The Future Of DigitalHenry BlodgetCEO & EIC, Business Insider
The medium is now ~20years old.
So, how are we doing?
2+ billion people online05001,0001,5002,0002,5001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004...
2/3 of the world left to goGlobal Popula onInternet Popula on01,0002,0003,0004,0005,0006,0007,0001990 1991 1992 1993 1994 ...
However…
Most of the money is already onlineBo om 70percent18%Top 30 percent82%Distribu on Of Global Income, 2000Source: UN Human D...
So the market’s moremature than you think.
Meanwhile, somethingprofound happened lastyear…
PC growth stalledHPLenovoDellAcerAppleOther010,00020,00030,00040,00050,00060,00070,00080,00090,000100,0001Q08 2Q08 3Q08 4Q...
Smartphone sales blew past PC salesPersonal ComputersSmartphonesTablets-100,000,000200,000,000300,000,000400,000,000500,00...
Tablets are now driving all the growth in PC marketPCsTablets020,00040,00060,00080,000100,000120,000140,0001Q08 2Q08 3Q08 ...
So the future is mobileFixed FixedFixedMobileMobile05001,0001,5002,0002,5003,0002005 2010 2015ConsumerBroadbandConnec ons(...
Where are we in themobile revolution?
Globally, we’re still early…1BSmartphoneUsers6BMobilePhone Users01,0002,0003,0004,0005,0006,0007,000Smartphone Mobile Phon...
But growth slows after 50% penetration
U.S. and other markets are past halfway pointFeature Phones55%Smartphones50%45%0%10%20%30%40%50%60%70%80%Oct-10 Nov-10 Dec...
US smartphone growth starting to slow0510152025303540Q12008Q22008Q32008Q42008Q12009Q22009Q32009Q42009Q12010Q22010Q32010Q42...
Most future US smartphone buyers will beolder and poorer56%43%31%18%16% 16%53%58%44%32%17%15%69%65%50%30%23%16%70%65%52%41...
So the focus is on markets like China, whichnow accounts for ~25% of smartphone sales.Rest Of The WorldChina-20,00040,0006...
China is already twice the size of US marketMobileBroadbandTotal0100200300400500600June 06 Dec 06 June 07 Dec 07 June 08 D...
MEDIA
Remember when they said noone would ever pay for content?
Digital content revenues are explodingiTunesNe lix$0$2,000,000$4,000,000$6,000,000$8,000,000$10,000,000$12,000,000$14,000,...
Digital Advertising still growing rapidly$0$5$10$15$20$25$30$351995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006...
At largest U.S. tech and media companies,nearly 40% of ad revenue is digital77%share62%share23%share38%share$0$10,000$20,0...
TV still biggest. Online close behind.Print getting smashed.41%42%10%23%13%14%20%9%11%7%6%4%$0$10,000$20,000$30,000$40,000...
Digital has already “disrupted”one media sector…
As news consumption moved online…17%5%1% 1% 1%-1%-4%23%-4%-7%1%9%-6%-7%-10%-5%0%5%10%15%20%25%Online Network TV Local TV A...
Newspaper ad revenue collapsed
Google now generates as much U.S. ad revenue asnewspapers and magazines (all of them)$0$5,000$10,000$15,000$20,000$25,000$...
(Some) paywall subscriptions are growing,but…01002003004005006002Q11 3Q11 4Q11 1Q12 2Q12 3Q12(thousands)Source: company re...
“Digital dimes” don’t offset lost print dollars$-$10,000$20,000$30,000$40,000$50,000$60,0002003 2004 2005 2006 2007 2008 2...
Of course, print news isold news…
Now the question is…
IsTV next?5.35.45.55.65.75.85.96.06.16.22007-2008 2008-2009 2009-2010 2010-2011 2011-2012Nielsen Prime me Household Ra ngs...
For now,TV ad spending still growing$58$60$62$64$66$68$70$72$742007 2008 2009 2010 2011Total TVAd Spend(billions)TV Ad Spe...
But behavior is changing82% 83%64%17% 16%26%6% 6%8%7%2004 2008 2012%ofTVsetusersSource: GfKU.S. Prime me TV Viewing(% of 1...
PayTV subscriptions are now trending downSource: Bernstein ResearchCableSatelliteTelCoTotal-1000-800-600-400-2000200400600...
‘Over-the-top’ video is real and growing fast.Ne lixYouTubeHulu$0$1,000$2,000$3,000$4,000$5,0002006 2007 2008 2009 2010 20...
Live events are increasingly being viewed overthe Internet0%50%100%150%200%250%300%2-Jul 9-Jul 16-Jul 23-Jul 30-Jul 6-Aug ...
Digital video advertising is on the rise$0$500$1,000$1,500$2,000$2,5002006 2007 2008 2009 2010 2011(millions)Online Video ...
But as with print, digital = less money thanTV75.2%98.5%92.1%24.8%1.5%7.9%0%10%20%30%40%50%60%70%80%90%100%TV Online video...
What does history teach us?
As habits change…
The money follows.
By the way, “old media” isn’tthe only media beingdisrupted...
Americans now spend more time onsocial networks than portalsSocial NetworksPortals051015202530Nov-2010 Dec-2010 Jan-2011 F...
1/7th of the world’s population now use FacebookMonthly Ac ve UsersDaily Ac ve Users01002003004005006007008009001,0001,100...
Time spent onYahoo, et al, continues to decline0%2%4%6%8%10%12%14%16%1Q07 2Q07 3Q07 04Q7 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q0...
Now, in online ads, it’s Google, Facebook, and “other”…Google
Facebook has blown past AOL,Microsoft, andYahooGoogleFacebookMicrosoYahooAOLOther$0$1,000$2,000$3,000$4,000$5,000$6,000$7,...
YouTube, Hulu, Glam,Twitter, Demand, et al.,also taking portal share…FacebookYouTubeWebMDHuluDemand MediaTwi erFederated M...
“Display” ad growth is flatteningGoogleOtherYahooAOLMicroso$0$500$1,000$1,500$2,000$2,500$3,0002Q06 3Q06 4Q06 1Q07 2Q07 3Q...
Real-time bidding is automating what’s left0%5%10%15%20%25%30%2010 2011 2012 2013 2014 2015 2016Source: eMarketerRTB As % ...
So, will Facebook ever be biggerthan Google?
Unlikely.
Google is likeadvertising at a store.
Facebook is likeadvertising at a party.
Social referrals to commerce sites are tinyFacebook referrals up 92% year-over-year…80.6%9.7% 7.5% 1.7% 0.5% 0.02%0.0%10.0...
And speaking of advertisingat stores...
E-tailers are now building ad businesses
Amazon ad revenue is already $1+ billion a year…
And as eCommerce continues to take share…Offline Retail SalesE-Commerce$0$500,000$1,000,000$1,500,000$2,000,000$2,500,000$...
New brands are blending marketing and commerceGrouponGilt GroupeLivingSocialRue La LaHauteLookBeyond The RackZulilyIdeeliO...
MOBILE
So, what do peopledo on mobile?
Well, first, they do pretty mucheverything they do online…
They play games and social-network…25 2415241112101077Q1 2011 Q1 2012Daily Smartphone App Consump on, Minutes Per Category...
They listen to music...5%Pandora70%1%Facebook33%Twi er55%0%25%50%75%2008 2009 2010 2011%ofTrafficfromMobileSource: Mary Me...
They consume content…134%94%82%80%77%74%74%72%70%69%05,00010,00015,00020,00025,00030,00035,000HealthInforma onOnline Retai...
They look at pictures and video.6393110152231276324378472425Mar 2011 June 2011 Sept 2011 Dec 2011 Mar 2012U.S. Video Engag...
They use their devices while they watchTV0%10%20%30%40%50%60%70%80%90%Monthly Mul ple Times A Week DailySource: Nielsen Cr...
They shop…PCSmartphoneTablet0%10%20%30%40%50%60%70%80%90%100%Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Ecomme...
They use smartphones to make buyingdecisions in stores.19.7%18.8%20.4%14.6%13.1%14.1%8.3%10.9%6.3%24.0%22.3%16.2%20.2%12.3...
They pay for stuff$0$1,000$2,000$3,000$4,000$5,0002008 2009 2010 2011TotalPaymentVolume(millions)PayPal Mobile Payments Pr...
They buy content0%10%20%30%40%50%60%70%DownloadedMusicBooks Movies Magazines TV Shows StreamingRadioSports NewsMedia Conte...
And they do stuff theyDON’T do online…
Play Angry Birds, et al0100,000200,000300,000400,000500,000600,000700,000Mar 10 Jun 10 Sept 10 Dec 10 Mar 11 Jun 11 Sept 1...
Take and share pictures010,00020,00030,00040,00050,00060,00070,00080,00090,000100,0003/2011 4/2011 5/2011 6/2011 7/2011 8/...
BOTTOM LINE:Mobile devices =More Internet usage +New applications
Source: comScore, Telefonica, Macquarie Capital (USA), December 2011In fact, mobile has made digital 24/7Share Of Device P...
This leads to another bigquestion…
Mobile usage is up across the boardSent Text MessageUsed BrowserUsed Downloaded AppsPlayed gamesAccessed Social NetworkOr ...
People are consuming a huge amount ofcontent through mobile…41%27% 26%23%59%53%29% 29%22%9% 10% 9%5%57%53%25%27%20%Books M...
As mobile increases, all other media decreases45%25%17%4%9%7%44%26%16%6%8% 8%43%26%15%9%7% 7%42%26%14%12%6%5%TV Online Rad...
So mobile advertisingwill be huge, right?
Hmmm…
The “bullish” mobile-ad story is the hugegap between time-spent and ad spending.42%25%22%11%1%43%7%26%15%10%TV Print Web R...
But maybe there’s a good reasonfor that gap…
The screen is really small.
Mobile monetization still behind the desktop$3.87 $5.00$17.61$6.62$25.00$58.95Pandora Zynga TencentARPU, Desktop vs. Mobil...
Mobile CPMs are much lower$3.50$0.75Desktop Internet Mobile InternetEffec ve CPM, Desktop vs. MobileSource: comScore, Viva...
Most “mobile” ads are mainly web search +display ads viewed on mobileSearch62%Display28%Messaging10%2011 Global Mobile Ad ...
Google completely owns mobile searchGoogleYahoo!bing0%10%20%30%40%50%60%70%80%90%100%Dec08Mar09Jun09Sep09Dec09Mar10Jun10Se...
So Google owns mobile, tooGoogleMillennial MediaPandoraAppleYahooMicrosoOther0%10%20%30%40%50%60%70%80%90%100%1Q09 2Q09 3Q...
Overall, mobile is still a tiny fraction ofdigital ad spending.Mobile$0$5$10$15$20$25$30$352007 2008 2009 2010 2011(billio...
And it’s growing much slower thanTV +Internet in the first 5 years$358$1,012$2,162 $2,162$3,698$80 $160$392$806$1,171$55$2...
But!
“Native” mobile ads are finally beginningto appear…• Ads in timelines (Twitter / Facebook)• Shareable ads• Location-based ...
Location-based mobile ads can target usersat the mall, restaurants, car dealers …01020304050607080MallLibrarySchoolCampusH...
Targeted mobile ads have higher CPMs$10.00$5.00$5.00$3.50$- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00Flurry video adsAdsmobi v...
So, yes, mobile ads are just getting startedMediaLocal$0$1,000$2,000$3,000$4,000$5,000$6,000$7,0002009A 2010A 2011A 2012E ...
APPS
App Store downloads on pace to hit 60billion by mid-201305,000,000,00010,000,000,00015,000,000,00020,000,000,00025,000,000...
Smartphone users spend more time on apps than webMobile WebApps020406080100120140Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11...
Mobile app revenue is growing fast, butstill relatively small.$0$500$1,000$1,500$2,000$2,500$3,000$3,500$4,0002008 2009 20...
Because most downloads are freeMobile App Store Downloads, Free vs. Paid: 2011Source: Garner, September 2012Total Download...
“Freemium” is the dominant model
Games are the biggest money makers
Mobile has become aplatform game.
Platform markets tend tostandardize around one or twoplatforms.
Right now, mobile is a two-horse race.AndroidAppleBlackberryWindowsOther0%10%20%30%40%50%60%70%80%90%100%Q1 2009 Q2 2009 Q...
Android has the largest smartphoneplatform globally.AndroidAppleBlackberrySymbianOtherMicroso0%10%20%30%40%50%60%70%80%90%...
Partly because it owns ChinaAndroidAppleSymbianOther0%10%20%30%40%50%60%70%80%90%100%Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 20...
And it’s the same two-horse story in tabletsiPadAndroidKindleNookBlackberry0%10%20%30%40%50%60%70%80%90%100%Q2 2010 Q3 201...
But a big mystery hasarisen...
Where are all these Androidusers?
Apple is dominating app revenueApple iOSAndroidOther$0$500$1,000$1,500$2,000$2,500$3,000$3,500$4,0002008 2009 2010 2011(mi...
And most commerce and web traffic is from AppleiPadiPhoneAndroidAndroid TabletsOther0%10%20%30%40%50%60%70%80%90%100%Q1 20...
Do Android folks actually usetheir devices?
Mobile profits are going mainly to two players.AppleNokiaSamsungRIMMotorolaSony EriccsonLGHTC-20%-10%0%10%20%30%40%50%60%7...
So, what’s the future of media?
Digital?
Yes.
Mobile?
Yes.
Mobile ONLY?
No.
Digital is now a 4-screen world…
Maybe 5 screens soon…
But mobile FIRST?
Only if you have a totallymobile-centric app...
...Or you want to annoy yourusers and customers.
Thank you very much.
Henry BlodgetFounder, CEO & Editor-in-Chief, BusinessInsiderAlex Cocotas, AnalystMarcelo Ballvé, Editorial DirectorBI Inte...
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Ignition 2012 deck future of digital final

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Business Insider conference NY Nov 2012 , The Future of Digital - una buena ayuda para tomar decisiones en el 2013 y en adelante

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Ignition 2012 deck future of digital final

  1. 1. The Future Of DigitalHenry BlodgetCEO & EIC, Business Insider
  2. 2. The medium is now ~20years old.
  3. 3. So, how are we doing?
  4. 4. 2+ billion people online05001,0001,5002,0002,5001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(millions)Global Internet Popula onSource: Interna onal Communica on Union, Google
  5. 5. 2/3 of the world left to goGlobal Popula onInternet Popula on01,0002,0003,0004,0005,0006,0007,0001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(millions)Global Internet Popula onSource: Interna onal Communica on Union, Google
  6. 6. However…
  7. 7. Most of the money is already onlineBo om 70percent18%Top 30 percent82%Distribu on Of Global Income, 2000Source: UN Human Development Report, Trends In Global Income Distribu on
  8. 8. So the market’s moremature than you think.
  9. 9. Meanwhile, somethingprofound happened lastyear…
  10. 10. PC growth stalledHPLenovoDellAcerAppleOther010,00020,00030,00040,00050,00060,00070,00080,00090,000100,0001Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12Global PC Shipments By ManufacturerSource: Gartner, IDCiPad released
  11. 11. Smartphone sales blew past PC salesPersonal ComputersSmartphonesTablets-100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,0001,000,000,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011UnitsGlobal Internet Device SalesSource: Gartner, IDC, Strategy Analy cs, company filings, BI Intelligence es mates
  12. 12. Tablets are now driving all the growth in PC marketPCsTablets020,00040,00060,00080,000100,000120,000140,0001Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12(thousands)Global Computer ShipmentsSource: Gartner, IDC, Strategy Analy cs company releases
  13. 13. So the future is mobileFixed FixedFixedMobileMobile05001,0001,5002,0002,5003,0002005 2010 2015ConsumerBroadbandConnec ons(milions)G-20 Internet AccessSource: Boston Consul ng Group, Mary Meeker, Kleiner Perkins, Morgan Stanley Research, Berg Insight
  14. 14. Where are we in themobile revolution?
  15. 15. Globally, we’re still early…1BSmartphoneUsers6BMobilePhone Users01,0002,0003,0004,0005,0006,0007,000Smartphone Mobile PhoneGlobalUsers(millions)Source: Strategy Analy cs, Interna onal Telecommunica ons UnionNote: Some users own more than one deviceGlobal Smartphone vs. Mobile Phone Users, 2012E
  16. 16. But growth slows after 50% penetration
  17. 17. U.S. and other markets are past halfway pointFeature Phones55%Smartphones50%45%0%10%20%30%40%50%60%70%80%Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12U.S. Smartphone Penetra onSource: Nielsen
  18. 18. US smartphone growth starting to slow0510152025303540Q12008Q22008Q32008Q42008Q12009Q22009Q32009Q42009Q12010Q22010Q32010Q42010Q12011Q22011Q32011Q42011Q12012Q22012Q32013UsersAdded(millions)U.S. Smartphone Market: Year-Over-Year Net AddsSource: comScore, Nielsen
  19. 19. Most future US smartphone buyers will beolder and poorer56%43%31%18%16% 16%53%58%44%32%17%15%69%65%50%30%23%16%70%65%52%41%27%21%65%74%63%51%42%24%77%80%75%60%48%38%0%10%20%30%40%50%60%70%80%90%Ages 18 - 24 Ages 25 - 34 Ages 35 - 44 Ages 45 - 54 Ages 55 - 64 Ages 65+Smartphone Penetra on By Age And Income (U.S.)<15k 15k - 35k 35k - 50k 50k - 75k 75k - 100k 100k+Source: Nielsen
  20. 20. So the focus is on markets like China, whichnow accounts for ~25% of smartphone sales.Rest Of The WorldChina-20,00040,00060,00080,000100,000120,000140,000160,000180,0001Q11 2Q11 3Q11 4Q11 1Q12 2Q12(thousands)Global Smartphone ShipmentsSource: Gartner, IDC, Strategy Analy cs, Canalys, BII es mates
  21. 21. China is already twice the size of US marketMobileBroadbandTotal0100200300400500600June 06 Dec 06 June 07 Dec 07 June 08 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 June 12(millions)Chinese Internet UsersSource: China Internet Network Informa on Center
  22. 22. MEDIA
  23. 23. Remember when they said noone would ever pay for content?
  24. 24. Digital content revenues are explodingiTunesNe lix$0$2,000,000$4,000,000$6,000,000$8,000,000$10,000,000$12,000,000$14,000,0002005 2006 2007 2008 2009 2010 2011TotalDigitalContentRevenue(thousands)Source: BI Intelligence, company filingsDigital Content Revenue, 2005-2011ZyngaDropboxSpo fyHuluLinkedInNY Times DigitalWSJ DigitalTheStreet.comGlenn Beck TVKindle
  25. 25. Digital Advertising still growing rapidly$0$5$10$15$20$25$30$351995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(billions)U.S. Digital Adver singSource: IAB
  26. 26. At largest U.S. tech and media companies,nearly 40% of ad revenue is digital77%share62%share23%share38%share$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,0002006 2007 2008 2009 2010 2011U.S.Adver singRevenue(millions)Source: Company filings and BI Intelligence es mates. Companies include: Google, Yahoo, AOL, Microso , Facebook, Time Warner, Disney, Viacom, CBS, NewsCorp, New York Times, Ganne , McClatchy, Time Inc, Entercom, CBS Radio, Clear Channel, Citadel, CumOnline vs. Offline Adver sing (U.S.), 2006-2011OnlineOffline
  27. 27. TV still biggest. Online close behind.Print getting smashed.41%42%10%23%13%14%20%9%11%7%6%4%$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,0002006 2007 2008 2009 2010 2011U.S.Adver singRevenue(millions)Source: Represents annual U.S. adver sing revenue for 20 large media companies based on company filings and our own es matesU.S. Adver sing, 2006-2011All Other OnlineTelevisionPrintRadioOutdoorGoogle
  28. 28. Digital has already “disrupted”one media sector…
  29. 29. As news consumption moved online…17%5%1% 1% 1%-1%-4%23%-4%-7%1%9%-6%-7%-10%-5%0%5%10%15%20%25%Online Network TV Local TV Audio Cable TV Magazines NewspaperNews Media Audience and Revenue Growth, 2010-2011Audience Growth Revenue GrowthSource: Nielsen Media Research, the Audit Bureau of Circula on and Arbitron, SNL Kagan, eMarketer, Veronis Suhler Stevenson, Radio Adver sing Bureau, PublishersInforma on Bureau, Na onal News Associa on, BIA/Kelsey
  30. 30. Newspaper ad revenue collapsed
  31. 31. Google now generates as much U.S. ad revenue asnewspapers and magazines (all of them)$0$5,000$10,000$15,000$20,000$25,000$30,000$35,000$40,000$45,000$50,0002004 2005 2006 2007 2008 2009 2010 2011 1H2012U.S. AdRevenue(millions)Source: Google, NAA, PIBGoogle Generates More U.S. Ad Revenue Than NewspapersGoogle (U.S.) U.S. Magazines U.S. Newspapers
  32. 32. (Some) paywall subscriptions are growing,but…01002003004005006002Q11 3Q11 4Q11 1Q12 2Q12 3Q12(thousands)Source: company releasesNote: does not include print subcribers with digital accessNew York Times Digital Subscribers
  33. 33. “Digital dimes” don’t offset lost print dollars$-$10,000$20,000$30,000$40,000$50,000$60,0002003 2004 2005 2006 2007 2008 2009 2010 2011InMillionsSource: Newspaper Associa on Of AmericaNewspaper Ad Revenue (Print vs. Online)Print Online
  34. 34. Of course, print news isold news…
  35. 35. Now the question is…
  36. 36. IsTV next?5.35.45.55.65.75.85.96.06.16.22007-2008 2008-2009 2009-2010 2010-2011 2011-2012Nielsen Prime me Household Ra ngsBig 4 U.S. TV Networks Average
  37. 37. For now,TV ad spending still growing$58$60$62$64$66$68$70$72$742007 2008 2009 2010 2011Total TVAd Spend(billions)TV Ad Spend, 2007-2011Source: Nielsen
  38. 38. But behavior is changing82% 83%64%17% 16%26%6% 6%8%7%2004 2008 2012%ofTVsetusersSource: GfKU.S. Prime me TV Viewing(% of 18-49 TV set users during 8-9 PM hour, mul ple responses permi ed)Live TV Recorded TV Video game Streaming video
  39. 39. PayTV subscriptions are now trending downSource: Bernstein ResearchCableSatelliteTelCoTotal-1000-800-600-400-200020040060080010001Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12SubscriberNet Addi ons(thousands)Pay TV Subscriber Net Addi ons
  40. 40. ‘Over-the-top’ video is real and growing fast.Ne lixYouTubeHulu$0$1,000$2,000$3,000$4,000$5,0002006 2007 2008 2009 2010 2011TotalDigitalRevenues(millions)Source: Company filings and BI Intelligence es matesDigital Video Revenue, 2006-2011
  41. 41. Live events are increasingly being viewed overthe Internet0%50%100%150%200%250%300%2-Jul 9-Jul 16-Jul 23-Jul 30-Jul 6-Aug 13-Aug 20-Aug 27-Aug 3-Sep 10-Sep 17-Sep 24-SepSource: OoyalaGrowth Of Total Live Video Viewing Time Via Connected TVDevices And Gaming Consoles (Q3 2012)
  42. 42. Digital video advertising is on the rise$0$500$1,000$1,500$2,000$2,5002006 2007 2008 2009 2010 2011(millions)Online Video Ad Revenue (U.S.)Source: Interac ve Adver sing Bureau, eMarketer, comScore, BI Intelligence es mates
  43. 43. But as with print, digital = less money thanTV75.2%98.5%92.1%24.8%1.5%7.9%0%10%20%30%40%50%60%70%80%90%100%TV Online video Streaming TV onlineSource: comScore, June 2012Ad Loads, TV vs. Digital(% share of programming)Content Ads
  44. 44. What does history teach us?
  45. 45. As habits change…
  46. 46. The money follows.
  47. 47. By the way, “old media” isn’tthe only media beingdisrupted...
  48. 48. Americans now spend more time onsocial networks than portalsSocial NetworksPortals051015202530Nov-2010 Dec-2010 Jan-2011 Feb-2011 Mar-2011 Apr-2011 May-2011 Jun-2011 Jul-2011 Aug-2011 Sep-2011 Oct-2011 Nov-2011 Dec-2011Average MinutesPer Usage DayAverage Time Spent: Portals vs. Social Networks (U.S.)Source: comScore
  49. 49. 1/7th of the world’s population now use FacebookMonthly Ac ve UsersDaily Ac ve Users01002003004005006007008009001,0001,1001Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12Ac veUsers(millions)Facebook Ac ve Users
  50. 50. Time spent onYahoo, et al, continues to decline0%2%4%6%8%10%12%14%16%1Q07 2Q07 3Q07 04Q7 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12Yahoo Time Spent % vs. Total Internet (U.S.)Source: comScore, Ci Investment Research And Analysis
  51. 51. Now, in online ads, it’s Google, Facebook, and “other”…Google
  52. 52. Facebook has blown past AOL,Microsoft, andYahooGoogleFacebookMicrosoYahooAOLOther$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,0002Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12DigitalAdver singRevenue(millions)U.S Digital Adver singSource: company filings BII es mates40%11%30%13%6%55%11%8%7%4%15%
  53. 53. YouTube, Hulu, Glam,Twitter, Demand, et al.,also taking portal share…FacebookYouTubeWebMDHuluDemand MediaTwi erFederated MediaGlam Media$0$200$400$600$800$1,000$1,200$1,400$1,600$1,8002Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12DigitalAdver singRevenue(millions)US Digital Adver sing: New Growth CompaniesSource: company filings BII es mates
  54. 54. “Display” ad growth is flatteningGoogleOtherYahooAOLMicroso$0$500$1,000$1,500$2,000$2,500$3,0002Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12DisplayAdver singRevenue(millions)U.S. Display Adver singSource: company filings, BII es mates
  55. 55. Real-time bidding is automating what’s left0%5%10%15%20%25%30%2010 2011 2012 2013 2014 2015 2016Source: eMarketerRTB As % Of Digital Display Ad Spending
  56. 56. So, will Facebook ever be biggerthan Google?
  57. 57. Unlikely.
  58. 58. Google is likeadvertising at a store.
  59. 59. Facebook is likeadvertising at a party.
  60. 60. Social referrals to commerce sites are tinyFacebook referrals up 92% year-over-year…80.6%9.7% 7.5% 1.7% 0.5% 0.02%0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%Google Yahoo Bing AOL Facebook Twi erPercentageOf TrafficDrivers of E-Commerce TrafficSource: RIchRelevance
  61. 61. And speaking of advertisingat stores...
  62. 62. E-tailers are now building ad businesses
  63. 63. Amazon ad revenue is already $1+ billion a year…
  64. 64. And as eCommerce continues to take share…Offline Retail SalesE-Commerce$0$500,000$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000$3,500,000$4,000,000$4,500,000$5,000,0001995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(millions)U.S. Retail SalesSource: Federal Reserve Economic Data--St. Louis Fed, BI Intelligence es mates
  65. 65. New brands are blending marketing and commerceGrouponGilt GroupeLivingSocialRue La LaHauteLookBeyond The RackZulilyIdeeliOne Kings LaneShoeDazzleFab$0$500$1,000$1,500$2,000$2,500$3,000$3,5002008 2009 2010 2011TotalRevenue(millions)Social Commerce RevenuesSource: Company Filings, BII Es mates
  66. 66. MOBILE
  67. 67. So, what do peopledo on mobile?
  68. 68. Well, first, they do pretty mucheverything they do online…
  69. 69. They play games and social-network…25 2415241112101077Q1 2011 Q1 2012Daily Smartphone App Consump on, Minutes Per CategoryGames Social Networking News Entertainment OtherSource: Flurry Analy cs
  70. 70. They listen to music...5%Pandora70%1%Facebook33%Twi er55%0%25%50%75%2008 2009 2010 2011%ofTrafficfromMobileSource: Mary Meeker, Kleiner Perkins, companies
  71. 71. They consume content…134%94%82%80%77%74%74%72%70%69%05,00010,00015,00020,00025,00030,00035,000HealthInforma onOnline Retail MensMagazineContentElectronicPaymentGamingInforma onJob Lis ngs GeneralReferenceClassifieds Auc on Sites FamilyEntertainmentTotalMobileAudience(thousands)Top Mobile Categories By Growth In Audience, Dec. 2010 vs. Dec. 2011 (U.S.)Dec-10 Dec-11Source: comScore MobieLens, 3 mon. avg. ending Dec-2011 vs. Dec-2010
  72. 72. They look at pictures and video.6393110152231276324378472425Mar 2011 June 2011 Sept 2011 Dec 2011 Mar 2012U.S. Video Engagement, Monthly Minutes Per Ac ve UserGoogle Internet Sites iOS & Android Photo & Video AppsSource: Flurry Analy cs, comScore Video Matrix
  73. 73. They use their devices while they watchTV0%10%20%30%40%50%60%70%80%90%Monthly Mul ple Times A Week DailySource: Nielsen Cross-Pla orm Report Q2, 2012Percentage Of Smartphone Users Who Use Their PhonesWhile Watching TV
  74. 74. They shop…PCSmartphoneTablet0%10%20%30%40%50%60%70%80%90%100%Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Ecommerce Website Traffic By DeviceSource: Monetate
  75. 75. They use smartphones to make buyingdecisions in stores.19.7%18.8%20.4%14.6%13.1%14.1%8.3%10.9%6.3%24.0%22.3%16.2%20.2%12.3%10.0%11.1%7.2%5.2%Took Picture OfProductTexted/CalledFriends/FamilyAbout ProductScanned AProduct BarcodeSent Picture OfProducts ToFamily/FriendsFound StoreLoca onComparedProduct PricesFound CouponsFor DealsResearch ProductFeaturesChecked ProductAvailabilityU.S. Smartphone Owners Ac vity In Retail StoresMales Females
  76. 76. They pay for stuff$0$1,000$2,000$3,000$4,000$5,0002008 2009 2010 2011TotalPaymentVolume(millions)PayPal Mobile Payments Processed
  77. 77. They buy content0%10%20%30%40%50%60%70%DownloadedMusicBooks Movies Magazines TV Shows StreamingRadioSports NewsMedia Content Paid For On A Tablet, Q4 2011US Italy UK GermanySource: Nielsen
  78. 78. And they do stuff theyDON’T do online…
  79. 79. Play Angry Birds, et al0100,000200,000300,000400,000500,000600,000700,000Mar 10 Jun 10 Sept 10 Dec 10 Mar 11 Jun 11 Sept 11 Dec 11TotalDownloadsOr Sales(thousands)Angry Birds Downloads vs. Nintendo DS SalesNote: Includes Nintendo 3DS SalesSource: New reports, company releases, BI Intelligence estimates
  80. 80. Take and share pictures010,00020,00030,00040,00050,00060,00070,00080,00090,000100,0003/2011 4/2011 5/2011 6/2011 7/2011 8/2011 9/2011 10/2011 11/2011 12/2011 1/2012 2/2012 3/2012 4/2012 5/2012 7/2012 7/2012 8/2012 9/2012TotalUsers(thousands)Instagram Es mated UsersSource: news reports, company releases, BII Es mates
  81. 81. BOTTOM LINE:Mobile devices =More Internet usage +New applications
  82. 82. Source: comScore, Telefonica, Macquarie Capital (USA), December 2011In fact, mobile has made digital 24/7Share Of Device PageTraffic Over A Day:
  83. 83. This leads to another bigquestion…
  84. 84. Mobile usage is up across the boardSent Text MessageUsed BrowserUsed Downloaded AppsPlayed gamesAccessed Social NetworkOr BlogListened to music0%10%20%30%40%50%60%70%80%Feb10Apr10May10Jun10Jul10Aug10Sept10Oct10Nov10Dec10Jan11Feb11Mar11Apr11May11Jun11Jul11Aug11Sept11Oct11Nov11Dec11Jan12Feb12Mar12Apr12May12June12July12Aug12Sep12Shareofmobilepopulaonthathas...U.S. Mobile Content UsageSource: comScore
  85. 85. People are consuming a huge amount ofcontent through mobile…41%27% 26%23%59%53%29% 29%22%9% 10% 9%5%57%53%25%27%20%Books Movies TV Shows Magazines News SocialNetworkingDownloadedMusicSports StreamingRadioMedia Content Accessed Through Mobile DeviceTablet SmartphoneSource: Nielsen Q4 2011 Mobile Connected Device Report
  86. 86. As mobile increases, all other media decreases45%25%17%4%9%7%44%26%16%6%8% 8%43%26%15%9%7% 7%42%26%14%12%6%5%TV Online Radio Mobile Print OtherSource: eMarketer, October 2012Share Of Consumer Time Spent With Major Media2009 2010 2011 2012
  87. 87. So mobile advertisingwill be huge, right?
  88. 88. Hmmm…
  89. 89. The “bullish” mobile-ad story is the hugegap between time-spent and ad spending.42%25%22%11%1%43%7%26%15%10%TV Print Web Radio Mobile2011 U.S. Ad Spending vs. Consumer Time Spent By MediaAd Spend Per Media Time Spent Per MediaSource: Mary Meeker (KPCB), eMarketer, IAB
  90. 90. But maybe there’s a good reasonfor that gap…
  91. 91. The screen is really small.
  92. 92. Mobile monetization still behind the desktop$3.87 $5.00$17.61$6.62$25.00$58.95Pandora Zynga TencentARPU, Desktop vs. MobileMobile DesktopSource: Pandora, Zynga, Tencent
  93. 93. Mobile CPMs are much lower$3.50$0.75Desktop Internet Mobile InternetEffec ve CPM, Desktop vs. MobileSource: comScore, Vivaki, Mobclix Exchange
  94. 94. Most “mobile” ads are mainly web search +display ads viewed on mobileSearch62%Display28%Messaging10%2011 Global Mobile Ad Spend By CategorySource: IAB
  95. 95. Google completely owns mobile searchGoogleYahoo!bing0%10%20%30%40%50%60%70%80%90%100%Dec08Mar09Jun09Sep09Dec09Mar10Jun10Sep10Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12Global Mobile Search Market ShareSource: Global StatCounter
  96. 96. So Google owns mobile, tooGoogleMillennial MediaPandoraAppleYahooMicrosoOther0%10%20%30%40%50%60%70%80%90%100%1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11Mobile Ad Market ShareSource: news reports, company releases, BII es mates
  97. 97. Overall, mobile is still a tiny fraction ofdigital ad spending.Mobile$0$5$10$15$20$25$30$352007 2008 2009 2010 2011(billions)U.S. Digital Adver sing RevenuesSource: IAB, BIA-Kelsey, BII es mates
  98. 98. And it’s growing much slower thanTV +Internet in the first 5 years$358$1,012$2,162 $2,162$3,698$80 $160$392$806$1,171$55$267$907$1,920$4,621$0$500$1,000$1,500$2,000$2,500$3,000$3,500$4,000$4,500$5,000Year 1 Year 2 Year 3 Year 4 Year 5Compara ve U.S. Adver sing MediaAnnual $ Revenue Growth (First 5 Years)Broadcast TV Mobile InternetSource: IAB, McCann-Erickson, BIA-Kelsey, BII es mates Note: Adjusted for infla on
  99. 99. But!
  100. 100. “Native” mobile ads are finally beginningto appear…• Ads in timelines (Twitter / Facebook)• Shareable ads• Location-based mobile ads
  101. 101. Location-based mobile ads can target usersat the mall, restaurants, car dealers …01020304050607080MallLibrarySchoolCampusHotelAirportBigBoxRetailersQuickServiceRestaurantsOtherRestaurantsElectronicsRetailersCarDealersClothingRetailersSource: JiWire, Q3 2012Monthly Ad Requests Per Mobile User By Loca on
  102. 102. Targeted mobile ads have higher CPMs$10.00$5.00$5.00$3.50$- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00Flurry video adsAdsmobi video adsLSN Mobile local adsxAd localSource: Ad pla orms, BII Research, Greg Sterling, Opus ResearchCPMs For Selected Mobile Ad Pla orms
  103. 103. So, yes, mobile ads are just getting startedMediaLocal$0$1,000$2,000$3,000$4,000$5,000$6,000$7,0002009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E 2017EMobile AdRevenue(millions)U.S. Mobile Ad ForecastWe are here
  104. 104. APPS
  105. 105. App Store downloads on pace to hit 60billion by mid-201305,000,000,00010,000,000,00015,000,000,00020,000,000,00025,000,000,00030,000,000,00035,000,000,00040,000,000,00045,000,000,00050,000,000,00055,000,000,00060,000,000,00065,000,000,0001/1/112/1/113/1/114/1/115/1/116/1/117/1/118/1/119/1/1110/1/1111/1/1112/1/111/1/122/1/123/1/124/1/125/1/126/1/127/1/128/1/129/1/1210/1/1211/1/1212/1/121/1/132/1/133/1/134/1/135/1/136/1/13Apple App Store Downloads
  106. 106. Smartphone users spend more time on apps than webMobile WebApps020406080100120140Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12Minutes SpentPer Month(Biillions )Total Time Spent Using Mobile Web vs. AppsSource: Nielsen Smartphone Analy cs
  107. 107. Mobile app revenue is growing fast, butstill relatively small.$0$500$1,000$1,500$2,000$2,500$3,000$3,500$4,0002008 2009 2010 2011(millions)Mobile App RevenueSource: iSuppli, Forrester Research, company releases, BII es mates
  108. 108. Because most downloads are freeMobile App Store Downloads, Free vs. Paid: 2011Source: Garner, September 2012Total DownloadsFree Downloads89%
  109. 109. “Freemium” is the dominant model
  110. 110. Games are the biggest money makers
  111. 111. Mobile has become aplatform game.
  112. 112. Platform markets tend tostandardize around one or twoplatforms.
  113. 113. Right now, mobile is a two-horse race.AndroidAppleBlackberryWindowsOther0%10%20%30%40%50%60%70%80%90%100%Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Global Mobile Pla orm Market ShareSource: Gartner, IDC, Strategy Analy cs, BI Intelligence es mates, and company filings
  114. 114. Android has the largest smartphoneplatform globally.AndroidAppleBlackberrySymbianOtherMicroso0%10%20%30%40%50%60%70%80%90%100%Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Share ofGlobal UnitSalesSmartphone Market Share By OS (Global)Source: Gartner
  115. 115. Partly because it owns ChinaAndroidAppleSymbianOther0%10%20%30%40%50%60%70%80%90%100%Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Source: Analysys Interna onalChinese Smartphone Market Share By Pla orm
  116. 116. And it’s the same two-horse story in tabletsiPadAndroidKindleNookBlackberry0%10%20%30%40%50%60%70%80%90%100%Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Tablet Market Share By Pla ormSource: Es mates based on informa on from IDC, Strategy Analy cs, and company filings
  117. 117. But a big mystery hasarisen...
  118. 118. Where are all these Androidusers?
  119. 119. Apple is dominating app revenueApple iOSAndroidOther$0$500$1,000$1,500$2,000$2,500$3,000$3,500$4,0002008 2009 2010 2011(millions)Mobile App Revenue By Pla ormSource: iSuppli, Forrester Research, company releases, BII es mates
  120. 120. And most commerce and web traffic is from AppleiPadiPhoneAndroidAndroid TabletsOther0%10%20%30%40%50%60%70%80%90%100%Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Source: MonetateEcommerce Website Traffic By Mobile Pla orm
  121. 121. Do Android folks actually usetheir devices?
  122. 122. Mobile profits are going mainly to two players.AppleNokiaSamsungRIMMotorolaSony EriccsonLGHTC-20%-10%0%10%20%30%40%50%60%70%80%2007 2008 2009 2010 2011 Q1 2012 Q2 2012 Q3 2012Opera ng Profit Share By VendorSource: Company releases, Canaccord Genuity es mates
  123. 123. So, what’s the future of media?
  124. 124. Digital?
  125. 125. Yes.
  126. 126. Mobile?
  127. 127. Yes.
  128. 128. Mobile ONLY?
  129. 129. No.
  130. 130. Digital is now a 4-screen world…
  131. 131. Maybe 5 screens soon…
  132. 132. But mobile FIRST?
  133. 133. Only if you have a totallymobile-centric app...
  134. 134. ...Or you want to annoy yourusers and customers.
  135. 135. Thank you very much.
  136. 136. Henry BlodgetFounder, CEO & Editor-in-Chief, BusinessInsiderAlex Cocotas, AnalystMarcelo Ballvé, Editorial DirectorBI Intelligence is a new subscription service from Business Insiderthat provides in-depth insight, data, and analysis of the mobile industry.More info at intelligence.businessinsider.comPeter Lee, InternJosh Luger, Director of Subscription Products

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