Transcript Portfolio company name - Vanderbilt University

Digital Media Revolution
January 2009
The Intellectual Father of Digital Media
Johannes Gensfleisch zur Laden
zum Gutenberg
Born
c. 1398
Mainz, Electorate of Mainz
Died
February 3, 1468
Mainz, Electorate of Mainz
Occupation
Printer
2
Source: Wikipedia.org
Engraver, Inventor, and
Industrial Age Electronic Media
 Linear
 Broad Brush Mass Content
 The Wanamaker Syndrome
3
1925 - 1980
Transitional Age Electronic Media
 Linear
 Expansion of Niche Content
 The Wanamaker Syndrome
4
1980 - 2001
Digital Age Electronic Media
2001 - ?
 What You Want, When You Want, Where You Want
 Explosion of Niche Content
 Precise ROI Metrics
5
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
6
It is Still Early
%
Market Share
Today
Year
7
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
Media Consumption vs. Ad Spend, 2007
TV
Newspapers
Radio
Magazines
Online
0%
10%
% ad spending by media
Source:
Forrester
Research,
January
8 Source:
Forrester
Research,
January2008
2008
20%
30%
40%
% of time households spend by media
Creative Destruction
9
Marketing Dollars will Follow Consumers 34 Yrs & Under
 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
Favorite Leisure Activity
Playing games on consoles
Playing sports / exercise
Using the Internet
Playing PC (CD/DVD) games
Listening to music
Watching TV
Reading books
Playing free Web-based games
Talking on cell phone
Watching DVDs or VHS
Reading newspapers & magazines
Talking on home phone (landline)
Other
None of above
10
Source: Frank N. Magid Associates, Inc.
Ages 12-17
45%
17%
12%
9%
7%
3%
2%
1%
1%
0%
0%
0%
4%
0%
Males
18-24
18%
14%
19%
8%
12%
12%
4%
3%
1%
6%
0%
0%
2%
2%
25-34
17%
9%
20%
4%
5%
17%
11%
3%
1%
7%
1%
0%
4%
2%
12-17
11%
6%
28%
0%
13%
6%
10%
3%
11%
7%
0%
2%
4%
0%
Females
18-24
3%
7%
22%
2%
21%
13%
7%
8%
2%
8%
2%
1%
4%
1%
25-34
2%
4%
32%
3%
9%
19%
15%
1%
2%
7%
1%
1%
2%
3%
Internet and Mobile Advertising Spending
Internet & Mobile Spending
(Advertising and Content)
$100
($ billions)
$90
$87.8
$80
 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
$70
19%
$60
Percentage Of Ad Budgets Expected To Change Over The
Next Six Months
$50
$40
$36.6
$30
32%
$20
$10
$0
11
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%
43%
48%
National Newspapers
9%
Source: Advertiser Perceptions Inc. Fall 2008
$9.2
2002
Increase
2007
Source: VSS Communications Industry Forecast 2008
2012
Mounting Pressure to Expand Digital Assets
 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
Traditional Media Company
New Media Acquisitions
$486m
$649m
$1.2b
NA
$1.3b
$6.3b
$1.5b
NA
NA
NA
$10m
NA
$591m
$105m
$50m
NA
$49m
$35.0m
$650m
NA
$192m
NA
NA
NA
NA
NA
NA
NA
NA
$100m
NA
$102m
NA
NA
$410m
NA
$33m
$475m
$668m
$850m
$50m
$13.5m
$5m
NA
$15m
NA
$50m
NA
$366m
$20m
$161m
12
NA
$275m
$700m
NA
NA
$525m
$435m
$925m
$75m
NA
$100m
NA
NA
$500 m
NA
$3.5b
$47m
$31m
NA
Landscape of Strategics with Captive Funds
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Dedicated
Dollars (millions)
Avg. Investment
Size (millions)
Year
Established
Portfolio
Companies
$250
$3-$25
2007
4
$200
$2-$15
2000
20
N/A
$1-$10
1993
44
$7,500
N/A
1991
1,000+
N/A
N/A
1997
14
N/A
N/A
2008
N/A
N/A
< $25
N/A
N/A
$500
$2-$15
1999
44
$63
N/A
2006
17
N/A
N/A
2008
N/A
N/A
N/A
2000
N/A
The Buyer Universe for Digital Properties is Expanding
Digital Media
Companies
14
Media & Marketing
Conglomerates
Source: GCA SAVVIAN/Interactive Advertising Bureau
Traditional Media
Companies
Other Strategic
Buyers
Third Screen Media Case Example
 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
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IXI Case Example
 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
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[X+1] Case Example
 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
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