Post on 08-May-2015
The Future Of Digital Henry Blodget CEO & EIC, Business Insider
The medium is now ~20 years old.
So, how are we doing?
2+ billion people online
0"
500"
1,000"
1,500"
2,000"
2,500"
1990" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011"
(millions))
Global)Internet)Popula4on)
Source:(Interna-onal(Communica-on(Union,(Google(
2/3 of the world left to go
Global&Popula*on&
Internet&Popula*on&
0"
1,000"
2,000"
3,000"
4,000"
5,000"
6,000"
7,000"
1990" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011"
(millions)&
Global&Internet&Popula*on&
Source:(Interna-onal(Communica-on(Union,(Google(
However…
Most of the money is already online
Bo#om%70%percent%18%%
Top%30%percent%82%%
Distribu(on+Of+Global+Income,+2000++
Source:(UN(Human(Development(Report,(Trends(In(Global(Income(Distribu=on(
So the market’s more mature than you think.
Meanwhile, something profound happened last
year…
PC growth stalled
HP#
Lenovo#
Dell#
Acer#
Apple#
Other#
0"
10,000"
20,000"
30,000"
40,000"
50,000"
60,000"
70,000"
80,000"
90,000"
100,000"
1Q08" 2Q08" 3Q08" 4Q08" 1Q09" 2Q09" 3Q09" 4Q09" 1Q10" 2Q10" 3Q10" 4Q10" 1Q11" 2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12"
Global#PC#Shipments#By#Manufacturer#
Source:(Gartner,(IDC(
iPad"released"
Smartphone sales blew past PC sales
Personal)Computers)
Smartphones)
Tablets)
)3))))
)100,000,000))
)200,000,000))
)300,000,000))
)400,000,000))
)500,000,000))
)600,000,000))
)700,000,000))
)800,000,000))
)900,000,000))
)1,000,000,000))
2000) 2001) 2002) 2003) 2004) 2005) 2006) 2007) 2008) 2009) 2010) 2011)
Units)
Global)Internet)Device)Sales)
Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(filings,(BI(Intelligence(es5mates(
Tablets are now driving all the growth in PC market
PCs$
Tablets$
0"
20,000"
40,000"
60,000"
80,000"
100,000"
120,000"
140,000"
1Q08"2Q08"3Q08"4Q08"1Q09"2Q09"3Q09"4Q09"1Q10"2Q10"3Q10"4Q10"1Q11"2Q11"3Q11"4Q11"1Q12"2Q12"3Q12"
(tho
usan
ds)$
Global$Computer$Shipments$
Source:(Gartner,(IDC,(Strategy(Analy5cs(company(releases(
So the future is mobile
Fixed& Fixed&Fixed&
Mobile&
Mobile&
0&
500&
1,000&
1,500&
2,000&
2,500&
3,000&
2005& 2010& 2015&
Consumer&Broadband&Connec:ons&(milions)&
G>20&Internet&Access&
Source:(Boston(Consul/ng(Group,(Mary(Meeker,(Kleiner(Perkins,(Morgan(Stanley(Research,(Berg(Insight(
Where are we in the mobile revolution?
Globally, we’re still early…
1B#Smartphone#
Users#
6B#Mobile#
Phone#Users#
0#
1,000#
2,000#
3,000#
4,000#
5,000#
6,000#
7,000#
Smartphone# Mobile#Phone#
Glob
al&Users&(m
illions)&
Source:#Strategy#AnalyCcs,#InternaConal#TelecommunicaCons#Union#Note:#Some#users#own#more#than#one#device#
Global&Smartphone&vs.&Mobile&Phone&Users,&2012E&
But growth slows after 50% penetration
U.S. and other markets are past halfway point
Feature'Phones'
55%'
Smartphones''
50%'
45%'
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
Oct/10#Nov/10#Dec/10# Jan/11# Feb/11#Mar/11#Apr/11#May/11#Jun/11# Jul/11# Aug/11#Sep/11# Oct/11#Nov/11#Dec/11# Jan/12# Feb/12#Mar/12#Apr/12#May/12#Jun/12#
U.S.'Smartphone'Penetra6on'
Source:(Nielsen(
US smartphone growth starting to slow
0"
5"
10"
15"
20"
25"
30"
35"
40"
Q1"2008"
Q2"2008"
Q3"2008"
Q4"2008"
Q1"2009"
Q2"2009"
Q3"2009"
Q4"2009"
Q1"2010"
Q2"2010"
Q3"2010"
Q4"2010"
Q1"2011"
Q2"2011"
Q3"2011"
Q4"2011"
Q1"2012"
Q2"2012"
Q3"2013"
Users%Added%
(millions)%
U.S.%Smartphone%Market:%Year9Over9Year%Net%Adds%
Source:(comScore,(Nielsen(
Most future US smartphone buyers will be older and poorer
56%$
43%$
31%$
18%$16%$ 16%$
53%$
58%$
44%$
32%$
17%$15%$
69%$
65%$
50%$
30%$
23%$
16%$
70%$
65%$
52%$
41%$
27%$
21%$
65%$
74%$
63%$
51%$
42%$
24%$
77%$80%$
75%$
60%$
48%$
38%$
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
Ages#18#1#24# Ages#25#1#34# Ages#35#1#44# Ages#45#1#54# Ages#55#1#64# Ages#65+#
Smartphone#Penetra=on#By#Age#And#Income#(U.S.)#
<15k# 15k#1#35k# 35k#1#50k# 50k#1#75k# 75k#1#100k# 100k+#
Source: Nielsen
So the focus is on markets like China, which now accounts for ~25% of smartphone sales.
Rest%Of%The%World%
China%
!"!!!!
!20,000!!
!40,000!!
!60,000!!
!80,000!!
!100,000!!
!120,000!!
!140,000!!
!160,000!!
!180,000!!
1Q11! 2Q11! 3Q11! 4Q11! 1Q12! 2Q12!
(tho
usan
ds)%
Global%Smartphone%Shipments%
Source:(Gartner,(IDC,(Strategy(Analy5cs,(Canalys,(BII(es5mates(
China is already twice the size of US market
Mobile'
Broadband'
Total'
0"
100"
200"
300"
400"
500"
600"
June"06" Dec"06" June"07" Dec"07" June"08" Dec"08" June"09" Dec"09" June"10" Dec"10" June"11" Dec"11" June"12"
(millions)'
Chinese'Internet'Users'
Source:(China(Internet(Network(Informa5on(Center(
MEDIA
Remember when they said no one would ever pay for content?
Digital content revenues are exploding
iTunes'
Ne)lix'
$0#
$2,000,000#
$4,000,000#
$6,000,000#
$8,000,000#
$10,000,000#
$12,000,000#
$14,000,000#
2005# 2006# 2007# 2008# 2009# 2010# 2011#
Total''Digital'Content'Revenue'
(thousands)'
Source:(BI(Intelligence,(company(filings(
Digital'Content'Revenue,'2005<2011'
Zynga'
Dropbox'SpoDfy'
Hulu'LinkedIn'
NY'Times'Digital'WSJ'Digital'TheStreet.com'
Glenn'Beck'TV'
Kindle
Digital Advertising still growing rapidly
$0#
$5#
$10#
$15#
$20#
$25#
$30#
$35#
1995# 1996# 1997# 1998# 1999# 2000# 2001# 2002# 2003# 2004# 2005# 2006# 2007# 2008# 2009# 2010# 2011#
(billions))
U.S.)Digital)Adver6sing)
Source:(IAB(
At largest U.S. tech and media companies, nearly 40% of ad revenue is digital
77%#share#
62%#share#
23%#share#
38%#share#
$0#
$10,000#
$20,000#
$30,000#
$40,000#
$50,000#
$60,000#
$70,000#
$80,000#
2006# 2007# 2008# 2009# 2010# 2011#
U.S.$Adver*sing$Revenue$(millions)$
Source:#Company#filings#and#BI#Intelligence#esFmates.#Companies#include:#Google,#Yahoo,#AOL,#MicrosoN,#Facebook,#Time#Warner,#Disney,#Viacom,#CBS,#News##Corp,#New#York#Times,#GanneX,#McClatchy,#Time#Inc,#Entercom,#CBS#Radio,#Clear#Channel,#Citadel,#Cum#
Online$vs.$Offline$Adver*sing$(U.S.),$2006<2011$
Online
Offline
TV still biggest. Online close behind. Print getting smashed.
41%$ 42%$
10%$
23%$13%$
14%$
20%$
9%$
11%$
7%$
6%$
4%$
$0$
$10,000$
$20,000$
$30,000$
$40,000$
$50,000$
$60,000$
$70,000$
$80,000$
2006$ 2007$ 2008$ 2009$ 2010$ 2011$
U.S.$Adver*sing$Revenue$(millions)$
Source:$Represents$annual$U.S.$adverAsing$revenue$for$20$large$media$companies$based$on$company$filings$and$our$own$esAmates$
U.S.$Adver*sing,$2006:2011$
All$Other$Online$
Television$
Print$
Radio$Outdoor$
Digital has already “disrupted” one media sector…
As news consumption moved online…
17%$
5%$
1%$ 1%$ 1%$
&1%$
&4%$
23%$
&4%$
&7%$
1%$
9%$
&6%$&7%$
&10%$
&5%$
0%$
5%$
10%$
15%$
20%$
25%$
Online$$ Network$TV$ Local$TV$ Audio$ Cable$TV$ Magazines$ Newspaper$
News%Media%Audience%and%Revenue%Growth,%201092011%%%
Audience$Growth$ Revenue$Growth$Source:(Nielsen(Media(Research,(the(Audit(Bureau(of(Circula9on(and(Arbitron,(SNL(Kagan,(eMarketer,(Veronis(Suhler(Stevenson,(Radio(Adver9sing(Bureau,(Publishers(Informa9on(Bureau,(Na9onal(News(Associa9on,(BIA/Kelsey(
Newspaper ad revenue collapsed
Google now generates as much U.S. ad revenue as newspapers and magazines (all of them)
$0##
$5,000##
$10,000##
$15,000##
$20,000##
$25,000##
$30,000##
$35,000##
$40,000##
$45,000##
$50,000##
2004# 2005# 2006# 2007# 2008# 2009# 2010# 2011# 1H2012#
U.S.$Ad$Revenue$(millions)$
Source:(Google,(NAA,(PIB(
Google$Generates$More$U.S.$Ad$Revenue$Than$Newspapers$
Google#(U.S.)# U.S.#Magazines## U.S.#Newspapers##
(Some) paywall subscriptions are growing, but…
0"
100"
200"
300"
400"
500"
600"
2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12"
(tho
usan
ds)+
Source:(company(releases(Note:(does(not((include(print(subcribers(with(digital(access(
New+York+Times+Digital+Subscribers+
“Digital dimes” don’t offset lost print dollars
!$#!!!!
!$10,000!!
!$20,000!!
!$30,000!!
!$40,000!!
!$50,000!!
!$60,000!!
2003! 2004! 2005! 2006! 2007! 2008! 2009! 2010! 2011!
In!M
illions!
Source:(Newspaper(Associa0on(Of(America(
Newspaper(Ad(Revenue((Print(vs.(Online)(
Print! Online!
Of course, print news is old news…
Now the question is…
Is TV next?
5.3$
5.4$
5.5$
5.6$
5.7$
5.8$
5.9$
6.0$
6.1$
6.2$
2007-2008$ 2008-2009$ 2009-2010$ 2010-2011$ 2011-2012$
Nielsen'Prime+me'Household'Ra+ngs'
Big$4$U.S.$TV$Networks$Average$
For now, TV ad spending still growing
$58$
$60$
$62$
$64$
$66$
$68$
$70$
$72$
$74$
2007$ 2008$ 2009$ 2010$ 2011$
Total&TV&Ad&Spend&(billions)&
TV&Ad&Spend,&200772011&
Source:(Nielsen(
But behavior is changing
82%$ 83%$
64%$
17%$ 16%$
26%$
6%$ 6%$
8%$
7%$
2004$ 2008$ 2012$
%"of"T
V"set"u
sers"
Source:(GfK(
U.S."Prime2me"TV"Viewing"(%"of"18949"TV"set"users"during"899"PM"hour,"mul2ple"responses"permiBed)"
Live$TV$ Recorded$TV$ Video$game$ Streaming$video$
Pay TV subscriptions are now trending down
Source: Bernstein Research
Cable&
Satellite&
TelCo&
Total&
!1000$
!800$
!600$
!400$
!200$
0$
200$
400$
600$
800$
1000$
1Q09$ 2Q09$ 3Q09$ 4Q09$ 1Q10$ 2Q10$ 3Q10$ 4Q10$ 1Q11$ 2Q11$ 3Q11$ 4Q11$ 1Q12$ 2Q12$ 3Q12$
Subscriber&Net&Addi3ons&(thousands)&
Pay&TV&Subscriber&Net&Addi3ons&
‘Over-‐the-‐top’ video is real and growing fast.
Ne#lix'
YouTube'
Hulu'
$0#
$1,000#
$2,000#
$3,000#
$4,000#
$5,000#
2006# 2007# 2008# 2009# 2010# 2011#
Total'Digital'
Revenues'(millions)'
Source:#Company#filings#and#BI#Intelligence#esDmates#
Digital'Video'Revenue,'2006?2011'
Live events are increasingly being viewed over the Internet
0%#
50%#
100%#
150%#
200%#
250%#
300%#
2(Jul# 9(Jul# 16(Jul# 23(Jul# 30(Jul# 6(Aug# 13(Aug# 20(Aug# 27(Aug# 3(Sep# 10(Sep# 17(Sep# 24(Sep#
Source:(Ooyala(
Growth'Of'Total'Live'Video'Viewing'Time'Via'Connected'TV'Devices'And'Gaming'Consoles'(Q3'2012)'
Digital video advertising is on the rise
$0#
$500#
$1,000#
$1,500#
$2,000#
$2,500#
2006# 2007# 2008# 2009# 2010# 2011#
(millions))
Online)Video)Ad)Revenue)(U.S.))
Source:(Interac-ve(Adver-sing(Bureau,(eMarketer,(comScore,(BI(Intelligence(es-mates(
But as with print, digital = less money than TV
75.2%&
98.5%&92.1%&
24.8%&
1.5%&7.9%&
0%&
10%&
20%&
30%&
40%&
50%&
60%&
70%&
80%&
90%&
100%&
TV& Online&video& Streaming&TV&online&
Source:(comScore,(June(2012(
Ad#Loads,#TV#vs.#Digital#(%#share#of#programming)#
Content& Ads&
What does history teach us?
As habits change…
The money follows.
By the way, “old media” isn’t the only media being
disrupted...
Americans now spend more time on social networks than portals
Social'Networks'
Portals'
0'
5'
10'
15'
20'
25'
30'
Nov62010' Dec62010' Jan62011' Feb62011' Mar62011' Apr62011'May62011' Jun62011' Jul62011' Aug62011' Sep62011' Oct62011' Nov62011' Dec62011'
Average'Minutes'Per'Usage'Day'
Average'Time'Spent:'Portals'vs.'Social'Networks'(U.S.)'
Source:(comScore(
1/7th of the world’s population now use Facebook
Monthly(Ac+ve(Users(
Daily(Ac+ve(Users(
0(
100(
200(
300(
400(
500(
600(
700(
800(
900(
1,000(
1,100(
1Q09( 2Q09( 3Q09( 4Q09( 1Q10( 2Q10( 3Q10( 4Q10( 1Q11( 2Q11( 3Q11( 4Q11( 1Q12( 2Q12( 3Q12(
Ac+ve(Users(
(millions)(
Facebook(Ac+ve(Users(
Time spent on Yahoo, et al, continues to decline
0%#
2%#
4%#
6%#
8%#
10%#
12%#
14%#
16%#
1Q07#2Q07#3Q07#04Q7#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Yahoo%Time%Spent%%%vs.%Total%Internet%(U.S.)%
Source:(comScore,(Ci-(Investment(Research(And(Analysis(
Now, in online ads, it’s Google, Facebook, and “other”…
Facebook has blown past AOL, Microsoft, and Yahoo
Google&
Facebook&
Microso0&
Yahoo&
AOL&Other&
$0#
$1,000#
$2,000#
$3,000#
$4,000#
$5,000#
$6,000#
$7,000#
$8,000#
$9,000#
2Q06#3Q06#4Q06#1Q07#2Q07#3Q07#4Q07#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Digital&Adver:sing&Revenue&(millions)&
U.S&Digital&Adver:sing&
Source:(company(filings(BII(es5mates(
40%&
11%&
30%&
13%&6%&
55%&
11%&
8%&
7%&
4%&
15%&
YouTube, Hulu, Glam, Twitter, Demand, et al., also taking portal share…
Facebook(YouTube(
WebMD(
Hulu(
Demand(Media(
Twi6er(Federated(Media(
Glam(Media(
$0#
$200#
$400#
$600#
$800#
$1,000#
$1,200#
$1,400#
$1,600#
$1,800#
2Q06#3Q06#4Q06#1Q07#2Q07#3Q07#4Q07#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Digital(Adver=sing(Revenue((millions)(
US(Digital(Adver=sing:(New(Growth(Companies(
Source:(company(filings(BII(es5mates(
“Display” ad growth is flattening
Google&
Other&
Yahoo&
AOL&
Microso3&
$0#
$500#
$1,000#
$1,500#
$2,000#
$2,500#
$3,000#
2Q06#3Q06#4Q06#1Q07#2Q07#3Q07#4Q07#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Display&Adver9sing&Revenue&(millions)&
U.S.&Display&Adver9sing&
Source:(company(filings,(BII(es6mates(
Real-‐time bidding is automating what’s left
0%#
5%#
10%#
15%#
20%#
25%#
30%#
2010# 2011# 2012# 2013# 2014# 2015# 2016#
Source:(eMarketer(
RTB$As$%$Of$Digital$Display$Ad$Spending$
So, will Facebook ever be bigger than Google?
Unlikely.
Google is like advertising at a store.
Facebook is like advertising at a party.
Social referrals to commerce sites are tiny
Facebook referrals up 92% year-over-year…
80.6%&
9.7%& 7.5%& 1.7%& 0.5%& 0.02%&0.0%&
10.0%&
20.0%&
30.0%&
40.0%&
50.0%&
60.0%&
70.0%&
80.0%&
90.0%&
Google& Yahoo& Bing& AOL& Facebook& TwiBer&
Percentage&Of&Traffic&&
Drivers&of&ELCommerce&Traffic&
Source:(RIchRelevance(
And speaking of advertising at stores...
E-‐tailers are now building ad businesses
0"
5,000"
10,000"
15,000"
20,000"
25,000"
30,000"
Q3"2011" Q4"2011" Q1"2012" Q2"2012" Q3"2012"
(MM)"
Source:(comScore(
U.S.$Retailers:$Total$Display$Ad$Impressions$$
""""Other" """"Target"Corpora8on" """"Best"Buy"Sites" """"WalBMart" """"Amazon"
Amazon ad revenue is already $1+ billion a year…
And as eCommerce continues to take share…
Offline&Retail&Sales&
E.Commerce&
$0#
$500,000#
$1,000,000#
$1,500,000#
$2,000,000#
$2,500,000#
$3,000,000#
$3,500,000#
$4,000,000#
$4,500,000#
$5,000,000#
1995# 1996# 1997# 1998# 1999# 2000# 2001# 2002# 2003# 2004# 2005# 2006# 2007# 2008# 2009# 2010# 2011#
(millions)&
U.S.&Retail&Sales&
Source:(Federal(Reserve(Economic(Data66St.(Louis(Fed,(BI(Intelligence(es=mates(
New brands are blending marketing and commerce
Groupon'
Gilt'Groupe'
LivingSocial'
Rue'La'La'
HauteLook'
Beyond'The'Rack'
Zulily'
Ideeli'
One'King's'Lane'
ShoeDazzle'
Fab'
$0'
$500'
$1,000'
$1,500'
$2,000'
$2,500'
$3,000'
$3,500'
2008' 2009' 2010' 2011'
Total'Revenue'(millions)'
Social'Commerce'Revenues'
Source:(Company(Filings,(BII(Es8mates(
MOBILE
So, what do people do on mobile?
Well, first, they do pretty much everything they do online…
They play games and social-‐network…
25# 24#
15#24#
11#
12#10#
10#7#
7#
Q1#2011# Q1#2012#
Daily&Smartphone&App&Consump4on,&Minutes&Per&Category&
Games# Social#Networking# News# Entertainment# Other#Source:(Flurry(Analy/cs(
They listen to music...
5%#
Pandora#
70%#
1%#
Facebook#33%#
Twi6er#
55%#
0%#
25%#
50%#
75%#
2008# 2009# 2010# 2011#
%#of#T
raffic#from
#Mob
ile#
Source:#Mary#Meeker,#Kleiner#Perkins,#companies#
They consume content…
134%%
94%%
82%%
80%%77%%
74%%
74%%
72%%
70%%
69%%
0%
5,000%
10,000%
15,000%
20,000%
25,000%
30,000%
35,000%
Health%Informa:on%
Online%Retail% Men's%Magazine%Content%
Electronic%Payment%
Gaming%Informa:on%
Job%Lis:ngs% General%Reference%
Classifieds% Auc:on%Sites% Family%Entertainment%
Total&Mobile&Audience&
(thousands)&
Top&Mobile&Categories&By&Growth&In&Audience,&Dec.&2010&vs.&Dec.&2011&(U.S.)&
DecS10% DecS11%
Source:(comScore(MobieLens,(3(mon.(avg.(ending(Dec82011(vs.(Dec82010(
They look at pictures and video.
63#93#
110#
152#
231#
276#
324#
378#
472#
425#
Mar#2011# June#2011# Sept#2011# Dec#2011# Mar#2012#
U.S.$Video$Engagement,$Monthly$Minutes$Per$Ac;ve$User$
Google#Internet#Sites# iOS#&#Android#Photo#&#Video#Apps#
Source:(Flurry(Analy/cs,(comScore(Video(Matrix(
They use their devices while they watch TV
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
Monthly# Mul5ple#Times#A#Week# Daily##
Source:(Nielsen(Cross/Pla2orm(Report(Q2,(2012(
Percentage)Of)Smartphone)Users)Who)Use)Their)Phones)While)Watching)TV)
They shop…
PC#
Smartphone#Tablet#
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Ecommerce#Website#Traffic#By#Device#
Source:(Monetate(
They use smartphones to make buying decisions in stores.
19.7%&18.8%&
20.4%&
14.6%&
13.1%&14.1%&
8.3%&
10.9%&
6.3%&
24.0%&
22.3%&
16.2%&
20.2%&
12.3%&
10.0%&11.1%&
7.2%&
5.2%&
Took&Picture&Of&Product&
Texted/Called&Friends/Family&About&Product&
Scanned&A&Product&Barcode&
Sent&Picture&Of&Products&To&
Family/Friends&
Found&Store&LocaJon&
Compared&Product&Prices&
Found&Coupons&For&Deals&
Research&Product&Features&
Checked&Product&Availability&
U.S.$Smartphone$Owners$Ac3vity$In$Retail$Stores$
Males& Females&
They pay for stuff
$0#
$1,000#
$2,000#
$3,000#
$4,000#
$5,000#
2008# 2009# 2010# 2011#
Total##Payment#Volume#(millions)#
PayPal#Mobile#Payments#Processed#
They buy content
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
Downloaded#Music#
Books# Movies# Magazines# TV#Shows# Streaming#Radio#
Sports# News#
Media&Content&Paid&For&On&A&Tablet,&Q4&2011&
US# Italy# UK## Germany#Source:(Nielsen(
And they do stuff they DON’T do online…
Play Angry Birds, et al
0"
100,000"
200,000"
300,000"
400,000"
500,000"
600,000"
700,000"
Mar"10" Jun"10" Sept"10" Dec"10" Mar"11" Jun"11" Sept"11" Dec"11"
Total&Downloads&Or&Sales&
(thousands)&
Angry&Birds&Downloads&vs.&Nintendo&DS&Sales&
Note:&Includes&Nintendo&3DS&Sales&Source: New reports, company releases, BI Intelligence estimates
Take and share pictures
0"
10,000"
20,000"
30,000"
40,000"
50,000"
60,000"
70,000"
80,000"
90,000"
100,000"
3/2011" 4/2011" 5/2011" 6/2011" 7/2011" 8/2011" 9/2011" 10/2011"11/2011"12/2011" 1/2012" 2/2012" 3/2012" 4/2012" 5/2012" 7/2012" 7/2012" 8/2012" 9/2012"
Total&&Users&
(thousands)&
Instagram&Es5mated&Users&
Source:(news(reports,(company(releases,(BII(Es6mates(
BOTTOM LINE:
Mobile devices = More Internet usage +
New applications
Source: comScore, Telefonica, Macquarie Capital (USA), December 2011
In fact, mobile has made digital 24/7
Share Of Device Page Traffic Over A Day:
This leads to another big question…
Mobile usage is up across the board
Sent%Text%Message%
Used%Browser%
Used%Downloaded%Apps%
Played%games%
Accessed%Social%Network%%Or%Blog%
Listened%to%music%%
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
Feb#10#
Apr#10#
May#10#
Jun#10#
Jul#10#
Aug#10#
Sept#10#
Oct#10#
Nov#10#
Dec#10#
Jan#11#
Feb#11#
Mar#11#
Apr#11#
May#11#
Jun#11#
Jul#11#
Aug#11#
Sept#11#
Oct#11#
Nov#11#
Dec#11#
Jan#12#
Feb#12#
Mar#12#
Apr#12#
May#12#
June#12#
July#12#
Aug#12#
Sep#12#
Share%of%m
obile%pop
ulaC
on%th
at%has...%
U.S.%Mobile%Content%Usage%
Source:(comScore(
People are consuming a huge amount of content through mobile…
41%$
27%$ 26%$23%$
59%$
53%$
29%$ 29%$
22%$
9%$ 10%$ 9%$5%$
57%$53%$
25%$27%$
20%$
Books$ Movies$ TV$Shows$ Magazines$ News$ Social$Networking$
Downloaded$Music$
Sports$ Streaming$Radio$
Media&Content&Accessed&Through&Mobile&Device&
Tablet$ Smartphone$
Source:(Nielsen(Q4(2011(Mobile(Connected(Device(Report(
As mobile increases, all other media decreases
45%$
25%$
17%$
4%$
9%$7%$
44%$
26%$
16%$
6%$8%$ 8%$
43%$
26%$
15%$
9%$7%$ 7%$
42%$
26%$
14%$12%$
6%$ 5%$
TV$ Online$ Radio$ Mobile$ Print$ Other$
Source:(eMarketer,(October(2012(
Share&Of&Consumer&Time&Spent&With&Major&Media&
2009$ 2010$ 2011$ 2012$
So mobile advertising will be huge, right?
Hmmm…
The “bullish” mobile-‐ad story is the huge gap between time-‐spent and ad spending.
42%$
25%$22%$
11%$
1%$
43%$
7%$
26%$
15%$
10%$
TV$ Print$ Web$ Radio$ Mobile$
2011$U.S.$Ad$Spending$vs.$Consumer$Time$Spent$By$Media$
Ad$Spend$Per$Media$ Time$Spent$Per$Media$
Source: Mary Meeker (KPCB), eMarketer, IAB
But maybe there’s a good reason for that gap…
The screen is really small.
Mobile monetization still behind the desktop
$3.87& $5.00&
$17.61&
$6.62&
$25.00&
$58.95&
Pandora& Zynga& Tencent&
ARPU,&Desktop&vs.&Mobile&&
Mobile& Desktop&
Source:(Pandora,(Zynga,(Tencent(
Mobile CPMs are much lower
$3.50&
$0.75&
Desktop&Internet& Mobile&Internet&
Effec%ve'CPM,'Desktop'vs.'Mobile'
Source:(comScore,(Vivaki,(Mobclix(Exchange(
Most “mobile” ads are mainly web search + display ads viewed on mobile
Search'62%'
Display'28%'
Messaging'10%'
2011$Global$Mobile$Ad$Spend$By$Category$
Source:((IAB(
Google completely owns mobile search
Google&
Yahoo!& bing&
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Dec#08#
Mar#09#
Jun#09#
Sep#09#
Dec#09#
Mar#10#
Jun#10#
Sep#10#
Dec#10#
Mar#11#
Jun#11#
Sep#11#
Dec#11#
Mar#12#
Jun#12##
Sep#12#
Global&Mobile&Search&Market&Share&
Source:(Global(StatCounter(
So Google owns mobile, too
Google&
Millennial&Media&
Pandora&Apple&
Yahoo&Microso4&Other&
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
1Q09# 2Q09# 3Q09# 4Q09# 1Q10# 2Q10# 3Q10# 4Q10# 1Q11# 2Q11# 3Q11# 4Q11#
Mobile&Ad&Market&Share&
Source:(news(reports,(company(releases,(BII(es5mates(
Overall, mobile is still a tiny fraction of digital ad spending.
Mobile'
$0#
$5#
$10#
$15#
$20#
$25#
$30#
$35#
2007# 2008# 2009# 2010# 2011#
(billions)'
U.S.'Digital'Adver7sing'Revenues'
Source:((IAB,(BIA-Kelsey,(BII(es2mates(
And it’s growing much slower than TV + Internet in the first 5 years
$358%
$1,012%
$2,162% $2,162%
$3,698%
$80% $160%$392%
$806%
$1,171%
$55%$267%
$907%
$1,920%
$4,621%
$0%
$500%
$1,000%
$1,500%
$2,000%
$2,500%
$3,000%
$3,500%
$4,000%
$4,500%
$5,000%
Year%1% Year%2% Year%3% Year%4% Year%5%
Compara've*U.S.*Adver'sing*Media*Annual*$*Revenue*Growth*(First*5*Years)*
Broadcast%TV% Mobile% Internet%
Source:((IAB,(McCann1Erickson,(BIA1Kelsey,(BII(es9mates( Note:(Adjusted(for(infla9on(
But!
“Native” mobile ads are finally beginning to appear…
• Ads in timelines (Twitter / Facebook) • Shareable ads • Location-‐based mobile ads
Location-‐based mobile ads can target users at the mall, restaurants, car dealers …
0"10"20"30"40"50"60"70"80"
Mall"
Library"
School"Campus"
Hotel"
Airport"
Big"Box"Retailers"
Quick"Service"Restaurants"
Other"Restaurants"
Electronics"Retailers"
Car"Dealers"
Clothing"Retailers"
Source:(JiWire,(Q3(2012(
Monthly(Ad(Requests(Per(Mobile(User(By(Loca9on(
Targeted mobile ads have higher CPMs
!$10.00!!
!$5.00!!
!$5.00!!
!$3.50!!
!$(!!!! !$2.00!! !$4.00!! !$6.00!! !$8.00!! !$10.00!! !$12.00!!
Flurry!video!ads!
Adsmobi!video!ads!
LSN!Mobile!local!ads!!
xAd!local!
Source:(Ad(pla.orms,(BII(Research,(Greg(Sterling,(Opus(Research(
CPMs%For%Selected%Mobile%Ad%Pla3orms%
So, yes, mobile ads are just getting started
Media&
Local&
$0#
$1,000#
$2,000#
$3,000#
$4,000#
$5,000#
$6,000#
$7,000#
2009A# 2010A# 2011A# 2012E# 2013E# 2014E# 2015E# 2016E# 2017E#
Mobile&Ad&Revenue&(millions)&
U.S.&Mobile&Ad&Forecast&
We are here
APPS
App Store downloads on pace to hit 60 billion by mid-‐2013
0"
5,000,000,000"
10,000,000,000"
15,000,000,000"
20,000,000,000"
25,000,000,000"
30,000,000,000"
35,000,000,000"
40,000,000,000"
45,000,000,000"
50,000,000,000"
55,000,000,000"
60,000,000,000"
65,000,000,000"
1/1/11"
2/1/11"
3/1/11"
4/1/11"
5/1/11"
6/1/11"
7/1/11"
8/1/11"
9/1/11"
10/1/11"
11/1/11"
12/1/11"
1/1/12"
2/1/12"
3/1/12"
4/1/12"
5/1/12"
6/1/12"
7/1/12"
8/1/12"
9/1/12"
10/1/12"
11/1/12"
12/1/12"
1/1/13"
2/1/13"
3/1/13"
4/1/13"
5/1/13"
6/1/13"
Apple%App%Store%Downloads%
Smartphone users spend more time on apps than web
Mobile'Web''
Apps'
0"
20"
40"
60"
80"
100"
120"
140"
Mar+11" Apr+11" May+11" Jun+11" Jul+11" Aug+11" Sep+11" Oct+11" Nov+11" Dec+11" Jan+12" Feb+12" Mar+12"
Minutes'Spent'Per'Month'(Biillions')'
Total'Time'Spent'Using'Mobile'Web'vs.'Apps'
Source:(Nielsen(Smartphone(Analy5cs(
Mobile app revenue is growing fast, but still relatively small.
$0#
$500#
$1,000#
$1,500#
$2,000#
$2,500#
$3,000#
$3,500#
$4,000#
2008# 2009# 2010# 2011#
(millions))
Mobile)App)Revenue)
Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(
Because most downloads are free
Mobile'App'Store'Downloads,'Free'vs.'Paid:'2011'
Source:(Garner,(September(2012(
Total'Downloads'
Free$Downloads$89%$
“Freemium” is the dominant model
Games are the biggest money makers
Mobile has become a platform game.
Platform markets tend to standardize around one or two
platforms.
Right now, mobile is a two-‐horse race.
Android'
Apple'
Blackberry'
Windows'
Other'
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Q1#2009# Q2#2009# Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Global'Mobile'Pla:orm'Market'Share'
Source:(Gartner,(IDC,(Strategy(Analy5cs,(BI(Intelligence(es5mates,(and(company(filings#
Android has the largest smartphone platform globally.
Android'
Apple'
Blackberry'
Symbian'
Other'Microso8'
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Share'of'Global'Unit'
Sales'
Smartphone'Market'Share'By'OS'(Global)'
Source:(Gartner(
Partly because it owns China
Android'
Apple'
Symbian'
Other'
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#Source:(Analysys(Interna1onal(
Chinese'Smartphone'Market'Share'By'Pla9orm'
And it’s the same two-‐horse story in tablets
iPad%
Android%
Kindle%
Nook%Blackberry%
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Tablet%Market%Share%By%Pla8orm%
Source:(Es+mates(based(on(informa+on(from(IDC,(Strategy(Analy+cs,(and(company(filings#
But a big mystery has arisen...
Where are all these Android users?
Apple is dominating app revenue
Apple%iOS%
Android%%
Other%
$0#
$500#
$1,000#
$1,500#
$2,000#
$2,500#
$3,000#
$3,500#
$4,000#
2008# 2009# 2010# 2011#
(millions)%
Mobile%App%Revenue%By%Pla<orm%
Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(
And most commerce and web traffic is from Apple
iPad%
iPhone%
Android%
Android%Tablets%Other%
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Monetate(
Ecommerce%Website%Traffic%By%Mobile%Pla:orm%
Do Android folks actually use their devices?
Mobile profits are going mainly to two players.
Apple%Nokia%
Samsung%
RIM%
Motorola%
Sony%Ericcson%
LG% HTC%
!20%%
!10%%
0%%
10%%
20%%
30%%
40%%
50%%
60%%
70%%
80%%
2007% 2008% 2009% 2010% 2011% Q1%2012% Q2%2012% Q3%2012%
Opera?ng%Profit%Share%By%Vendor%
Source:(Company(releases,(Canaccord(Genuity(es6mates(
So, what’s the future of media?
Digital?
Yes.
Mobile?
Yes.
Mobile ONLY?
No.
Digital is now a 4-‐screen world…
Maybe 5 screens soon…
But mobile FIRST?
Only if you have a totally mobile-‐centric app...
...Or you want to annoy your users and customers.
Thank you very much.
Henry Blodget Founder, CEO & Editor-in-Chief, Business Insider
Alex Cocotas, Analyst
Marcelo Ballvé, Editorial Director
BI Intelligence is a new subscription service from Business Insider that provides in-‐depth insight, data, and analysis of the mobile industry. More info at intelligence.businessinsider.com
Peter Lee, Intern
Josh Luger, Director of Subscription Products