fitbit go-to market plan

Agenda

Fitbit Smart Coach

Go To Market Objectives

Target Audience● Owns a Fitbit wearable and a

smartphone● Value conscious but has

expendable income● Is comfortable with technology

but not necessarily an expert● Uses social media frequently● More comfortable buying from

well-known companies● Lives in North America● 30+

Persona:

Chris

● Has a desk job

● Earns 100K+ per year

● Willing to pay for a product that received good reviews on improving health habits

● Uses a smartphone and often visits social sites to post comments and images

● Wants to work out more regularly

● Is 34 and lives in the U.S.

“Get More With Fitbit” - Campaign Flow

Use both paid and owned channels to target current FitBit users w/o paid subscription.

Display Ads (Retargeting)

Premium Subscription Landing Page

30 Day Free Trial

Paid Subscription ($49 annual)

Paid

Push Notification

Owned (Little or No Additional Cost)

Newsletter and Announcements (email)

Display Ads (FitBit.com)

Social Channels

Device Box Inserts

Direct Marketing Conversion

No commitment 30 day free trial will result in high conversion to trial.

Premium Subscription Landing Page

30 Day Free Trial

Paid Subscription ($49 annual)

Paid

Click Thru Rate: 0.8%

Conversion: 30.0%

Conversion: 5.0%

No commitment

Opt in

● Impressions per paid: 8,333 ● Impressions per trial: 417● Using CPM rate of $5.00

o Cost per conversion: $41.67 (max is $56.49)o Cost per trial: $2.08 (max is $2.82)

● Max = 50% of 3 year subscription● We will monitor conversion to trial rates and

adjust CPM buys to stay below maximum.

Display Ads (Retargeting)

Model Details

● Optimizing spend with use of owned channels

● Using retargeting techniques to focus on device owners

o Retargeting spend tied to device sales

● Increase awareness with retail fixture and box inserts

● Seasonal adjustments

● Compounding effect of renewals

Projections

Q4 2014 2015 2016

Devices Sold (Million Units) 2.5 13 33

New Subscriptions (Owned Channels) 125,338 811,552 2,013,380

Total New Subscriptions 132,161 846,701 2,100,775

Subscription Revenue $6.61M $46.95M $138.35M

Marketing Cost $5.55M $7.79M $11.77M

● Fitbit Smart Coach will increase revenue and brand awareness

● Target market is current Fitbit users● Overall Marketing ask: $25 million

o - First quarter marketing ask: $5 million● Estimate revenue: $192 million

Summary

Appendix

Paid Marketing: Maximum Acquisition Cost

Allow higher acquisition costs since majority of new subs will be from owned channels and subscription also benefit hardware sales● Maximum acquisition cost is 50% of lifetime value = $56.49

o 50% of 3 years of subscription ($110.74)o Y1 ($49.99) + Y2 ($34.99 - 70%) + Y3 ($27.99 - 80%) = $112.98

● Premium subscriptions brings additional valueo Differentiates Fitbit and Increases perceived value of bando User with premium have higher loyalty (plus years of data)

● Risk of higher cancellation rate: Address with on-line pre-expiration campaigns to increase engagement before renewal

Sensitivity Analysis: Cost per Trial

CPM

Impressions per Trial (IPT)

400 500 600 700 800 900 1000 1100 1200$2.50 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 $3.00 $2.75 $1.10 $1.38 $1.65 $1.93 $2.20 $2.48 $2.75 $3.03 $3.30 $3.00 $1.20 $1.50 $1.80 $2.10 $2.40 $2.70 $3.00 $3.30 $3.60 $3.25 $1.30 $1.63 $1.95 $2.28 $2.60 $2.93 $3.25 $3.58 $3.90 $3.50 $1.40 $1.75 $2.10 $2.45 $2.80 $3.15 $3.50 $3.85 $4.20 $3.75 $1.50 $1.88 $2.25 $2.63 $3.00 $3.38 $3.75 $4.13 $4.50 $4.00 $1.60 $2.00 $2.40 $2.80 $3.20 $3.60 $4.00 $4.40 $4.80 $4.25 $1.70 $2.13 $2.55 $2.98 $3.40 $3.83 $4.25 $4.68 $5.10 $4.50 $1.80 $2.25 $2.70 $3.15 $3.60 $4.05 $4.50 $4.95 $5.40 $4.75 $1.90 $2.38 $2.85 $3.33 $3.80 $4.28 $4.75 $5.23 $5.70 $5.00 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $5.25 $2.10 $2.63 $3.15 $3.68 $4.20 $4.73 $5.25 $5.78 $6.30 $5.50 $2.20 $2.75 $3.30 $3.85 $4.40 $4.95 $5.50 $6.05 $6.60 $5.75 $2.30 $2.88 $3.45 $4.03 $4.60 $5.18 $5.75 $6.33 $6.90 $6.00 $2.40 $3.00 $3.60 $4.20 $4.80 $5.40 $6.00 $6.60 $7.20 $6.25 $2.50 $3.13 $3.75 $4.38 $5.00 $5.63 $6.25 $6.88 $7.50 $6.50 $2.60 $3.25 $3.90 $4.55 $5.20 $5.85 $6.50 $7.15 $7.80 $6.75 $2.70 $3.38 $4.05 $4.73 $5.40 $6.08 $6.75 $7.43 $8.10 $7.00 $2.80 $3.50 $4.20 $4.90 $5.60 $6.30 $7.00 $7.70 $8.40 $7.25 $2.90 $3.63 $4.35 $5.08 $5.80 $6.53 $7.25 $7.98 $8.70

Will adjust CPM based on IPT to keep costs per trial below $2.82 (expect $2.08)

Box Inserts - Quarterly

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

New Devices 2,500,000 3,375,000 1,875,000 1,875,000 6,250,000 8,437,500 4,687,500 4,687,500 15,625,000

Trials 750,000 1,012,500 562,500 562,500 1,875,000 2,531,250 1,406,250 1,406,250 4,687,500

Subscriptions 37,500 50,625 28,125 28,125 93,750 126,563 70,313 70,313 234,375

Revenue $1,874,625 $2,530,744 $1,405,969 $1,405,969 $4,686,563 $6,326,859 $3,514,922 $3,514,922 $11,716,406

Box Insert Cost

$225,000 $303,750 $168,750 $168,750 $562,500 $759,375 $421,875 $421,875 $1,406,250

30% trial rate, 5% conversion rate

Email Newsletter - Quarterly

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Opens 2,711,059 2,888,681 2,051,732 2,172,912 6,638,951 7,125,761 5,063,271 5,375,226 16,490,654

Clicks 94,887 101,104 71,811 76,052 232,363 249,402 177,214 188,133 577,173

Trials 28,466 30,331 21,543 22,816 69,709 74,820 53,164 56,440 173,152

New Subscriptions 1,423 1,517 1,077 1,141 3,485 3,741 2,658 2,822 8,658

Revenue $71,151 $75,813 $53,847 $57,028 $174,238 $187,014 $132,884 $141,071 $432,793

Subscription Rate (Opt Out) 50% Trial Rate 30%

Open Rate 24% Trial Conversion Rate 5%

Click Rate 3.50%

Push Notifications - Quarterly

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Opened Notifications 2.8M 4M 4.2M 4.5M 6.9M 9.9M 10.6M 11.2M 17.2M

Trials 847,206

1,203,617 1,282,333 1,358,070 2,074,672 2,969,067 3,164,544 3,359,516 5,153,329


Revenue $2.1M $3.0M $3.2M $3.4M $5.2M $7.4M $7.9M $8.4M $12.9M

50% of customers open a notification, 30% trial rate once open, 5% trial conversion rate

Fitbit.com Display Ads - QuarterlyQ4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Addressable Users 5.65M 8.02M 8.55M 9.05M 13.83M 19.79M 21.10M 22.40M 34.36M

Impressions 147M 209M 222m 235M 360M 515M 549M 582M 893M

Click Throughs 2.94M 4.17M 4.45M 4.71M 7.19M 10.29M 10.97M 11.65M 17.86M

Trials 881,094 1,251,762 1,333,626 1,412,393 2,157,659 3,087,830 3,291,126 3,493,897 5,359,462


Revenue $2.20M $3.13M $3.33M $3.53M $5.39M $7.72M $8.23M $8.73M $13.40M

Visits per week per device 2

CTR on Display Ads 2%

Display Ad Trial Rate 30%

Trial Conversion Rate 5%

Retargeting - Quarterly

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Imp.s/ Customer 10 10 5 3 10 10 5 3 10

Max Spend $284,296 $407,814 $218,340 $138,286 $700,113 $1,010,597 $542,091 $343,818 $1,744,968

New Subs 6,823 9,788 5,240 3,319 16,803 24,254 13,010 8,252 41,879

Revenue $341,087 $489,279 $261,955 $165,910 $839,967 $1,212,474 $650,380 $412,499 $2,093,543

CPM 5 Conversion Rate 5%

CTR 0.80% Cost Per Conversion $41.67

Trial rate 30%

Costs - QuarterlyQ4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Retail Fixture Costs $5,020,000 $5,020,000 $5,020,000

Creative Costs $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000

Box Insert Cost $225,000 $303,750 $168,750 $168,750 $562,500 $759,375 $421,875 $421,875 $1,406,250

Retargeting $284,296 $407,814 $218,340 $138,286 $700,113 $1,010,597 $542,091 $343,818 $1,744,968

Total New Subscribers 132,161 184,698 165,240 171,108 325,655 457,403 408,764 424,057 810,551

Renewals - - - - 92,513 129,289 115,668 119,775 301,969

Total Subscriptions 132,161 184,698 165,240 171,108 418,168 586,691 524,433 543,832 1,112,520

Subscription Revenue (Millions)

$6.61 $9.23 $8.26 $8.55 $20.90 $29.33 $26.22 $27.19 $55.61

Marketing Ask (Millions) $5.55 $0.74 $0.41 $0.33 $6.31 $1.79 $0.99 $0.79 $8.20

fitbit go-to market plan

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