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This is an overview of the ad tech ecosystem. Research was conducted by Thomvest Ventures. It covers topics such as DSP, SSP, Agency, Video, Mobile, and TV advertising.
Citation preview
Adver&sing Technology Overview
September 2014
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2011A 2012A 2013E 2014E 2015E 2016E
TV Print Radio Digital (Ex-‐Mobile) Mobile Other
US Adver&sing Spending By Format ($B)
Source: eMarketer, Jefferies
Total ad spend con&nues to grow, fueled by TV and Digital (display and mobile)
• Total ad spending expected to reach $190.86B in 2013
• TV captures the lion share of the market – 39.1% or $64.5B in 2012
Mobile and digital video are the fastest growing segment
• By 2017, eMarketer expects mobile to be 13% of the market
• Digital video (mobile and display) is the fastest-‐growing segment
Print con&nues to decline, mostly driven by decline in newspaper readership
• Newspapers is expected to fall to $16.2B by 2016
• Magazines are expected to stabilize at $15.1B per year for the foreseeable future
Despite growth in digital, consumers remain more resistant to digital formats
• 45% vs. 39% had a nega&ve a^tude towards digital vs. TV formats respec&vely
Note: Other includes outdoor and directories. Detailed defini&ons in appendix
Total US Adver&sing Spend
0%
10%
20%
30%
40%
50%
Search Display Banners
Classifieds Mobile Digital Video Lead Generation
Rich Media
2006 2007 2008 2009 2010 2011 2012
3 Source: IAB , eMarketer
Digital Ad Format Share (% of total US digital ad revenue)
Search retains the largest share of market • Search has consistently owned more than 40% of the market, and will con&nue to grow steadily
Mobile is experiencing the most rapid growth in terms of ad budget alloca&on
• Share of ad spend on mobile has grown the fastest since IAB began measuring in 2010
• Widespread smartphone adop&on, faster connec&on speeds, new in-‐app ad formats contribute to growth
Digital video is also growing quickly but with caveats
• 75% of marke&ng professionals globally plan to increase their on video ad and content spend next year
• However, Tremor Q3 2013 reports were lackluster, causing a 50% drop in share price
Google owns majority of internet display and mobile market share
• According to eMarketer, Google owns 52.36% of net 2012 mobile internet ad revenues ($4.61B)
• Twiger is growing the fastest in digital adver&sing, up 106.7% in 2012 at $290M in revenue, up from $140M in 2011
US Digital Ad Revenue Format Share
4
Adver&sing Technology Ecosystem
Source: Rubicon, Cantor Fitzgerald, Comscore, Thomvest Research
Adver+sin
g Ag
ency
Supp
ly Side Pla8
orm
Programma+c Guaranteed (Direct Order Automa+on)
Auc+on Markets (Ad Networks and
Exchanges)
Demand Side
Pla8o
rms
Adver+sers
Agen
cy Trading Desk
Publish
ers (Inventory)
$$
$$
$$ $$ $$
$$
$$
$$
$$
$$
$$
$$
5
How Things Work: Third-‐Party Ad Serving
User Publisher Web/ App Server
Publisher Ad Server
Marketer Ad Server
Source: Thomvest Research, AdOpsInsider
SSP
Ad Exchange
DSP1
DSP2
Content Distribu&on Network
User hits the website, publisher’s web server is called and sends back content and ad tag.
1 User’s browser sends ad request to publisher ad server along with cookie informa&on.
2
Publisher’s ad server sends back an ad tag for user’s browser to access SSP for ad auc&on.
3
SSP chooses winner and sends an ad tag to the user with marketer’s ad server informa&on.
4Marketer’s ad server sends ad tag to user’s browser to call the Content Distribu&on Network.
5
CDN delivers ad to user’s browser and the marketer’s ad server is called to inject a 1x1 tracking pixel.
6
6
How Things Work: Programma&c Ad Buying Programma&c buying is an automated transac&on between the buyer and the seller where:
• the buyer can determine the quality and subsequently the price of the audience on the fly • the seller can iden&fy the best value for their ad space • the best sale price is determined through a mul&-‐party auc&on • the best determined buyer gets to buy the ad spot
The auc&on between various par&es happens through an ad marketplace or an exchange and this auc&on leverages a protocol called Real Time Bidding (RTB) which helps various par&es communicate with one another.
The Benefits: The Process:
Source: Persicopix
Seconds
7
How Things Work: Real Time Bidding (RTB)
User clicks on URL and publisher’s content begins to load
Seconds
Publisher asks its ad server if an ad is available. If not, server asks Ad Exchange
0.04
Seconds
Ad Exchange federates ad request to mul&ple demand side planorms (DSPs)
0.08
Seconds
Ad Exchange sends user’s anonymous profile, website category, and page ad safety informa&on
0.10
Seconds
Each DSP overlays adver&ser targe&ng and budget rules, and applies third-‐party data
0.12
Seconds
Each DSP algorithm evaluates and computes op&mal bid for adver&ser
0.125
Seconds
Each DSP responds to Ad Exchange
0.13
Seconds
Ad Exchange runs a second-‐price auc&on and selects winning bid form DSP response
0.14
Seconds
Ad Exchange sends price and ad from winning bid to publisher’s ad server
0.18
Seconds
Publisher’s ad server tells browser which ad to display
0.19
Seconds
Adver&ser’s ad server sends winning ad to browser
0.23
Seconds
Browser displays web page including winning ad, and signals to winning DSP the ad was viewed
0.31
0.0
Seconds 0.36
The en+re RTB ad buying process takes ~ .36 seconds
Source: Turn, Thomvest Research
8
RTB Market Size
Source: eMarketer
RTB is currently 20% of the digital display ad market but will con&nue to grow as more premium content is distributed on RTB and agribu&on and targe&ng technology improves.
9
Pricing Models in Digital Adver&sing
Effec-ve Cost Per 1000 Impressions (eCPM)
Publishers are paid under a common denominator, net
effec+ve CPM. For CPE, eCPM is calculated as (net revenue/# of impressions)*1000. eCPM is also known as RPM (revenue per mille)
Publisher
Adver+ser
Cost-‐Per Engagement (CPE)
Adver&ser only pays if a user completes an
ac&on. Common pricing models:
• Cost-‐per-‐click (CPC) • Cost-‐per-‐view (CPV) • Cost-‐per-‐ac&on (CPA) • Cost-‐per-‐install (CPI)
Cost-‐Per 1000 Impression (CPM) Adver&sers pay
whenever an ad is shown, regardless of
whether user converts. CPM is used more for brand lio rather than user engagement.
Source: IAB, AppFlood, Thomvest Research
CPM Pricing Model Example
Adver&ser
Buys 10,000 impressions at $5 gross CPM
Total cost: $5*10,000
= $50
Intermediary (ad network)
Takes 40% cut from publisher
Total revenue: 40%*$50=$20
Publisher
Earns a net CPM of $3 (60%*$5)
Total revenue: $3/1,000* 10,000=$30
CPE Pricing Model Example
Adver&ser
Buys app installs at $5 per install. 10 installs aoer
10,000 impressions.
Total cost: $5*10= $50
Intermediary (ad network)
Takes 40% cut from publisher
Total revenue : 40%*$50=$20
Publisher
Earns a net eCPM of $3 (60%*$50/
10,000)*1000
Total revenue: $3/1,000* 10,000=$30
Methods to Calculate CPM and eCPM eCPM (CPI) = Click-‐Through-‐Rate x Install-‐Rate x Bid (CPI) x 1000 eCPM (CPC) = Click-‐Through-‐Rate x Bid (CPC) x 1000 eCPM (CPM)= Bid (CPM) x 1000 Note: Adver&sers pay gross CPM, Publishers earn net CPM aoer intermediary costs.
10
Pricing Models in Digital Adver&sing
46% 48%
45%
39% 37%
33% 31% 32%
41%
47%
51%
57% 59%
62% 65%
66%
13%
5% 4% 4% 4% 5% 4%
2% 0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012
CPM Performance Hybrid
Ad Revenue by Pricing Model (% of Ad Revenue)
Source: IAB, Thomvest Research
Performance-‐based digital ads generate the largest por&on of ad revenue as compared to CPM and hybrid ads. Note: Performance-‐based ads are synonymous with cost-‐per-‐engagement pricing models.
11
Top 20 Ad Networks (ComScore)
Source: Comscore, Thomvest Research
0
50,000
100,000
150,000
200,000
250,000
Sept. 2013 -‐ Top 20 Ad Networks and Buy Side Networks by Unique Visitor (000)
12
DataXu is a DSP for omnichannel targe&ng, guaranteed media, and private exchanges.
Employees & Status: 290+, Private Products: DX3 Planorm (DSP), DX Social (social DSP), DX Brand (brand management), DX Mobile (mobile DSP), and DX Video Investors: Atlas Ventures, Flybridge, Menlo Ventures, Thomvest Ventures
Turn is a DMP and DSP that uses online and offline sources to drive mul&-‐channel marke&ng decisions. Employees & Status: 341+, Private Products: Origin Digital Marke&ng Hub, Origin Media DSP, Origin Analy&cs, Origin Data Management Planorm, and Origin Site Investors: Norwest Ventures, Shasta, Trident Capital, Focus Ventures
MediaMath is a DSP and DMP that has been used by over 3,500 brands. Employees & Status: 395+, Private Products: TerminalOne (RTB, campaign management, targe&ng), Feature Spotlight (audience buying and private marketplace), and MathClarity (analy&cs). Investors: Silicon Valley bank, QED Investors, European Founders Fund, Safeguard Scien&sts
Rockenuel is a DSP ad network that generates two-‐thirds of its revenue from performance ads and the rest from brand ads.
Employees & Status: 1000+, Public (FUEL) Products: Rocket Fuel for display, video, mobile, social, marketers, publishers and networks Investors: MDV, Nokia Growth Partners, Labrador Ventures, Comerica Bank, Northgate, Summit Partners, Cross Creek
Criteo is an adver&sing retarge&ng and programma&c ad network (6,000 publishers). The company focuses on product-‐level recommenda&on ads based on a CPC model.
Employees & Status: 1000+, Public (CRTO) Products: Criteo’s Performance Op&miza&on Planorm (CPOP), Programma&c buying, FB Exchange, Mobile, Ad-‐X Tracking Investors: Bessemer Venture Partners, Index Ventures, IDInvest Partners, Elaia Partners
AdRoll is a retarge&ng company. Unlike Criteo, AdRoll does not use a media arbitrage model; AdRoll generates revenue based on % of media spend. Employees & Status: 640+, Private Features: Facebook retarge&ng, customer segmenta&on, analy&cs, Liquid Ads (dynamically retargeted ads) Investors: Founda&on Capital, Accel, Floodgate, Merus Capital, Peter Thiel
Notable DSPs and Retarge&ng Companies
Source: TechCrunch, AdExchanger, Inc., Businessweek, SEC, Linkedin, Forbes, Thomvest Note: All informa4on is publicly available
DSP 1 35%
DSP 2 13% DSP 3
12%
DSP 4 11%
DSP 5 7%
DSP 6 6%
DSP 7 4%
DSP 8 4%
DSP 9 4%
DSP 10 1%
Other 3%
Market Share by DSP, Q1’13
13 Source: CasaleMedia (Index Exchange)
DSP Market Share (Desktop & Mobile)
DSP 1 20%
DSP 2 17%
DSP 3 13%
DSP 4 12%
DSP 5 7%
DSP 6 7%
DSP 7 6%
DSP 8 5%
DSP 9 4%
DSP 10 3%
Other 6%
Market Share by DSP, Q2’13
Note: Index by CasaleMedia is an exchange layer that enables publishers and suppliers to sell their ad impressions in real &me (in essence, a SSP). Index tracks over 40,000 brands and adver&sers globally on a daily basis across RTB marketplaces. Index processes 3 to 4 billion bids per day.
According to Index Exchange, over 70% of ad spend on its planorm was concentrated among only 5 DSPs. Top three DSPs accounted for 42% of the market.
14
Rubicon is a SSP and premium ad network. The company claims it powers 40% of the top 500 publishers and works with over 100,000 adver&sers.
Employees & Status: 450+, Public (RUBI) Products: Adver&sing Automa&on Cloud, Buyer Cloud, Seller Cloud Investors: Clearstone Ventures, Mayfield, IDG Ventures, Peacock Equity, SVB, Square 1
PubMa&c is a SSP. The company claims it works with 400+ adver&sing partners.
Employees & Status: 354+, Private Products: PubMa&c Premier (ad solu&ons for large media companies), AdFlex (ad purchasing system), REVV (yield op&miza&on planorm), PubConnect, and PubMa&c Ad Auc&on Engine Investors: Nexus VP, DFJ, Helion VP, August Capital, SVB
Admeld is an SSP that powers Google’s DoubleClick for Adver&sers. Admeld was acquired for ~$400M in 2011.
Employees & Status: N/A, Acquired by Google Features: Ad serving, yield and sales management, mobile, video, audience management, rich media Investors: Foundry Group, Spark Capital, Norwest Venture Partners, Time Warner Investments
MoPub is a mobile SSP and RTB ad exchange. As of May 2013, MoPub conducts +2b ad auc&ons each day and reaches more than 550m unique devices a month.
Employees & Status: 59+, Acquired by Twiger Products: Ad Serving, Network media&on, MoPub Marketplace, Demand-‐Side Planorm, Private Marketplace, Rich Media Investors: Jafco Ventures, Accel Partners, Harrison Metal Capital, Iris Capital
Nexage is a mobile SSP and private exchange. The company claims to work with 300+ publishers. 50% of ad spend through Nexage comes from DSPs, 40% from ad networks, and 10% from trading desks.
Employees & Status: 85+, Acquired by Millennial Media Products: RTB, Media&on, Private Exchange, Ad Server, Nexage Connect Investors: GrandBanks Capital, Relay Ventures, SingTel Inno8, Hearst Ventures
LioDNA powers OpenX’s publisher SSP solu&ons. OpenX is RTB ad exchange and SSP, ranked second behind Google in terms of publisher ad server install base.
Employees & Status: N/A, Acquired by OpenX Features: yield op&miza&on, cross-‐device targe&ng, transparency Investors: Ben Franklin Technology Partners, various Angel investors
Notable SSPs
Source: TechCrunch, AdExchanger, Inc., Businessweek, SEC, Linkedin, Forbes, Thomvest Note: All informa4on is publicly available
15
Bluekai is a data exchange and DMP. Bluekai has data on +200m customers across 10,000 agributes and executes over 18m data traders per day.
Employees & Status: 139+, Acquired by Oracle Products: DMP, Audience Data Marketplace, Mobile DMP, Audience Analy&cs Suite Investors: Redpoint Ventures, e.ventures, Bagery Ventures, GGV Capital
eXelate is an data exchange for behavioral targe&ng data. eXelate has a 700m+ user database and 200+ data partnerships
Employees & Status: 100+, Private Products: Op&X (analy&cs), conneX (data sales infrastructure), eXchange (data marketplace), maX (custom model service) Investors: Carmel Ventures, Menlo Ventures, Trident Capital, NewSpring Capital\\
[X+1] is a DMP and DSP, among other marke&ng sooware offerings.
Employees & Status: 138+, Acquired by Rockenuel Products: Origin Digital Marke&ng Hub planorm includes the Origin Media DSP, Analy&cs, DMP, and site op&miza&on Investors: Advanced Technology Ventures, Hudson Ventures, Blue Chip, Intel Capital, Areas Capital
Aggregate Knowledge (AK) is a DMP. Most of AK’s customers are direct adver&sers charged on a fixed fee and/or per-‐impression basis. AK gets data from publishers and data providers but does not pay them, rather AK gives them visibility to adver&sers.
Employees & Status: 63+, Acquired by Neustar Products: Media Intelligence Planorm Investors: First Round Capital, NSV, KPCB, DAG Ventures, OVP, Founda&on Capital
Lotame is a data exchange and a DMP. The bulk of Lotame’s revenue comes is from a license fee plus usage model.
Employees & Status: 67+, Private Products: Crowd Control (audience DMP), Smart Data (audience targe&ng), Crowd Control Intelligence (audience insight) and G.O.A.L. (audience segment op&miza&on) Investors: Bagery Ventures, Hillcrest, Emergence, Pinnacle Ventures, beta works
Krux is a DMP with a focus on security. Krux’s planorm reaches more than 600 million users worldwide.
Employees & Status: 90+, Private Products: Data Sentry & Krux Inspector (security), SuperTag & ADM (analy&cs and management), Interchange (data mone&za&on) Investors: Accel Partners, IDG Ventures
Notable DMPs
Source: TechCrunch, AdExchanger, Inc., Businessweek, SEC, Linkedin, Forbes, Thomvest Note: All informa4on is publicly available
16
Acxiom collects data on consumers from public filings, consumer surveys, magazine subscriber lists, warrant cards, and more. The company executes +1 tril. data transac&ons per week and maintains a database of 700 mil. customers.
Employees & Status: 6,300+, Public (ACXM) Business divisions: Marke&ng and data services, IT infrastructure, e-‐mail fulfillment, and outsourced call-‐centers
LiveRamp enables ad targe&ng based on offline customer data. The company is focused solely on data onboarding. LiveRamp’s services are mostly used by DSPs and DMPs.
Employees & Status: 80+, Acquired By Acxiom Investors: Ron Conway, North Bridge Ventures, SooTech VC, Rembrandt, Founders Fund, Felicis Ventures, Peter Thiel, Jeff Clavier
Datalogix collects data on customers mainly from agreements with companies that offer loyalty cards or membership programs. The company claims it holds data on almost every U.S. household and more than $1 tril. worth of transac&on data
Employees & Status: 370+, Private Products: DLX Planorm, DLX ROI, DLX Net Investors: General Catalyst, Costanoa, Sequel VP, IVP
Alliance Data’s Epsilon provides data management and loyalty marke&ng services for 750+ clients. By managing e-‐mail lists for their clients and mapping them to loyalty program data, Epsilon has built transac&on profiles on 130m households.
Employees & Status: 3800+, Public (ADS) Products: Marke&ng Data, Online Targe&ng, Agility Loyalty (loyalty programs), Agility Harmony (email), Aspen CRM (automo&ve)
Experian marke&ng services collects data from Hitwise (IP-‐based web traffic measurement) and CheetahMail (e-‐mail planorm) along with Experian’s extensive consumer credit databases that can be used to target customers online.
Employees & Status: 9800+, Public (EXPN) Features: Consumer insights, targe&ng, cross-‐channel marke&ng, data quality
Notable Data Providers
Neustar collects telco data that can be used to target customers offline and online. Notably, Neustar acquired TARGUSinfo in 2011 for $650M. At the &me, TARGUSinfo was responsible for 86% of all U.S. cable and VOIP caller ID subscribers.
Employees & Status: 1400+, Public (NSR) Features (marke&ng only): iden&fica&on & verifica&on, customer acquisi&on, customer iden&ty management, SMS messaging
Source: TechCrunch, AdExchanger, Inc., Businessweek, SEC, Linkedin, Forbes, Thomvest Note: All informa4on is publicly available
17
Ad Formats – Global
0% 10% 20% 30% 40% 50%
120x600 160x600 180x150 300x250 300x600 468x60 728x90 Other
Display (% of Total Impressions)
0%
25%
50%
75%
100%
300x50 300x250 320x50 728x90
Mobile (% of Total Impressions)
0%
25%
50%
75%
15-‐second pre-‐roll
15-‐second pre-‐roll companion
30-‐second pre-‐roll
30-‐second pre-‐roll companion
Video (% of Total Impressions)
Source: Turn
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
$11
$12
Display Mobile Video
eCPM – Global Ad Spend Jul-‐Sept. 2013
July August September
Defini&ons
Display: Ads that appear on website on Desktop, non –search
Mobile: In-‐app and mobile web adver&sements, includes sta&c, interac&ve, and video ads
Video: Video adver&sements that are displayed on desktop formats, non-‐mobile
89%
11%
% of Desktop Impressions Q2’13
Cookie
No Cookie
18
Cookie Prevalence
Source: Casale Media (Index Exchange)
38%
62%
% of Mobile Impressions Q2’13
Cookie
No Cookie
17%
47%
36%
% of Impressions by Cookie State Q2’13
No Cookie
Cookie & 3P Data
Cookie & No 3P Data
27%
31%
41%
1%
Distribu&on of Impressions without Cookies Q2’13
Windows Desktop
Mac Desktop
Mobile
Other Desktop
Cookie tracking is highly prevalent on desktop and much less prevalent on mobile. The majority of impressions served with the use of cookies, about half were served with cookies and third-‐party data.
19
Bid Volume and Avg. CPM (Desktop & Mobile) According to data from Index Exchange, there is a moderate degree of consistency in bid volumes and avg. CPMs across quarters.
Travel, Auto, and Telecom have the highest avg. CPMs while Retail, Telecom and Financial have the largest bid volumes.
0
10
20
30
40
50
60
70
80
90
100
Bid Volume Avg. CPM
Top 10 Sectors by Bid Volume (Indexed), Q2’13
0
10
20
30
40
50
60
70
80
90
100
Bid Volume Avg. CPM
Top 10 Sectors by Bid Volume (Indexed), Q1’13
Source: Casale Media (Index Exchange)
20
US Digital Display Ad Spending
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015
Net US Digital Display Ad Revenue Share
Yahoo
Microsoo
Aol
Twiger
Other
Google and Facebook generate the largest por&on of US digital display ad revenue. Yahoo! is expected to decline substan&ally in the coming years while Twiger con&nues to grow display revenues at nearly 100% year over year.
$12.3B $23.9B $15B $17.7B $20.73B Total Revenue:
Source: eMarketer
21
Top 20 Video Ad Networks (ComScore)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
August 2013 -‐ Top 20 Video Proper&es by Unique Visitors (000’s) -‐ (Comscore)
Total Unique Vieweres Average Daily Unique Viewers
Source: ComScore
Total U
niqu
e View
ers
Average Daily Uniqu
e View
ers
22
Notable Video Ad Tech Companies
Tremor is a video ad network that generates the majority of its revenue through media sales of premium digital video inventory.
Employees & Status: 345+, Public (TRMR) Products: Video Hub, Video Hub for Adver&sers (VHA), Tremor Video Network Investors: SV Angel, Canaan, Masthead, Meritech, SAP Ventures, DFJ, W Capital Partners, European Founders Fund
TubeMogul is a programma&c video ad SaaS planorm that allows adver&sers to buy media from public and private exchanges, instead of buying and reselling inventory.
Employees & Status: 375+, Public (TUBE) Products: Play&me Video Adver&sing, OneLoad Investors: Trinity, Founda&on Capital, Knight’s Bridge, SingTel, Northgate
YuMe is a video ad network that offers publisher-‐ and agency-‐side technologies. YuMe is ooen used in conjunc&on with primary ad serving planorms such as DoubleClick and Freewheel. Employees & Status: 500+, Public (YUME) Products: Connected Audience Network, Service Providers, Publishers Investors: SV Angel, Accel, Kholsa, DAG, Intel, Samsung, Translink, WestSummit
Videology is a video DSP for RTB through exchanges, including their own exchange. Videology generates revenue through arbitrage of guaranteed inventory.
Employees & Status: 320+, Private Technology: Ad decisioning, advanced targe&ng, repor&ng & analy&cs Investors: NEA, Valhalla, Comcast, Pinnacle
Adap.tv provides programma&c exchange technology to adver&sers and publishers. Adapt.tv does not sell media but rather takes a cut of transac&ons. Adap.tv offers premium inventory via private exchanges
Employees & Status: 300+, Acquired by AOL Products: Pathway Planorm, Marketplace Investors: Gemini Israel, Redpoint, BVP, Spark Capital
BrightRoll is a programma&c video ad network and private & public exchange. According to comScore, BrightRoll is second to Google (Youtube) in terms of unique visitors.
Employees & Status: 425+, Private Products: Brightroll Exchange (BRX), BRIQ (ad buying), Targe&ng, Op&miza&on Engine Investors: True Ventures, Adam Street Partners, Scale VP, KPG, Comerica, Trident Capital, Felicis Ventures
Premium brand network, scager, non-‐programma&c
Performance brand network, scager, programma&c
Video DSP, programma+c
Video DSP for RTB, video ad exchange
Video DSP, private and public exchange, programma+c
Video ad market, private and public exchange, programma&c
Source: TechCrunch, AdExchanger, Inc., Businessweek, SEC, Linkedin, Forbes, Thomvest Note: All informa4on is publicly available
23
Mobile eCPMs
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
May-‐12 Jun-‐12 Jul-‐12 Aug-‐12 Sep-‐12 Oct-‐12 Nov-‐12 Dec-‐12 Jan-‐13 Feb-‐13 Mar-‐13 Apr-‐13 May-‐13 Jun-‐13 Jul-‐13 Aug-‐13 Sep-‐13
MoPub Marketplace eCPM (Banner + Inters&&als)
0
2
4
6
8
Q1 '13 Q2 '13 Jul-‐13 Aug-‐13 Sep-‐13
Compe&&ve Factor (Avg. Bids Per Auc&on Won)
According to MoPub, eCPMs and bidding compe&&on are rising for mobile adver&sing formats. Furthermore, iOS consistently provides higher eCPMs than Android.
Source: MoPub
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
iOS vs. Android eCPM
iOS Android
24
Mobile Ad Network Landscape
Source: Mobyaffiliates, MobiThinking, Kargo, Thomvest Research
Mobile Exchanges
Mobile Ad Networks
Demand Side Planorms
Ad Servers & Supply Side Planorm
Rewards Networks
Rich Media and Video Networks
Premium Mobile Ad Network
Local Mobile Networks
Cross Promo&on Networks Data Partners
CPA Ad Networks
Acquired
Brands & Agencies
25
26
Top 10 Adver&sers by Ad Spend
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
INTERNET DISPLAY
RADIO
TV
OUTDOOR
NEWSP.
MAGAZINES
UNMEASURED
Aoer many years of growth, top adver&sers’ ‘Internet’ spend remained consistent at 9% between 2011-‐12 Note: this figure includes display only (excluding search, video and mobile channels)
Source: AdAge
Top Adver&sers by Ad Spend in 2012 ($MM)
27
Digital vs. Analog % of Spend
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Fast Moving Consumer Goods
Retail
Healthcare
Auto
Leisure/Luxury/Energy
TMT
Financial Services
Publicis Clients’ % of Spend to Digital/IP vs. Analog By Industry Ver&cal
Digital/IP Analog
Source: Publicis Groupe
28
Top 15 Agencies Holding Co.'s by Revenue
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
WPP Omnicom Group
Publicis Groupe
Interpublic Group of Cos.
Dentsu Inc.* 1
Havas Hakuhodo DY
Holdings*
Alliance Data
Systems Corp.'s
Epsilon* 2
MDC Partners
Experian's Experian Marke&ng Services
Acxiom Corp.
Sapient Corp.'s
SapientNitro
IBM Corp.'s IBM
Interac&ve*
DJE Holdings 3
Cheil Worldwide
Top 15 Agency Holding Co. Ranked by 2012 Revenue ($M)
Worldwide US
1. Es&mated pro forma revenue including Aegis Group (acquired in March 2013) and Roundarch (acquired by Aegis in March 2012). 2. Es&mated pro forma revenue including Hyper Marke&ng (acquired in November 2012) and Aspen Marke&ng Services (acquired in May 2011). 3. Owns Edelman.ca
Source: AdAge DataCenter
Top 10 agency holding companies generate 42% of the worldwide and 42% of the US revenues of the top 50 agency holding companies. Overall, revenues grew 4.5% worldwide and 5.3% in the US.
29
Agency Revenue Composi&on
CRM , 35%
PR, 10% Specialty, 10%
Media Buying, 15%
Crea&ve, 30%
Adver&sing 45%
Marke&n
g Services 55%
Source: AdAge, J.P. Morgan
Agency Discipline 2012 Revenue
Growth Rate (vs. 2011)
Digital (From All Disciplines) $11.6B 6.9%
Adver&sing $11B 4.8%
CRM/Direct $6.6B 3.6%
Public Rela&ons $3.9B 5.6%
Health Care $3.6B 2.1%
Media $3.3B 7.4%
Promo&on $2.9B 9.2%
U.S. Agency Revenue by Category – Ad Age Est. Agency Revenue Breakdown – J.P. Morgan
30
Top 5 Agencies Worldwide by Category
Source: AdAge DataCenter, 2013
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Dentsu [Dentsu] BBDO Worldwide* [Omnicom]
McCann Erickson Worldwide [Interpublic]
Hakuhodo [Hakuhodo DY Holdings]
DDB Worldwide [Omnicom]
Agencies by 2012 Wordwide Revenue ($M)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Epsilon [ Alliance Data Systems]
Wunderman [WPP]
Experian Marke&ng Services (Experian)
Acxiom Corp. DigitasLBi [Publicis]
CRM/Direct-‐Marke&ng Networks by 2012 Worldwide Rev. ($M)
$0
$200
$400
$600
$800
$1,000
$1,200
Wunderman [WPP]
Digital@Ogilvy [WPP]
DigitasLBi [Publicis]
SapientNitro [Sapient Corp.]
IBM Interac&ve [IBM Corp.]
Digital Agency Networks by 2012 Worldwide Revenue ($M)
$0
$200
$400
$600
$800
$1,000
$1,200
Starcon MediaVest [Publicis]
OMD Worldwide [Omnicom]
Mindshare Worldwide [WPP]
Carat [Dentsu] ZenithOp&media [Publicis]
Media Agencies by 2012 Worldwide Revenue ($M)
31
Top 5 US Agencies by Category
Source: AdAge DataCenter, 2013
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
iCrossing [Hearst Corp]
360i [Dentsu] iProspect [Dentsu]
Pla�orm Adver&sing
Performics [Publicis]
US Search-‐Marke&ng Agencies by 2012 Revenue (000’s)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Wunderman [WPP]
SapientNitro [Sapient Corp.]
Deloige Digital [Deloige Touche
Tohmatsu]
Razorfish [Publicis]
Ogilvy & Mather Adver&sing [WPP]
US Mobile-‐Marke&ng Agencies by 2012 Revenue (000’s)
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
George P. Johnson [Project WorldWide]
GMR Marke&ng [Omnicom]
Jack Morton Worldwide [Interpublic]
Derse Team Enteprises [MDC Partners]
US Experien&al/Event-‐Marke&ng Agencies by 2012 Rev. (000’s)
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
Integer Group [Omnicom]
MarketStar [Omnicom]
George P. Johnson [Project WorldWide]
Momentum Worldwide [Interpublic]
GMR Marke&ng [Omnicom]
US Promo&on Agencies by 2012 Revenue (000’s)
32
Agency Holding Company Structure
Source: BMO Capital Markets
Adver&sing Marke&ng Services Key Clients
Major: JWT, Ogilvy & Mather, Y&R, Grey
Other: United Group, Bates Asia, CHI, Tapsa
Media Buying: GroupM (Mediaedge:cia, Mindshare,MediaCom, Maxus)
CRM/Direct: Wunderman, OgilvyOne, 141 Worldwide, G2, 24/7 Real Media
PR: Hill & Knowlton, Burson-‐Marsteller, Ogilvy Public Rela&ons, Cohn & Wolfe
Market Research/Other: Kantar Group, CommonHealth, Landor
Ford, Unilever, P&G, Microsoo, Dell, J&J, Colgate, Nestle, GSK, BP, Allianz, Pfizer, IBM, HSBC
Adver&sing Marke&ng Services Key Clients
Global Adver&sing Network: BBDO, BBD, TBWA
Other: Goodby Silverstein, GSD&M, Merkley + Partners
Media Planning and Buying: OMD, PHD, Prometheus
Direct marke&ng and digital: Rapp
Promo&on and events: Integer
PR: Fleishman-‐Hillard
McDonald’s, Pepsi, Nissan, AT&T, Hewleg-‐Packard, Johnson & Johnson, Chevrolet, Mars
Adver&sing Marke&ng Services Key Clients
Global Adver&sing Network: McCann Erickson, Draofcb, Lowe + Partners
Other: Compbell-‐Ewald, Hill Holiday, Gotham
Media Planning and Buying: Universal McCann, Ini&a&ve
Interac&ve: R/GA, MRM Worldwide
Draofcb, Jack Morton, Weber Shandwick
General Motors, Johnson & Johnson, Microsoo, Mastercard, P&G, Verizon, Unilever, Coca-‐Cola
Adver&sing Marke&ng Services Key Clients
Major: Publicis WW, Saatchi & Saatchi, Leo Burneg
Other: Fallon Worldwide, Kaplan Thaler, Bartle Bogle Hegarty
Media Buying: Publicis Groupe Media, Zenith Op&media, Starcom MediaVest
CRM/Direct: Digitas, ARC Worldwide, Razorfish, Rosega
PR: Manning, Selvage & Lee
Other: Publicis Healthcare Group, Bromley, iSE
P&G, Toyota, Ferrero, Coca-‐Cola, General Mills, Disney, Nestle, Sanofi-‐Aven&s, L’Oreal, Carrefour
33
Agency Trading Desks Holding Company
Source: BMO Capital Markets, Thomvest Research
Media Group Agency Trading
Desk Other Tech-‐Focused Specialty Agencies
Relevant IPG Umbrella Agencies: Universal McCann, Ini&a&ve
• Reprise Media – SEO, SEM, SMM and custom solu&ons • Ansible – Full-‐service mobile marke&ng agency; crea&ve, strategy, analy&cs, texts, QR codes • Geomentum – Hyper-‐local marke&ng and media strategy • Shopper Sciences – Full-‐service shopper marke&ng consultancy • IPG Media Lab – New product analysis and development, planorm resource
Relevant WPP Umbrella Agencies: GroupM (Mindshare, MEC, MediaCom, Maxus)
• 24/7 Media – Digital ad management planorm for adver&sers and publishers. SSP is called Open AdStream. 24/7 provides ad network and analy&cs
• Media Innova&on Group – Develops new technology for acquiring, op&mizing and measure digital media
• GroupM Next – Research agency focused on online, search, social, mobile and emerging markets
Relevant Omnicom Umbrella Agencies: Omnicom Media Group, PHD, OMD
• Annalect – Data and analy&cs driven marke&ng technology planorm. Used by nearly all of Omnicom’s media planning and buying clients to build insights and dash boards. Includes the following:
• Resolu&on Media – Behavior, search, social media, mobile and display marke&ng • BrandScience – Business and marke&ng consultancy, econometrics
• TargetBase – Database marke&ng agency, provides crea&ve, analy&cs, tech, strategy • Promoetheus – Spun off from OMD in 2005, focused on ROI and accountable media
Relevant Publicis Umbrella Agencies: Vivaki (Starcom MediaVest, ZenithOp&media)
• Digitas – Number one digital agency in the US by revenue • Razorfish – All aspects of digital campaigns from crea&ve to ad buying across channels • Big Fuel – Social marke&ng agency • CRM365 – Social/mobile data-‐lead offering • Performics – SEO and SMO services • Vivaki Nerve Center – Used by en&re Vivaki network; tests new technologies, tracking, bid management, data partnerships, analy&cs
Investments and Exits
34
35
Global VC Investment in Ad Tech
Source: Crunchbase, Pitchbook Data
74
105
159
193
157
201
222
237
217
139
0
50
100
150
200
250
$0
$500
$1,000
$1,500
$2,000
$2,500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Capital Invested ($M) Deal Count
Venture capital investment in adver&sing technology reached an all-‐&me high in 2011. VC investment in ad tech declined in 2013 as compared to 2012 and 2011.
Ad Tech VC Deal Count and Amount Raised 2005-‐2014 ($MM)
36
Recent US VC Financings in Ad Tech
Source: Pitchbook Data
Company Deal Date Deal Size Raised to Date VC Round HQ Loca&on Adjust 08-‐Sep-‐2014 7.60 11.90 4th Round Berlin, Germany
BlueCava 04-‐Sep-‐2014 1.50 36.87 6th Round Irvine, CA
Netser&ve 04-‐Sep-‐2014 3.00 21.27 3rd Round Morrisville, NC
xAd 04-‐Sep-‐2014 50.00 92.19 7th Round New York, NY
Adinch 03-‐Sep-‐2014 3.00 4.00 2nd Round San Francisco, CA
Verve Mobile 26-‐Aug-‐2014 4.10 41.57 7th Round Carlsbad, CA
Datanyze 25-‐Aug-‐2014 2.00 2.00 1st Round San Mateo, CA
AdStage 13-‐Aug-‐2014 6.25 8.78 4th Round San Francisco, CA
Adello 12-‐Aug-‐2014 2.00 2.00 1st Round Redwood City, CA
EverString 12-‐Aug-‐2014 12.00 12.00 2nd Round San Mateo, CA
Windsor Circle 12-‐Aug-‐2014 5.25 7.69 4th Round Durham, NC
July Systems 08-‐Aug-‐2014 3.25 58.18 7th Round Burlingame, CA
JoopLoop 07-‐Aug-‐2014 0.03 0.03 1st Round Hoboken, NJ
VentureBeat 07-‐Aug-‐2014 3.28 3.64 2nd Round San Francisco, CA
Reten&on Science 05-‐Aug-‐2014 7.00 9.05 3rd Round Santa Monica, CA
Smaato 05-‐Aug-‐2014 25.00 47.00 4th Round San Francisco, CA
ADmantX 31-‐Jul-‐2014 2.40 6.60 3rd Round West Harnord, VT
Ds&llery 30-‐Jul-‐2014 24.32 56.00 3rd Round New York, NY
Kixer 29-‐Jul-‐2014 1.00 1.00 1st Round Los Angeles, CA
Mobile Ac&on 23-‐Jul-‐2014 0.81 0.81 1st Round San Francisco, CA
SmartZip Analy&cs 23-‐Jul-‐2014 12.00 23.05 3rd Round Pleasanton, CA
Glow Digital Media 22-‐Jul-‐2014 7.00 8.30 2nd Round London, United Kingdom
Intent Media 21-‐Jul-‐2014 22.70 50.99 3rd Round New York, NY
Supersonic 21-‐Jul-‐2014 15.00 23.20 3rd Round San Bruno, CA
Monetology 18-‐Jul-‐2014 1.50 1.50 1st Round Atlanta, GA
37
Recent US VC Financings in Ad Tech Cont.
Source: Pitchbook Data
Company Deal Date Deal Size Raised to Date VC Round HQ Loca&on Capillary Technologies 17-‐Jul-‐2014 14.00 35.60 4th Round Bangalore, India
Locket 17-‐Jul-‐2014 0.02 0.52 3rd Round New York, NY
AdAdapted 11-‐Jul-‐2014 0.75 1st Round Ann Arbor, MI
Ohana Companies 11-‐Jul-‐2014 0.79 15.91 5th Round Wilmington, DE
Tapad 30-‐Jun-‐2014 7.00 16.80 5th Round New York, NY
BrightFunnel 29-‐Jun-‐2014 1.00 1st Round San Francisco, CA
App Annie 27-‐Jun-‐2014 17.00 39.00 4th Round Beijing, China
ContextLogic 27-‐Jun-‐2014 50.00 74.70 4th Round San Francisco, CA
LiquidM 27-‐Jun-‐2014 3.67 5.45 2nd Round San Francisco, CA
White Ops 24-‐Jun-‐2014 11.09 11.09 1st Round New York, NY
OwnerIQ 20-‐Jun-‐2014 11.00 39.36 6th Round Boston, MA
TapFwd 19-‐Jun-‐2014 0.15 0.15 1st Round San Francisco, CA
Appier 18-‐Jun-‐2014 6.00 7.00 2nd Round Taipei, Taiwan
Pixability 18-‐Jun-‐2014 1.80 10.97 4th Round Boston, MA
Rhiza 17-‐Jun-‐2014 3.00 3.00 1st Round Pigsburgh, PA
Wayin 17-‐Jun-‐2014 13.10 34.24 2nd Round Denver, CO
LaunchHub 16-‐Jun-‐2014 1.83 1.83 1st Round Redwood City, CA
mNectar 16-‐Jun-‐2014 7.00 7.08 1st Round San Francisco, CA
BrightRoll 13-‐Jun-‐2014 1.24 37.52 5th Round San Francisco, CA
Snipi 12-‐Jun-‐2014 3.10 7.42 3rd Round Philadelphia, PA
Placed 10-‐Jun-‐2014 10.00 13.40 3rd Round Seagle, WA
Yieldbot 05-‐Jun-‐2014 18.00 30.35 4th Round New York, NY
Yext 04-‐Jun-‐2014 50.25 116.44 7th Round New York, NY
Free ATM 03-‐Jun-‐2014 0.75 1.09 3rd Round Brooklyn, NY
MediaMath 03-‐Jun-‐2014 176.00 222.92 7th Round New York, NY
BlueConic 28-‐May-‐2014 4.00 8.00 3rd Round Boston, MA
Datalogix 28-‐May-‐2014 45.25 91.97 6th Round Westminster, CO
38
Global Ad Tech M&A Ac&vity
Source: Pitchbook Data
Note: Transac&on amounts do not encompass every recorded deal; some private market acquisi&ons are not disclosed. However, deal count encompasses disclosed and undisclosed transac&ons.
Global Ad Tech M&A Ac&vity by Deal Count (2008-‐2013)
24
20
34 35
46
39 42
2008 2009 2010 2011 2012 2013 2014
39
Recent Ad Tech M&A Ac&vity
Source: Pitchbook Data
Company Deal Date Deal Size Total Raised Acquirer HQ Loca&on [x+1] 05-‐Sep-‐2014 230.00 67.78 Rocket Fuel New York, NY
Luminate 05-‐Sep-‐2014 30.00 Yahoo Mountain View, CA
InsightExpress 26-‐Aug-‐2014 25.00 Milward Brown Stamford, CT
adSage 21-‐Aug-‐2014 100.00 20.00 BesTV Beijing, China
LiveRail 15-‐Aug-‐2014 500.00 5.00 Facebook San Francisco, CA
OnSwipe 05-‐Aug-‐2014 19.40 Beanstock Media New York, NY
BlueKai 23-‐Jul-‐2014 425.00 37.49 Oracle Cuper&no, CA
Grow Mobile 16-‐Jul-‐2014 42.00 1.00 Perion San Francisco, CA
Zoove 14-‐Jul-‐2014 67.87 Mblox Palo Alto, CA
LiveRamp 01-‐Jul-‐2014 310.00 32.00 Acxiom San Francisco, CA
Jirbo 24-‐Jun-‐2014 350.00 2.00 Opera Sooware Los Angeles, CA
mDialog 19-‐Jun-‐2014 8.15 Google Toronto, Canada
Kontera 11-‐Jun-‐2014 150.00 36.16 SingTel San Francisco, CA
Namo Media 05-‐Jun-‐2014 50.00 1.90 Twiger San Francisco, CA
NowSpots 02-‐Jun-‐2014 25.50 1.10 Marin Sooware Chicago, IL
Dis&mo 28-‐May-‐2014 1.00 App Annie Utrecht, Netherlands
MarketVibe 21-‐May-‐2014 OwnLocal Aus&n, TX
PrecisionDemand 21-‐May-‐2014 16.72 Adap.tv Seagle, WA
Mocean Mobile 19-‐May-‐2014 15.50 46.59 PubMa&c New York, NY
Convertro 07-‐May-‐2014 91.00 10.25 AOL Santa Monica, CA
Adometry 06-‐May-‐2014 30.61 Google Aus&n, TX
Adchemy 05-‐May-‐2014 119.22 WalmartLabs Foster City, CA
AcuityAds 25-‐Apr-‐2014 5.75 Wildlaw Capital Toronto, Canada
Korrelate 23-‐Apr-‐2014 9.55 JD Power New York, NY
40
Global Ad Tech IPO Ac&vity
Source: Pitchbook Data
2013 was a breakout year for ad tech IPOs with five companies raising a combined ~$630M from public markets. Several more adver&sing technology companies are expected to IPO in 2014.
Note: Transac&on amounts do not encompass every recorded deal; some private market acquisi&ons are not disclosed. However, deal count encompasses disclosed and undisclosed transac&ons.
Global Ad Tech IPO Ac&vity (2009-‐2013)
0
1
0
1
5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
$0
$100
$200
$300
$400
$500
$600
$700
2009 2010 2011 2012 2013
IPO Transac+on ($M) IPO Deal Count
Company Date Amount Raised ($M)
Criteo (CRTO) 29-‐Oct-‐2013 288.10
Rocket Fuel (FUEL) 20-‐Sep-‐2013 116.00
YuMe (YUME) 06-‐Aug-‐2013 46.13
Tremor Video (TRMR) 28-‐Jun-‐2013 75.00
Marin Sooware (MRIN) 22-‐Mar-‐2013 105.00
Millennial Media (MM) 29-‐Mar-‐2012 132.60
MediaMind Technologies (MDMD) – Acquired by Digital Genera&on
11-‐Aug-‐2010 57.50
41
Thank you
Don Butler [email protected]
Andrew Tweed [email protected]
Daphne Ewing-‐Chow [email protected]
A special thanks to Eric Liu and Natasha Osborne for their contribu&ons to the research
203 Redwood Shores Parkway Suite 680 Redwood City, CA 94065