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Social Media Market

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State of Social Media Industry
Number of worldwide internet users now exceeds 2.64 billion, representing a global penetration of 37%
Rapidly expanding social network audiences in the emerging markets of Asia-Pacific and the Middle East & Africa will be huge drivers of social user growth
Social media industry is both a mature and an emerging market:
Mature in term of user size – subscriber growth slowing down
In terms or revenue social media companies are still in early stages, with most still looking for creative ways to monetize services

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Social Media Market

  1. 1. Social Media Sector Overview February 2014
  2. 2. Contents 1. Industry Overview 2. Global M&A Statistics 2
  3. 3. 3
  4. 4. 6 Feb 2014: Twitter shares plummet by 24% after it reported slower growth in numbers +28.62% +9.65% 4 4
  5. 5. Social Media Industry Overview State of Social Media Industry Social Network Penetration Number of worldwide internet users now exceeds 2.64 billion, representing a global penetration of 37% Rapidly expanding social network audiences in the emerging markets of Asia-Pacific and the Middle East & Africa will be huge drivers of social user growth Social media industry is both a mature and an emerging market: o Mature in term of user size – subscriber growth slowing down o In terms or revenue social media companies are still in early stages, with most still looking for creative ways to monetize services • • • Number of users in billions Source: eMArketer, April 2013 Social Network Users Worldwide , 2011 - 2017 millions Top Social Media Networking Sites (2013) CAGR 2011 2012 2013 2014 2015 2016 2017 27 30 32 34 35 36 37 2.7% Western Europe (excl. UK) 115 130 142 152 160 166 172 4.2% Central & Eastern Europe 137 155 174 190 203 213 223 5.6% Asia Pacific 502 633 777 907 Latin America 152 183 217 247 280 303 324 9.6% Middle East & Africa 123 164 210 249 287 325 358 12.9% North America 164 174 181 188 194 199 204 2.7% UK 1,018 1,130 1,232 10.7% Worldwide 1,220 1,468 1,733 1,965 2,177 2,372 2,550 % internet users 58.2% 63.1% 67.7% 71.1% 74.1% 76.6% 78.7% % population 17.6% 20.9% 24.4% 27.4% 30.0% 32.4% 34.5% Source: eMArketer, April 2013 14-17 +9% 9.1% +23% +6% % change in millions of active users between Q2 and Q4 2013 Source: GlobalwebIndex 5
  6. 6. Rise of Social Media Advertising Spending Summary Global Social Media Advertising Spending Conservative estimates predict huge growth and increase in campaign spending North America clear market leader in social media advertising spending European social media marketing spend forecast to reach $3.3 billion in 2014 • • • Total 7,329 10,217 13,057 16,445 UK ~ $643m in 2013 CAGR = 37.5% CAGR = 25.6% UK Social Media Advertising Spending • CAGR = 62.3% Social media advertising spending has grown 53% YOY reaching £243 million in H12013 (IAB) CAGR = 31.0% £243m CAGR = 32.6% Source: IAB UK Social Media extends beyond sales and marketing – rise of the enterprise social network 6
  7. 7. Challenges facing the Social Media Industry 1. Difficulty measuring ROI and justifying efforts and resources 2. Lack of profits 3. Low barriers to entry 4. Channel in continuous change/improvement 5. Lack of control 6. Data Privacy “Rights to be forgotten law”! • European initiative enabling anyone to delete their personal details from online service providers • Analysts predict that the new EU privacy legislation could “The full extent and implementation of the European privacy legislation is as yet uncertain, and the fractured manner in which such derivatives are applied across various European countries means that compliance costs for marketers will rise” (James McDavid, Forrester) cut the predicted social media marketing spending by more than €880m (Forrester) • Britain seeks to opt out of Initiative 7
  8. 8. Future of Social Media Social Media Marketing Trends for 2014 1. Investment in social media to become a necessity, not a luxury 2. Rise of paid social advertising 3. Imaged-based content to drive social media engagement 4. Increased mobile usage will be huge driver for growth 5. New smaller, mobile apps and platforms 6. CRM connects with social media 8
  9. 9. Contents approach 1. Social Media Market Landscape 2. Global M&A Statistics 9
  10. 10. 2012 M&A Deal Activity  Big year for social media – big multiples and headlines  Transactions in 2012 were focused on acquisition of developer teams and software and platforms  Technology-based social media companies dominated deals 2012 deals of note include: • Microsoft acquisition of Yammer, an enterprise social networking portal for $1.2billion • Salesforce acquisition of BuddyMedia for $689m, a social enterprise software • Google acquisition of Wildfire for $350million, a social marketing software developer • Oracle acquisition of social marketing platform provider Virtue for $300m • Facebook IPO, priced at $38 and raised a total of $16billion 10
  11. 11. 2013 Global M&A Deals Infographic Total deals = 80 Geographical Split Canada 4 deals Subsector Split Eastern Europe 2 deals Social Media Agency Digital UK 6 deals AdTech Western Europe 14 deals North America 43 deals APAC 11 deals Results Deals South America 4 deals By quarter Q1 Middle East 0 deals 26 Africa 0 deals Major Buyers Dentsu Amazon Salesforce 1 1 LinkedIn Publicis 1 1 26 Facebook 1 PE/VC backed deals 5 2 1 BlueFocus 2 2 Twitter To the New 5 18 Q3 2 Cross border deals Yahoo Match.com Q2 Deal type WPP 1 19 10 Q4 11
  12. 12. Selected Recent Deal Activity – Social Media Social Media Transactions Date Buyer Target EV ($m) EV/REV EV/ EBITDA n.A Description Dec- 13 40.8 1.2x Dec- 13 n.a. n..a n.A Social media marketing firm based in Singapore Oct- 13 35 n.A n.A Provides social media advertisement creation and related CRM SaaS n.A n.A n.A May- 13 1,100 84.6x Apr- 13 n.a Mar- 13 May -13 UK based social media agency Social media agency based in Amsterdam n.A Provides a social networking service and an online publishing platform n.a n.A Operates and manages a micro-blogging website n.A n.a n.A A social blogging network Mar- 13 150 n.a n.A A social reading portal which provides recommendation software and social networking portal based around books Mar- 13 n.A n.A n.a Swiss-based social-monitoring analytics business Feb- 13 c.80 n.a n.A Provides social media commentary analytics SaaS 12 12

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