Future Of Advertising Webinar Full Deck

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The Program – New Media specialist Troy Centazzo reviewed the rapid trends in marketing and provided strategic insights into where marketers and investors should be focusing their attention. Attended by hundreds of media industry investors, companies, strategic firms, analysts, and others.

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Future Of Advertising Webinar Full Deck

  1. 1. The State of Advertising –Trends, Opportunities and Challenges February 1, 2011 1:00 pm EST / 10:00 am PST
  2. 2. Overview• About our Sector Snapshot Program• Growthink’s Bottom Line** – Mr. Troy Centazzo, Managing Director• The View from the Trenches – Mr. Mike Mothner, Founder and CEO, WPromote – Mr. Trevor Shanski, Founder and President, eWORDofMOUTH**See Bonus Pack in Back
  3. 3. About Our Sector Snapshot Program1. 45 Minute Webinar2. Questions/comments as we go: – Type in utilizing GoToWebinar toolbar3. After Call: – Survey feedback – Within 2 hours after the call, you will receive, via email, copies of the reviewed slides**This presentation does not constitute a general offering orsolicitation to purchase or acquire securities.
  4. 4. The Ad Universe (Pre-Internet)Print Advertisements in Newspapers and Magazines; Short and Long-Form Commercials and Sponsorships on Radio and Television; Billboards and Signs; Public Relations; Direct Mail and Catalogs; Tiny Classified Ads; Network Marketing
  5. 5. Massive Opportunity for Emerging Firms:Advertisers Have Not Yet Shifted Spend to Meet Consumer Behavior • The Guru Speaks Represents an Represents an Incremental $50B Incremental $50B Global Opportunity Global Opportunity Source: (Then) Morgan Stanley Analyst, Mary Meeker, in her presentation at the Nov, 2010 Web 2.0 Summit • Why? • Advertiser concerns about social media and mobile ad ROI • Natural lag time for ad spend to catch up with new offerings • Internal disagreement over social media management (marketing? PR? IT?) • Advertisers are now “drinking out of a fire hose” with so many options
  6. 6. Sector on Fire:The M&A Wave and Venture InvestmentAcquisition Experian Buys In To Social Media Marketing Jan 17, 2011 N/AVenture Capital SnagFilms Raises $10 Million From Comcast, NEA; Will Expand Beyond Docs Jan 17, 2011 $10,000,000Acquisition Travel Organizer TripIt Sold To Concur For Up To $120 Million Jan 13, 2011 $120,000,000Acquisition RockYou Buys Social Game Developer Playdemic Jan 13, 2011 N/AAcquisition After Absorbing Adify, Cox Digital Buys IB Local Jan 13, 2011 N/AAcquisition LivingSocial Expands Abroad By Buying A Stake In Let’s Bonus Jan 13, 2011 N/AAcquisition Daily Deals By Newspapers: Archant Buys A Local Groupon Clone Jan 13, 2011 N/AVenture Capital Primesense Raises Undisclosed Amount From Silver Lake Partners Jan 12, 2011 N/AVenture Capital Baynote Closes $13M From SingTel Innov8 Jan 12, 2011 $13,000,000Venture Capital Formspring Raises Over $12 Million In First Round Jan 12, 2011 $11,500,000Venture Capital Adknowledge Raises $200 Million In Debt, Equity Financing Jan 12, 2011 $200,000,000Venture Capital Tumblr Raises $30 Million In New Round Led By Sequoia Dec 17, 2010 $30,000,000Venture Capital As Regulatory Scrutiny Intensfies, Ad Targeter eXelate Adds To Second Round Dec 16, 2010 $16,000,000Acquisition AOL Acquires Display Ad Tool Pictela; Project Devil Gets Full Roll Out Dec 16, 2010 N/AVenture Capital Twitter Raises $200 Million In Funding Round Led By Kleiner Perkins Dec 15, 2010 $200,000,000Venture Capital As Video Space Heats Up, SpotXchange Closes $12 Million Round Dec 15, 2010 $12,000,000Venture Capital Social Net For Gay Men Fab Gets $1.75 Million More From WaPost, Others Dec 13, 2010 $1,750,000Venture Capital Social Ad Targeter Media6degrees Raises $17 Million Second Round Dec 13, 2010 $17,000,000Source: Content Next Media, Inc., Paid Content.org, http://paidcontent.org/deals/#item_4899, retrieved January 31, 2011.
  7. 7. Growthink’s Bottom Line1. Emerging Ad Business Models We Like2. Promising Strategies for Corporate Advertisers3. Areas of Opportunity for Advertising and Marketing Companies and Agencies
  8. 8. Emerging Ad Business Models We Like • Technology and service providers that… 1 2 3 4 …help marketers …enable …can rapidly …provide video sort through companies to scale with technology to the thousands of upgrade their proprietary enhance online options they now customer access to / / mobile databases have to assist technology presence and and integrate decision making for Facebook user experience with communicati Ads ons
  9. 9. Promising Strategies for Corporate Advertisers • There is still a significant opportunity to optimize a Web 2.0 platform with limited investment 1 2 3 4 Search Engine Collecting Yes, social Video added to Optimization customer info; media your website, (SEO); CRM/Data campaigns, but mobile, social Educational management; done right (not strategy Content; Web- Loyalty just a Facebook based lead gen; programs page) Public Relations Large ROI PotentialWe’re not really focused on the Fortune 1000+ here; they’re investing heavily in these areas.
  10. 10. Areas of Opportunity for Advertising and Marketing Companies • A young company must cut through the crowded marketplace for advertising and marketing offerings 1 2 3 4 Don’t Establishing Create channel Want to exit? underestimate credibility partnerships Understand the importance for prospective early with evolving of hiring your customers – complementary strategies of first head of client logos, firms with acquirers and sales & PR, education, access to targets set milestones; marketing content Advisory Board Despite what the engineering team says, the coolest technology won’t sell itself.
  11. 11. Areas of Opportunity for Advertising and Marketing Agencies • Continued willingness of enterprise-level clients to work with small, highly creative agencies; huge need in middle market for integrated marketing and “social media” advice 1 2 3 4 If you haven’t yet Develop Market your Want to exit? integrated “white label” firm as well as Know the key digital and channel you market your acquisition social media partnerships clients – metrics of the services, you’re with become the leading buyers at risk of future technologies / industry and focus on extinction services experts milestones. Acquisition interest will likely be there upon reaching critical mass; there’s a massive amount of capital available for acquisitions.
  12. 12. The Coming M&A Wave:Unprecedented Capital for Sector Acquisitions Who Doesn’t Want to Enter the Marketing, Advertising and Data Services Business? And These Are Just the “Usual Suspects,” Not Tier 2 - 3 Buyers
  13. 13. Another Look:The M&A Wave and Venture InvestmentAcquisition Experian Buys In To Social Media Marketing Jan 17, 2011 N/AVenture Capital SnagFilms Raises $10 Million From Comcast, NEA; Will Expand Beyond Docs Jan 17, 2011 $10,000,000Acquisition Travel Organizer TripIt Sold To Concur For Up To $120 Million Jan 13, 2011 $120,000,000Acquisition RockYou Buys Social Game Developer Playdemic Jan 13, 2011 N/AAcquisition After Absorbing Adify, Cox Digital Buys IB Local Jan 13, 2011 N/AAcquisition LivingSocial Expands Abroad By Buying A Stake In Let’s Bonus Jan 13, 2011 N/AAcquisition Daily Deals By Newspapers: Archant Buys A Local Groupon Clone Jan 13, 2011 N/AVenture Capital Primesense Raises Undisclosed Amount From Silver Lake Partners Jan 12, 2011 N/AVenture Capital Baynote Closes $13M From SingTel Innov8 Jan 12, 2011 $13,000,000Venture Capital Formspring Raises Over $12 Million In First Round Jan 12, 2011 $11,500,000Venture Capital Adknowledge Raises $200 Million In Debt, Equity Financing Jan 12, 2011 $200,000,000Venture Capital Tumblr Raises $30 Million In New Round Led By Sequoia Dec 17, 2010 $30,000,000Venture Capital As Regulatory Scrutiny Intensfies, Ad Targeter eXelate Adds To Second Round Dec 16, 2010 $16,000,000Acquisition AOL Acquires Display Ad Tool Pictela; Project Devil Gets Full Roll Out Dec 16, 2010 N/AVenture Capital Twitter Raises $200 Million In Funding Round Led By Kleiner Perkins Dec 15, 2010 $200,000,000Venture Capital As Video Space Heats Up, SpotXchange Closes $12 Million Round Dec 15, 2010 $12,000,000Venture Capital Social Net For Gay Men Fab Gets $1.75 Million More From WaPost, Others Dec 13, 2010 $1,750,000Venture Capital Social Ad Targeter Media6degrees Raises $17 Million Second Round Dec 13, 2010 $17,000,000Source: Content Next Media, Inc., Paid Content.org, http://paidcontent.org/deals/#item_4899, retrieved January 31, 2011.
  14. 14. Opportunities for Early Stage Investors • Trends in venture investing have been challenging for many traditional VCs, but provide opportunities that have never existed before for: • start-ups seeking capital, and • angel investors seeking access to quality deals • The AngelList provides first-of-its-kind access to angels and deals • Requirements to join: Accredited; Active seed stage investor
  15. 15. “In The Trenches” – Q&A with Emerging Firms
  16. 16. WPromote - Online Advertising / Marketing Firm • Interview with Mike Mothner, Founder and CEO • Founded WPromote in 2001 • Provides online marketing services to clients ranging in size from small businesses to the Fortune 500 • Rated as #1 Search Engine Marketing Firm Worldwide (topseos.com) and winner of numerous industry awards • Competes with thousands of marketing services agencies, consultants and other providers • 60 employees • 35,000 clients
  17. 17. WPromote – Representative Agency Clients
  18. 18. eWORDofMOUTH – Referral-based marketing services• Interview with Trevor Shanski, Founder and President• Founded eWORDofMouth in 2004• Provides a software-based product (SaaS) for companies to rapidly attract new customers and contacts by sourcing them from their existing customers• Customers receive a promotion through email to provide their friends’ email and/or mobile info; they then receive a promotion• Fully managed solution with creative services – reporting, ROI• Leverages referrals and word of mouth• Incorporates social media programs
  19. 19. eWORDofMOUTH – At a Key Inflection Point• Recently focused on client acquisition after finalizing software technology and raising seed round• Clients and pipeline:
  20. 20. Conclusions1. Massive changes in consumer behavior and most advertisers have not been able to adjust quickly.2. There are SO many opportunities / ways / means / to reach out and interact with customers. This is good and bad.3. Because of the global speed and reach of new media (i.e., Twitter’s coverage of Egypt), there will be bigger and faster winners (i.e., Facebook, Groupon, et al.) and more spectacular busts than ever before.
  21. 21. To Learn More• Questions / Discussion• Return our survey• Contact: – Stacey Polychronis: 310-954-2013 – Email: stacey.p@growthink.com
  22. 22. Bonus Pack The State of Advertising – Trends, Opportunities and Challenges
  23. 23. GT’s Brief History of Advertising 3.4 million years ago Paleontologists recently Paleontologists recently discovered that hominid species discovered that hominid species likely showed each other how to likely showed each other how to use stone tools, leading to use stone tools, leading to countless Tupperware parties countless Tupperware parties 4000 BC Middle Ages “Lost and Found” ads and “Lost and Found” ads and signs posted on papyrus in signs posted on papyrus in Signs posted with images to Signs posted with images to Ancient Greece and Rome Ancient Greece and Rome th 17 Century represent services available represent services available Handbills and ads in weekly Handbills and ads in weekly newspapers newspapers Web 1.0 – about 1.75 Web 1.0 – about 1.75 Oct, ‘94 1960s – 90s 19th Century The start of the “Creative The start of the “Creative Mail order ads and the Mail order ads and the Revolution,” the modern period Revolution,” the modern period first agencies appear first agencies appear of advertising of advertising Early 20th Century The Last 3 Years Sponsorships of radio programs; celebrity Sponsorships of radio programs; celebrity endorsements. Mary Pickford paves the endorsements. Mary Pickford paves the way for Kim Kardashian’s $10k tweets. way for Kim Kardashian’s $10k tweets. Audience Question! ? Sources: Wikipedia; Growthink Research.
  24. 24. i, i Sir! Fastest Product Ramp Ever? Infographic- Forecasting the Near Term Consumer Environment (the US Example) Continued Macroeconomic Uncertainty: Continued Macroeconomic Uncertainty: * Unemployment, real estate values, * Unemployment, real estate values, government deficits and spending cuts, 67% government deficits and spending cuts,Consumers increasingly rely onthe Internet to make buying Google dominates search, with a 67% The Coming Year of Mobile: Smartphonedecisions: 56% to inform share (ComScore, Dec. 2010) Share to 50%, Apps, Location-based, Instant Ads, Commerce, Bankingtheir buying decisions and 11%use the Web and smartphones to 35 hrs of new content / min (source: Morgan Stanley)find lowest price (Cisco, 1/11). How People Spend How People Spend Their Time: Their Time: UNPRECEDENTED UNPRECEDENTED UNPRECEDENTED •TV •TV • Internet -500 Million Users -500 Million Users …data …tools for ...calls for • Internet • Social Media Social Media -$50B valuation -$50B valuation collection on advertisers to privacy and the • • Mobile -$50M in bank -$50M in bank and understand protection of • Mobile • Games -OpenGraph -OpenGraph “crunching” of customer consumer • Games -Person of Year! -Person of Year! consumer behaviors and information behavior target them Word of Mouth recommendations from friends are still by far the most trusted form of advertisingStill The Fastest Growing Company Ever? Americans continue to spend less time reading printed newspapers, books, magazines, phone directories and maps. They also spend less time listening to radios and seeing movies in traditional movie theaters.
  25. 25. Consumer Behavior, 2011
  26. 26. Consumers and “Traditional” Media – Drifting Apart? Change in Average Time Spent Per Day with Media Types by US Adults 2009: -13.2% Includes Video 2010: -9.1% 2009: -3.9% 2009: +5.1% 2009: -12.0% 2010: -2.0% 2010: -1.1% Flat Over Last 5 2010: -9.1% YearsSource: eMarketer, Dec. 2010.
  27. 27. So What Are Consumers Spending Their Time Doing? For the first time, Americans now spend as much time on the Internet as they do watching TV (13 hours per week)*45% Have a DVR Up 121% Over Last 5 Years Share of Time Spent on Internet (2010) Share of Time Spent on Internet (2010) (on PCs and Laptops) (on PCs and Laptops) Social Networks / Blogs: Games: Email: 22.7%, up 43% from 2009 10.2%, up 10% 8.3%, down from 2009 28% from 2009 * Note: A recent meta-study by eMarketer concluded that US adults spent 40% of their time with media watching TV and 24% on the Internet. Sources: The Nielson Company; eMarketer (2010).
  28. 28. So What Are Those Consumers Spending Their Time Doing? Time spent on mobile devices – increasingly smartphones and tablets – is rising the fastest compared to other media Share of Time Spent on Smartphones (US & UK) Share of Time Spent on Smartphones (US & UK) Research Has Shown Much Diversity: • 50% of time spent keeping in touch with others (email, text, phone calls) • 20% - media (music, videos, pictures) and games) • 12% browsing the internet • 2% on “productive” activitiesSources: eMarketer (2010); Falaki, Hossein et al. 2010. Diversity in Smartphone Usage. MobiSys’10
  29. 29. So What Are Those Consumers Spending Their Time Doing?The Rapid Rise of Cell Phones (and now Tablets) in the US and Around the World Mobile Subscriptions per 100 Inhabitants (2000-10) US = ͠100% US = ͠45% Projected Growth of Tablet Sales, US AdultsSources: ITU World Telecommunications; Forrester Research, Inc.; Nielson; Forrester Research, Inc.
  30. 30. The Bottom Line:This ‘Aint the Consumer You Marketed to….Three Years Ago 2008 2011
  31. 31. The State of the Media and Advertising Industry
  32. 32. What the %$#* Just Happened?Recent Carnage Across the Traditional Media Industry Source: Media Finder, Growthink research.
  33. 33. A Partial Shift to Online:What Sector Analysts Predict for the Advertising Industry On Right: Survey of US CPG Manufacturers, August, 2010. Sources: eMarketer (Dec, 2010); StrongMail (Nov, 2010), AdWeek (Sept.,2010); Booz & Co. and Grocery Manufacturers Association, 11/10
  34. 34. About Growthink
  35. 35. Comprehensive Service Offerings for Early‐Stage Clients  • Strategy and Management Consulting and Execution; Business Planning• Help Clients Raise Capital• Help Clients Sell their Businesses and Non-core Business Units• Market Research• Help Clients Find Business Partners and Alliances• SEO & SEM Strategy and Consulting
  36. 36. Experienced, Senior Team – Founding Partners World Renown Experts in the Fields of Online Marketing, Web 2.0 and Social Media Growthinkʹs co‐founder and CEO, Jay has led  A  co‐founder  of  Growthink,  Dave  has  Growthinkʹs emergence as the countryʹs  managed more than 150 client engagements  largest strategic advisory and investment  across  all  of  Growthinkʹs practice  areas,  banking firm to emerging and middle market  with  a  specialty  practice  and  expertise  in  companies.  marketing.      He  also  leads  the  firm’s  Publishing Division. In his 17 years of experience in corporate finance and Jay Turo capital formation, Jay has worked with dozens of growth  Dave Lavinsky Dave  was  the  founder  and  President  of  Emerge  Juice  CEO and middle market companies, including clients such  President & Nutrition Systems, a health food manufacturing and  Porsche AG, Paramount Pictures, Infospace, Deutsche  marketing  firm.  Dave  also  launched  the  Marketing  Bank and McKesson. Services  division  of  New  York‐based  consulting  firm  PIRA  Energy  Group.  At  PIRA,  Dave  helped  develop  Jayʹs entrepreneurial experience was gleaned from  the  original  business  plan  for  KeySpan Energyʹs  building and selling two companies: Hyannis Ice Cream,  Energy  Service  Division,  which  now  has  revenues  Inc., and Least Cost Routing, Inc. At Hyannis Ice Cream,  exceeding $1 billion annually. Jay built and then sold a small seasonal startup into a  leading regional distributorship with over an 80% share  Dave  also  has  professional  management  consulting,  in its market niche. At Least Cost Routing, Jay positioned  marketing  consulting  and  market  research  experience  the firm to profit from the Telecommunications Act of  with  FIND/SVP,  BPA  International  and  The  NPD  1996, building the firmʹs switch and operational  Group. infrastructure. He lives in Los Angeles with his wife and  two sons Education Education • MBA, Anderson School of Management, UCLA  • BA, University of Virginia • MBA, Anderson School of Management, UCLA  • BA, Stanford University  (with Distinction and with  Departmental Honors)
  37. 37. Experienced, Senior Team Troy is a Managing Director at Growthink,  where he leads the investment banking  practice and also consulting engagements for  the firm’s clients.  Troy brings to Growthink  more than 15 years of experience advising  corporations at all stages of development, from  Troy start‐up firms to Fortune 500 companies. Centazzo Troy joins Growthink’s Los Angeles office after serving as  Managing  the founding Principal of MBL, an advisory and  Director;  investment firm that assisted clients in all areas of Practice Lead,  business, including developing their strategies and raising  Venture  capital.  Also a seasoned entrepreneur, he helped found,  Investment  manage and invest in several start‐up companies,  primarily in the New Media , consumer products, and  Banking &  technology sectors while at and before MBL. Strategy Troy additionally worked as an Associate in the  Investment Banking and Merchant Banking Divisions at  Donaldson, Lufkin & Jenrette (DLJ, now CS First Boston).    Education • JD, Law School; MBA, Darden School, University of  Virginia (Winner, The Faculty Award; Raven Society) • BA, Brown University (Honors; Class Co‐President)
  38. 38. CONVERGENCE:  Digital Marketing and Lead Gen / Ad Tech / Social Media / Gaming –Recent Engagements and Hands‐On Experience* Chinese MMOG Developer (85 Employees) Social Shopping  Business / Growth  Developer of Social  Designed, Funded and  Technology Currently creating  Media Games Launched the first  Strategy, Lead Gen  Business Plan and  Wellness Channels on  Web 2.0 Publishing  Presentation for VCs YouTube, Twitter,  Investment Banking /  Business Strategy, Plan,  Group Facebook, MySpace Financial Advisory FM – Secured Funding Regional Mobile App Theater Client Chain Inspired Instruments App for Venue /  Co‐Founder, Business  Ticket Sales Led sale to American  Digital/MIDI/Gaming  Plan and Cap Raise for  Capital Partners  Guitar Market Strategy Integrated Movie/Gaming  Business Strategy,  New Production Release Plan (ACP) Entertainment Centers Corporate Advisory Evaluated The Communications Board cute  Tech Leading Game $20M Build‐Up of  Referral‐based Social  Client Developer Video Chat Technology  PR Agencies Media Marketing System for Social/Mobile Social Media Strategy,  Business Strategy,  Business Plan, Capital  Full Partnership – Capital,  IB, Strategic  Business Model  Business Plan, Financials,  Raise Strategy, Sales, Branding Restructuring and Market  Investor Presentation Options, Branding Strategy; Financing * Note that several of these engagements involved Growthink professionals at affiliate or additional firms. 
  39. 39. CONVERGENCE:  Digital Marketing and Lead Gen / Ad Tech / Social Media / Gaming –Recent Engagements and Hands‐On Experience* cute  Web Portal for Car  Enthusiasts Film Exhibition / Digital  Conversion of Theaters Nick on the Go Domain Parking and  Developed strategy  Monetization Business Plans and  resulting in industry‐ Executed Joint  Business Plan for $1B  Executive Summaries  Business Plan; IR Venture (M&A) Debt/Equity  for Investors  leading site traffic Acquired in 2009 Digital “Want Ad” Platform  for Social Media/Mobile Social Media  Mobile Game  Business Plan, Financials,  Platform  Monetization Platform Investor Presentation Business Model;  Business Plan, Deck Ongoing Capital Raise * Note that several of these engagements involved Growthink professionals at affiliate or additional firms. 

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