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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 1030 omma adnets joshua wepman Presentation Transcript

  • Display Advertising 2.0:New Perspectives on a Changing Landscape
    July 18, 2011
    Joshua Wepman
    GCA Savvian Advisors
  • 2
    Where We Are Today
    Ad Exchanges
    Media Buying Desks
    Ad Networks
    Agencies
    Sharing Data/ Social Tools
    DSPs
    ADVERTISERS
    PUBLISHERS
    Video / Rich Media
    AUDIENCE
    SSPs
    Vertical Custom
    Creative Optimization
    DMPs and Data Aggregators
    Media Planning and Attribution
    Targeted Networks / AMPs
    Publisher
    Tools
    Performance
    Retargeting
    Ad Servers
    Measurement and Analytics
    Data Suppliers
    Ad Servers
    Verification
    Mobile
    Media Mgmt Systems
    Ad Operations
  • 3
    Data Suppliers
    Landscape Observations
    Ad Exchanges
    Media Buying Platforms
    Ad Networks
    Agencies
    Sharing Data / Social Tools
    DSPs
    Horizontal
    Trading Desk
    ADVERTISERS
    PUBLISHERS
    24 categories
    AUDIENCE
    Yield Optimization
    Video / Rich Media
    Vertical
    260 companies
    Targeted
    Publisher
    Tools
    Data Exchanges / Aggregators
    Data Optimization
    Creative Optimization
    Performance
    Over $3.0 billion invested
    Ad Servers
    Ad Servers
    Verification / Attribution
    Mobile
    Analytics
    Data Suppliers
    Ad Ops / Infrastructure
  • 4
    Online Advertising Accelerating …
    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).
  • … But Exchange-Based Buying is Still a Small Market
    Ad Exchanges
    Media Buying Desks
    Ad Networks
    Agencies
    Sharing Data/ Social Tools
    DSPs
    Exchange-Based Buying Market
    ADVERTISERS
    PUBLISHERS
    Video / Rich Media
    AUDIENCE
    Yield Optimization
    Vertical Custom
    Creative Optimization
    DMPs and Data Aggregators
    Media Planning and Attribution
    Targeted Networks / AMPs
    Publisher
    Tools
    Performance
    Retargeting
    Ad Servers
    Measurement and Analytics
    Data Suppliers
    Ad Servers
    Verification
    Mobile
    Despite doubling YoY, exchange-based ad buying is expected to continue to be a small part of the overall display ad market
    Media Mgmt Systems
    Ad Operations
    5
  • 6
    Notable Trends
    • 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
  • Brands Moving Online …
    DRIVERS:
    • High impact formats (video, rich media and new, engaging formats)
    • Increasing transparency and sense of brand safety
    • Following the audience (time spent)
    • Real ROI
    CAGR: 24%
    7
  • 8
    … But There Are Challenges
    Which metrics are most valuable for brand-building campaigns?
    What brand marketers want
    What brand marketers get
    Notes:
    Source: Bain & Company
  • Brands Care About the Top of the Funnel
    Awareness
    • Brands focused here
    • Brand Awareness
    • Favorability
    • Current metrics and new technologies focused here
    • Clickthrough
    • Time spent
    • Interaction
    • Conversion / sales
    Opinion
    Consideration
    Intention
    Sales
    The metrics that brands care about correspond to “top of funnel” activities rather than conversion and click throughs
    9
  • Brands Care About Inventory Quality
    10
    By buying on longer tail sites, audience targeting exposes brands to the potential to advertise against questionable content
  • Brand-Oriented Solutions Offer Quality and Safety
    Premium Networks
    Video Networks
    Private Exchanges
    • High quality properties
    • Brand-safe inventory
    • Engaging formats
    • Professional video content
    • In-stream ad units
    • Access to inventory at scale
    • Leading publishers and advertisers
    • RTB capabilities
    • Proprietary, differentiated data
    11
  • The Rise of Private Exchanges
    Real time biddable inventory
    Transparent
    Premium publisher inventory & data
    Optimized Pricing
    “Category 5” Private Exchange
    12
    Private exchanges enable brands to buy safe, targeted inventory while enabling publishers to enter RTB market and protect CPMs
  • 13
    Video is Growing and Outpacing Other Formats
    US Online Video Ad Spending ($Bn) (1)
    US Online Ad Spending Growth by Format (1)
    CAGR: 38%
    Notes:
    Source: Wall Street Research.
  • Video Value Chain Fragmented Like Display
    Delivery / Content Management
    Aggregation / Portals
    Enablers
    Monetization
    Publishing Tools
    Content Creators
    Like display, there are several areas across the video value chain that will benefit from the growth in online brand advertising
    14
  • Online Video Growth Drivers
    vs.
    • 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
    15
  • Impact of Social Media
    Awareness
    • 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
    Opinion
    Consideration
    Intention
    Sales
    Social is a key component of online brand advertising campaigns
    16
  • 17
    Agencies Recognizing the Challenges
  • Google Gets It
    Ad Exchanges
    Media Buying Desks
    Ad Networks
    Agencies
    Sharing Data/ Social Tools
    DSPs
    ADVERTISERS
    PUBLISHERS
    Video / Rich Media
    AUDIENCE
    SSPs
    Vertical Custom
    Creative Optimization
    DMPs and Data Aggregators
    Media Planning and Attribution
    Targeted Networks / AMPs
    Publisher
    Tools
    Performance
    Retargeting
    Ad Servers
    Measurement and Analytics
    Data Suppliers
    Ad Servers
    Verification
    Mobile
    Media Mgmt Systems
    Ad Operations
    18
  • 19
    So Do Ad Networks
    • 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
    Ad Networks
    Video / Rich Media
    Vertical Custom
    Targeted Networks / AMPs
    Performance
    Mobile
    Media Mgmt Systems
  • Who Else is Meeting the Needs of Brands?
    20
  • 21
    The Quest for Integrated Solutions
    CMO
    Display Ad Tech Point Providers
    RTB
    Creative
    Optimization
    Vendors
    Retargeting
    Data Management
    Platforms
    Integrated Display Advertising Optimization Solution Provider
    While the landscape is full of point providers, today’s CMO is looking for comprehensive solutions providers that can drive efficiencies
  • Decade of the 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
    CMO
    In today’s constrained environment, the CMO is tasked with finding creative ways to grow top line while maximizing bottom line
    22
  • Consolidation is Inevitable
    Digital Media M&A Transactions
    • 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
    Notes:
    (1) GCAS database.
    23
  • 24
    Strategic M&A and Investment Activity
  • 25
    Private-to-Private Transactions Increasing
    • 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
    October 2010
    December 2010
    April 2011
    Acquired
    Acquired
    Acquired
    Acquired
    Acquired
    Acquired
    Acquired
    Acquired
    Acquired
    Acquired
    July 2011
    February 2011
    October 2010
    November 2010
    November 2010
    November 2010
    February 2011
  • Return Formula … More Important Now
    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
    1
    n( )
    Return
    t
    - 1
    =
    d
    26
  • Diverse Strategic Interest in Ad Tech Innovators
    Marketing
    Agency
    Targets
    Technology
    Network / Data
    Ad Networks
    27
  • Diverse Strategic Interest in Demand-Side Ad Tech
    Strategic Fit
    Ability / Willingness to Pay
    28
  • Key Takeaways
    • 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
    29
    • 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
    GCA Savvian’s Digital Media Advisory Business
    TOKYO • SAN FRANCISCO • MENLO PARK • CHICAGO • NEW YORK • LONDON • MUMBAI • SHANGHAI
  • 31
    Acquired by
    Sold Stake in
    Acquired by
    Preferred Equity Investment and
    Credit Facility
    TOB of Common Stock of
    to
    $448MM
    $75MM
    $500MM
    $747MM
    Acquired by
    Acquired by
    $10.8Bn
    $493MM
    $300MM
    $1.3Bn
    Acquired by
    $1.6Bn
    Leading Global Independent Advisory Firm
    Selected Cross-Border Transactions
    Acquired by
    Acquisition of
    Acquired by
    Tender Offer
    Formation of
    JV with
    Acquired by
    Divestiture of U.S. Venture Portfolio
    Semiconductor Business
    $9Bn
    $5.9Bn
    $522MM
    $150MM
    Acquisition of
    Acquisition of
    Formation of
    JV with
    Acquisition of
    GmB H – Automotive
    ATE Operations
    Acquisition of
    Acquisition of
    Acquisition of
    $690MM
    $400MM
    Yamakawa Trading Co.
    Next Gen. Mobile Comm. Systems Assets
    PVOH Business
    $125MM
    Acquisition of
    Acquired by
    Acquired by
    Acquisition of
    Over 50 successful cross-border transactions representing nearly 15 different countries
    Select OP-1 Assets &Manufacturing Facility
    $1.1Bn
    Offices in San Francisco, Menlo Park, Chicago, New York, London, Mumbai, Shanghai and Tokyo
  • 32
    Proven Leadership in Digital Media Transactions