Commentary on 2009 IAB-PwC Internet Advertising Revenue Report

2009 Internet Advertising Revenue Report

Rethinking the Market Opportunity

April 7, 2010

Terence Kawaja GCA Savvian Advisors

CAGR = 12%

Notes: Source: IAB / PricewaterhouseCoopers internet advertising revenue reports.

Interactive Advertising is on a Long Term Growth Path…

Media Consumption vs. Ad Spend, 2009

Notes: Source: Wall Street research, 2010. (1) As a percentage of ad spending on the media channels indicated above only: TV, Newspaper, Radio, Magazines and Online.

…But Has Much More Upside Potential

The Crowded Display Ad Tech Landscape

Deals are Back and Consolidation is Coming

Recent Digital Media Acquisitions: Global Tech Transactions $10MM - $1.0Bn (1)

Notes: (1) Source: FactSet as of 2/28/10; Includes global announced acquisitions in the specified range of transaction sizes; excludes minority investments, JVs etc.; includes all transactions with target in Electronic Technology, Technology Services, and Communications sectors as defined by FactSet.

Transaction Volume ($Bn) Number of Transactions

Convergence in the Purchase Funnel

Purchase Funnel Metric Example Companies

CPM

CPC

CPL

CPA

Transaction

Customer

Search

Lead

Impression

Sale

Data

Going After the Elephant in the Room: TV

•  Online video is currently a fraction of total TV and online spending

•  The holy grail is achieved when digital video is part of the television budget

•  Much of the media optimization techniques honed in online can be applied to TV audiences

•  Shift in agency dynamic and marketer mindset is key

Notes: Source: VSS Communications, August 2009; eMarketer, December 2009.

US Video & Display Advertising, 2009 ($MM)

Achieving the Holy Grail: Solving for Attribution

  Several links in the attribution chain are missing: –  Online to online (the last click phenomenon) –  Online to offline –  Offline to online

  Technology is improving data collection and analysis which will allow for the discovery of “digital footprints”

  Once attribution is achieved, there is no reason all media cannot be optimized

  Already, several interesting technologies have been deployed:

–  TV set top box measurement –  Mobile location-based services

TELEVISION

DIGITAL

RETAIL

Rethinking the Market Opportunity

  Forecasts show the interactive channel growing to $50+ billion in 5 years

–  Represents an linear, evolutionary approach –  The challenge is to think revolution, not evolution –  How does interactive get to a $100 billion marketplace? –  Think new definition for “interactive” to go beyond online

•  Digitally-addressable video (aka TV) •  Offline commerce enablement •  Mobile

  Several reasons for a revolution –  Innovation (eg. media optimization, real time phenomenon) –  Simplification (less point solutions) –  Consolidation (entry of larger players) –  Attribution (eg. TV, offline retail)

Putting $100 Billion in Perspective

  Healthcare reform for one year

  War in Iraq and Afghanistan for a year

  Cost of recent bank failures to the FDIC

  A controlling stake in Google (at market)

GCA Savvian’s Digital Media Advisory Business

  Leading investment banking firm with over 200 professionals worldwide

  Services include advice on mergers and acquisitions, private capital finance and restructurings

  Advised on over $60 billion in transactions since 2006

  Advisor to media companies new and old

  Think like principals; offer trusted advice to clients

TOKYO • SAN FRANCISCO • CHICAGO • NEW YORK • LONDON

Terence Kawaja Managing Director +1 212.999.7082 [email protected]

John Lambros Managing Director +1 212.999.7083 [email protected]

Steven Fletcher Managing Director +1 415.318.3661 [email protected]

Commentary on 2009 IAB-PwC Internet Advertising Revenue Report

Technology

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