SURVIVING MOBILE’S
ROLLER COASTER FUTURE
Terence Kawaja
Why Are You Listening to an Investment Banker?
Unlearning What They Teach You on Wall Street
THE !
RED SUIT
RULE!
Mobile Becomes a Greater Part of Everyday Life
Source: KPCB
Greatest Advertising Opportunity is Mobile…
Source: KPCB
Dollars	
  vs.	
  Time	
  Spent	
  in	
  US	
  
Mobile	
  
Opport...
…And Spend Continues to Increase
Source: KPCB
$8.8	
  
$17.8	
  
$32.7	
  
$49.7	
  
$69.1	
  
$88.6	
  
$108.9	
  
2012	
...
This is going to
be awesome!
10
9
19
22
19
22
18
-
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014*
Mobile M&A Deals Are Up
10
9
19
22
19
22
18
-
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014*
Mobile M&A Deals Are Up, But Few Scaled Exits
$100...
$190
$287
$170
$628
$342
$218
$0
$100
$200
$300
$400
$500
$600
$700
2008 2009 2010 2011 2012 2013
Mobile Ad Tech Funding C...
Layer Not a Channel
Digital Marketing Channels
Search Display Social Video Mobile
?
Mobile is a Layer, Not a Channel
Search Display Social Video
Data
Collection
The Cookie-less World of Mobile
No
Cookies?!
DEVICE
ID
Cross-Screen is Now a Marketing Imperative
Logged	
  in	
  individuals	
   Direct	
  match	
  of	
  	
  
devices	
  to	
  ...
Creates“Walled Gardens”of First Party Data…
…Continue Expansion Through 3rd-Party Networks
259%	
  Growth	
  
2014	
  
$32.7	
  Billion	
  
Other	
  
22%	
  
47%	
  
Mobile Advertising is Concentrating
Source: eMa...
Marketers
The	
  “Ad	
  Tech	
  Squeeze”	
  
Publishers
Commerce
Large Digital Players Are In-Sourcing Ad Tech
Bifurcated Market
CPI	
  for	
  LTV	
  
App	
  on	
  App	
  
The Two Worlds of Mobile Advertising
CPM	
  /	
  CPA	
  
General	
  Marketers	
...
Apps Continue To Dominate Time and Revenue
$2 $3
$6
$14
$24
$38
$0
$10
$20
$30
$40
2008 2009 2010 2011 2012 2013
Mobile We...
Increasingly More Expensive to Acquire Loyal Users
Fiksu	
  Cost	
  Per	
  Install	
  Index	
  
$0.82
$1.28
$1.01
$1.31
$0...
Freemium Apps Continue to Gain Traction
Source: KPCB
88% 90% 91% 92% 93% 94% 94%
12% 10% 9% 8% 7% 6% 6%
0%
10%
20%
30%
40%...
CPI	
  for	
  LTV	
  
App	
  on	
  App	
  
The Two Worlds of Mobile Advertising
Cost	
  per	
  Re-­‐engagement	
  
CPM	
  ...
CPI	
  for	
  LTV	
  
App	
  on	
  App	
  
The Two Worlds of Mobile Advertising
CPM	
  /	
  CPA	
  
General	
  Marketers	
...
Inventing New
Formats
CPI	
  for	
  LTV	
  
App	
  on	
  App	
  
The Two Worlds of Mobile Advertising
CPM	
  /	
  CPA	
  
General	
  Marketers	
...
Source: Garnter, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates, eMarkter
US Mobile Video Viewers
Mil...
ConnecFvity	
  Entertainment	
   ProducFvity	
  
PASSIVE	
   ACTIVE	
  ATTENTIVE	
  
Consumer Modality Matters
Mobile
banner ads
are
ineffective
…and
disruptive
ads annoy
the
consumer
FACILITATIVE	
   INTERRUPTIVE	
  
InformaFve	
  
Intolerable	
  
Mobile-first
native
formats are
better for
marketer
and
consumer Consumer in
control –
unobtrusive ad
Experience
within pag...
Content Is Critical to Branding
Bridges Physical
and Digital Worlds
CPI	
  for	
  LTV	
  
App	
  on	
  App	
  
The Two Worlds of Mobile Advertising
CPM	
  /	
  CPA	
  
General	
  Marketers	
...
Mobile Bridges the Physical & Digital Worlds
…and Facilitates the Path to Purchase
Source:	
  BIA/Kelsey	
  
LocaFon	
  
PersonalizaFon	
  
FacilitaFon	
  
Search	
  
90%	
  
Take	
  
AcFon	
  
70%	
  
Connect	
  
	
  
66%	
  
Visit	
  
36%	
  
Purchase	
  
23%	
  
Review	
  
O...
Opportunity
Ahead
Advertising
$180bn
Digital Advertising
$51bn
Sources: eMarketer, Forrester, Gartner,
The Nilson Report, LUMA estimates
Pro...
Communications
$1,2000bn Commerce
$4,430bn
eCommerce
$305bn
mCommerce
$58bn
Marketing
$432bn MarTech
$181bn
Advertising
$1...
Strategic Buyer LUMAscape
Significant Recent Digital M&A Activity
LUMA’s Content Strategy: Substance and Fun!
Over 300,000 views!
Investment Banking. Evolved.
New York – Palo Alto
lumapartners.com
Thank
you.
LUMA's 2014 MMA Summit Keynote
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LUMA's 2014 MMA Summit Keynote

  1. 1. SURVIVING MOBILE’S ROLLER COASTER FUTURE Terence Kawaja
  2. 2. Why Are You Listening to an Investment Banker?
  3. 3. Unlearning What They Teach You on Wall Street THE ! RED SUIT RULE!
  4. 4. Mobile Becomes a Greater Part of Everyday Life Source: KPCB
  5. 5. Greatest Advertising Opportunity is Mobile… Source: KPCB Dollars  vs.  Time  Spent  in  US   Mobile   Opportunity   5% 12% 38% 25% 20%19% 10% 45% 22% 4% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Print Radio TV Internet Mobile Time Spent Ad Spend
  6. 6. …And Spend Continues to Increase Source: KPCB $8.8   $17.8   $32.7   $49.7   $69.1   $88.6   $108.9   2012   2013   2014   2015   2016   2017   2018   CAGR:  52%   Global  Mobile  Ad  Spend  ($BN)  
  7. 7. This is going to be awesome!
  8. 8. 10 9 19 22 19 22 18 - 5 10 15 20 25 2008 2009 2010 2011 2012 2013 2014* Mobile M&A Deals Are Up
  9. 9. 10 9 19 22 19 22 18 - 5 10 15 20 25 2008 2009 2010 2011 2012 2013 2014* Mobile M&A Deals Are Up, But Few Scaled Exits $100MM $230MM $350MM $240MM $321MM $275MM $675MM 7 of 110 DEALS
  10. 10. $190 $287 $170 $628 $342 $218 $0 $100 $200 $300 $400 $500 $600 $700 2008 2009 2010 2011 2012 2013 Mobile Ad Tech Funding Continues to Decrease Source: BI Intelligence. Mobile  AdverFsing  Financings  ($  millions)  
  11. 11. Layer Not a Channel
  12. 12. Digital Marketing Channels Search Display Social Video Mobile ?
  13. 13. Mobile is a Layer, Not a Channel Search Display Social Video
  14. 14. Data Collection
  15. 15. The Cookie-less World of Mobile No Cookies?! DEVICE ID
  16. 16. Cross-Screen is Now a Marketing Imperative Logged  in  individuals   Direct  match  of     devices  to  people   Algorithmic  match   Perfect   Knowledge   DeterminisFc     Matching   ProbabilisFc   Matching   Types  of  Device  Matching  
  17. 17. Creates“Walled Gardens”of First Party Data…
  18. 18. …Continue Expansion Through 3rd-Party Networks
  19. 19. 259%  Growth   2014   $32.7  Billion   Other   22%   47%   Mobile Advertising is Concentrating Source: eMarketer 2012   $8.8  Billion   Other   5%   53%  
  20. 20. Marketers The  “Ad  Tech  Squeeze”   Publishers Commerce Large Digital Players Are In-Sourcing Ad Tech
  21. 21. Bifurcated Market
  22. 22. CPI  for  LTV   App  on  App   The Two Worlds of Mobile Advertising CPM  /  CPA   General  Marketers  
  23. 23. Apps Continue To Dominate Time and Revenue $2 $3 $6 $14 $24 $38 $0 $10 $20 $30 $40 2008 2009 2010 2011 2012 2013 Mobile Web Apps ($  in  billions)   Mobile  Revenue   Source: BI Intelligence 86%  OF   TIME  SPENT   ON  MOBILE   APPS   ACCOUNT  FOR  
  24. 24. Increasingly More Expensive to Acquire Loyal Users Fiksu  Cost  Per  Install  Index   $0.82 $1.28 $1.01 $1.31 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Jan-13 Jan-14 iOS Android Source: BI Intelligence, FIiksu 34%  INCREASE  IN     COST  PER   LOYAL  USER   OVER  LAST   YEAR  
  25. 25. Freemium Apps Continue to Gain Traction Source: KPCB 88% 90% 91% 92% 93% 94% 94% 12% 10% 9% 8% 7% 6% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2011 2012 2013 2014F 2015F 2016F 2017F Free Paid
  26. 26. CPI  for  LTV   App  on  App   The Two Worlds of Mobile Advertising Cost  per  Re-­‐engagement   CPM  /  CPA   General  Marketers  
  27. 27. CPI  for  LTV   App  on  App   The Two Worlds of Mobile Advertising CPM  /  CPA   General  Marketers  
  28. 28. Inventing New Formats
  29. 29. CPI  for  LTV   App  on  App   The Two Worlds of Mobile Advertising CPM  /  CPA   General  Marketers  
  30. 30. Source: Garnter, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates, eMarkter US Mobile Video Viewers MillionsofViewers Mobile Video Explosion
  31. 31. ConnecFvity  Entertainment   ProducFvity   PASSIVE   ACTIVE  ATTENTIVE   Consumer Modality Matters
  32. 32. Mobile banner ads are ineffective
  33. 33. …and disruptive ads annoy the consumer FACILITATIVE   INTERRUPTIVE   InformaFve   Intolerable  
  34. 34. Mobile-first native formats are better for marketer and consumer Consumer in control – unobtrusive ad Experience within page; Engages the consumer Leverages data to effectively target Connects through various touch points
  35. 35. Content Is Critical to Branding
  36. 36. Bridges Physical and Digital Worlds
  37. 37. CPI  for  LTV   App  on  App   The Two Worlds of Mobile Advertising CPM  /  CPA   General  Marketers  
  38. 38. Mobile Bridges the Physical & Digital Worlds
  39. 39. …and Facilitates the Path to Purchase Source:  BIA/Kelsey   LocaFon   PersonalizaFon   FacilitaFon  
  40. 40. Search   90%   Take   AcFon   70%   Connect     66%   Visit   36%   Purchase   23%   Review   ONLINE  OFFLINE   Connect  online   (Maps/Direc=ons,  etc.)   Call   Visit  Website   Visit  Store   Online   In-­‐store   Online-­‐Review   WOM   52%   50%   26%   13%   50%   48%   21%   15%   Mobile Flattens the Purchase Funnel
  41. 41. Opportunity Ahead
  42. 42. Advertising $180bn Digital Advertising $51bn Sources: eMarketer, Forrester, Gartner, The Nilson Report, LUMA estimates Programmatic $10bn Reorienting the TAM Opportunity
  43. 43. Communications $1,2000bn Commerce $4,430bn eCommerce $305bn mCommerce $58bn Marketing $432bn MarTech $181bn Advertising $180bn Digital Advertising $51bn Programmatic $10bn SaaS $17bn Sources: eMarketer, Forrester, Gartner, The Nilson Report, LUMA estimates Reorienting the TAM Opportunity Payments $88bn
  44. 44. Strategic Buyer LUMAscape
  45. 45. Significant Recent Digital M&A Activity
  46. 46. LUMA’s Content Strategy: Substance and Fun! Over 300,000 views!
  47. 47. Investment Banking. Evolved. New York – Palo Alto lumapartners.com Thank you.
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