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LUMA partners
Digital Brief 001 The Good, the Bad & the Ugly of Digital Advertising
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BAD: Digital Supply / Demand Imbalance SUPPLY DEMAND
>
2,500 companies 200 companies
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UGLY: Digital Supply / Demand Imbalance SUPPLY DEMAND
2,500 companies 200 companies LUMA
partners150 priori3zed 50 priori3zed
>90+% FAILURE RATE
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What’s the Good News?
3 Things: 1. Secular Organic Growth
2. Changing Business Models
3. Scaled Exits
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GOOD: Significant Growth in Digital Market
Source: eMarketer
Source: eMarketer
Source: eMarketer
Source: eMarketer
($ in billions)
$0
$50
$100
$150
$200
$250
$300
2012 2014 2016
Digital0Ad0Spend Total0Ad0Spend
$100
$0
$50
$200
$250
$150
US Ad Spend US Digital Ad Spend
CAGR 35%
CAGR 10%
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GOOD: Exceptional Growth in Programmatic
Source: eMarketer
Source: eMarketer
Source: eMarketer
Source: eMarketer
($ in billions)
$0
$50
$100
$150
$200
$250
$300
2012 2014 2016
Digital0Ad0Spend Total0Ad0Spend US Digital Ad Spend ProgrammaAc
CAGR 53%
CAGR 216%
$20
$0
$10
$40
$50
$30
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Programmatic as a Business Model
Media
Low
40-50% Gross Margins
I/O Based Spend
SaaS Software
High
70-80% Gross Margin
Contractual Spend
5 – 10 x REVENUE MULTIPLE 0.5 – 2 x
BUSINESS MODEL DRIVERS
GROWTH
OPERATING LEVERAGE
PREDICTABILITY
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Programmatic Changes the Media Business Model
Programmatic
High Growth
70-80% Gross Margin
Predictable Spend
4 – 8 x
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WARNING: LUMA Decks Usually Call for More M&A
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AD TECH
CRM SOFTWARE
INTERNET GIANTS
ECOMMERCE
TELCO
MARKETING
MEDIA
DATA
REALLY GOOD: A Growing Pool of Strategic Buyers CONSUMER INTERNET
TECH SERVICES
Right Time Decisioning of
Consumer Data
(Ad Tech and MarTech)
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AD TECH
CRM SOFTWARE
INTERNET GIANTS
ECOMMERCE
TELCO
MARKETING
MEDIA
DATA
CONSUMER INTERNET
TECH SERVICES
Right Time Decisioning of
Consumer Data
(Ad Tech and MarTech)
NEW ENTRANTS
REALLY GOOD: A Growing Pool of Strategic Buyers
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New York – Palo Alto lumapartners.com