1400 omma display linda gridley
TRANSCRIPT
Transformation of the Measurement Transformation of the Measurement Industry: How Much Can be Industry: How Much Can be
Attributed to M&A?Attributed to M&A?
November 7, 2011
2
Introduction
• Industry leaders today are facing a quickly changing landscape
- Rate of change in industry among the highest in all of digital technology
- Emergence of real time data collection and dissemination driving technology deeper into today’s solutions
• Increasingly tough to compete with new, innovative entrants
- Growing channels and use cases bringing new players to the market
Unprecedented opportunity for new leaders to emerge
3
Snapshot of the Web 10 Years Ago
Social networks limited to forums, blogs, and chatrooms
41% of Americans using mobile phones (voice only)
Users spent seven hours per week online (email, news, chat)
143 million Americans (54%) using the Internet
Source: NTIA Source: Harris Interactive
Source: CTIA
4
Despite its Size, Online Advertising was Quite Underdeveloped
U.S. Online Advertising Revenue
($ in billions)($ in billions)
Source: IAB Internet Advertising Report, BusinessWeek
$7.1
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
2001
• Highly manual processes
• Little to no accurate measurement methodology
“…big advertisers still don't see the value of the Internet yet,"
Morgan Stanley analyst Michael Russell - July ’01
“…big advertisers still don't see the value of the Internet yet,"
Morgan Stanley analyst Michael Russell - July ’01
“… experts in the field now say that advertisers ought to forget about click-throughs… Online ads aren't meant only to spawn direct sales.. They're also for establishing or burnishing a brand…”
BusinessWeek – July ‘01
“… experts in the field now say that advertisers ought to forget about click-throughs… Online ads aren't meant only to spawn direct sales.. They're also for establishing or burnishing a brand…”
BusinessWeek – July ‘01
5
Tried and True Methodologies Were Manual, Expensive and Hard to Scale
Random Digit Dialing Random Digit Dialing
Mall Intercepts / InterviewsMall Intercepts / Interviews Focus GroupsFocus Groups Mailed SurveysMailed Surveys
Set MetersSet Meters
6
The Web Quickly Developed Scale and Use
43%
79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2000 2010
Doubling of U.S. Online PenetrationDoubling of U.S. Online Penetration
Radio15%
Other7%
Magazines3%
TV | Video39%
Newspaper5%
Mobile8%
Internet 23%
Time Spent on Internet + Mobile Approaching TV
Time Spent on Internet + Mobile Approaching TV
Source: eMarketerSource: eMarketer
Avg. hrs spent per week
Avg. hrs spent per week ~7hrs~7hrs ~13hrs~13hrs
Source: ITU, Harris Interactive, comScoreSource: ITU, Harris Interactive, comScore
7
Fundamental Shifts in Usage Are Driving Need for New Measurement Methodologies
~8x growth in U.S. eCommerce~8x growth in
U.S. eCommerce($ in billions)($ in billions)
$25.8
$164.6
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
2000 2010
Source: U.S. Census BureauSource: U.S. Census Bureau
0%
23%
0%
5%
10%
15%
20%
25%
2001 2010
8%
61%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2010
Introduction of the SmartphoneIntroduction of the Smartphone
Social Networking Creating Information at ScaleSocial Networking Creating Information at Scale
Source: comScoreSource: comScore Source: Pew ResearchSource: Pew Research
8
The Rapid Growth in Online Advertising Has Created Various Measurement Complexities
How effective are my ads?
How effective are my ads?
BrandBrand Transaction Transaction
How are users behaving?
How are users behaving?
How do I measure safety and effectiveness in blind environments?
How do I measure safety and effectiveness in blind environments?
On SiteOn Site On Social PlatformsOn Social Platforms
9
M&A Has Been Critical in Shaping Online Measurement
• Key themes from 2000 – 2008:
• Offline players buying online capabilities
• Proprietary data sets became highest sought after
• Realization of mobile potential, key players acquired mobile capabilities
• Real time emerging as important factor in measurement
January2005
April – June2007
/
/
/(Online Audience Measurement Assets)
/
/
March2008
/February
2007
April 2008
May 2008
October 2007
/
/
January 2006
/June2002
/July 2006 /
/
10
January2011
2010
Online advertising overtakes
newspapers in U.S. (source: eMarketer)
September 2009
/
June2010
/
July 2008
Nielsen releases its first quarterly “Three
Screen Report”, covering TV,
Internet, and mobile
October2009
February 2010
September2010
February2011
April2011
March 2011
August2011
September
2011
/
/
/
/
/
/
/
/
/
• Key themes from 2009 – today:
• New entrants to the market with use cases beyond research – Adobe, IBM, Salesforce
• Measurement in real time environments – Social, RTB
• Measurement -> Data Analytics
M&A Has Been Critical in Shaping Online Measurement (cont’d)
/
11
Online Measurement Landscape Today
/
Social
Online Ad Safety /
VerificationAttribution /
AnalyticsAd
Effectiveness
/
/
/
/
/
/
Ratings
/
/
/
Mobile
/
12
Highly Attractive Valuations in Online Measurement
Survey / OtherWeb / Data Analytics
Mobile
Acquirer / TargetAcquirer / TargetDateDate
$100.0$100.0
$300.0$300.004/18/1104/18/11
$340.7$340.703/30/1103/30/11
Acquirer / TargetAcquirer / TargetDateDate
$75.0$75.003/03/0803/03/08
$240.0$240.004/19/0704/19/07
$381.8$381.810/25/0710/25/07
Acquirer / TargetAcquirer / TargetDateDateImplied Ent. Value ($MM)Implied Ent. Value ($MM)
12/22/0912/22/09 NANA
Acquirer / TargetAcquirer / TargetDateDate
$421.5$421.508/06/0808/06/08
$43.7$43.705/28/0805/28/08
$328.3$328.302/06/0702/06/07
Implied Ent. Value ($MM)Implied Ent. Value ($MM)
LTM Rev.Mult.
LTM Rev.Mult.
LTM Rev.Mult.
LTM Rev.Mult.
LTM Rev.Mult.
LTM Rev.Mult.
Implied Ent. Value ($MM)Implied Ent. Value ($MM)
LTM Rev.Mult.
LTM Rev.Mult.
5.03x5.03x
6.00x6.00x
5.10x5.10x
NANA
4.41x4.41x 1.54x1.54x
NANA
NANA
3.06x3.06x
7.50x7.50x
NANA06/27/0706/27/07 NANA
NMNM06/26/0906/26/09 NMNM
$1,675.7$1,675.709/15/0909/15/09
NANA
4.60x4.60x
NANA
$237.7$237.702/14/1102/14/11 2.02x2.02x
02/07/1102/07/11
06/15/1006/15/10
Social
02/26/0702/26/07
Implied Ent. Value ($MM)Implied Ent. Value ($MM)
02/23/1002/23/10 NANA NANA
10/06/0910/06/09 NANANANA
NANA NANA
01/10/1101/10/11 $50.0$50.0 7.14x7.14x
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AcquirerAcquirer
Implied Enterprise
Value
Implied Enterprise
Value Target Target LTM Rev Multiple
LTM Rev MultipleDateDate
05/28/0805/28/08
03/03/0803/03/08
04/19/0704/19/07
$43.7$43.7 4.41x4.41x
$75.0$75.0
$240.0$240.0 6.00x6.00x
5.03x5.03x
Developing mobile capabilities for cross-media planning
Added competitive internet ratings
Able to provide internet intelligence to its client base
CommentsComments
M&A Case Studies: Obtaining Premium Valuation
Strengthened display media buying opportunities with retail clients
01/10/1101/10/11 $50.0$50.0 7.14x7.14x
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Who are the Big Acquirers?AcquirerAcquirer TargetsTargets ThemesThemes
• Leveraging strong publisher assets to solve publisher ROI challenges through data
• Approaching from the biggest data challenges – marketing/advertising business intelligence
• Coming at online measurement through strong consumer level data sets (CRM and Jigsaw)
New PlayersNew Players
Existing PlayersExisting Players
• Using M&A to as part of product and channel extension strategy
15
Measurement Technologies Will be Important to the Development of Real-Time Bidding
• Measurement of
quality and
effectiveness will
grow in importance
• Stigma of low quality
will further increase
importance of real
time measurement
technologies
• Measurement of
quality and
effectiveness will
grow in importance
• Stigma of low quality
will further increase
importance of real
time measurement
technologies
BlindBlind“Cookied”“Cookied”
Rapidly growing market >Rapidly growing market > Majority of impressions still relatively anonymousMajority of impressions still relatively anonymous
$353
$823
$380
$592
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2001 2010
U.S. Exchange Traded Media Spending in $MMU.S. Exchange Traded Media Spending in $MM
Source: ForresterSource: Forrester
RTBRTB
Non-RTBNon-RTB
16
Ad Effectiveness Solutions will Follow the $$ Up the Funnel
65%65%
35%35%
71%71%
29%29%
PerformancePerformanceBrandBrand
Traditional MediaTraditional Media Digital MediaDigital Media
Share shift to digital
Share shift to digital
Demand fulfillmentMost innovation and technology M&A at this part of funnel
Demand fulfillmentMost innovation and technology M&A at this part of funnel
Demand generation Increased interest and innovation as new digital $$ focus earlier in the purchase cycle
Demand generation Increased interest and innovation as new digital $$ focus earlier in the purchase cycle
Source: Credit Agricole, GridleySource: Credit Agricole, Gridley
17
Social will Challenge the Status Quo in Both Advertising and User Measurement
Coca-Cola
Example of Coke using Facebook to
elicit feedback on bottle design
Example of Coke using Facebook to
elicit feedback on bottle design
Massive audienceMassive audience
Facebook controls a large part of the adtech supply
Facebook controls a large part of the adtech supply
(~30%)
(~30%)
Rest of the Web
Rest of the Web
Brands are going directly to its consumers through FacebookBrands are going directly to its consumers through Facebook
Source: Comscore Q1 estimates for U.S. Web, FacebookSource: Comscore Q1 estimates for U.S. Web, Facebook
Q1’11: 1.1 trillion impressionsQ1’11: 1.1 trillion impressions
18
Source: eMarketerSource: eMarketer
Tremendous Promise with Mobile Given Unique Characteristics
Computer
Newspapers, Magazines, Books
Snail Mail
Video Camera
Range Finder
Game ConsoleAlarm
ClockMusic Player
Credit Cards,
Identity
Telephone
PDA
GPS, Maps,
Compass
Camera
Watch
Don’t knowDon’t know
Performed worse than expectedPerformed worse than expected
Performed as expectedPerformed as expected
Exceeded expectationsExceeded expectations
Haven’t measuredHaven’t measured
Far below expectationsFar below expectations
ROI of Existing Mobile Marketing CampaignsROI of Existing Mobile Marketing Campaigns
Measurement will be critical to achieve scale by marketersMeasurement will be critical to achieve scale by marketers
Over 50% of campaigns lack any sort of measurement
19
Everything is Becoming Internet-Enabled
PC: 1990 - PC: 1990 - VoIP: 1999 -VoIP: 1999 - Mobile: 2008 -Mobile: 2008 - Tablet: 2010 -Tablet: 2010 - TV: 2012 ?TV: 2012 ? Car: 2013?Car: 2013?
OfflineOffline OnlineOnline
• Growing interest from brand marketers to define ROI across channels
• Data integration becoming increasingly possible/seamless as world become internet-enabled
20
Convergence of Capabilities
• Becoming hard to determine who is competitive as separate disciplines converge
• Has major M&A implications
MobileMobile SocialSocial
Ad Effectiveness
Ad Effectiveness
Ad Safety / VerificationAd Safety / Verification
Users
21
Advice to the Audience – Private Companies
• Unprecedented opportunity for new leadership
• Clear, differentiated capabilities are key
• Buyers will pay premiums for market leaders and experienced teams
• Scale and successful client case studies are key
• Watch for new buyers to emerge
22
Advice to the Audience – Public Companies
• Traditional leaders – You are more vulnerable than you think
• Think strategically about innovation and M&A
• Tremendous value being created, competitive dynamics are changing
• Watch out for disruptive business models
23
Advice to the Audience – VC / PE Investors
• "Jump In – The Water's Fine"
• Be careful about amount of $ invested
• $250MM+ exits aren't easy!
• Look for new strategic buyers to emerge
• Different companies require different exit strategies
24
Questions?
Linda GridleyGridley & Company LLC
10 East 53rd Street, 24th FloorNew York, NY 10022
212.400.9720 tel212.400.9717 fax
Twitter: @gridleycowww.gridleyco.com