng Sa a y da o C Ex er ec b e ss Sc ne ds ar n ofi- i lle ay u Br s or l SA ou m mb C rs nti i tt l So an Pfi z u D erin l M -M eB Kr on e k C o ki w t D ar ew M ch l o gr y am p r le G Fo a fe ne al M ra iti G l A Be t af e r& p e e Ti te ic ki h oc C er W eu Pr Am R so Key Stats M • $35 Billion Spent by Top - Top 20 US TV Advertisers 100 US TV Buyers comprise 23% of total TV ad market Source: Advertising Age, Top 100 Leading National Advertisers, June 25, 2007
  • Advanced Ads & Creative Management Platform Video Market Growth Estimates Consensus 2009 Market Size: $750M to $1.85B • All major analyst forecasts show strong growth over the next 3-5 years. - eMarketer projects a 3 year CAGR of 65% - Forrester projects a 3 year CAGR of 80% - Lehman projects a 2 year CAGR of 48% • Huge upside potential. All video advertising today = <2% of TV ad spending • Annual TV ad spend = $74B • Strong story in a cost-cutting environment - Key drivers of growth include:  cost efficiency  performance  measurement  targeting
  • Advanced Ads & Creative Management Platform Agenda 1. Market environment and opportunity for video 2. Strategic/competitive positioning overview 3. Sizing the video opportunity for Y! -- market potential 4. Requirements for Y! to compete and succeed in video
  • Advanced Ads & Creative Management PlatformUnderstanding the Major Brand Advertiser Segment Synopsis • Medium to large, national ―mass‖ branders • Heavy TV spenders struggling to justify ROI on traditional media • Need to establish emotional connection with their audiences; value innovation and partnership • Require cross-media measurement • Heavy focus on media partnerships, including agencies • Potential example advertisers: BMW, Merck Needs Care about Don’t care about 1. Reps understand my business (Partner) 1. Stop campaign easily 2. Brand adjacency (Ad context) 2. Not willing to pay premium CPM 3. Reach mass audience (Audience) 3. Cost 4. Create an emotional connection (Ad detail) 4. Motivate to act within a specific time frame 5. Quantify ROI (Performance) 6. Innovative ad formats (Innovate) 7. Demographic targeting (Targeting) 8. Reps provide insights into campaign effectiveness (Partner) 9. Audience able to interact with Ad (Ad detail) • Best value given cost Source: 2008 Advertiser Needs-based Segmentation Study
  • Advanced Ads & Creative Management Platform Positioning: Quality Content & Reach Professionally Produced Content Web sites ―Heads‖ ―Necks‖ Large Brand High CPMs with Advertisers’ scale High CPMs sweet spotwithout scale Lower Higher Reach Reach ―Tails‖ Low CPMs User Generated Content
  • Advanced Ads & Creative Management Platform Y! O&O Video Viewership Falling Behind Competition In the last year, Google/YouTube’s share of streams grew 69%, while Y!’s share declined 43%. July 2007 Share of Video Streams July 2008 Share of Video Streams Viewed (Y! #3) Viewed (Y! #5) Fox Interactive Media, 4.4% Yahoo! Sites, 4.2% Google Sites, 44% Microsoft Sites, Fox InteractiveGoogle Sites, 26.7% 1.6% Media, 3.9% AOL/Tim e Warner/Turner, 2.0% Yahoo! Sites, 2.4% Viacom Digital, 3.1% Microsoft Sites, 2.5% Disney Online, 2.0% AOL/Tim e Warner/Turner, 2.7% Viacom Digital, ESPN, 0.8% 2.2% Disney, 1.6% ABC/CBS/NBC HULU.COM, 1.0% Com bined, 2.3% ESPN, 0.6% All Others, 37.9% ABC/CBS/NBC All Others, 52.9% Com bined, 1.2% Source: ComScore Video Metrix, July 2007 and July 2008 reports AOL/Time Warner/Turner figures aggregated * All data from comScore press releases
  • Advanced Ads & Creative Management Platform Increasing Competition from Ad Networks • Advertisers are looking for scale, context and efficient reach with their buys. • Ad inventory on Y! O&O sites is shrinking relative to video ad networks. • Ad nets are aggressively competing with us for major ad buys putting our O&O revenue at risk. • Most networks are VC backed and focused on growing scale • Examples: YuMe/MSFT deal, BrightRoll $1M buy, BBE P&G deal, etc. Broadband Yahoo! BrightRoll YuMe Enterprises Tremor Monthly Ad 200M 250M (?) 300M 1 Billion 200M-300M Impressions Impressions Served US Potential 82% Not Available 71% 68% 53% Reach Targeting Content Channel Content Channel Content Channel Content Channel Content Channel Capabilities Age Age Gender Geo (DMA) Age Gender Gender Age Age & Gender (via Gender Basic Geo Basic Geo Geo ComScore or Basic Geo BT where supported by publisher) Top Advertisers ABC, HP, Lenovo, Kellogg‘s, Procter & Gamble, WalMart, Mars, MSFT, Visa Blackberry, AMEX, Army, Ford, AT&T, IBM Microsoft, Nokia, Intel, Honda Hilton, WaMu
  • Advanced Ads & Creative Management Platform Video | Healthy Demand Is Stifled • Y! turned away demand in 2007 and 2008 due to lack of inventory and/or lack of advertiser solutions. • With ~$20MM in Upfront dollars already committed for 2009 and flattening video streams, we will likely continue to turn away demand in 2009 if additional Supply is not opened. 2007 2008 2009 Upfront O+O Revenue $24MM $28MM $20MM Unmet Demand ~$43MM* ~$40MM* ?? Total Demand $67MM $70MM ?? All revenue numbers above are pre-TAC • Assuming Ad Supply stays flat Y/Y at 975MM, and the bulk of 2009 Upfront dollars fall in calendar year 2009, this implies we are already more than 80% sold out of 2009 inventory. *Note that “Unmet Demand” is calculated based on market-movers, big buys that we couldn’t accommodate. Does not include day-to-day RFPs looking to book against sold-out demos.
  • Advanced Ads & Creative Management Platform “We Sell” for Video Ads v1.0 Planned for 10/22/08 Yahoo leverages its user insights to sell and serve more relevant video ads off-network onto other publishers sites and take a share of revenue. Video Ad Network Video Content Channels News Sports Entertainment Lifestyle Other Advertisers Y! Sales & NPC Vertical Ad Serving Content Channels Off-Network Targeting • By Content Channel • Demo Targeting • Geo Targeting • Behavioral Targeting • Publisher exclusion * Example WS publishers listed
  • Advanced Ads & Creative Management Platform “You Sell” for Video Ads You Sell enables premium content providers with sales forces to leverage Y!’s audience to create new advertising opportunities.  Content provider sells ads to advertisers and books ad inventory on Y! via a 3rd party ad server.  When partner content runs, Y! makes an ad call to 3rd party ad server who delivers ad to be played in Y! player. Advertisers Sales Ad Serving/ Y! YEP Reporting Compatible Player Content provider (e.g. CNet)  distributes Content content onto Yahoo sites Distribution
  • Advanced Ads & Creative Management Platform Agenda 1. Market environment and opportunity for video 2. Strategic/competitive positioning overview 3. Sizing the video opportunity for Y! -- market potential 4. Requirements for Y! to compete and succeed in video
  • Advanced Ads & Creative Management PlatformTop Down Market Opportunity Sizing “What If” Scenarios Online Video Advertising Sales (does not include Sponsorships or YS revenue) 2009 2010 2011 Y/Y Rev Y/Y Rev Y/Y Rev Share Rev Growth Share Rev Growth Share Rev GrowthLow End Online Video Spending Forecast $750 $1,150 $1,9001. Y! Share of Mkt declines 33% per year 3.7% $28 -0.5% 2.5% $29 3% 1.7% $32 11%2. Y! SOM flat 5.5% $42 49% 5.5% $64 53% 5.5% $105 65%3. Y! SOM grows 33% per year 7.4% $55 98% 9.8% $113 104% 13.0% $248 120% All revenue numbers above are pre-TAC.What would be required to grow market share?1.Significantly more inventory to sell - Grow audience and streams on Y! O&O (―You Sell‖) - Grow video ad network of other publishers (―We Sell‖)2. Focused, effective channel based sales against TV budgets not allocated online3. Innovative ad formats that provide strong performance and are easy for advertisers to run4. Robust campaign performance reporting including unduplicated reach across network5. Video in exchange to enable efficient monetization of unsold inventory.
  • Advanced Ads & Creative Management Platform Agenda 1. Market environment and opportunity for video 2. Strategic/competitive positioning overview 3. Sizing the video opportunity for Y! -- market potential 4. Requirements for Y! to win in video
  • Advanced Ads & Creative Management Platform Video Ads Y! Desired End-State Secure & Grow Yahoo‘s O&O video content deals – Bring in exclusive & ―hot‖ video content with competitive ad features – Severe video business downside if content deals are not secured Efficiently monetize current inventory – Remove buy friction & meet ad metrics needs of large TV advertisers – Fill unsold inventory (caused by ―spiky‖ video traffic) gap Grow sellable inventory via an effective video ad network – Extend Yahoo‘s vid ad inventory reach by expanding beyond O&O – Build effective video ads support on Y!‘s ad network & ad exchange
  • Advanced Ads & Creative Management Platform DYNAMIC ADS
  • Advanced Ads & Creative Management Platform Retail Smart Ad example 1. Advanced Targeting 2. Dynamic Creative 3. Reporting and Optimization coupling 1 and 2 Target Example • Rich Media expandable ad • Interaction metrics • Smart Ads providing listing selection and optimization • Retail Listings from ShopLocal
  • Advanced Ads & Creative Management Platform Dynamic Ads Market Opportunity Category Market Size CAGR Y! Revenue Market Share 3-yr (Ops Fin; GAAP; Annualized) 2008 2009E* 2008E1 2009E2 2008E 2009E Retail $30M $267M 78% $6M $37M 20% 14% Autos $20M $104M 79% $1.8M $23M 9% 22% Travel $5M $48M 68% $300k 6% Total $55M $419M 77% $8.1M $60M 15% 14% Total (all $65M $457M 87% $8.1M $60M 12% 13% verticals) Retail • $20B US Retail yearly ad spend, $7B (35%) on newspaper, $1B (5%) online • Dynamic Ads well suited for weekly printed circular shift to online from declining newspaper market • Category team revenue estimates based on achieving 10 of the top 26 advertisers is $100M – Target, JC Penny, Kohl‘s, Walgreens, CVS, Staples, Lowes, Old Navy, Safeway Autos • Category team revenue estimates based on achieving 6 top advertisers is $62M – Ford, GM, Chrysler, Toyota, Honda, Nissan Revenue Analysis • Platform-agnostic market opportunity, focus on Retail and Auto categories; Travel marginally supported • 2009 TAC estimates would include the following fees: – $3.7M Retail listing aggregation fees to ShopLocal (contractual 10% of ad spend) – $6M partner fees ($3.7M Retail; $2.3M Autos; estimated 10% of ad spend) * Market sizing provided by PMM; methodology and data sources in appendix (1) Based on September forecast (2) PMM preliminary estimate; Sales estimate due 11/08
  • Advanced Ads & Creative Management Platform Dynamic Ads Market Dynamics Simplified Value Chain Listings Feed Mgmt Aggregation Targeting Content Media Optimization Creative Creative Advertisers Aggregation Targeting Planners/ of dynamic Authoring Agencies $$$ & Inventory Buyers creative •Technology •Technology •Technology •Technology •Services •Services •Partners •Partners Yahoo! making our inventory & Creative Providers adding core reach advantage more valuable technology to any inventory Risks • Y! loses pricing power if Creative providers: – Buy targeted inventory on Exchange at lower CPMs – Distribute ad spend across Y! and non-Y! inventory sources • Y! loses targeting competitive advantage as Ad Networks evolve – Search retargeting tests demonstrate significant performance benefits – Multiple ad networks and technology providers developing BT • Y! loses unique user reach advantage as Exchanges consolidate inventory
  • Advanced Ads & Creative Management Platform Dynamic Ads Competitive Landscape* Feed providers Integrated end-to-end Dynamic Ads providers Creative providersCapability ShopLocal Dapper Smart Ads Smart Ads Teracent Choice- Tumri PointRoll Eye-Blaster DART Motif Eye- Retail Retail++1 Stream WonderAdv / Agency RelationshipsCreative MgmtCreative Authoring 1Campaign BookingReportingBusiness RulesOptimizationTargeting YAHOO!Access to InventoryFeed Management 2Listings Aggregation 3Infrastructure Strength andStabilityCampaign Launch TimeBusiness Strength 1. Creative providers have strong advertiser relationships and professional services model 2. Creative providers provide single-stop across all inventory (Y! and non-Y!) 3. Limited providers listings aggregators (ShopLocal acquired by PointRoll) *Selection of industry players is representative 1Not currently available
  • Advanced Ads & Creative Management Platform Market Evolution Current Scenario: External Provider: Smart Ads / GD PointRoll / Y! Exchange 5 5 $0.75 $0.75 4 $0.50 4 $0.50 3 3CPM CPM $5.00 $2.75 $5.00 $2.75 2 2 1 1 $1.00 $1.00 0 0 Advertiser Creative fee Listings GD markup Inventory Advertiser Creative cost Listings Optimization Exchange Spend (PointRoll) aggregation (Y!) opportunity Spend (PointRoll) aggregation markup Inventory (Y!) (ShopLocal) cost (Y!) (ShopLocal) (PointRoll) • It is likely that advertisers will switch to NGD for approximately the same delivery • Y! must convert today‘s GD markup to other sources of value-add • If Y! does not invest, our competitors will fill the gap
  • Advanced Ads & Creative Management Platform Dynamic Ads Market Dynamics Conclusion Simplified Value Chain Listings Feed Mgmt Aggregation Targeting Content Media Optimization Creative Creative Advertisers Aggregation Targeting Planners/ of dynamic Authoring Agencies $$$ & Inventory Buyers creative •Technology •Technology •Technology •Technology •Services •Services •Partners •Partners Yahoo! making our inventory & reach Creative Providers adding core advantage more valuable technology to any inventory Yahoo! must protect our revenue • Aggressively control end-to-end Dynamic Ad solutions (internal or partnered) • Further develop core competencies in targeting and optimization of dynamic creative • Understand how to step-wise create an ecosystem that maximizes long-run Y!‘s profit
  • Advanced Ads & Creative Management Platform Dynamic Ads Y! Win Conditions (12+ months) Product Solutions Strategic Impact1. Y! maintains/ •Control majority of technology stack (internal or partner) •Mitigate risk of losing up to 50% of ad spend on external grows pricing •Invest in targeting & dynamic creative optimization to solutions gaining market power power sustain competitive advantage of Y! inventory •Mitigate risk of external solutions buying non-Y! inventory2. Targeting •In-house optimization •Maximize use of existing Y! targeting data making Y! a partner Optimization of of choice with differentiated offering Dynamic Creative3. Targeting •Zip-based targeting reach improvements •Bias ad spend to Y! inventory by enhancing Y! targeting •Deep Targeting (aka SOUP) •Zip-code necessary for Autos (currently only x% coverage) •Off-network use of Y! targeting •Q1‘08 SA Deep Targeting exceeded search ad performance •Search History Retargeting4. Y!-centric Healthy •Expose user information to SA-certified vendors •Bias ad spend to Y! inventory Ecosystem •Develop optimization to enable creative providers •Lower barriers of entry for Creative partners to compete with •Open Y!Post to make listings widely available integrated end-to-end solutions (PointRoll) •Enable external professional services for creative design •Enable partners to base solutions on Y! technology rather than compete to develop alternatives
  • Advanced Ads & Creative Management Platform ADINTERAX – SITE UP
  • Advanced Ads & Creative Management Platform Rich Media – AdInterax Site Up Opportunity Summary • Opportunity Overview – Total Rich Media Market Revenue (US) $1.96B 2008, $2.19B 2009 – Current Y! Revenue from Rich Media including 3rd party ad servers: $167mm (Q408-Q409) – Revenue via AdInterax: $43.9mm ex-TAC (Q408-Q409) • If we do not support AdInterax in a site up manner we will maintain majority of revenue streams for a forecast of $30.5mm (Q408-Q409) – AdInterax can drive an additional $13.4M in revenue if maintained • Keep 100% of AI ad related revenue but pay 3rd Party subsidy to keep it (+1.2M cost) • Loss of all $6M of Publisher ASP revenue paid to Y! • Loss of 10% of Smart Ads revenue ($2M) but pay 3rd Party fee to keep it • Loss of $5M of revenue due to no RM house ads • Proposal – Maintain site up support for AdInterax Rich Media solution • Maintains functional solution for NC partners and Y!AN for house ads and custom projects • Not a competitive product that will be taken to market for additional customer engagement – Continue engaging partners to ease friction in ad submission/validation process in APT • Market Dynamics – Competition is stiff and entrenched – attacking the market with a competitive solution is not recommended – No ―self-service‖ Rich Media solutions exist – research is in progress to determine if we can deliver this solution, and the associated value for Y! • Assumptions/Comments – Site up support would be limited to critical bugs and any additional site up issues – Longevity of the platform past 12 months is questionable – Platform will maintain current revenue levels if supported in site-up fashion • Where does this get us from a Market perspective? – Maintaining AdInterax in a site up manner enables us to continue offering Rich Media to Y! globally as a custom service and at a lower cost than via a partner – We are not a market player in the Rich Media space currently, and this does not get us there
  • Advanced Ads & Creative Management Platform CUSTOMER CRITICAL CREATIVE VALIDATION & ASSEMBLY
  • Advanced Ads & Creative Management Platform Creative Platform – Customer Critical Validation and Assembly • Opportunity Overview – Creative platform and its core services including Validation, Ad Assembly, Creative/Ad Mgmt, Trafficking, etc… enable our Advanced Ad solutions and is key to demand acquisition strategies – Value associated with the Creative platform is not explicitly captured in $$ • Proposal – Validation improvements enabling more support for 3rd party ad servers, flash creative acceptance, and visibility into detailed publisher ad specifications – Increased support of custom html ad development flows to accept more forms of demand – Deploy new capabilities such as advertiser self-classification to assist in ad review and matching processes, and trafficked visibility to improve integration points between demand and creative experiences – Support for International market rollout • Market Dynamics – Creative development and submission processes are a primary friction point in online graphical advertising – we reduce friction – Creative Mgmt takes an open approach enabling demand generation through acceptance of all 3 rd party ad servers and ad validation to ensure the ad is functional and acceptable for impressions – Critical to focus on core competencies and differentiators, while partnering for the rest • Assumptions – Continue to partner with 3rd party ad servers, as well as with solution providers like Adobe to give us access to more capabilities and users throughout the demand generation chain • Where does this get us from a Market perspective? – Provides APT with a solid platform enabling the implementation of Advanced Ad formats and eases friction in the Creative Mgmt process – Core capabilities enable partner ecosystem and movement into player on agency desktop
  • Advanced Ads & Creative Management Platform Appendix - Video
  • Advanced Ads & Creative Management Platform Video | Unmet Demand, Sold-Out Demos • Constrained inventory in most desirable demos continues to hamper sales progress – Below table is a snapshot of what Sales sees when trying to book Female impressions in our largest video properties – mostly sold out – Smaller ‗lifestyle‘ properties even more constrained • B-cookies utilized to get more targetable inventory • Pursuing strategic WS deals (Demand Media, Real Networks, etc.) can also open up more inventory in sold-out demos Female Demo (all ages) STR (as of 9/22/08) Property Position Oct Nov Dec Network SAV30 66% 62% 65% Network VID 100% 100% 100% News SAV30 86% 79% 77% News VID 93% 92% 100% Music VID 100% 100% 100% Movies VID 100% 100% 100% Sports SAV30 45% 36% 8% Sports VID 100% 100% 100% TV VID 97% 93% 100% Health VID 41% 40% 37% Entertainment VID 100% 100% 91% Y! Living VID 100% 100% 100% OMG VID 100% 100% 92%
  • Advanced Ads & Creative Management Platform Video Ads Market Opportunity Market Size* CAGR Y! Revenue** Y! Market Share** 3-yr 2008E 2009E 2008E Low High 2008E Low High 2009E 2009E 2009E 2009E GAAP ~$500M ~$750M 35% $28M $57M $68M 6% 8% 9% Ex-TAC $12M $16M $23M Video is one of the fastest growing segments of the online ad marketplace. – Total streams viewed growing at >50% Y/Y – 2009 online video ad spend only <2% of the $74B TV spend All major analyst forecasts show strong growth over the next 3-5 years. – Analyst‘s 2009 Market Size: $750M to $1.85B (up from $500M – $1B in 2008) Not captured in above revenue projections: – Video sponsorship (includes both in-stream & regular display ad units) – Comcast, NPC (<$1M ex-TAC) – New 2009 capabilities increasing video content acquisitions & eyeballs* Market size numbers are derived by taking the conservative end of analyst projections.** Projected revenues do not include sponsorship; market share calculated based on gross.See Appendix for full list of financial assumptions
  • Advanced Ads & Creative Management Platform Video Ads Market Dynamics (OLD) •CBS •Turner Content You-Sell Deals Licensor (via Content Licensor sales force) Video Video Ad Media Video Ad Creative Creative Advertisers Publisher Server or Planners/ Technology Authoring Agencies $$$ (inventory) Network Buyers •Technology •Services • Yahoo! • Yahoo! •Yahoo! •EyeWonder •Services • YuMe Where Yahoo plays today • Comcast •Tremor •EyeBlaster • YouTube • YouTube •EyeWonder •Tremor Ad Network space • DoubleClick •YouTube Sales Force Increasing competition for streams & eyeballs – YouTube‘s stream share jumped from 27% to 44% from ‘07 to ‘08 – Y!‘s stream share dropped from 4.2% to 2.4% from ‘07 to ‘08 Tight supply of premium streams & ad inventory – Publishers rely on Content Licensor partnerships for video streams – Tight supply means Content Licensors will increasingly dictate content contract models (i.e., demand ―You-sell Video‖) – Y! consistently sells out of predicted ad inventory Increasing competition from Ad Networks. – All of above are exacerbated by increasing competition from ad networks on scale, context, and reach – Y! will capture ~6% in 2008 (down from ~8% in 2007).
  • Advanced Ads & Creative Management Platform Market Opportunity – Analyst Forecasts Video Market Growth Estimates Consensus 2009 Market Size: $750M to $1.85B • All major analyst forecasts show strong growth over the next 3-5 years. • eMarketer projects a 3 year CAGR of 65% • Forrester projects a 3 year CAGR of 80% • Lehman projects a 2 year CAGR of 48% • Forecast sources are ambiguous about if in-banner dollars are included: • eMarkert and MAGNA states they include in-banner in their analysis • Lehman Brothers states it includes in-stream only • Other forecasts do not specify what are included • Large variance between forecasts, with or without banner dollars • Key drivers of growth include cost efficiency, performance, measurement, targeting Estimates of Online Video Advertising Spending in the United States, 2007 - 2013 (in Millions) 2007 2008 2009 2010 2011 2012 2013 Borrell Associates Inc., April 2008 $522.00 $10,000.00 eMarketer, August 2008 $324.00 $505.00 $750.00 $1,150.00 $1,900.00 $3,400.00 $5,800.00 Forrester Research, December 2007 $471.00 $989.00 $1,859.00 $3,198.00 $4,875.00 $7,153.00 International Data Corporation (IDC), May 2008 $500.00 $3,800.00 JupiterResearch, June 2008 $5,100.00 Lehman Brothers, August 2008 $669.00 $1,091.00 $1,669.00 $2,387.00 LiveRail, September 2008 $371.00 $619.00 $962.00 $1,399.00 MAGNA, June 2007 (3) $365.50 $560.00
  • Advanced Ads & Creative Management Platform Video Ads Video You-Sell and We-Sell Overview • Self-Sell – Yahoo has content partnership deals with content providers. – The business model is limited to revenue sharing with content partners – Who can sell: Yahoo! Sales • We-Sell (WS) – Yahoo sells and serves video ads into a partner publisher‘s site and shares revenue with the publisher – Ability to split inventory between 3PAS and Y! ad system X% and (100-X)% – Who can sell: Yahoo! Sales • You-Sell (YS) – A Video YS deal is based on the following relationship with Content Licensor (i.e., CBS & Turner): • Content Licensor syndicate their content on Yahoo • Content Licensor sells ads against the inventory created by their content – Yahoo receives a share of the sales revenue for distributing the content on its site(s). – Who can sell: Content Partner Sales • Video YS is different from Display Ad YS because: – Content syndication is unique to Video YS – Content owner has rights to sell ads against syndicated inventory
  • Advanced Ads & Creative Management Platform 2009 Projections by Product Capabilities HIGH Estimate LOW Estimate Project GAAP Ex-TAC, CC Assumptions GAAP Ex-TAC, CC Assumptions O&O Self-Sell $41,411,497 $20,705,749 46% growth from 2008 $33,600,000 $16,800,000 20% growth from 2008 WS* $3,141,758 $1,256,703 60% TAC rate $785,440 $314,176 75% reduction from High estimate 3rd Party Remnant (VQW) $4,000,000 $2,000,000 $3,000,000 $1,500,000 50% reduction from High estimate Targeting, applies to YS 0.5 Targeting (part of VQW) $300,000 $150,000 only $300,000 $150,000 Overlay+targeting, applies to YS 0.5 only From FinOps estimates week of FP (part of VQW) $2,500,000 $1,250,000 10/6 $2,028,422 $1,014,211 Assumes the same gr. Rate as rest of O&O Assumes 4 additional YS deals similar to CBS and YS (part of YS 0.5 & 1.0) $1,875,000 $1,875,000 Assumes normal ramp $1,000,000 $1,000,000 Turner Overlay (part of YS 1.0) $2,000,000 $900,000 $1,622,738 $730,232 Adjusted proportionally to O&O self-sell Pharma (part of YS 1.0) $1,500,000 $750,000 $1,217,053 $608,527 Adjusted proportionally to O&O self-sell Very prelim, assumes switch to MLB $3,000,000 ($9,000,000) Flash $0 ($12,000,000) Assumes no MLB revenue Total $59,728,255 $19,887,452 $43,553,653 $10,117,146 * - excludes Comcast Assumptions & Caveats 39 • All project revenues are annualized; no dependency on when features are rolled out • The ‘09 stream projections that should come from the Audience team; Audience has not provided the official projection yet • Deals such as WS and MLB are still up in the air; overall impact are uncertain. Therefore, low estimates are made assuming • MLB does not go through and • WS deal is halved • No YS 1.0 specific projections are made OTHER than dollars from new ad formats; no new content partner dollars are assumed •Sponsorship dollars (campaigns sponsored by video content but conists of display, video, and custom ad formats) were taken out of the above. Sponsorship projections for ‘08 and ‘09 are both: • GAAP: ~$60M • Ex-TAC, CC: ~$30M
  • Advanced Ads & Creative Management Platform Video Ads Value Chain – Self-Sell •CBS •Turner Content Yahoo Components Licensor Sales Force Video Video Ad Media Video Ad Creative Creative Advertisers Publisher Server or Planners/ $$$ Technology Authoring Agencies (inventory) Network Buyers Yahoo! Yahoo! Yahoo! •EyeWonder •Technology •Services •EyeBlaster •Services •Tremor • Who can sell: Yahoo! Sales • Yahoo sells and serves ad against video content aggregated across its multiple content partners • Yahoo shares ad revenue sharing with its content partners
  • Advanced Ads & Creative Management Platform Video Ads Value Chain – We-Sell (WS) •ABC •FOX Content Yahoo Components Licensor Sales Force Video Video Ad Media Video Ad Creative Creative Advertisers Publisher Server or Planners/ $$$ Technology Authoring Agencies (inventory) Network Buyers Comcast Yahoo! Yahoo! •EyeWonder •Technology •Services •EyeBlaster •Services •Tremor • Who can sell: Yahoo! Sales • Yahoo sells and serves video ads into a publisher partner‘s site • Partner publishers can split inventory between 3PAS and Y! ad system by % • Yahoo shares ad revenue with its publisher partner (who then shares that revenue with its content partners)
  • Advanced Ads & Creative Management Platform Video Ads Value Chain – You-Sell (YS) •CBS Yahoo Components •Turner Sales Force Content You-Sell Deals Licensor (via Content Licensor sales force) Video Video Ad Media Server or Video Ad Creative Creative Advertisers Publisher Planners/ $$$ Network Technology Authoring Agencies (inventory) Buyers Yahoo! DoubleClick Yahoo! •EyeWonder •Technology •Services •EyeBlaster •Services •Tremor • Who can sell: Content Licensor • Based on relationship with Content Licensor (i.e., CBS & Turner): – Content Licensor syndicate their content on Yahoo – Content Licensor sells ads against the inventory created by their content • Content licensor shares ad revenue with Yahoo for distributing their content • Video YS is different from Display Ad YS because: – Content syndication is unique to Video YS – Content owner has rights to sell ads against syndicated inventory
  • Advanced Ads & Creative Management PlatformYouTube is not just for UGC anymore YT building a solid position in pro content: • 17 of top 25 most viewed videos of all time are music videos • 21 of top 25 are professionally produced • Approximately 20% of new video content and 50% of video views are pro¹ YT has deals with: • CBS: short-form video programming from its news, sports and entertainment divisions on a daily basis YOU SELL deal • HBO: select promotional content from its shows on HBO‘s new branded YouTube channel • PBS: selected online-only features, program excerpts and extended previews. (700 videos on channel) • BBC: branded BBC ―Channels‖ on YouTube • Oprah Winfrey: exclusive, behind-the-scenes footage from the ―Oprah‖ show and special guest moments. • Hearst Argyle TV: posting local video content to dedicated channels • Disney/ABC TV: Studio 9 focused on original short-form programming by merging innovative creativity with superior production quality. Will distribute via YouTube. ¹(Based on samples taken in May 2008. Exact results of sample in appendix)
  • Advanced Ads & Creative Management Platform Video Ads Competitive Landscape* Publishers Integrated E2E Video Ad Network & Technology Creative providersCapability Yahoo O&O YouTube YuMe BBE BrightRoll Tremor EyeWonder EyeBlaster PointRoll Atlas DARTVideo Ad PublisherVideo Ad NetworkVideo Ad ExchangeVideo Ad TechnologyCreative AuthoringReportingCreative Agencies ??Content Licensor *TBD
  • Advanced Ads & Creative Management Platform Appendix – Dynamic Ads
  • Advanced Ads & Creative Management Platform Dynamic Ads – Solution Objective • Personalize creative based on advertising goals and user interests – Right message – Right user – Right time • Develop solution that utilizes many ad system components in a scalable manner – Dynamic creative – Advanced audience targeting – Personalization, optimization, and bidding – Listing feeds – Ad rules (business logic)  Revenue Growth 1. Enable new advertising products that attract offline $ 2. Boost display performance to capture Google sponsored search $ 3. Develop ecosystem that makes Yahoo! the solution partner of choice
  • Advanced Ads & Creative Management PlatformCan Yahoo! lose pricing power?Hypotheses AssessmentY! has pricing power • Premium-priced BT on GD is generally not sold out and can be purchased as NGD • Ops Fin / PMM estimates DA displacement revenue at $1 CPM on Exchange • External Dynamic Ads providers can also buy at $1 CPM on Exchange Right Media enables data provider • Typically 10% revenue share (~$0.20 CPM) Rich Media / creative costs • PointRoll $0.75 CPM • Teracent $0.50 - $0.25 CPM tiered • Tumri $1 CPM Retail listings fee • ShopLocal 10% of ad spend (~$0.50 CPM for GD; ~$0.20 CPM for Exchange)Y! BT is sustainable BT technology providers, and ad networks:competitive advantage • Predicta BT, AdLINK 360, Adaptlogic, Avail, Boomerang, Criteo, Leiki, nugg.ad, prudsys, wunderloop • ValueClick Precision Profiles, and Precision Retargeting, Tacoda (AOL), Burst! Media, Netmining Deep packet inspection has higher access to user behaviors • Phorm, NebuAd, Front PorchY! has reach not • Ad Networks will consolidateavailable elsewhere • Exchanges connect these hubs and standardize targeting • Deep packet inspection has high reach • Right Media enables data providers while consolidating access to user pools • Estimated monthly unique users in autos category: Y! Autos 12M, Edmunds 6M, KBB 6M Conclusion • Significant risk of losing pricing power • Yahoo! must protect our revenue using technology and competing aggressively • Further develop core competencies in targeting and optimization of dynamic creative
  • Advanced Ads & Creative Management Platform Dynamic Ads Partner Comparison – SummaryCapability Smart Ads Smart Ads PointRoll Tumri Teracent ChoiceStream Retail Retail++Infrastructure Strength and StabilityCampaign BookingBusiness Rules(including 3rd party tracking)CreativeTargetingReportingOptimizationCampaign Launch TimeBusiness Strength
  • Advanced Ads & Creative Management Platform Dynamic Ads Partner Comparison – ExplanationCapability Retail Retail++ PointRoll Tumri Teracent ChoiceStreamPlatform Stability Good Very Good Very Good Good Average (Beta) Likely Below AverageCampaign Same Level ofBooking Complexity across all solutionsBusiness Rules Rigid More flexible, but Rigid Flexible Flexible(includes 3rd still Rigidparty tracking)Creative Good Very Good Excellent Very Good GoodTargeting Good Very Good Good Very Good (with Very Good (with parameter parameter passing) passing)Reporting Average Above Average Above Average Excellent (creative Average to Below heat maps) AverageOptimization CTR only CTR only Website activity Interaction, CTR, CTR only only Conversion, CreativeCampaign 3 weeks 3 weeks 2 weeks 3 weeks 3 weeksLaunch TimeBusiness Excellent Excellent Very Good Good PoorStrength