OMMA Display 2011 -- Transformation of the Measurement Industry: How Much Can Be Attributed to M&A
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Transcript of OMMA Display 2011 -- Transformation of the Measurement Industry: How Much Can Be Attributed to M&A
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 drivingtechnology 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)
Source: IAB Internet Advertising Report, BusinessWeek
$7.1
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
2001
• Highly manual processes
• Little to no accurate measurement methodology
“…big advertisers still don't see the value of the Internet yet,"
Morgan Stanley analyst Michael Russell - July ’01
“… experts in the field now say that advertisers ought to forget about click-throughs… Online ads aren't meant only to spawn direct sales.. They're also for establishing or burnishing a brand…”
BusinessWeek – July ‘01
5
Tried and True Methodologies Were Manual, Expensive and Hard to Scale
Random Digit Dialing
Mall Intercepts / Interviews Focus Groups Mailed Surveys
Set Meters
6
The Web Quickly Developed Scale and Use
43%
79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2000 2010
Doubling of U.S. Online Penetration
Radio
15%
Other
7%
Magazines
3%
TV | Video
39%
Newspaper
5%
Mobile
8%
Internet
23%
Time Spent on Internet + Mobile Approaching TV
Source: eMarketer
Avg. hrs spent per week ~7hrs ~13hrs
Source: ITU, Harris Interactive, comScore
7
Fundamental Shifts in Usage Are Driving Need for New Measurement Methodologies
~8x growth in U.S. eCommerce
($ 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 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 Smartphone
Social NetworkingCreating Information at Scale
Source: comScore Source: Pew Research
8
The Rapid Growth in Online Advertising Has Created Various Measurement Complexities
How effective are my ads?
BrandTransaction
How are users behaving?
How do I measure safety and effectiveness in blind environments?
On Site On 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
January
2005
April – June2007
/
/
/(Online Audience Measurement Assets)
/
/
March2008
/February
2007
April 2008
May 2008
October 2007
/
/
January 2006
/June
2002
/July 2006 /
/
10
January2011
2010
Online advertising
overtakes newspapers in U.S. (source: eMarketer)
September
2009
/
June2010
/
July
2008Nielsen 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 / TargetDate
$100.0
$300.004/18/11
$340.703/30/11
Acquirer / TargetDate
$75.003/03/08
$240.004/19/07
$381.810/25/07
Acquirer / TargetDateImplied Ent. Value ($MM)
12/22/09 NA
Acquirer / TargetDate
$421.508/06/08
$43.705/28/08
$328.302/06/07
Implied Ent. Value ($MM)
LTM Rev.Mult.
LTM Rev.Mult.
LTM Rev.Mult.
Implied Ent. Value ($MM)
LTM Rev.Mult.
5.03x
6.00x
5.10x
NA
4.41x 1.54x
NA
NA
3.06x
7.50x
NA06/27/07 NA
NM06/26/09 NM
$1,675.709/15/09
NA
4.60x
NA
$237.702/14/11 2.02x
02/07/11
06/15/10
Social
02/26/07
Implied Ent. Value ($MM)
02/23/10 NA NA
10/06/09 NANA
NA NA
01/10/11 $50.0 7.14x
13
Acquirer
Implied Enterprise
Value Target LTM Rev MultipleDate
05/28/08
03/03/08
04/19/07
$43.7 4.41x
$75.0
$240.0 6.00x
5.03x
� Developing mobile capabilities for cross-media planning
� Added competitive internet ratings
� Able to provide internet intelligence to its client base
Comments
M&A Case Studies: Obtaining Premium Valuation
� Strengthened display media buying opportunities with retail clients
01/10/11 $50.0 7.14x
14
Who are the Big Acquirers?Acquirer Targets Themes
• 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 Players
Existing 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
Blind“Cookied”
Rapidly growing market > Majority 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 $MM
Source: Forrester
RTB
Non-RTB
16
Ad Effectiveness Solutions will Follow the $$ Up the Funnel
65%
35%
71%
29%
Performance
Brand
Traditional Media Digital Media
Share shift to digital
Demand fulfillmentMost innovation and technology M&A at this part of funnel
Demand generationIncreased interest and innovation as new digital $$ focus earlier in the purchase cycle
Source: 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 audience
Massive audience
Facebook controls a large part of the adtech supply
(~30%)
Rest of the Web
Brands are going directly to its
consumers through Facebook
Source: Comscore Q1 estimates for U.S. Web, Facebook
Q1’11: 1.1 trillion impressions
18
Source: eMarketer
Tremendous Promise with Mobile Given Unique Characteristics
Computer
Newspapers, Magazines, Books
Snail Mail
Video Camera
Range Finder
Game Console
Alarm ClockMusic
Player
Credit Cards, Identity
Telephone
PDA
GPS, Maps,
Compass
Camera
Watch
29%
34%
5%
5%
16%
8%
Don’t know
Performed worse than expected
Performed as expected
Exceeded expectations
Haven’t measured
Far below expectations
ROI of Existing Mobile Marketing Campaigns
Measurement 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 - VoIP: 1999 - Mobile: 2008 - Tablet: 2010 - TV: 2012 ? Car: 2013?
Offline Online
• 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
Mobile Social
Ad Effectiveness
Ad 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