Digital Media Revolution January 2009. 2 Johannes Gensfleisch zur Laden zum Gutenberg Bornc. 1398...
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Transcript of Digital Media Revolution January 2009. 2 Johannes Gensfleisch zur Laden zum Gutenberg Bornc. 1398...
Digital Media Revolution
January 2009
2
Johannes Gensfleisch zur Laden
zum Gutenberg
Born c. 1398Mainz, Electorate of Mainz
Died February 3, 1468Mainz, Electorate of Mainz
Occupation Engraver, Inventor, and Printer
The Intellectual Father of Digital Media
Source: Wikipedia.org
3
Industrial Age Electronic Media 1925 - 1980
Linear
Broad Brush Mass Content
The Wanamaker Syndrome
4
Transitional Age Electronic Media 1980 - 2001 Linear
Expansion of Niche Content
The Wanamaker Syndrome
5
Digital Age Electronic Media 2001 - ?
What You Want, When You Want, Where You Want
Explosion of Niche Content
Precise ROI Metrics
6
Key Themes in Media Today
The media and marketing landscape is going through its greatest set of changes since the advent of mass market commercial television in the 1950s
Pace of change will accelerate over the next 3-5 years, shifting billions of dollars of annual spending into digital media
Seismic shifts will be primarily driven by powerful technology-enabled change - Technology driven efficiencies will continue to deliver increased value to
advertisers- Spending will migrate to digital platforms, causing significant value
destruction in traditional sectors
Unprecedented fragmentation and complexity– Web 2.0+ is flooding the landscape with thousands of small digital media
companies, causing unprecedented fragmentation– Vast majority of these companies are too small to move the needle for
traditional media companies, which must manage their legacy cost structures while responding to increasing pressure to grow digital revenue
ROI focused- Increasing demand for ROI and accountability- Metrics of media buying and media measurement rapidly evolving
7
It is Still Early
Today
Year
%Market Share
8
Online Ad Spending Significantly Lags Shift in Consumer Behavior
Huge discrepancy between media consumption and online ad spending
To reach equilibrium, spending will increasingly shift to online and mobile platforms
Source: Forrester Research, January 2008
0% 10% 20% 30% 40%
Online
Magazines
Radio
Newspapers
TV
% ad spending by media % of time households spend by media
Media Consumption vs. Ad Spend, 2007
0% 10% 20% 30% 40%
Online
Magazines
Radio
Newspapers
TV
% ad spending by media % of time households spend by media
Media Consumption vs. Ad Spend, 2007
Source: Forrester Research, January 2008
9
Creative Destruction
10
Young people consume media, information and entertainment in vastly different ways than their parents
New technology adoption cycles are becoming shorter with each generation and products are reaching critical mass and supplanting legacy platforms faster than ever
Source: Frank N. Magid Associates, Inc.
Marketing Dollars will Follow Consumers 34 Yrs & Under
Favorite Leisure Activity Ages 12-17 18-24 25-34 12-17 18-24 25-34Playing games on consoles 45% 18% 17% 11% 3% 2%Playing sports / exercise 17% 14% 9% 6% 7% 4%Using the Internet 12% 19% 20% 28% 22% 32%Playing PC (CD/DVD) games 9% 8% 4% 0% 2% 3%Listening to music 7% 12% 5% 13% 21% 9%Watching TV 3% 12% 17% 6% 13% 19%Reading books 2% 4% 11% 10% 7% 15%Playing free Web-based games 1% 3% 3% 3% 8% 1%Talking on cell phone 1% 1% 1% 11% 2% 2%Watching DVDs or VHS 0% 6% 7% 7% 8% 7%Reading newspapers & magazines 0% 0% 1% 0% 2% 1%Talking on home phone (landline) 0% 0% 0% 2% 1% 1%Other 4% 2% 4% 4% 4% 2%None of above 0% 2% 2% 0% 1% 3%
Males Females
11
Internet and Mobile Advertising Spending
$9.2
$87.8
$36.6
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2002 2007 2012
Internet advertising forecast to be largest ad medium by 2011
Now larger than consumer magazines, book publishing, broadcast & satellite, B2B media, yellow pages, and out-of-home
In recessionary environment, marketers will shift spending to more measurable media, which will benefit online models
32%
19%
($ billions)
Source: VSS Communications Industry Forecast 2008
Internet & Mobile Spending(Advertising and Content)
Percentage Of Ad Budgets Expected To Change Over The Next Six Months
Increase Maintain Decrease
Online 68% 25% 7%
Mobile 51% 37% 12%
Cable TV 27% 49% 24%
Magazines 18% 47% 35%
Outdoor 17% 54% 30%
Broadcast TV 16% 51% 33%
Radio 16% 49% 35%
Local Newspapers 11% 47% 42%
National Newspapers 9% 43% 48%Source: Advertiser Perceptions Inc. Fall 2008
12
Mounting Pressure to Expand Digital Assets
$410m
$525m $366m
$475m$192m $47m
$668m
Traditional media is aggressively buying and building out digital assets, however it is becoming increasingly difficult to keep up with the proliferation of digital media companies and to identify the most valuable platforms of the future
$35.0m $33m
$3.5b$925m
$31m
NA NA
NANANA
NA NA
$100m$50m$105m$275m$10m$435m $850m
$15m$700m NA$20m NA
$486m $1.2b $500 m $75m $5m$6.3b NANA
Traditional Media Company New Media Acquisitions
NA
NA $50m $102m$49m$161m
$649m $1.5b NANANANANANA NA
$1.3b NA $100mNA NA NA NA NA NA
NANA NA$13.5m$650m$50m$591m
13
Landscape of Strategics with Captive FundsDedicated
Dollars (millions)
Avg. Investment Size
(millions)
Year Established
Portfolio Companies
$250
N/A
N/A
N/A
$500
$63
$200
N/A
$3-$25
N/A
N/A
< $25
$2-$15
N/A
$2-$15
$1-$10
2007
1997
2008
N/A
1999
2006
2000
1993
4
14
N/A
N/A
44
17
20
44
$7,500 N/A 1991 1,000+
N/A N/A 2008 N/A
N/A N/A 2000 N/A
14
Other Strategic Buyers
The Buyer Universe for Digital Properties is Expanding
Source: GCA SAVVIAN/Interactive Advertising Bureau
Traditional Media
Companies
Media & Marketing
Conglomerates
Digital Media Companies
15
Business Description: Third Screen Media is a mobile media ad network and mobile media ad management platform
Investment Thesis: The rise of mobile media would require a dominant ad serving infrastructure (e.g. DoubleClick) and an enabling media planning platform to link the agencies with the mobile publishers
Value Add / Influence:
- By Q1 of 2007, Third Screen Media had become the industry standard enabling network for mobile media. Over 70% of mobile media ad inventory flowed through the network
- Wright worked closely with the CEO to help him build out the management team
Third Screen Media Case Example
16
Business Description: IXI creates, customer segmentation and market targeting systems for the financial services industry and other industries that target affluent US consumers. IXI also enables clients in a number of financial sectors to track their market share by defined geography
Investment Thesis: Financial institutions need the capability to determine product-specific market shares within defined geographic areas, and the same information required to answer that question would be highly valuable to marketers across industries
Value Add / Influence:
- Wright played the lead role in recruiting IXI’s CEO
IXI Case Example
17
Business Description: [X+1] has two operating divisions. The first, [site +1], enables clients like xxxxx and xxxxxx to dynamically optimize consumer engagement and revenue application lift at their corporate websites. The second division, [media +1], optimizes the targeting of advertising companies across the internet through the use of behavioral targeting.
Investment Thesis: The rise of online media will increasingly be driven by optimized ad inventory, in order to maximize each campaign’s ROI.
Value Add/Influence:
- Wright played the lead role in recruiting the CEO and CFO
- Wright led a recap of the company which enabled x+1 to attract additional outside capital
[X+1] Case Example