30 Trends that will shape
European web & digital media business in 2012 Current and upcoming business opportunities for European web eco system, derived from US VC-Deal-Flow 2011 by Marc Ziegler, March 2012

Why this report?  Yes,
there are hundreds of successful European, truly innovative startups out there, but the global web & digital media business is clearly dominated by players from the USA. The market dynamics and all major trends are created by US tech companies, whether we like it or not.  Goal of this analysis is to grasp these market dynamics in digital media business at an early stage in order to derive business opportunities for European startups prior to “common sense” observations.  This analysis suggests that US investors have a higher risk taking culture than their European, especially German counterparts and have an acute awareness for future web opportunities.  Therefore, this analysis focuses on investments, primarily carried out by US investors, although our prime source (Crunchbase) includes some investments by non-US companies that we have not sorted out.  The findings of our analysis do neither claim to be complete nor free of overlaps, nor to be a guide for cloning other hot startups. This report is simply a useful tool for founders and investors to challenge own market observations – not more, not less. Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 2 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

How we conducted the anaylsis
1 2 3 Clustering search results Identification of trends 3.939 Mn US$ • Tech companies funded • Aggregating search results • 1st: quantitative analysis between Jan-Dec 2011 into 12 most relevant digital • 2nd: identification of accu- • 2 investment funding sizes: media segments mulated new business 100K-10M and 10M-1000M • Sorting out tech companies mechanics within each • 95% US investors, with no media connection digital media segment 5% European (e.g. security, energy, nano) • Derivation of trends Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 3 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Thesis 1: USA = „Home“
of digital media innovation (Nearly) all successful business models in digital media originated in the US Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 4 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Thesis 2: transfer USA =>
Germany (Europe) Successful business approaches in digital media (here some examples) always migrate to Germany/Europe – time lags are shrinking Productivity apps Vertical networks Couponing 3-4 months Social networks Content/gaming Vertical search apps Group deals Paid search Portals 9-12 months Daily deals Auctions Online Crowdsourcing classifieds LBS AR 12-18 months Reverse Targeting auctions UGC Real-time bidding 2002 2004 2006 2008 2010 2012 Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 5 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Investment categories in digital media
– overlaps may occur due to combined business mechanics by startups eCommerce/ Games Social B2B tools eTransaction networks websites that all types of non- social platforms to tools that increase convert traffic into console games & publish, consume efficiency in digital sales (leads) gaming middleware & engage media processes Advertising Productivity Crowdsourcing B2B solutions solutions apps outsourcing of platforms & solu- mobile apps that intelligence and solutions that boost tions that enhance enhance everyday workforce to web companies’ digital the ad eco system aspects of life community media business Content-driven Search LBS Others platforms websites with a services & tools all types of audio, focus on vertical & that increase user all other companies video, picture and local search experiences at with a touch point text content sites (no e-commerce) point-of-location in digital media Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 6 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Overall summary - Investments in
digital media tech companies 2011 942 no. of companies 13,6* bn US$ investments in digital media comp. 690 252 2,6 bn US$ 11,0** bn US$ single investments single investments < 10 Mn US$ > 10 Mn US$ ** excluding Facebook, Groupon and Twitter * Share of international investments: < 15% (mostly in Chinese, Indian, Russian, Australian and Israeli startups) * Share of deals by international investors : < 5% Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia 7 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Overall summary - Digital media
investment clusters 2011 138 no. of companies total funding per cluster (in Mn US$) 3.939 125 57 115 92 1.899 112 1.660 1.534 111 54 1.088 34 888 40 696 571 43 21 347 476 260 236 eCom- Adver- Games Content B2B Prod. B2B Search Social Crowd- LBS Others merce tising solut. apps tools netw. sourcing Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia 8 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Ranking of investment clusters according
to funding vol. Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia 9 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Ranking of investment clusters according
to funding vol. Investment category < 10 Mn > 10 Mn Overall eCommerce/eTransaction 5. 1. 1. Advertising solutions 1. 2. 2. Games 9. 3. 3. Content-driven platforms 6. 4. 4. B2B solutions 3. 5. 5. Productivity apps/tools 4. 6. 6. B2B tools 2. 8. 7. Search 8. 7. 8. Social networks 10. 9. 9. Crowdsourcing 7. 11. 10. LBS 11. 10. 11. Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 10 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Categories with investment volumes above
average Many multi- high operating browser games costs (e.g. inter- publisher among nationalization), top-funded comp. high profit potent. 62,1 63,7 56,1 Investments > 10Mn US$ Ø 43,8 Mn US$ Content- Games eCommerce/ driven eTransaction platforms Investments < 10Mn US$ 4,6 4,9 Ø 3,7 Mn US$ Advertising B2B solutions solutions Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia 11 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „eCommerce“ (1) 10
biggest single investments 2011 3.939 Mn US$ 138 companies in eCommerce/eTransaction platforms (Mn US$) daily deals couponing member-only (daily) deals group buying 576 Chinese fashion eCommerce 305 230 200 165 150 138 123 120 112 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 12 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „eCommerce“ (2) Major
trends (some of them ongoing) Group deals/daily Neighborhood Socially assisted UGC monetizing deals/couponing commerce commerce platforms • … still investors’ • eTransaction on a • … another ongoing • platforms that darling, but … local scale gain serious trend is convert user momentum social shopping generated content • stronger verticaliza- into sales also tion to be observed • Mostly people from • These sites support scored on investor the neighborhood social interaction, • especially fashion & side offer goods and user contributions apparels, grocery, services to let or to and recommenda- • Most of these sites home design, mums sell (topics: mobility, tions to assist in deal with design, & kids cooking, nanny, …) buying products & fotos and articles services from the community Hottest verticals: mobility/car sharing, fashion & apparel, food delivery, home design, travel Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 13 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „advertising solutions“ (1)
10 biggest single investments 2011 1.899 Mn US$ 125 companies in advertising solutions (Mn US$) mobile ad network long-tail ad digital marketplace marketing multichannel services marketing solut. watch ad next gen. later 200 200 TV targeting paid search In-app monetization In-video monetization 61 52 51 50 49 48 37 35 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 14 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „advertising solutions“ (2)
Major trends (some of them ongoing) Targeting Real-time bidding Data-driven In-app, in-game, solutions solutions marketing in-video solutions • more sophistication • demand-side- • big data solutions • different approa- platforms that analyze… ches to increase • tracking targeting monetization within performance • matching supply • … ad performance apps, games and and demand of ad across multiple • targeted television videos inventory as well as platforms advertising performance adjust- • … in most cases via • … demographic • search-Retargeting ments in real-time analyzing user trends and deliver behavior (clicks, • overall: stronger • … similar to inventory social media com- specialization on Google, potentials accordingly munication, social media/ for hub role within • … local information purchases, etc.) contextual behavior ad eco system for contextual ads Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 15 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „productivity apps/tools“ (1)
Biggest single investments 2011 888 Mn US$ 112 companies in productivity apps/tools (Mn US$) file management personal communication 250 personal finance pers. traffic management personal 129 personal learning fitness 50 10 10 30 23 19 16 15 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 16 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „productivity apps/tools“ (2)
Major trends (beside productivity “champion” file management) Personal Content produc- Personal Personal finance tion & discovery learning / educ. communication • Tools helping to • Tools that ease the • Tools that enhance • Tools that improve better organize (self-)production, the personal lear- cross-platform com- everyday’s finance adaptation, organi- ning experience by: munication capabili- life, related to … zation & discovery tracking progress, ties, such as … of various media exchanging with • … accounts, debts, • … inbox notification assets / contents others / bench- loans, bills, receipts, management, such as … marking, grade fixed expenditures, dialing without tracking, etc. bank transactions • … pictures, videos, numbers, real-time etc. music, articles, … • Fields of interest: radiation indication languages, college, science Further hot app genres: health/wellness/fitness, kids & family, travel Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 17 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „games“ (1) Biggest
single investments 2011 1.660 Mn US$ 57 companies in games (Mn US$) (social) browser games entertain- ment Mobile software games 490 distribution Multi-platform video game 350 MMSGs streaming 200 85 42 40 30 30 26 24 * * partially secondary investment Source: Crunchbase, Media Cluster of North Rhine-Westphalia 18 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „games“ (2) Major
trends (differentiated) Gamification of In-game (traffic) Cross-platform social games real-world markets monetization game middleware • Players in pursuit of • Non-entertainment • Beside p-a-y-go and • Rapid game finding USPs in the companies increa- subscription-based creation techno- space of social singly discover the gaming biz models, logies games such as … power of games to various in-game re- • Solutions for cross- address real-world venue sources have • … cross-platform platform game challenges, as … been developed: distribution development approaches, mobile, • … in the fields of • Real rewards for in- AR, social bench- health, wellness, game achievements marking, kids, education, research, • Performance-based edutainment recruiting, etc. advertising tools Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 19 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „content“ (1) Biggest
single investments 2011 1.534 Mn US$ 115 companies live in content (Mn US$) strea- ming/ VOD (e)Book content retailer sharing/ discovery interactive MOD out-of-home legal entertainment music 250 content detection platform content cognitive discovery enhance- 100 ment 85 66 50 46 45 40 33 32 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 20 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „content“ (2) Major
trends Enhanced music/ Next level of eLearning plat- Multi-chan. video audio experience content discovery forms/tools & more sharing, casting • platforms & tools for • platforms that • environments for • web video enter- increased digital intelligently aggre- sharing & discovering tainment beyond audio excitement, gate content from learning materials & youtube, such as … such as … various sources & curricula with co- • …sharing (mobile) channels to create students & teachers • creating & sharing videos in real-time new (and mostly audio content in • video-based learning dashboard-driven) • … social live video real-time, detecting communities, social user experiences casting & commu- music, do-it-yourself prep-center, online nication, social music-related sites • focus varies: either course creator suites, video upload. & apps, music per- by type of content or interactive tutorials sonalization suites distribution platform for coder, designer … • … VOD services Further hot topics: social TV guides, textbook rental sites, eBook hubs, tech & financial content sites Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 21 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „crowdsourcing“ (1) Biggest
single investments 2011 260 Mn US$ 43 companies in crowdsourcing (Mn US$) UGC monetization crowdfunding crowd- lending 35 people corporate powered idea antivirus sourcing social trading 26 25 19 17 10 10 10 10 8 * * Source: Crunchbase, Media Cluster of North Rhine-Westphalia * see also under eCommerce trends 22 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „crowdsourcing“ (2) Major
trends Crowdfunding/ Crowdsourced Enterprise / brand Community -investing labor/jobs/tasks empowerment opinion aid • enforced by tre- • platforms that target • solutions for • platforms that help mendous kickstarter companies who are corporations that individuals to sort success, various outsourcing tasks to engage and activate out the wheat from other crowdfunding the crowd (and brand audiences, the chaff in terms of platforms evolved users who search especially within “taste bench- that have speciali- for such tasks) in the social networks … marking” zed in … fields of … • … to measure • mostly these sites • … social projects, • … design/graphic brand awareness are related to private investments, arts, programming, fashion, food, enter- • … for assistance to creative ventures translation, text cre- tainment, travel, “spread the word” and big ideas/trends ation, research, … lifestyle, … Further hot topics: social lending, collaborative trading, enterprise innovation, social benchmarking Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 23 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „search“ (1) Biggest
single investments 2011 571 Mn US$ 54 companies in search (Mn US$) car search local service search/ (mobile) review job 200 search real-estate search meta local editorial search supported caregiver search search wedding 84 search 30 27 23 18 15 12 11 10 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 24 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „search“ (2) Major
trends Comment on ma- App search / Travel-related Job-related jor search trends app discovery search search • the “search” invest- • platforms that help • platforms that allow • even the highly ment cluster does to search for apps in a better search contested job not reveal as many general (discover & experience beyond search market distinct trends as experiences new monothematic que- generates new others apps) or business ries, mostly fueled approaches with apps in specific with community supporting specs: • however, as in pre- know-how vious years, most of • most of these • internship search, new search plat- include reviews from • multi-parameter job-related metrics, forms tend towards the community requests, finding employer reviews, increased speziali- private homes to job advices, focus • also purpose: zation and include stay, local reviews on job verticals etc. market research SoLoMo functiona- lities Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 25 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „location-based services“ (1)
Biggest single investments 2011 236 Mn US$ 21 companies in LBS (Mn US$) geo- geo-location location service social (Russia’s network Foursquare) geo-location 110 gadget P2P (shared location payment interests) (LaaS) real-time LBS real-time urban 50 location family game navigation tracking tracking 15 13 5 4 3,5 1,0 10 10 Lashou.com Source: Crunchbase, Media Cluster of North Rhine-Westphalia 26 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „location-based services“ (2)
Major trends Comments on Geo-location services Other LB-Services major LBS trends (but no distinct trends) • due to the small and • investors identified geo-location • P2P/NFC mobile payments heterogeneous field related services as a promising • WIFI location solutions for of players in this field of business. These services retailers segment, few dis- cover a wide range of functional- tinctive trends could ities and focus such as … • LBS-enhanced local search be retrieved • local guides/ local discovery • real-time location tracking • small number of • LBS-based social networks • family tracking & neighborhood “pure” LBS compa- (e.g. for mums & dads) safety nies results from the fact that LBS fea- • find interest-alike people nearby • urban navigation services tures are often inte- • on-demand delivery services • LBS + gaming elements grated into products with different core Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 27 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „B2B solutions“ (1)
Biggest single investments 2011 1.088 Mn US$ 92 companies eCommerce in B2B solutions (Mn US$) check-out event organizer mobile app & ticketing developm. platform solutions inflight online social commu- enter- video nication platform 155 prise solution 136 softw. on-demand online- billing & degree subscriber progam managemnt. kits 54 50 35 33 24 20 19 19 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 28 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „B2B solutions“ (2)
Major trends iPad POS solutions Context-sensitive commerce platforms In-flight entertainment & communication (Cross-platform) app development suites Mobile device identification/profiling In-restaurant solutions Mobile shopping solutions Mobile payment solutions Social loyalty & rewards White label app storefronts Video management platforms Billing & subscriber management Social commerce solutions Real-time shopping-cart recovery Publishing/app/video monetization services Augmented human intelligence (Mobile) payment processing Event organizing platforms Personalized customer experiences & engagement eCommerce checkout / order fulfillment Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 29 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „B2B tools“ (1)
realtime Biggest single investments 2011 696 Mn US$ frame- 111 companies works in B2B tools (Mn US$) video rights manage- customer ment retention brand consumer fb power talent engage- tool for intelli- 100 adaptive ment musicians gence learning eLearning social tools financial marketing office SaaS tool 33 25 25 24 20 18 17 16 16 Source: Crunchbase, Media Cluster of North Rhine-Westphalia 30 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Details on „B2B tools“ (2)
Major trends (Real-time) user behavior analytics Social media performance tracking Social media monitoring/analytics Instant loyalty programs Social recruiting tools Community building tools Social media Social media engagement tools Rental marketing tools Social media campaign mgmnt. Control & centralize social media Social talent engine (universal) tag management Big data analytics/visualization Online accounting/invoicing (Adaptive) eLearning tools App analytics Twitter filter SEO improvement tools Developer tools Backend as a service Business productivity tools for SME SDK for social apps Gesture-based interfaces Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 31 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Estimated digital media investment radar
for Germany/ Europe – what will be top on investor’s list in 2012? hot 1 Group/daily deals/coup. 17 Enhanced music exper. high 2 Neighborhood com. 18 Next level content disc. 17 18 6 3 Social commerce 19 eLearning platforms 21 Chances to get funded in GER* 5 4 UGC monetizing 20 Multichannel video 4 3 2 12 9 26 5 Targeting solutions 21 Crowdfunding 10 8 20 11 28 6 Real-time bidding 22 Crowdsourced work 19 22 30 7 Data-driven marketing 23 Brand empowerment 7 1 27 24 23 25 15 8 In-app/-video/-game adv. 24 Community opinion aid 29 13 9 Personal finance 25 App search 14 16 10 Content prod.+discovery 26 Travel search 11 Personal learning 27 Job search funding chances within B2B sectors vary and 12 Personal communication 28 Geo-location services could possibly be higher 13 Social games 29 B2B solutions 14 Gamification 30 B2B tools 15 In-game monetization low 16 Cross-platf. middleware low high Market biz & capitalization potential Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia * assuming that team is excellent and respective product has USP 32 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Conclusions from VC deal flow
analysis 2011  Consumer web topics (although this is a rather fuzzy aggregated notion) remain investment segment No. 1 in digital media  However, investments in B2B startups are unmistakably on the rise, especially in seed, angel and series A rounds. It remains to be seen, if German investors follow that line …  The leading position of e-commerce platforms & advertising solutions in the investment ranking reflects the relevance of their corresponding business models within the global web eco system – and will dominate investment activities in the future too  Productivity apps/tools and (slightly behind) crowdsourcing services gain momentum and are firing the imagination of investors in Europe/Germany too  Within all “older” digital media categories (such as content, e-commerce, search, social networks) a higher degree of specialization along the following parameters can be observed: social-local-mobile, contextual, rich media, real-time, personal/on-demand, Facebook-integration …  The hottest overall company? Impossible to tell! There were so many innovative startups with disruptive potential. Find out yourself. There are a couple mentioned within this slide deck … Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia 33 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

Contact details / acknowledgement /
copyright Marc Ziegler Mediencluster NRW GmbH Fon +49-151-24151900 eMail: marc.ziegler@medien.nrw.de Twitter: @medienziegler web: www.medien.nrw.de Acknowledgement A big thank you to my colleague Sebastian Lautwein, who gave me a big hand in the first phase of this analysis by identifying and clustering hundreds of funded digital media startups. Creative Commons „30 Trends that will shape European web & digital media business in 2012“ by Marc Ziegler is licensed under Creative Commons Attribution-ShareAlike 3.0 Unported License. 34 30 trends that will shape European web & digital media business in 2012 Marc Ziegler