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Lynotech’s Value PropositionIncreasing Premium Publishers digital revenues by managing the user’sknowledge they can generate.
Value Proposition¨ Lynotech transforms user’s data generated by Premium Publishers into knowledge through state of the art data processing technologies, and provides publishers with the interfaces to manage that knowledge in order to enhance its value.¨ Every publisher is owner of the user’s knowledge generated in its sites. Lynotech will help publishers to use this knowledge to: ¤ Design their editorial strategies based on users insights to increase their audience and therefore their influence. ¤ Create a higher value advertisement product that allows publishers to sell segmented audiences instead of advertising spaces. ¤ Capture more market value by disintermediating the advertising selling ecosystem creating a bridge that reaches advertisers and agencies directly with premium targeted advertising products.
Market SizePremium publishers market value chain and market size estimation inmillions of dollars
Market Value ChainOnline DisplayAdvertisingMarket ValueChainSource: Terence kawaja, GCASavvian Advisors
Market Size USA 2011 Europe 2010* Spain 2011PremiumPublishers Internet Ad Revenue (m$) 31.896,55 22.713,15 1.141,24Internet 11.100,00 7.495,34 550,44 Display Ad Revenue (m$)Displays (34,8%) (33%) (48,23%) Last Years Display AdAdvertising Revenue Growth (%) 15% 21,10% 12,60%Market Size in 9.102,00 523,75 Premium Publishers (m$) Not availabledollars, (Top 50: 90%) (Top 30: 95%)according tothe Interactive Sources:Advertising IAB USA – Internet Advertising Revenue Report Full Year 2011: http://www.slideshare.net/pmereles/iab-internet-advertising-revenue-report-full-year-2011Bureau (IAB) IAB Europe – European Online Advertising Expenditure 2010 (2011 Report not available yet*): http://www.slideshare.net/pmereles/iab-europe-2010data IAB Spain – Estudio sobre Inversión Publicitaria en Medios Digitales: http://www.slideshare.net/IAB_Spain/estudio-de-inversin-en-publicidad-digital-total-ao-2011-iab-spainpwc
Testing Value PropositionInterviews with four different agents involved in the premiumpublishers advertising market
Interviews Display Advertising Ecosystem EuropeInterview 1: Interview 3:Google Agency, Ad Network, Demand Side PlatformInterview 2:PremiumPublisher andSales House
Interview 1: Google Manager at Google Spain, with different international roles in sales at Google.Who: He is also an internet entrepreneur which has successfully founded and launched his own start-up and acts as mentor for other start-up projects. Local premium publishers may have a big opportunity with our approach: bigInsights: online advertising players don’t reach local advertisers and currently there is no online advertising product for them. Local newspapers have the local audience and a local sales force, and Lynotech will provide them with products suitable for local market. National premium publishers will have to fight against the rest of the players involved in the online ad market (for example AdSense) for the same advertisers and with inferior targeting technology but higher quality advertising inventory. The project is not technically easy, specially if we consider to allow different customers share their data to drive higher incomes.
Interview 2: Premium Publisher Corporative Manager Director at one the three biggest Spanish newspapers andWho: media groups, accountable for 10% of the online advertising revenues in 2011. Market presence as Premium Publisher and Sales House. Publishers need a solution like the one proposed by Lynotech. Users knowledgeInsights: will be critical for media survival and publishers haven’t moved yet. There’s a market opportunity, but Lynotech has to move fast. Advertising market is depressed, so publishers are right now concerned about gaining audience and influence, as these will be the drivers for revenues when the market grows and the economic crisis is over. Lynotech should not only focus on advertising but also on helping publishers gain influence and increase their audiences based on users insights: new services, better contents, etc. Proprietary data: every single user insights and data generated in premium publishers sites must be owned by publishers. They must be the only ones to decide what to do with it, and Lynotech must offer them different solutions for their different needs.
Interview 2: Premium Publisher It’s critical to be compliant with all European users privacy laws, or even moreInsights: strict, as premium publishers brand could be seriously damaged in case any privacy scandal takes place. Premium Publishers won’t buy developments, they’ll buy products, so its basic to go to the market with a fully developed solution. Premium publishers may be willing to share data with other premium publishers as long as it drives higher incomes for them, but it’s not fundamental in this point. That should be phase three, or four of Lynotech’s road map. Lynotech’s proposal has a significant impact on media groups’ workflows. It has editorial and commercial implications that will force to change working methods in areas of the organization and persons with aversion to change. In order to address this issue we need a very high commitment from our customers. It would be very helpful to count with some of the Spanish traditional editorial shareholders as Lynotech’s investors.
Interview 3: Agencies Manager at one of the main advertising agencies in Spain and Europe,Who: accountable for a significant part of advertising expenditure in Spain, and present in most of the online display ecosystem in Europe (Agencies, Ad Network, Demand Side Platform, etc.) The market opportunity exists, as premium publishers have the necessity ofInsights: increasing their online advertising revenues and they’ll only achieve this by developing a system that helps them know their users and start selling “audience” instead of “space”, and to deliver better contents and services to their audiences to achieve higher user engagement, better traffic, and more ads. There’s been several attempts to develop similar solutions for publishers, but current advertising ecosystem has prevented them from succeeding as it reduces the part of the market value they manage and capture, and therefore their profitability. Any similar solution would be boycotted by current agents, leading to damages on premium publishers short term incomes (not only in digital advertising but also in other medias like paper).
Interview 3: AgenciesStrategy Suggestions Don’t let other market agents figure out Lynotech’s intentions to disintermediate the display advertising market in order to avoid their pressures andTrojan Horse countermeasures. He suggests to keep a very low profile (zero promotion andStrategy communication to the market). Refer to Lynotech’s solution as an audience analysis tool that helps premium publishers gather users insights from their audiences to deliver better contents and new editorial services. In order to impose to the market an advertising solution like the one proposed it’s important to add as many premium publishers to the project as possibleAdd before it goes live. It needs to become a standard as soon as possible andPublishers without advance in order to protect publishers from any possible attacks from other agents involved.
Customer Surveys¤ As Lynotech is a Business to Business solution for Premium Publishers, the number of potential customers in the market is very low. We’ve maintained personal meetings with two potential customers which we understand represent the market thinking and they showed a great interest in Lynotech.