2009 New Business Plans

2 eBay Inc. confidential

Executive Summary

• 2009 will see New Business continue to drive a bigger share of overall revenue for eBay Australia and a significant proportion of it’s growth

• With the right investment and focus, New Business could deliver $44.5m revenue in 2009; an increase of 47% YoY

• Motors will continue to deliver solid results, whilst most growth will come from Advertising

• Whether we get there also depends largely on eBay’s willingness as a business to think long term and to make bold moves around advertising including establishing an in-house sales force and increasing ad units available on site


Agenda

• New Business Lookback

• 2009 Strategy

• Revenue and expenses

• Plans– Advertising

– Verticals

– Motors

• Headcount Requirements


New Business - 2008 Review

• Accelerated advertising revenues 290% YoY

– Display, 660% YoY

– Text, 228% YoY

– eBay now #8 publisher in Australia!

• Motors business healthy– Motors revenue 30% YoY

– Cars GMV growth 30% YoY

– Live listings doubled in last 12 mths due to Drive partnership

• Entered previously non-addressable segments through partnerships

– Lotsofhotels.com.au – Travel

– Jobs – CareerOne, $960k max revenue pa

– Real Estate – Domain, $140k test, 4 mths

– Active discussions with Services & DDG

• Huge learnings from new innovations that can be applied to 2009 initiatives eg

– Motors microprojects; technical issues, traffic drivers, technology partner selection

– Integration with marketing processes

Successes

• Advertising:– Lack of on site inventory to sell

– Need to maximise monetisation on display and premium content

– Build more integrated & flexible solutions for advertisers with more technical product resource

– Cross functional marcoms process unsustainable for ad sales due to tight lead times

• Motors – Driving demand to match supply

– Stepped improvement in UE

• How to most effectively enter non-addressable segments & nurture their performance?

• Rapidly applying learnings from 2008 to 2009 initiatives and scale, scale, scale!

Challenges


Revised New Business Strategy: 2009

New Business Strategy: Leverage eBay asset portfolio to tap into the broader eFees market

Position eBay as major publisher

through display, SP, text advertising & Ad

Centre

Build Motors as mainstream place to

buy cars by optimizing the UE &

driving demand

Build tightly integrated new

verticals in traditionally non-

addressable markets

Verticals like Jobs, RE, & DDG appear on site as

a seamless eBay experiences, powered by

blue ribbon partners

eBay to be #8 publisher and be top of mind formajor AU advertisers

Build top of mind consideration whilst

matching right type of buyers to right type of cars

Support AU marketplaces strategy

by leveraging NB expertise

New Business to consult to

marketplaces to develop & execute on core strategy

NB to add value by providing expertise across

product, analytics,Business development

Accelerate advertising revenue stream

1Build & nurture

verticals

2Broaden appeal of

Motors

3






Centre



driving demand



addressable markets






1Build & nurture

verticals

2Broaden appeal of

Motors

3

Finding Selection LoyaltySelection


New Business aspiration of $44.5m in 2009, 47% YoY growth

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

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Q2

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Q1

2009

Q2

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Q3

2009

Q4

Quarter

Rev

enu

e

2006

$8.7m

2008

$30.2m

2007

$14.9m

2009

$44.5m


New Business revenue growth primarily driven by a 67% YoY increase in Advertising revenues

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$5,000,000

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$45,000,000

$50,000,000

2008 2009

Year

Rev

enu

e

Vehicle Revenue Silverstone Drive Total Text Total Graphical Adcenter

Advertising

$29.1m

Motors

$15.3m

2008

$30.20m

2009

$44.5m


2009 New Business Expense Request of $4m

New Business Budget Summary Q1 09 Q2 09 Q3 09 Q4 09 TotalMotors 653,606$ 581,587$ 636,182$ 595,523$ 2,466,898$ Ad Sales 82,841$ 115,135$ 134,968$ 94,664$ 427,606$ Services 5,000$ 20,000$ 25,000$ 10,000$ 60,000$ Mobile 2,000$ -$ 2,000$ -$ 4,000$ DDG 5,000$ 20,000$ 10,000$ 20,000$ 55,000$ Travel 34,000$ 90,000$ 35,000$ 45,000$ 204,000$ Jobs 15,000$ 10,000$ 15,000$ 5,000$ 45,000$ Real Estate 15,000$ 10,000$ 15,000$ 20,000$ 60,000$ Shipping 16,000$ 13,000$ 3,000$ 3,000$ 35,000$ Research 40,000$ 40,000$ 40,000$ 40,000$ 160,000$ Operations

66,000$ 66,000$ 66,000$ 66,000$ 264,000$ Other 11,000$ 11,000$ 11,000$ 11,000$ 44,000$ Contractor 131,000$ 201,000$ 201,000$ 201,000$ 734,000$ T&T 49,981$ 40,575$ 24,307$ 59,634$ 174,496$ TOTAL 1,126,427$ 1,218,296$ 1,218,457$ 1,170,820$ 4,734,000$ Less: Contractors 995,427$ 1,017,296$ 1,017,457$ 969,820$ 4,000,000$

Contractor expenses included in case our request for new HC is not fulfiled


2009 Projected Expenses of $4m - assumes we get our full HC ask

2009 New Business Expenses (ex contractors)

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100%

Q1 09 Q2 09 Q3 09 Q4 09

Other

Operations

Research

Shipping

Real Estate

Jobs

Travel

DDG

Mobile

Services

Ad Sales

Motors


ROI Summary

*Other includes: shipping, operations, research, T&T

ROI Summary Costs Revenue ROIMotors 2,466,898$ 15,385,928$ 524%Ad Sales 427,606$ 26,665,443$ 6136%Verticals 459,000$ 2,474,478$ 439%Other costs (ex contractors) 646,496$ Total 4,000,000$ 44,525,848$ 1013%

Total with contractors 4,734,000$ 44,525,848$ 841%






Centre



driving demand



addressable markets

Verticals like Jobs, RE, DDG etc should appear

on site as a seamless eBay

experience, powered by blue ribbon partners











1Build & nurture

verticals

2Broaden appeal of

Motors

3


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2006A 2007A 2008F 2009B 2010 2011

MA / DC

Intl - Display

Intl - Text

US - Display

US - Text

Advertising net revenue (USD mio.)

50

• Launch US Text Ads

• Text Targeting (Kairos)

• Intl display• AdCommerce

Beta• ePN

• Design to advertise

• New ad placements

• Sales org• PubCommerce

launch

• AdCommerce display

• PubCommerce ramp up

• Bring sales force in-house

• M&A

Key events

1,000

700

450

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143

+ 186% + 96% + 61% + 55% + 43%YoY Growth

• Launch Int‘l Text Ads

• Turnaround Y! relationship

Globally, eBay Advertising has been asked to build plans to deliver US$1B revenue in 2011

• Network effects in adnetwork kick in

• Leading sales network

• M&A

Advertising

14 eBay Inc. confidential14

General online advertising in Australia is forecast to grow at 23% YoY in 2009

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*Source: Frost & Sullivan, Online General Advertising Market. Period: 2007/8. Country: Australia. Excludes text advertising

Australian General Ad Revenue Growth*

Advertising

Key Industry Trends*

• Growth dominated by performance and next generation brand marketing eg integrated content, video, eDM

• Most major publishers losing share to vertical and niche players (incl eBay)

• 51% Online advertising spend driven by Banking, Finance, Insurance, Auto, Communications

• Digital media advertising well placed to capture more spend as the economy slows and marketers seek more cost effective campaigns

15 eBay Inc. confidential15

eBay’s goal is to maintain or better it’s # 8 ranking as the market grows

*Source: Frost & Sullivan, Online General Advertising Market. Period: 2007/8. Country: Australia. Excludes text advertising

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REA

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2008 Publisher Share of AU Online Advertising market* (display + text)

2009 Goal: $29m

Advertising

$A

U m

illio

ns


AU advertising strategy is to maximise revenue by offering products for different segments of Advertisers along the yield curve

Site Volume

eCPM

Premium Display Ads in-house

Advertising

Partners powering eBay Verticals

Strategic partnerships

Ad Centre

Remnant display ads

Text Ads (Google + SDC)

Advertising Yield Curve


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$17.4m

$2.6m $0.2m

$2.3m$1.6m $-0.9m

$3.6m$2.1m $29.1m

Let’s look at where the growth in Advertising is coming from…

Breakdown of Advertising Revenues: 2008 vs 2009

Sal

es

For

ce

Advertising


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2009

$17.4m

$2.6m $0.2m

$2.3m$1.6m $-0.9m

$3.6m$2.1m $29.1m

Let’s look at where the growth in Advertising is coming from…

Breakdown of Advertising Revenues: 2008 vs 2009

Sal

es

For

ce

FD selling display until

30/6/09

Use in house sales team

from 1 July to sell premium

display

Most 08 SP revenue now appears in “Verticals”.

In 2009 will include ads

from finance, telcos, mobile,

FMGC, etc

Includes Jobs, DDG,

Travel (LOH), Real

Estate, Services

Outsource lower value

display to at least 2 remnant agencies

Full launch in Feb. Will replace

Featured Plus when Dynamo launches

Advertising


Investing in Advertising in 2009 has the potential to grow Display Ad Revenues to $10.1m, 108% YoY growth

YoY Growth - eBay

YoY Growth - industry

Display Advertising Revenues

(Sales force + remnant + SP + verticals)

127% 80%

23% 23%

Revenue ROI

2009

$10.1m

2010

$18.3m

Advertising

* Verticals includes travel. 2010 assume sales force ramping, STR and CPM improve YoY. High level, top down forecast

Invest in sales team, infrastructure

& industry marketing

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We could deliver $1.1 to $1.9m incremental revenue in 2009 with an in house sales force vs continuing with Fairfax Digital

Graphical Revenue Comparison: stay with Fairfax vs in house sales/remnant strategy

Assumptions: FD over deliver on rev gtd by 10% and grow 15% YoY in 2010; eBay revenue equals premium display + remnant + SP + verticals less travel (LOH). Travel excluded as it would not be impacted by whether sales force is in house or with Fairfax

Incremental revenue potential of $7.8m-

$10.54m in 2010 as the sales force scales and

we improve monetisation

Advertising

Rev

enu

e $m

$8.68$9.82$9.78

$17.56

$10.58

$20.36

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2009 2010

Stay with FDIn house sales force + remnant: low caseIn house sales force + remnant: medium case


Accelerating Display Advertising Revenues – Assumptions

• Get commitment for 4 new HC (excluding Glen – currently being converted to FTE) ie 2 x sales managers, 1 sales support, 1 trafficker

• Commence recruitment for new HC early Q1 09 with a view to starting new team in early Q2 09

• New business allocated less aggressive SP/verticals revenue targets in Q1/Q2 09 in order to devote time to set up in house sales operation

• Assume no over performance from Fairfax in Q1/Q2 09 as they will know our “in house” plan from 31 March 09

• Major variables in the revenue model:– % inventory we sell in house vs outsource to remnant agencies– CPM rate applied to premium and remnant inventory– Sell through rate

• eBay globally support advertising through the creation of new placements including integrated content, streaming videos and behavioural targeting

Advertising


In House Sales Force – Direct Costs

2009 Expenses $

Sales material $10,000

Advertiser entertainment $6,000

Launch event $25,000

PR $16,000

Attendance at industry events $20,000

Sponsorship of industry events $29,000

Infrastructure $85,000

Sub Total $191,000

Contractors (Preferred scenario is FTEs)

Sales Development Manager $300,000

Sales managers x 2 $144,000

Sales Support $45,000

Trafficker $45,000

Sub Total $534,000

TOTAL $725,000

Advertising


To Summarise the Display Ad Opportunity….

Invest $191k + 4 FTEs to

generate incremental revenue

of $1.1-$1.9m,

with 1 year ROI of 10X

Advertising


Ad Centre is a simple & effective solution to replace Featured Plus for sellers

Utilise existing Featured Plus! checkbox option in SYI/listing tools and Billing, displaying such listings randomly in the same Ad Widget at the top of Search Results Pages

Buyer’s ViewSeller’s View

Advertising


Ad Centre forecast to deliver $3.6m revenue in 2009

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Advertising

Ad Centre Revenue Forecast

Launch Ad Centre with category specific pricing to maximise adoption

Key Assumption

Convert 50% of FP users onto Ad Centre when it launches with category specific pricing

in Q1 09


Advertising Text Revenue will deliver $15.3m in 2009, 22% YoY growth

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$1,000,000

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Advertising text revenue forecast: Google + SDC Global opportunities to increase text revenue

•User segment targeting ie show fewer google ads to active buyers

•Behavioural targeting Google text ads

•Google text ads on VIPs

•Outsource mgmt of text ads to Global Centre of Excellence ( at the earliest, 2H09)

Challenges

•Page views will decrease if Finding 2.0 implemented

•Ensure that cannibilisation kept to a minimum (currently 1.2-1.8%) by keeping core eBay UE top of mind

•Top down direction on accepting ad placements that may increase cannibilisation

2007

$3.8m

2008

$12.6m

2009

$15.3m

Advertising


Let’s look at each part of our strategy in more detail




Centre



driving demand



addressable markets














1Build & nurture

verticals

2Broaden appeal of

Motors

3


Our Vision is to create integrated verticals that enhance the core marketplace

From this….. To this…..

As per TradeMe example:

Integrated RE listings that will look like eBay site, but are

powered by RE partner

Verticals


Largest opportunities are non-transactional, fastest-growing in non-addressable segments

Vertical Category in priority order*

CAGR %

2010 Revenue (AU$M)

Relevance to eBay community

Integration considerations

Travel (Accommodations)

23% $800 Top Buyer appetite Live, deeper integration possible

Real Estate 14% $143 Small existing category (Almost!) Live, deeper integration possible

Services Small existing category Live as category, potential for partner integration

Jobs 21% $294 Live, deeper integration possible

DDG 105% $307 Relevance

Cross-sell with devices

Transactional category

Tickets 15% $613 Existing category Litigation risks, partner reluctance

Groceries 21% $4,206 Small existing category Policy change required

Pets / Livestock Strong interest from searches, accessories

Policy change required

Dating (Personals) 10% $33 Connections with other members

•*Classifieds and ecommerce•**Source: Frost & Sullivan, Forrester

Most require industry expertise + supply from partner

Verticals


Verticals will contribute $2.47m revenue in 2009Note: Verticals roll up as part of “Display Advertising”

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Services Travel Jobs DDG Real Estate

Verticals revenue forecast 2009 Revenue Summary

Real Estate $460k

Jobs $820k

DDG $335k

Travel $338k

Services $520k


What is the difference between Strategic Partners & Verticals?

• Companies advertising products & services of interest to our community

• ST in nature

• Campaign driven, tactical focus

• Relatively quick & easy to implement

• Have complimentary offer to marketplaces

• Examples:– Finance/Insurance– Telcos/Broadband/Mobile– FMCG– Shipping– Promotional partners/seasonally driven

• All start as Strategic Partners (on trial basis), however they also meet other criteria:

• Need tailored shopping experiences to flourish (just like motors)

• Add value to our core marketplace experience

• Considered as a new eBay category

• Mostly fall into the traditional ‘non-addressable’ ecommerce segment for eBay

• Can be deeply integrated into eBay where it increases overall loyalty to eBay brand

• Often powered by a 3rd party

• Offer special content or deals to eBay community

• Minimum 12 month commitment

• Examples: – Travel (LOH), Jobs, DDG, Real Estate,

services, dating, tickets, groceries

eBay VerticaleBay Strategic Partner


Let’s look at each part of our strategy in more detail




Centre



driving demand



addressable markets














1Build & nurture

verticals

2Broaden appeal of

Motors

3


Motors forecast to deliver $15.3m revenue, 22% YoY growth

$0

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$1,000,000

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Q109 Q209 Q309 Q409

Quarter

Rev

enu

e

Cars OV Hybrid Silverstone

2009 Motors Revenue Forecast Assumptions

• Core auction business remains healthy with vehicles revenue 18% increase YoY; GMV increase 24% YoY

• Cars/OV price increase drives $695k incremental

• Silverstone price increase of 10%

• Hybrid a helps position eBay as more mainstream but is not a significant revenue driver


Motors – Implications for 2009

Build mainstream demand Innovate Product

Grow new revenue streams

Become Australia’s favourite place to buy & sell a vehicle

• Understand and market intelligently to mainstream buyers.

• Reposition eBay Motors brand.

• Integrating catalogues into the selling and buying flows.• Adapting global finding changes to the microsite.

• Improve the mix of offerings to buyers (and monetize)

• Higher end supply (Hybrid and Silverstone)

• Parts fitment project

• Finance & Insurance integration

Motors

1 2



Q1

Recruit & train in house sales team

Ad Centre Full Launch

Advertising

Verticals

Fairfax Digital manage Display

Q2 Q3 Q4

Negotiate Remnant deal Remnant out sourced to agency

Premium display managed in house

Set up in house sales systems Industry PR campaign

Optimise text advertising on site

Focus

Real Estate - light

Services - deep

Jobs - light

Travel (LOH) - light

DDG - light

Travel (LOH) - deep

Real Estate - deep

Jobs - deep

DDG - deep



Q1

SYI enhancements - catalogues

Demand marketing

Motors

UE testing

Q2 Q3 Q4

VPP

Dealer Sales Force - Classifieds

Focus

UE testing

Support marketplaces

Integrate shipping carriers into eBay tools eg SYI, calculator


2009 New Business HC Request

• Job / Contractor Role:Full-time sales staff to sell eBay display ads and close deals with advertisers. Role is commission based correlated with performance to target.

• Level:25

• Business Justification:Critical head count required in order to bring Display sales in-house to hit 2009 Display ad revenue ($7MM-10MM)

• Timing / term Q2 09

Ad Sales Manager X 2


• Job / Contractor Role:Full-time executive to co-ordinate Ad Sales projects and support sales staff

• Assist with preparation of sales materials and proposals

• Level:24

• Business Justification:Critical support required in order to bring Display sales in-house to hit 2009 Display ad revenue, as well as achieve total Ad Sales team revenue.

• Timing / term April 2009 onwards (currently 6-month contractor via Tequila commencing Oct 08)

Ad Sales Executive



• Job / Contractor Role:Full-time operational role to execute trafficking, optimising and reporting requirements for display ad campaigns

• Level:22

• Business Justification:Critical ops support required in order to successfully execute Display ad campaigns closed by sales staff

• Critical to ensure Advertiser’s campaigns are successful, in order to drive repeat business and a future revenue stream

• Timing / term Q2 09

Ad Sales Trafficker



• Job / Contractor Role:Full-time operational role to manager Dealer Classifieds business, execute marketing plans, input to overall strategy and execute user experience enhancements

• Level:24

• Business Justification:Motors forecast to drive $13.5m revenue in 2009. Currently we only have 1 HC which is not sufficient for the long term health and mgmt of the category in expanding it beyond a niche site

• Motors manager role is currently being performed via a contactor, which we are out sourcing via Dealer Ads for 6 months.

• Timing / term Late Q1 09

Motors Manager



In summary, 2009 is shaping up to be a great year for new business!

• New Business could potentially grow revenue 47% YoY, up to $44.5m in 2009 with a healthy ROI of 10X

• Revenue increase relies on a commitment to $4m budget including:– Bold moves and sustained commitment to growing eBay as a Publisher

– Establishment of in house sales force

– Time to plan and execute a first class sales strategy & marketing blitz

– Continued support to grow Motors – especially driving demand and improving the user experience

– Heavy cross functional support from marketing, finance, HR and legal

2009 New Business Plans

Documents

Transcript of 2009 New Business Plans