OMMA Display 2011 -- Transformation of the Measurement Industry: How Much Can Be Attributed to M&A
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The document analyzes the transformation of the measurement industry, emphasizing the significant impact of mergers and acquisitions (M&A) on online measurement practices from 2000 to 2011. It outlines challenges faced by traditional measurement methods and highlights the necessity for new methodologies to keep pace with rapidly evolving digital landscapes, particularly in real-time data collection and analytics. The document also discusses investor opportunities and strategic advice for companies navigating this shifting landscape.
OMMA Display 2011 -- Transformation of the Measurement Industry: How Much Can Be Attributed to M&A
- 1. Transformation of the Measurement Industry: How Much Can be 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 driving technology 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 2
- 3. Snapshot of the Web 10 Years Ago 143 million Americans (54%) Users spent seven hours per using the Internet week online (email, news, chat) Source: NTIA Source: Harris Interactive 41% of Americans using Social networks limited to mobile phones (voice only) forums, blogs, and chatrooms Source: CTIA 3
- 4. Despite its Size, Online Advertising was Quite Underdeveloped U.S. Online Advertising Revenue ($ in billions) • Highly manual processes $8.0 • Little to no accurate measurement $7.1 methodology $7.0 $6.0 “…big advertisers still don't see the value of $5.0 the Internet yet," $4.0 Morgan Stanley analyst Michael Russell - July ’01 $3.0 $2.0 “… experts in the field now say that advertisers ought to forget about click-throughs… Online ads $1.0 aren't meant only to spawn direct sales.. They're also for establishing or burnishing a brand…” $0.0 BusinessWeek – July ‘01 2001 Source: IAB Internet Advertising Report, BusinessWeek 4
- 5. Tried and True Methodologies Were Manual, Expensive and Hard to Scale Mall Intercepts / Interviews Focus Groups Mailed Surveys Random Digit Dialing Set Meters 5
- 6. The Web Quickly Developed Scale and Use Time Spent on Doubling of U.S. Online Penetration Internet + Mobile Approaching TV 90% 79% 80% Mobile 70% 8% Radio 15% Newspaper 60% 5% 50% Internet 43% Magazines 23% 3% 40% 30% Other TV | Video 7% 20% 39% 10% 0% 2000 2010 Avg. hrs spent per week ~7hrs ~13hrs Source: ITU, Harris Interactive, comScore Source: eMarketer 6
- 7. Fundamental Shifts in Usage Are Driving Need for New Measurement Methodologies Introduction of Social Networking ~8x growth in the Smartphone Creating Information at Scale U.S. eCommerce ($ in billions) $180.0 $164.6 25% 70% 23% $160.0 61% 60% $140.0 20% 50% $120.0 15% $100.0 40% $80.0 30% 10% $60.0 20% $40.0 5% $25.8 10% 8% $20.0 0% 0% 0% $0.0 2001 2010 2005 2010 2000 2010 Source: comScore Source: Pew Research Source: U.S. Census Bureau 7
- 8. The Rapid Growth in Online Advertising Has Created Various Measurement Complexities On Site On Social Transaction Brand Platforms How are users behaving? How effective are my ads? How do I measure safety and effectiveness in blind environments? 8
- 9. M&A Has Been Critical in Shaping Online Measurement • Key themes from 2000 – 2008: • Offline players buying online capabilities • Proprietary data sets became highest sought after • Realization of mobile potential, key players acquired mobile capabilities • Real time emerging as important factor in measurement / / July 2006 / May 2008 / / / / February October March January 2007 2007 2008 2005 January April 2006 April – June 2007 2008 June / / 2002 / / (Online Audience Measurement Assets) / 9
- 10. M&A Has Been Critical in Shaping Online Measurement (cont’d) • Key themes from 2009 – today: • New entrants to the market with use cases beyond research – Adobe, IBM, Salesforce • Measurement in real time environments – Social, RTB • Measurement -> Data Analytics / / September March / 2010 / 2011 / / / September February August 2009 January 2010 2011 2011 July 2008 2010 April June Nielsen releases its 2011 2010 Online advertising first quarterly “Three overtakes Screen Report”, covering TV, October / newspapers in U.S. / September 2009 (source: eMarketer) February 2011 Internet, and mobile 2011 / / / 10
- 11. Online Measurement Landscape Today Online Ad Ad Attribution / Safety / Effectiveness Analytics Social Verification / / / / / Mobile / Ratings / / / / / 11
- 12. Highly Attractive Valuations in Online Measurement Mobile Social Implied Ent. LTM Rev. Implied Ent. LTM Rev. Date Acquirer / Target Value ($MM) Mult. Date Acquirer / Target Value ($MM) Mult. 02/23/10 NA NA 04/18/11 $300.0 NA 12/22/09 NA NA 03/30/11 $340.7 NA 05/28/08 $43.7 4.41x 02/07/11 $100.0 1.54x 06/27/07 NA NA 02/26/07 NA NA Web / Data Analytics Survey / Other Implied Ent. LTM Rev. Implied Ent. LTM Rev. Date Acquirer / Target Value ($MM) Mult. Date Acquirer / Target Value ($MM) Mult. 01/10/11 $50.0 7.14x 02/14/11 $237.7 2.02x 06/15/10 NA NA 10/06/09 NA NA 09/15/09 $1,675.7 4.60x 03/03/08 $75.0 5.03x 06/26/09 NM NM 10/25/07 $381.8 5.10x 08/06/08 $421.5 3.06x 04/19/07 $240.0 6.00x 02/06/07 $328.3 7.50x 12
- 13. M&A Case Studies: Obtaining Premium Valuation Implied Enterprise LTM Rev Date Acquirer Target Value Multiple Comments Strengthened display 01/10/11 $50.0 7.14x media buying opportunities with retail clients 05/28/08 $43.7 4.41x Developing mobile capabilities for cross- media planning 03/03/08 $75.0 5.03x Added competitive internet ratings 04/19/07 $240.0 6.00x Able to provide internet intelligence to its client base 13
- 14. Who are the Big Acquirers? Acquirer Targets Themes New Players • 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) Existing Players • Using M&A to as part of product and channel extension strategy 14
- 15. Measurement Technologies Will be Important to the Development of Real-Time Bidding Rapidly growing market > Majority of impressions still relatively anonymous U.S. Exchange Traded Media Spending in $MM Non-RTB $1,600 RTB • Measurement of $1,400 quality and $1,200 effectiveness will $592 $1,000 grow in importance $800 “Cookied” Blind • Stigma of low quality $600 will further increase $380 importance of real $400 $823 time measurement $200 $353 technologies $0 2001 2010 Source: Forrester 15
- 16. Ad Effectiveness Solutions will Follow the $$ Up the Funnel Brand Performance Demand generation 65% Share Increased interest shift to and innovation as digital new digital $$ focus earlier in the purchase cycle Demand fulfillment Most innovation and 35% 29% technology M&A at 71% this part of funnel Traditional Media Digital Media Source: Credit Agricole, Gridley 16
- 17. Social will Challenge the Status Quo in Both Advertising and User Measurement Facebook controls a large part of the Brands are going directly to its adtech supply consumers through Facebook Coca-Cola Rest of the Facebook Web (~30%) Example of Example of Coke using Coke using Facebook to Facebook to elicit elicit Massive Massive feedback on feedback on audience audience bottle bottle Q1’11: 1.1 trillion impressions design design Source: Comscore Q1 estimates for U.S. Web, Facebook 17
- 18. Tremendous Promise with Mobile Given Unique Characteristics Newspapers, Magazines, Watch Books Measurement will be critical to achieve Camera scale by marketers Computer ROI of Existing Mobile Marketing Campaigns GPS, Snail Exceeded expectations Maps, Mail Compass 8% Performed as expected 16% Video Performed worse than expected Camera 5% PDA Far below expectations 5% Haven’t measured Range 34% Finder Don’t know Telephone 29% Game Credit Cards, Console Over 50% of campaigns Identity Alarm lack any sort of measurement Music Clock Player Source: eMarketer 18
- 19. Everything is Becoming Internet-Enabled PC: 1990 - VoIP: 1999 - Mobile: 2008 - Tablet: 2010 - TV: 2012 ? Car: 2013? • Growing interest from brand marketers to define ROI across channels Offline Online • Data integration becoming increasingly possible/seamless as world become internet- enabled 19
- 20. Convergence of Capabilities • Becoming hard to Mobile Social determine who is competitive as separate disciplines converge • Has major M&A Users implications Ad Ad Safety / Effectiveness Verification 20
- 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 21
- 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 22
- 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 23
- 24. Questions? Linda Gridley Gridley & Company LLC 10 East 53rd Street, 24th Floor New York, NY 10022 212.400.9720 tel 212.400.9717 fax Twitter: @gridleyco www.gridleyco.com 24