LYNOTECH Empowering Publishers

Increasing Premium Publishers digital revenues by managing the user’s knowledge they can generate.

Lynotech’s Value Proposition

Value Proposition ¨  Lynotech transforms user’s data generated by Premium Publishers into knowledge through state of

the art data processing technologies, and provides publishers with the interfaces to manage that knowledge in order to enhance its value.

¨  Every publisher is owner of the user’s knowledge generated in its sites. Lynotech will help publishers to use this knowledge to:

¤  Design their editorial strategies based on users insights to increase their audience and therefore their influence.

¤  Create a higher value advertisement product that allows publishers to sell segmented audiences instead of advertising spaces.

¤  Capture more market value by disintermediating the advertising selling ecosystem creating a bridge that reaches advertisers and agencies directly with premium targeted advertising products.

Premium publishers market value chain and market size estimation in millions of dollars

Market Size

Market Value Chain

Online Display Advertising Market Value Chain

Source: Terence kawaja, GCA Savvian Advisors

Market Size

Premium Publishers Internet Displays Advertising Market Size in dollars, according to the Interactive Advertising Bureau (IAB) data

USA 2011 Europe 2010* Spain 2011

Internet Ad Revenue (m$) 31.896,55 22.713,15 1.141,24

Display Ad Revenue (m$) 11.100,00 (34,8%)

7.495,34 (33%)

550,44 (48,23%)

Last Years Display Ad Revenue Growth (%) 15% 21,10% 12,60%

Premium Publishers (m$) 9.102,00 (Top 50: 90%)

Not available 523,75 (Top 30: 95%)

Sources: IAB USA – Internet Advertising Revenue Report Full Year 2011: http://www.slideshare.net/pmereles/iab-internet-advertising-revenue-report-full-year-2011 IAB Europe – European Online Advertising Expenditure 2010 (2011 Report not available yet*): http://www.slideshare.net/pmereles/iab-europe-2010 IAB Spain – Estudio sobre Inversión Publicitaria en Medios Digitales: http://www.slideshare.net/IAB_Spain/estudio-de-inversin-en-publicidad-digital-total-ao-2011-iab-spainpwc

Interviews with four different agents involved in the premium publishers advertising market

Testing Value Proposition

Interviews

Display Advertising Ecosystem Europe

Interview 3: Agency, Ad Network, Demand Side Platform

Interview 1: Google

Interview 2: Premium Publisher and Sales House

Interview 1: Google

Who:

Insights:

Manager at Google Spain, with different international roles in sales at Google. He is also an internet entrepreneur which has successfully founded and launched his own start-up and acts as mentor for other start-up projects.

Local premium publishers may have a big opportunity with our approach: big online advertising players don’t reach local advertisers and currently there is no online advertising product for them. Local newspapers have the local audience and a local sales force, and Lynotech will provide them with products suitable for local market.

National premium publishers will have to fight against the rest of the players involved in the online ad market (for example AdSense) for the same advertisers and with inferior targeting technology but higher quality advertising inventory.

The project is not technically easy, specially if we consider to allow different customers share their data to drive higher incomes.

Interview 2: Premium Publisher

Who:

Insights:

Corporative Manager Director at one the three biggest Spanish newspapers and media groups, accountable for 10% of the online advertising revenues in 2011. Market presence as Premium Publisher and Sales House.

Publishers need a solution like the one proposed by Lynotech. Users knowledge will be critical for media survival and publishers haven’t moved yet. There’s a market opportunity, but Lynotech has to move fast. Advertising market is depressed, so publishers are right now concerned about gaining audience and influence, as these will be the drivers for revenues when the market grows and the economic crisis is over. Lynotech should not only focus on advertising but also on helping publishers gain influence and increase their audiences based on users insights: new services, better contents, etc. Proprietary data: every single user insights and data generated in premium publishers sites must be owned by publishers. They must be the only ones to decide what to do with it, and Lynotech must offer them different solutions for their different needs.

Interview 2: Premium Publisher

Insights: It’s critical to be compliant with all European users privacy laws, or even more strict, as premium publishers brand could be seriously damaged in case any privacy scandal takes place.

Premium Publishers won’t buy developments, they’ll buy products, so its basic to go to the market with a fully developed solution.

Premium publishers may be willing to share data with other premium publishers as long as it drives higher incomes for them, but it’s not fundamental in this point. That should be phase three, or four of Lynotech’s road map.

Lynotech’s proposal has a significant impact on media groups’ workflows. It has editorial and commercial implications that will force to change working methods in areas of the organization and persons with aversion to change. In order to address this issue we need a very high commitment from our customers.

It would be very helpful to count with some of the Spanish traditional editorial shareholders as Lynotech’s investors.

Interview 3: Agencies

Who:

Insights:

Manager at one of the main advertising agencies in Spain and Europe, accountable for a significant part of advertising expenditure in Spain, and present in most of the online display ecosystem in Europe (Agencies, Ad Network, Demand Side Platform, etc.)

The market opportunity exists, as premium publishers have the necessity of increasing their online advertising revenues and they’ll only achieve this by developing a system that helps them know their users and start selling “audience” instead of “space”, and to deliver better contents and services to their audiences to achieve higher user engagement, better traffic, and more ads. There’s been several attempts to develop similar solutions for publishers, but current advertising ecosystem has prevented them from succeeding as it reduces the part of the market value they manage and capture, and therefore their profitability. Any similar solution would be boycotted by current agents, leading to damages on premium publishers short term incomes (not only in digital advertising but also in other medias like paper).

Interview 3: Agencies

Don’t let other market agents figure out Lynotech’s intentions to disintermediate the display advertising market in order to avoid their pressures and countermeasures. He suggests to keep a very low profile (zero promotion and communication to the market). Refer to Lynotech’s solution as an audience analysis tool that helps premium publishers gather users insights from their audiences to deliver better contents and new editorial services.

In order to impose to the market an advertising solution like the one proposed it’s important to add as many premium publishers to the project as possible before it goes live. It needs to become a standard as soon as possible and without advance in order to protect publishers from any possible attacks from other agents involved.

Strategy Suggestions

Trojan Horse Strategy

Add Publishers

Customer Surveys

¤  As Lynotech is a Business to Business solution for Premium Publishers, the number of potential customers in the market is very low. We’ve maintained personal meetings with two potential customers which we understand represent the market thinking and they showed a great interest in Lynotech.