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April 2015 / Page 0Dr. Augustine Fou marketing.scienceconsulting group, inc.
Investment Thesis
WebMD (April 2015)
Augustin...
April 2015 / Page 1Dr. Augustine Fou April 2015 / Page 1marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Executiv...
April 2015 / Page 2Dr. Augustine Fou April 2015 / Page 2marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Executiv...
April 2015 / Page 3Dr. Augustine Fou April 2015 / Page 3marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Annual F...
April 2015 / Page 4Dr. Augustine Fou April 2015 / Page 4marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Top 10 M...
April 2015 / Page 5Dr. Augustine Fou April 2015 / Page 5marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Ranking ...
April 2015 / Page 6Dr. Augustine Fou April 2015 / Page 6marketing.scienceconsulting group, inc.
Dr. Augustine Fou
WebMD Bu...
April 2015 / Page 7Dr. Augustine Fou April 2015 / Page 7marketing.scienceconsulting group, inc.
Dr. Augustine Fou
WebMD us...
April 2015 / Page 8Dr. Augustine Fou April 2015 / Page 8marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Shifting...
April 2015 / Page 9Dr. Augustine Fou April 2015 / Page 9marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Digital ...
April 2015 / Page 10Dr. Augustine Fou April 2015 / Page 10marketing.scienceconsulting group, inc.
Dr. Augustine Fou
Dr. Au...
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WebMD Investment Thesis 2015 April by Augustine Fou

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WebMD equity research and investment thesis

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WebMD Investment Thesis 2015 April by Augustine Fou

  1. 1. April 2015 / Page 0Dr. Augustine Fou marketing.scienceconsulting group, inc. Investment Thesis WebMD (April 2015) Augustine Fou, PhD. acfou @ mktsci .com 212. 203. 7239
  2. 2. April 2015 / Page 1Dr. Augustine Fou April 2015 / Page 1marketing.scienceconsulting group, inc. Dr. Augustine Fou Executive Summary THESIS • WebMD appears to have weathered the trough and is showing signs of share and revenue recovery. • There remains overall revenue headwinds and competitive pressures which drag on profits. Rating Sector Perform
  3. 3. April 2015 / Page 2Dr. Augustine Fou April 2015 / Page 2marketing.scienceconsulting group, inc. Dr. Augustine Fou Executive Summary THEN • WebMD has been the beneficiary of traditional ad dollars from pharma/healthcare advertisers shifting to digital, because it was the “only game in town” in terms of credible, medical information (vetted by doctors) NOW • Now, there are other credible sources of medical information online (e.g. MayoClinic.com) and users’ default habits mean they start with Google to search for medical info online, rather than go straight to WebMD.com • As free organic traffic softens, WebMD has to buy traffic via display ads and search ads to continue to prop up traffic in order to generate “inventory” to sell ad impressions • Display ad CPMs are also trending down industry-wide due to a variety of factors including much lower cost inventory from ad exchanges and social,like Facebook • WebMD’s business model relying on display ads and CPM-based pricing is out of sync with the industry trend towards “performance” (e.g. CPC and CPA) • There is an expected increase in DTC advertising spending by pharma, which will accrue new revenue to WebMD.
  4. 4. April 2015 / Page 3Dr. Augustine Fou April 2015 / Page 3marketing.scienceconsulting group, inc. Dr. Augustine Fou Annual Financials • Revenues growing, cost of revenues not growing as fast (which is good) • Able to keep SG&A relatively flat (good cost control)
  5. 5. April 2015 / Page 4Dr. Augustine Fou April 2015 / Page 4marketing.scienceconsulting group, inc. Dr. Augustine Fou Top 10 Medical Websites Source: Experian Hitwise, April 2013 WebMD.com re-gained share Source: Experian Hitwise, May 2014
  6. 6. April 2015 / Page 5Dr. Augustine Fou April 2015 / Page 5marketing.scienceconsulting group, inc. Dr. Augustine Fou Ranking Organic Keywords Source: iSpionage, April 2015 Data The number of ranking organic keywords (shows up on page 1 of results) is helping WebMD maintain site traffic.
  7. 7. April 2015 / Page 6Dr. Augustine Fou April 2015 / Page 6marketing.scienceconsulting group, inc. Dr. Augustine Fou WebMD Buys Traffic Large number of display ads driving traffic to themselves. Source: Moat.com
  8. 8. April 2015 / Page 7Dr. Augustine Fou April 2015 / Page 7marketing.scienceconsulting group, inc. Dr. Augustine Fou WebMD uses paid search There is some spending on paid search to drive traffic to the site Source: iSpionage.com
  9. 9. April 2015 / Page 8Dr. Augustine Fou April 2015 / Page 8marketing.scienceconsulting group, inc. Dr. Augustine Fou Shifting to Lower CPM Ads Big Portals Ad Networks Facebook 10’s of dollars 1’s of dollars 10’s of cents Advertisers are shifting allocation to get more impressions Large audience Publisher/portal has more power Lots of long-tail small websites Advertiser has more power Massive number of impressions “Junk” quality and super- low prices CPM 0.1% 0.01% 0.001%CTR
  10. 10. April 2015 / Page 9Dr. Augustine Fou April 2015 / Page 9marketing.scienceconsulting group, inc. Dr. Augustine Fou Digital is mainly a performance channel Source: IAB 2014 FY Annual Report
  11. 11. April 2015 / Page 10Dr. Augustine Fou April 2015 / Page 10marketing.scienceconsulting group, inc. Dr. Augustine Fou Dr. Augustine Fou – Digital Consigliere “I advise clients on innovating their business to stay ahead of trends and reduce their reliance on single forms of revenue (e.g. display ads in the case of WebMD).” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT '95) AT AGE 23 @acfou ClickZ Articles: http://bit.ly/augustine-fou-clickz Slideshares: http://bit.ly/augustine-fou-slideshares LinkedIn: http://linkd.in/augustinefou

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