1030 omma adnets joshua wepman


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  • Let’s look at a few of the notable developments in the past year. I’ll go into more detail on each of them. [Click]First, we’ve seen a clear increase in brands spending money online. As I’ll discuss, they are looking to the online channel for messaging rather than direct customer acquisition. But there are challenges, as we’ll discuss [Click]Second, we’ve seen the rise of private exchanges and premium networks that help premium publishers maximize the value of their inventory while creating brand friendly enviroments. [Click]Third, digital video and social seem to have found their groove. People are watching an ever increasing amount of video and becoming more social – and the brands are following them. As a result, these markets are taking off [Click]Fourth, large players such as Google, Yahoo and Aol are looking for ways to meet the needs of brand advertisers, whether through internal development or M&A [Click]Fifth, agencies and ad networks are responding to market dynamics and staying relevant. [Click]Finally, we’re seeing companies trying to become comprehensive marketing services providers, whether through internal development or by acquiring capabilities. In particular, we’ll touch on the spate of private to private mergers we’ve been seeing
  • Let’s start with the brands. As you can see, the online brand advertising market is expected to grow from just $6B in 2009 to $22 B in 2015, a nearly 25% compound annual growth rate, and a rate in excess of the overall online advertising market.What’s driving this growth? [Click]Introduction of engaging and impactful formats. Think Project Devil and Pictela from Aol, as well as the growth in in-stream video advertising [Click]Rise in amount of quality content on the web, as well as the introduction of private exchanges that give a sense of brand safety and security [Click]Following the audience. You go where your audience goes. [Click]Increased efficiency: reaching the right audience – leads to increased ROI. Don’t mean targeting for a click, but making sure you find relevant viewersBut what factors may hold this movement back?
  • The quest for relevant metrics and measurement has been a difficult issue for brands. They are looking for metrics that measure awareness, purchase intent and other top of the funnel metrics. These, historically, have not been what has been tracked by web analytics and measurement companiesThey are less concerned with the metrics mostly tracked to date: click through, uniques, impressions, etc.
  • The metrics brands care about correspond to awareness rather than conversion within the purchase funnel. However, many of the technologies within the landscape designed to push toward sale. This is what is generally tracked today.
  • In response, various ad tech vendors have come up with attempts to help advertisers find brand-safe inventory.First, there are the premium networks such as Undertone and Brand.net. In addition, larger digital media companies such as Aol have re-positioned their marketing services offerings to address the needs of brand advertisers. For example, Aol has positioned Advertising.com to be a premium, brand-safe network, and Yahoo acquired 5to1 to get access to premium quality inventory. These networks have [click]premium sites [click] brand safe inventory, and [click] brand friendly, engaging formats. Next, there are the pure-play video ad networks. These companies aggregate [click] high quality video inventory, [click] creative in-stream ad units and [click] access to sufficient video inventory to run a targeted branding campaignFinally, there are the private exchanges, often set up by [click] leading publishers in partnership with an SSP or other ad tech providers. Many of the private exchanges offer [click] RTB capabilities, [click] optimized pricing and [click] proprietary and differentiated data for targeting. While open exchanges optimize for direct response priorities, like audience targeting and performance, private exchanges optimize for brand priorities by ensuring access to safe inventory.
  • Let’s dive a little deeper. Private exchanges allow publishers to make their inventory available via RTB without degrading pricing or losing control over the inventory. Can set rules on pricing, availability, advertisers, etc. As I mentioned, they also allow brands to confidently buy real time inventory without worrying about quality or context. Both publisher and advertiser win.Private exchanges often allow publishers to attract higher CPMs (as much as 5x greater according to Forrester) than on traditional networks and exchanges due to transparency, proprietary data, quality of inventory and transparency offered to advertisersIncreasingly being adopted by publishers such as Forbes, CBS, Weather Channel and NBC InteractivePrivate exchanges helping bringing brands online, especially to exchange buying world and programmatic ad buying, while at the same time unlocking the inventory of leading publishers that was previously only available direct
  • Turning to video, the digital video ad market is on fire. I’ll get into what’s driving the market, but needless to say both audiences and brands recognize the value of digital video.Audiences are increasingly getting used to watching video on their PC or mobile device and their video consumption habits are rapidly changing.On the marketer side, there is a recognition that digital video is an excellent advertising medium with significant brand and message recall. As a result, as brands move online, they are sinking a lot of dollars into video, making it by far the fastest growing segment of online advertising. [click]
  • But like display, there is a lot of complexity throughout the landscape. That said, there are a lot fewer acronyms!!This is an area of intense scrutiny among buyers and investors and one in which we are spending an increasing amount of time. Last year, we sold BBE to SpecificMedia and we saw a number of additional video deals including Undertone / Jambo and Aol buying StudioNow, GoViral and 5min. Let’s see what happens with Hulu!
  • What’s driving the growth in the digital video ad market? [click]First, the shifting of audience viewing habits; moving to time-shifted media consumption [click]Second, a growth in the amount of time spent watching video. Now nearly a third of time spent online! [click]Third, several studies have shown that digital video advertising is viewed as more engaging than TV advertising [click] and promotes greater brand recall and message recall [click] Next, it’s capturing TV rather than online budgets. This is significant since this is a much larger pool from which to draw. As the two markets converge, this has the potential to make digital video advertising among the largest [click]Finally, improved targeting and technical standards have made this a more viable and efficient place to run large scale advertising campaigns
  • Social has also begun attracting serious online brand advertising dollars [click]Social media is altering the purchase funnel and creating a closed loop between awareness and branding. [click]Audiences are seeing what friends are buying or saying and moving to sales. Sales data is also being taken and driving additional social sales [click]Because of this, building a social presence is becoming of increasing importance to brands. They see the multiple benefits associated with social, including customer insight and engagement based on how customers interact with brand pages . They see the potential for social to build brand awareness and loyalty, as well as drive product development and create new consumers.
  • Agencies are getting the message that the world is changing and new capabilities are required to stay relevant. Last year, I said that agencies would be the biggest losers in the new display advertising world. I still think things are difficult for them. Their trading desks run the risk of being disintermediated. However, firms such as WPP with Xaxis and Dentsu with IgnitionOne have set up entities to maintain relevance. These are departures since they have a greater technology underpinning than traditionally found in agencies. We think that M&A will be an important part of the agency toolkit to stay relevant.
  • Several of the other digital media players have also made moves in the display and video ad tech world. Aol has been busy and its moves are consistent with its latest positioning as a premium content provider [click] (with its increased focus on editorial and its acquisition of HuffPo), [click] with a premium ad network and its acquisitions [click] Pictela and several video assets [click] back this upYahoo has made some moves too by acquiring 5to1 and is premium alliance, as well as the technology provided by Dapper. Will Yahoo be the Hulu suitor? [click]Microsoft has decided to outsource its capabilities by investing in Appnexus. [click]A couple of notable exclusions here are eBay and Amazon. eBay acquired GSI and its ad tech capabilities but has spent a lot of time focused on eCom and payments.Amazon recently partnered with Triggit to create an ad network with DSP capabilities. However, it has yet to buy a company in the ad tech space. Come back next year and let’s see what’s changed!
  • Why is this Important? Because the ultimate customer, the CMO, is looking for comprehensive solutions to their marketing challenges. They want providers that stretch across the various marketing and media silos. This simplifies the CMOs job and, with one check to write and one accountable party, will drive efficiencies
  • We are in the decade of the CMO. [click] If the last ten years were about the CTO, building out the technology infrastructure and controlling expenses, the next ten will be about attracting customers, building the topline and maximizing ROI [click]Because of this focus on topline growth, customer relationships and sales, it also draws in the CEO who has a vested interest in the outcome [click]The CMO has increasing options across multiple channels to help her achieve her goals [click] with ever increasing complexity [click]However, this landscape is evolving with an ever-increasing number of vendors. This all makes her job extremely difficult and makes consolidation and the emergence of comprehensive provider inevitable
  • There are a number of factors that will lead to increasing industry consolidation: [click]-As mentioned, CMOs want comprehensive solutions providers. They need someone that will make their job easier, not increase the complexity. [click]-Related to this is the fragmented landscape. There are a lot of features out there but not a lot of companies. Many are small and have been unable to reach any level of revenue scale or profitability. As these companies are acquired or combine, there are any number of cost and revenue synergies that should improve performance and build “companies” [click]-There are a lot of new potential buyers out there. For instance the software companies are realizing that many of these ad tech businesses are software companies. In addition, as mentioned earlier, the ad networks have become active buyers. They are some of the only scale businesses and recognize the need to transform to stay relevant [click]-Tech companies generally have a lot of cash and are looking to use it to grow [click]
  • Rise of private to privates
  • 1030 omma adnets joshua wepman

    1. 1. Display Advertising 2.0: New Perspectives on a Changing Landscape July 18, 2011 Joshua Wepman GCA Savvian Advisors
    2. 2. 2 Creative Optimization Targeted Networks / AMPs Video / Rich Media SSPs Ad Networks Vertical Custom Performance Mobile P U B L I S H E R S A U D I E N C E A D V E R T I S E R S Ad Exchanges DSPsMedia Buying Desks Agencies Publisher Tools Ad Operations Ad Servers Ad Servers Sharing Data/ Social Tools Data Suppliers DMPs and Data Aggregators Media Planning and Attribution Media Mgmt Systems Verification Retargeting Measurement and Analytics Where We Are Today
    3. 3. 3 Targeted Video / Rich Media Horizontal Yield Optimization Ad Networks Vertical Performance Mobile P U B L I S H E R S Data Exchanges / Aggregators Creative Optimization Data Optimization A U D I E N C E A D V E R T I S E R S Ad Exchanges DSPsMedia Buying Platforms Agencies Publisher Tools Data Suppliers Ad Ops / Infrastructure Ad Servers Ad Servers Verification / Attribution Sharing Data / Social Tools Analytics Trading Desk Landscape Observations Data Suppliers
    4. 4. 4 $0 $1 $2 $3 $4 $5 $6 $7 $8 ($Bn) Q1 2011 Was Highest Q1 Ever $7.3 Bn The display advertising market is forecast to grow over 30% more than the overall online advertising market from 2009 to 2014 Notes: Source: Interactive Advertising Bureau (IAB). Online Advertising Accelerating …
    5. 5. Creative Optimization Targeted Networks / AMPs Video / Rich Media Yield Optimization Ad Networks Vertical Custom Performance Mobile P U B L I S H E R S A U D I E N C E A D V E R T I S E R S Ad Exchanges DSPsMedia Buying Desks Agencies Publisher Tools Ad Operations Ad Servers Ad Servers Sharing Data/ Social Tools Data Suppliers DMPs and Data Aggregators Media Planning and Attribution Media Mgmt Systems Verification Retargeting Measurement and Analytics $10.0 $12.3 $0.7 $1.4 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2010A 2011E ($Bn) Display Advertising Exchange-Based Buying Exchange-Based Buying Market Despite doubling YoY, exchange-based ad buying is expected to continue to be a small part of the overall display ad market 5 … But Exchange-Based Buying is Still a Small Market
    6. 6. 6  Brands increasingly moving their ad spend online  The rise of private exchanges, proprietary data sets and premium ad networks  Brands fully embrace digital video and social  Google (and others) continue to march across the display advertising landscape  Agencies and ad networks recognize the challenges and respond  Appearance of comprehensive marketing solutions providers Notable Trends
    7. 7.  High impact formats (video, rich media and new, engaging formats)  Increasing transparency and sense of brand safety  Following the audience (time spent)  Real ROI DRIVERS: Brands Moving Online … 7
    8. 8. 0% 10% 20% 30% 40% 50% 60% PercentofRespondents 8 What brand marketers want What brand marketers get Notes: Source: Bain & Company Which metrics are most valuable for brand-building campaigns? … But There Are Challenges
    9. 9. Awareness Opinion Consideration Intention Sales 9  Brands focused here  Brand Awareness  Favorability  Current metrics and new technologies focused here  Clickthrough  Time spent  Interaction  Conversion / sales The metrics that brands care about correspond to “top of funnel” activities rather than conversion and click throughs Brands Care About the Top of the Funnel
    10. 10. By buying on longer tail sites, audience targeting exposes brands to the potential to advertise against questionable content 10 Brands Care About Inventory Quality
    11. 11.  High quality properties  Brand-safe inventory  Engaging formats Premium Networks  Professional video content  In-stream ad units  Access to inventory at scale Video Networks  Leading publishers and advertisers  RTB capabilities  Proprietary, differentiated data Private Exchanges 11 Brand-Oriented Solutions Offer Quality and Safety
    12. 12. Premium publisher inventory & data Optimized Pricing Real time biddable inventory Transparent “Category 5” Private Exchange 12 Private exchanges enable brands to buy safe, targeted inventory while enabling publishers to enter RTB market and protect CPMs The Rise of Private Exchanges
    13. 13. 13 US Online Video Ad Spending ($Bn) (1) Format 2010 Ad Spend ($Bn) 2015 Ad Spend ($Bn) 2010 ~ 2015 CAGR Search $12.0 $21.5 12% Banner Ads 6.2 11.7 14% Classifieds and Directories 2.6 4.3 11% Rich Media 1.5 1.7 2% Video 1.4 7.1 38% Lead Generation 1.3 1.5 3% Sponsorships 0.7 1.5 15% Email 0.2 0.2 2% Total $26.0 $49.5 14% $1.4 $2.2 $3.1 $4.2 $5.6 $7.1 $0.0 $2.0 $4.0 $6.0 $8.0 2010 2011 2012 2013 2014 2015 Video is Growing and Outpacing Other Formats US Online Ad Spending Growth by Format (1) Notes: Source: Wall Street Research.
    14. 14. Delivery / Content Management EnablersContent Creators MonetizationPublishing Tools Aggregation / Portals Like display, there are several areas across the video value chain that will benefit from the growth in online brand advertising 14 Video Value Chain Fragmented Like Display
    15. 15. vs. 15  Audience viewing habits changing; moving to time- shifted media consumption  Video streaming represents 32% of time spent online  Online video advertising more engaging than TV  Video advertising promotes greater brand recall  Beginning to draw from TV budgets  Improved targeting technology Online Video Growth Drivers
    16. 16. Awareness Sales 16 Social is a key component of online brand advertising campaigns  Social media is altering the purchase funnel and creating a closed loop between awareness & branding  Data from Facebook, Twitter, reviews, comments and other social platforms being used by marketers to drive branding and conversion  Building a social presence is of increasing importance to brands Impact of Social Media Consideration Intention Opinion
    17. 17. 17 Agencies Recognizing the Challenges
    18. 18. 18 Creative Optimization Targeted Networks / AMPs Video / Rich Media SSPs Ad Networks Vertical Custom Performance P U B L I S H E R S A U D I E N C E A D V E R T I S E R S Ad Exchanges DSPsMedia Buying Desks Agencies Publisher Tools Ad Operations Ad Servers Ad Servers Sharing Data/ Social Tools Data Suppliers DMPs and Data Aggregators Media Planning and Attribution Media Mgmt Systems Verification Retargeting Measurement and Analytics Mobile Google Gets It
    19. 19.  Networks creating new offerings, pivoting or acquiring businesses that bring desired capabilities  Some ad networks have attempted to transform their core business models to address new needs  Others have acquired desired capabilities  Networks need to evolve to survive and succeed 19 Targeted Networks / AMPs Video / Rich Media Ad Networks Vertical Custom Performance Mobile Media Mgmt Systems So Do Ad Networks
    20. 20. 20 Who Else is Meeting the Needs of Brands?
    21. 21. 21 CMO RTB Creative Optimization Vendors Retargeting Data Management Platforms Display Ad Tech Point Providers While the landscape is full of point providers, today’s CMO is looking for comprehensive solutions providers that can drive efficiencies Integrated Display Advertising Optimization Solution Provider The Quest for Integrated Solutions
    22. 22. CMO  Focus has moved from CTO’s office to CMO’s office in quest to grow business while maximizing ROI  Ever increasing options for the CMO across multiple channels (TV, radio, print, online display, digital video, search, etc.)  Increasing complexity and proliferation of technologies designed to drive “efficiency”  Ever-evolving landscape with alphabet soup of vendors In today’s constrained environment, the CMO is tasked with finding creative ways to grow top line while maximizing bottom line 22 Decade of the CMO
    23. 23. 23  Marketers are demanding comprehensive solutions to managing their online marketing spend  Current landscape is too fragmented and confusing  New entrants, such as large cap enterprise software providers and ad networks, are becoming more active in ad tech M&A  Large technology companies have record amount of cash on balance sheet and are looking to deploy it for growth $0 $2,000 $4,000 $6,000 $8,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2009 2010 2011 DigitalMediaDealValue($MM)(1) Notes: (1) GCAS database. Digital Media M&A Transactions Consolidation is Inevitable
    24. 24. 24 Strategic M&A and Investment Activity
    25. 25. 25  Recently, there has been an up-tick in private-to-private M&A deal activity  Larger private companies using M&A to: – Increase scale in advance of IPO or other event – Broaden suite of product offerings to meet needs of advertisers – Evolve business – Take advantage of price capitulation Acquired October 2010 Acquired October 2010 Acquired July 2011 Acquired February 2011 Acquired December 2010 Acquired November 2010 Acquired November 2010 Acquired November 2010 Acquired February 2011 Acquired April 2011 Private-to-Private Transactions Increasing
    26. 26.  Billions invested in ad tech landscape over last few years  Focus on investment returns may drive near-term consolidation  Time is important element of determining investment returns Return n( ) - 1 1 d = t 26 Return Formula … More Important Now
    27. 27. Marketing Network / Data Technology Agency Targets 27 Ad Networks Diverse Strategic Interest in Ad Tech Innovators
    28. 28. Ability / Willingness to Pay Strategic Fit 28 Diverse Strategic Interest in Demand-Side Ad Tech
    29. 29. 29  Exchange-based buying will be an important component of display … but only a component  Real revenue will continue come from direct buys and brand- oriented solutions  Private exchanges and programmatic premium buys will continue to proliferate and grow  Video and social will become dominant branding markets  Maybe agencies and networks will be okay  The CMO needs help and comprehensive solutions  This will continue to be a strategically important market Thank You Key Takeaways
    30. 30. • Leading investment banking firm with over 200 professionals worldwide • Services include advice on mergers and acquisitions, private capital finance and restructurings • Advised on over $70 billion in transactions since 2006 • Leading advisor to media companies new and old 30 TOKYO • SAN FRANCISCO • MENLO PARK • CHICAGO • NEW YORK • LONDON • MUMBAI • SHANGHAI GCA Savvian’s Digital Media Advisory Business
    31. 31. 31Offices in San Francisco, Menlo Park, Chicago, New York, London, Mumbai, Shanghai and Tokyo Preferred Equity Investment and Credit Facility $75MM $500MM Acquired by $448MM Acquired byAcquired by $5.9Bn to $493MM Sold Stake in Acquired by $1.3Bn Acquired by $300MM Tender Offer $9Bn TOB of Common Stock of $10.8Bn Acquired by $747MM Formation of JV with Acquisition of Semiconductor Business $522MM$150MM Divestiture of U.S. Venture Portfolio Acquired by $1.6Bn Acquisition of GmB H – Automotive ATE Operations Acquisition of $400MM Acquired byAcquired by Formation of JV with $690MM Selected Cross-Border Transactions Acquisition of $1.1Bn Acquisition of Acquisition of Next Gen. Mobile Comm. Systems Assets Select OP-1 Assets & Manufacturing Facility Acquisition of Acquisition of PVOH Business Acquisition of Acquired by $125MM Yamakawa Trading Co. Over 50 successful cross-border transactions representing nearly 15 different countries Leading Global Independent Advisory Firm
    32. 32. 32 Acquired By Acquired By Sale of Subscription Acquisition of JV from Sale of Business Unit Secondary Preferred Stock Acquired by Acquisition of Music Service to Mogae Consultants Six Apart KK to Sale We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Buyer We Advised the Seller We Advised the Founders Financial Advisor We Advised the Seller We Advised the Buyer May 2011 April 2011 March 2011 January 2011 January 2011 January 2011 December 2010 December 2010 November 2010 Preferred Stock Acquired by Acquisition of Preferred Stock Acquired by Acquired by Acquired by Acquired by Acquired by Financial Adviser We advised the seller We Advised the Buyer Financial Advisor We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller October 2010 October 2010 October 2010 August 2010 July 2010 June 2010 June 2010 June 2010 January 2010 1UP Digital Network Sold Stake in Preferred Stock Acquired by Preferred Stock Preferred Stock Acquired by Minority Preferred Preferred Stock Preferred Stock a Subsidiary of Investment in to Financial Advisor We Advised the Seller Financial Advisor Financial Advisor We Advised the Seller Financial Advisor Financial Advisor We Advised the Seller Financial Advisor October 2009 April 2009 February 2009 January 2009 January 2009 November 2008 November 2008 October 2008 August 2008 Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Acquired by Preferred Stock Preferred Stock Acquisition of & Recapitalization Mobile Services Business Financial Advisor Financial Advisor Financial Advisor Placement Agent Financial Advisor We Advised the Seller Placement Agent Placement Agent We Advised the Buyer July 2008 July 2008 June 2008 April 2008 March 2008 February 2008 January 2008 January 2008 December 2007 Acquired by Acquired by Acquired by Acquisition of Acquired by Senior Credit Facility Preferred Stock Merger with Minority Investment in We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Buyer We Advised the Seller Financial Advisor Placement Agent We Advised INTAC Financial Advisor December 2007 December 2007 December 2007 October 2007 October 2007 October 2007 October 2007 October 2007 August 2007 FRONTLINE MANAGEMENT Proven Leadership in Digital Media Transactions