The document discusses the evolving mobile advertising landscape. It notes that mobile is becoming a greater part of everyday life and the greatest advertising opportunity. While mobile ad spend and M&A deals are increasing, funding for mobile ad tech is decreasing. It also discusses the rise of native mobile ad formats and the importance of content in branding. Looking ahead, it outlines the large total addressable market opportunity across various mobile-related sectors such as marketing, advertising, and commerce.

1. SURVIVING MOBILE’S
ROLLER COASTER FUTURE
Terence Kawaja

2. Why Are You Listening to an Investment Banker?

3. Unlearning What They Teach You on Wall Street
THE !
RED SUIT
RULE!

4. Mobile Becomes a Greater Part of Everyday Life
Source: KPCB

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. …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. This is going to
be awesome!

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. 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. $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. Layer Not a Channel

12. Digital Marketing Channels
Search Display Social Video Mobile
?

13. Mobile is a Layer, Not a Channel
Search Display Social Video

14. Data
Collection

15. The Cookie-less World of Mobile
No
Cookies?!
DEVICE
ID

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. Creates“Walled Gardens”of First Party Data…

18. …Continue Expansion Through 3rd-Party Networks

19. 259%
Growth
2014
$32.7
Billion
Other
22%
47%
Mobile Advertising is Concentrating
Source: eMarketer
2012
$8.8
Billion
Other
5%
53%

20. Marketers
The
“Ad
Tech
Squeeze”
Publishers
Commerce
Large Digital Players Are In-Sourcing Ad Tech

21. Bifurcated Market

22. CPI
for
LTV
App
on
App
The Two Worlds of Mobile Advertising
CPM
/
CPA
General
Marketers

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. 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. 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. CPI
for
LTV
App
on
App
The Two Worlds of Mobile Advertising
Cost
per
Re-­‐engagement
CPM
/
CPA
General
Marketers

27. CPI
for
LTV
App
on
App
The Two Worlds of Mobile Advertising
CPM
/
CPA
General
Marketers

28. Inventing New
Formats

29. CPI
for
LTV
App
on
App
The Two Worlds of Mobile Advertising
CPM
/
CPA
General
Marketers

30. Source: Garnter, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates, eMarkter
US Mobile Video Viewers
MillionsofViewers
Mobile Video Explosion

31. ConnecFvity
Entertainment
ProducFvity
PASSIVE
ACTIVE
ATTENTIVE
Consumer Modality Matters

32. Mobile
banner ads
are
ineffective

33. …and
disruptive
ads annoy
the
consumer
FACILITATIVE
INTERRUPTIVE
InformaFve
Intolerable

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. Content Is Critical to Branding

37. Bridges Physical
and Digital Worlds

38. CPI
for
LTV
App
on
App
The Two Worlds of Mobile Advertising
CPM
/
CPA
General
Marketers

39. Mobile Bridges the Physical & Digital Worlds

40. …and Facilitates the Path to Purchase
Source:
BIA/Kelsey
LocaFon
PersonalizaFon
FacilitaFon

41. 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

42. Opportunity
Ahead

43. Advertising
$180bn
Digital Advertising
$51bn
Sources: eMarketer, Forrester, Gartner,
The Nilson Report, LUMA estimates
Programmatic
$10bn
Reorienting the TAM Opportunity

44. 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

45. Strategic Buyer LUMAscape

46. Significant Recent Digital M&A Activity

47. LUMA’s Content Strategy: Substance and Fun!
Over 300,000 views!

48. Investment Banking. Evolved.
New York – Palo Alto
lumapartners.com
Thank
you.