Académique Documents
Professionnel Documents
Culture Documents
January 2013
Ken Allen
Managing Director allen@blackstone.com
Rumena Manolova
Associate rumena.manolova@blackstone.com
Table of Contents
I.
II.
Executive Summary
Industry Themes
2
7 39 51
Blackstone
I.
Executive Summary
I.
Executive Summary
Summary Observations The Digital Marketing sector continues to evolve, and is becoming increasingly strategic to a large number of ecosystem players.
The Digital Marketing Ecosystem Continues to Undergo a Significant Transformation
Multi-decade transition from analog to digital Audience-centric, cross-channel, data-driven, real-time
Growth in the Digital Marketing Industry is Being Driven by a Number of Important Trends
Mobile, Social, Video, Audience Targeting / RTB, and Data / Analytics are critical capabilities
The Above Trends Have Catalyzed a Significant Wave of Consolidation in the Industry
Leading strategic acquirers seeking growth have gained access to these capabilities through
inorganic expansion
Stack convergence is resulting in unified, multi-channel offerings fueled by data and analytics
Consolidation / M&A Will Continue to Define the New Digital Marketing Ecosystem
Larger players will continue to leverage M&A as a means to unify the product suite, purchase
R&D, acquire talent, and, as a defensive measure, prevent strategic assets from falling into the wrong hands
Strategic M&A has become a core capability and a source of competitive advantage for
many firms
Blackstone 3
I.
Executive Summary
A Significant Shift Is Occurring in Online Marketing and Commerce Platforms Marketing and eCommerce platforms are becoming increasingly integrated, supported by data and analytics, and processed in real time.
How We Decide
How We Buy
Auctions
Radio Print
Branding
Call Center
Direct Mail
Multi-Channel Engagement
Multi-Channel Commerce
Purchase History
Intent
Behavioral
Social Graph
Demo / Geo
Preferences / Likes
10110011011001010110001 ...
Data
... 10110011011001010110001
Blackstone 4
I.
Executive Summary
The Online Channel Represents the Sole Growth Vector in the Global Advertising Market While currently smallest in size, the Online advertising market is vastly outpacing other channels in terms of long-term growth.
2011 Global Market Size ($bn)
$497bn Online, 18%
($87)
Online media becoming central pillar of advertisers marketing efforts Growth driven by increased Internet penetration, advanced technologies
+14% (6%)
Print, 23%
($116)
Shift towards brochures, flyers, booklets, press kits; away from news Increased integration with digital (QR, augmented reality, ambient) Strength in local / national cable offset by decline in broadcast TV, radio,
Broadcast, 25%
($125)
2%
Direct, 34%
($169)
(5%)
automotive sectors
($5)
Global Market Size
________________________________________________
Blackstone
I.
Executive Summary
Key Industry Growth Drivers A number of important themes are driving growth in the Digital Marketing ecosystem.
Mobile
$40 $30
Social
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
________________________________________________
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Blackstone
II.
Industry Themes
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 8
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Mobile Endpoints Are Expected to Drive Significant Data Consumption and Advertising Growth
Consolidation / M&A
Data / Analytics
The proliferation of mobile devices, combined with the potential inherent in mobile targeting, Callout presents a significant market opportunity.
Evolution of Hardware Device Penetration
(Millions in log scale)
1,000,000 Mobile Internet
10,000
40%
20%
1,000
10B+Units?
1B+Units / Users
0% Rev. Per Click iPad Desktop Conv. Rate Android Tablet Avg. Order Value iPhone Android Phone
100
Mini Computer
10
($ in millions)
$4,000 $3,000 $2,000 '11 - '14E CAGR 68%
1MM+Units
0 1950 1970 1990 2010 2030
$1,000 $0 2011
Google 2012E Facebook Twitter 2013E Apple (iAd)
There are currently 953mm smartphone subscriptions vs. 6.1bn mobile subscriptions, representing a massive growth opportunity.
________________________________________________
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Consumers are incorporating mobile in all aspects of their daily lives from social activities to commerce and TV viewing.
Share of Consumer Time Spent with Major Media(1)
50% 45%
45% 44% 43% 42%
Metric(2)
~1,100% YoY growth in users in Q4 2012
40%
35% 30%
26% 26% 26%
25%
20% 15% 10%
25%
70% of users from mobile in 2011 ~20% of shoppers scan a product barcode
and/or send product pictures to friends and family
6%
4%
Print 2012
Other
(1) Source: eMarketer, BII Research. (2) Source: BII Research, Facebook, Enders Analysis.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Despite its rapid growth to-date, mobile continues to represent a major untapped opportunity.
G-20 Internet Access(1)
3,000
7.0
2,707
6.0 5.0
6B Users
2,500
4.0
3.0 2.0 1.0
1B Users
0.0
Smartphone Mobile Phone
1,000
500 167
0
350
Global Population
2005
2010
Fixed Mobile
2015
Internet Population
________________________________________________
(1) Source: Strategy Analytics, International Telecommunications Union, BII Research. (2) Source: Boston Consulting Group, Mary Meeker, Kleiner Perkins, Morgan Stanley Research, Berg Insight, BII Research. (3) Source: International Communication Union, Google, BII Research.
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Blackstone 11
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
As more than half of U.S. mobile subscribers now own smartphones, the pace of net new adds has slowed down.
U.S. Smartphone Market: Year-Over-Year Net New Adds
(Users in millions)
40 35 30 25 20 15 21 12 13 10 13 27 29 29 35 34 32 32
100%
10
5 0
14
15 11
18
10
(20%) (40%)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2013 Users Added % YoY Growth
% Smartphone Penetration(1)
30%
________________________________________________
38%
41%
44%
48%
50%
55%
Source: comScore, Nielsen, BII Research. (1) Note: U.S. mobile subscribers 18+.
Blackstone
12
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Mobile Ad Revenues Have Exhibited Slower Growth Thus Far Relative to Other Media
Consolidation / M&A
Data / Analytics
Mobile advertising has grown more slowly than other media, as advertisers struggle to adopt the right advertising model.
Comparative U.S. Advertising Media Annual $ Revenue Growth (First 5 years)
($ in millions)
$4,621
$3,000
$2,500 $2,000 $1,500 $1,000 $1,012 $358 $80 $160 $267 $392 $907 $806 $2,162 $2,162
$1,920
$1,171
$500
$0
$55
Year 1
________________________________________________
Year 2
Broadcast TV
Year 3
Mobile Internet
Year 4
Year 5
Note: Adjusted for inflation. Source: IAB, McCann-Erickson, BIA-Kelsey, Bll Research.
Blackstone
13
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Search dominates mobile ad revenues; however, eCPMs are lower than Desktop. The two leading smartphone platforms, Android and iPhone, garner the highest eCPMs.
2011 Global Mobile Ad Spend(1)
Messaging
10%
$4.00 $3.50 $3.50
Display 28%
62% Search
Devices(2)
$1.50 $1.00
$2.85 $2.10
$0.75
$0.50 $0.00
$0.59
$0.64
RIM
$1.01
J2ME / others Android iPhone
Desktop Internet
Mobile Internet
(1) Source: IAB, BII Research. (2) Source: Opera Software, Q2 2012. (3) Source: comScore, Vivaki, Mobclix Exchange, BII Research.
Blackstone
14
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Native, Location-based, and Video Ads Represent the Next Big Opportunity in Mobile Native, social, location-based, and video ads integrate more seamlessly in consumer mobile experiences and have higher CPMs.
Ads in Timelines (Twitter / Facebook)(1) Location-Based Ads(2)
(Monthly Ad Requests Per Mobile User by Location)
75 60 45 30 15 0
Consolidation / M&A
Data / Analytics
70
67
67
47 37
39
35
27
24
23
16
(1) Source: Twitter, Facebook. (2) Source: JiWire, 3Q 2012. (3) Source: Ad platforms, BII Research, Greg Sterling, Opus Research.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Smartphone Users Spend More Time on Apps than on the Web Apple dominates the mobile app revenue market.
Total Time Spent Using Mobile Web vs. Apps(1)
(Minutes Spent per Month in billions)
Consolidation / M&A
Data / Analytics
Other
Android 7% 10%
________________________________________________
(1) Source: Nielsen Smartphone Analytics, BII Research, Blackstone. (2) Source: iSuppli, Forrester Research, company press releases, BII Research.
Blackstone
16
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Google practically owns the mobile search market, and has steadily increased its revenue share over time.
Mobile Ad Revenue(1)
(% of total)
Other
70%
60% 50% 40%
30%
20% 10% 0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
(1) Source: BII Research, Blackstone. (2) Source: Global StatCounter, BII Research.
Blackstone
17
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 18
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Social Networks Are Profoundly Changing How Consumers Discover and Interact with Brands
Consolidation / M&A
Data / Analytics
Social networks are becoming a primary source for consumers to discover new products, view peer recommendations, and seek reviews. Innovations such as mobile check-ins and Facebook integration with retailer sites have allowed consumers to take word-of-mouth marketing to a mass scale. Traditional Marketing Funnel Social Media Marketing Loop
Awareness Awareness
Interest
Interest
Recommendation
Decision
Action
Decision
Action
________________________________________________
Blackstone
19
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
The Shifting Display Ecosystem Has Resulted in Dramatic Share Shifts in Advertising
Consolidation / M&A
Data / Analytics
Underlying industry dynamics have resulted in significant display advertising share shifts from static, non-targeted premium channels to RTB and Social formats.
Net U.S. Online Display Ad Revenues
(% of Total Display Ad Revenues, 2011 2014)
2011 14.0%
2012E 16.8%
2013E 17.7%
2014E 17.1%
2011 70.9%
2012E 68.8%
2013E 65.6%
2014E 63.5%
13.8%
16.5%
19.8%
21.7%
5.5%
8.3%
11.1%
12.7%
10.8%
9.1%
8.1%
Social Games
5.5%
6.7%
7.0%
7.4%
4.5%
4.4%
4.3%
4.4%
4.3%
5.3%
5.8%
6.1%
4.3%
4.0%
3.8%
3.7%
1.8%
47.4%
50.8%
53.7%
54.4%
88.0%
89.1%
89.5%
89.7%
________________________________________________
Source: eMarketer.
Blackstone
20
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Facebooks data and potential targeting mechanisms hold significant promise for advertisers. Marketer response, however, has been mixed thus far.
Facebook Targeting Framework Facebook Advertising ROI vs. Competitors
(% Surveyed)
Superior
17.1%
Inferior 38.3%
44.5%
YOU
Targeting Mechanisms
Targeting Channels
Exec at Consumer / Business Printing Site Veteran Online Advertising Executive Exec at Online Ad Platform
Facebook Online
Facebook Newsfeed
Facebook Exchange
Zynga.com
________________________________________________
Blackstone
21
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 22
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
A Huge Opportunity, One that Online Video Is Ideally-Suited to Target, Exists in Display & Brand Advertising
Consolidation / M&A
Data / Analytics
A significant gap exists between the relative share of online and offline branding, implying a $13.0bn untapped market opportunity in the U.S. alone.
U.S. Market Opportunity (2011)
($ in billions)
Prime Time
100%
TV
Internet
50%
(2)
MEDIA
With undivided attention.
Traditional Media
25%
Fewer ads
(2)
0%
________________________________________________
Source: IAB, Wall Street research, comScore, Blackstone. (1) Offline DR includes direct mail and directories. Online DR includes classifieds, e-mail, lead generation, and search. (2) Offline Branding includes outdoor, print, radio, and TV. Online Branding includes banner ads, rich media, sponsorships, and video.
New Media
More ads
Blackstone
23
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
As consumers begin to view more content online, over-the-top video revenues are on the rise.
U.S. Primetime TV Viewing(1)
120%
100%
6%
6% 16%
7%
8% $4.0
17%
80%
26%
$3.0
20%
$1.0
2008
$0.0 2006 2007 2008 Netflix 2009 Youtube Hulu 2010 2011
(1) Source: GfK, BII Research. (2) Source: Company filings, Wall Street research, BII Research, Blackstone.
Blackstone
24
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Online Advertising Has Shown Robust Growth Over the Past Decade
Consolidation / M&A
Data / Analytics
Online advertising growth, which has averaged 18% per year over the past decade, has come mainly at the expense of Print. In the future, Video is expected to be a major growth driver online.
Historical U.S. Market Share by Channel
50% 47% 40%
47%
40%
38% 30%
40%
30%
24%
20%
21%
15%
20%
17% 10% 5% 0%
10%
0%
8% 6% 5% 5% 3% 0% 2011
5% 5% 4% 3% 0%
2012E 2013E 2014E 2015E 2016E
Broadcast (1)
________________________________________________
Print(2)
Direct (3)
Online(4)
Source: Wall Street research, eMarketer. (1) Broadcast includes outdoor, radio, and television. (2) Print includes magazines and newspapers. (3) Direct includes direct mail and directories. (4) Online includes search, display, video, classifieds, lead generation, rich media, sponsorships, and e-mail. (5) Includes mobile advertising.
Blackstone
25
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Google already generates almost as much U.S. ad revenue as all magazines and newspapers. The Company is well positioned to take share from TV networks as more video content is consumed online and becomes better monetized.
U.S. Ad Revenue(1)
($ in billions)
$50.0
$45.0 $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0
Online Video 98.5% 1.5% TV 75.2% 24.8%
Streaming TV Online
$5.0 $0.0 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
0% 20%
92.1%
7.9%
40%
60%
80%
100%
Google
________________________________________________
Magazines
Newspapers
Content
Ads
(1) Source: Google, NAA, PIB, BII Research. (2) Source: comScore, June 2012, BII Research.
Blackstone
26
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 27
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
The Display Markets Have Seen a Flood of Non-Premium Inventory That Is Less Attractive to Brands
Consolidation / M&A
Data / Analytics
The Display market has been driven by a rise in non-premium inventory, which has typically been less attractive to brands and has resulted in pricing pressure for premium publishers.
Global Display Advertising has Seen a Flood of Inventory
($ in billions)
$80.0
% Increase
'07-'10E '10E-'13E Supply Demand 122% (22%) 87% 13%
Cable TV Huge opportunity to increase ad effectiveness through social marketing / audience targeting / RTB Syndication TV Radio Magazine
$60.0 100%
90% 80%
$40.0 70%
41%
41%
47%
51%
$7.8
30%
20% 10% $0.0 0%
42%
46%
48%
45%
39%
Hulu
2007 Inventory Pricing 2010 2004 (Supply) 2005 (Demand) 2006 Inventory Pricing 2013E 2007 (Demand) 2008 (Supply)
CPM
<$2
$6
$10
$14
$18
$22
$26
$30
$34 >$40
Supply-Driven
Demand-Driven
________________________________________________ Source: Wall Street research, Blackstone. Note: Display inventory comprised of page views and ad coverage; pricing reflective of RPMs. Pricing reflective of the combination of CTRs and CPC.
Blackstone
28
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
A New Display Advertising Ecosystem Is Emerging The Display ecosystem is increasingly integrated, data-driven, and real-time in nature.
Advertisers Format
Display Search
Consolidation / M&A
Data / Analytics
Advertiser Tools Optimization / Analytics DSPs / Targeting Ad Campaign Management Media Buying Platforms Marketing Automation
Publisher Tools
Inventory Format
Display
Publishers
Brand
Optimization / Analytics
Search AdSense
Online Video
Mobile Social
DemandSide Platforms
Ad Exchanges
SupplySide Platforms
Mobile
Self-Service Ad Platforms
Direct
TV Radio (?)
Print (?)
Other (?)
SSPs
Mobile Social
Proprietary Networks
Direct Data Integration / Aggregation / DMPs Infrastructure Infrastructure Data Warehouse Client / Primary Data Third Party Data Cloud / Edge Network / CDN
________________________________________________
Source: Blackstone.
Blackstone
29
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
While it has been used historically to auction remnant inventory, RTB has extended to premium publishers, premium advertisers, and premium ad formats.
U.S. Real-Time Bidding Digital Display Ad Spending
($ in billions)
$10.0
$8.0
$7.1 $6.0
Q2 2012
$2.0 $1.0
$0.0 2011
% of Total Display Ad Spending 8%
2016
22%
________________________________________________
Note: Includes all display formats served to all devices. Source: eMarketer.
Blackstone
30
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Ecommerce Players Are Also Disrupting the Display Ecosystem by Leveraging Data
Consolidation / M&A
Data / Analytics
Major eCommerce players have developed significant advertising businesses by harnessing their unique data assets to target advertising to specific audiences.
U.S. Retailers: Total Ad Display Impressions(1)
(In billions)
25.0 20.0 15.0 10.0
Other
5.0
________________________________________________
Blackstone
31
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 32
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
98,000+ TWEETS
100+
Answers.com
40+
STATUS UPDATES 60+ NEW BLOGS 168 million EMAILS ARE SENT 694,445 SEARCH QUERIES 1,700+ DOWNLOADS 79,364 WALL POSTS 510,040 COMMENTS
Source: Go-Globe.com
Blackstone
33
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Data Usage Is Projected to Continue to Grow Exponentially In addition to massively increasing data volumes, the variety and complexity of data are experiencing similar exponential growth. The explosion of data represents a tremendous opportunity, and challenge, for marketers.
Multiple Sources Contributing to Growth in Data
Sensors / RFID / Devices Petabytes Mobile Web User Click Stream
Consolidation / M&A
Data / Analytics
Big Data
Sentiment
User Generated Content Social Interaction & Fees Spatial & GPS Coordinates External Demographics HD Video, Audio, Images Speech to Text Product / Service Logs SMS / MMS
48.0% 22.0%
75
Web
Terabytes Web logs Offer History A/B Testing Dynamic Pricing Affiliate Networks Segmentation Offer Details Search Marketing Behavioral Targeting Dynamic Funnels
60
53.2
CRM
Gigabytes
45 35.7 30 16.4 15 2.5 0 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 3.8 6.3 8.7 10.5 24.2
58.0%
Customer Touches
Support Contacts ERP
Megabytes
Unstructured
Structured
Blackstone
34
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Data Analytics, Mobile, and Social Are the Top Priorities of Todays CMO
Consolidation / M&A
Data / Analytics
Analytics, social, and performance-based advertising are at the forefront of the CMO agenda.
Technology that CMOs Worldwide Plan to Increase Use of in the Next 3 5 Years
(% Respondents)
Social Media
Customer Analytics CRM
5%
4%
4%
4%
5%
4%
Mobile Applications
Content Management Tablet Applications
80%
73% 72%
39%
37%
33%
31%
60%
50% 40% 30% 20% 10% 0%
42%
46%
70%
68% 66%
Reputation Management
Search Engine Optimization Campaign Management Score Cards / Dashboards Email Marketing 46%
63%
62% 61%
41%
41%
47%
51%
57%
59%
62%
65%
56%
2004
2005
2006
2007
2008
2009
2010
2011
0%
15%
30%
45%
60%
75%
90%
Performance-Based CPM Hybrid
Data-Driven Marketing
________________________________________________
Blackstone
35
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Agencies
Database Marketing
`
Networks / Exchanges (Google) (WPP)
(Omnicom)
(WPP)
________________________________________________
Blackstone
36
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 37
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Strategic M&A Activity Is Occurring on All Levels of the Digital Marketing Stack
/
Display
Consolidation / M&A
Data / Analytics
/
Email Email / MA Local Local
Services
Mobile Mobile
/
Search Search
/
Social Social
/
Video Video
/ / / / /
/
/ /
(Daily deal sites consolidation)
/ / /
/ / /
(Search partnership)
/ /
/ / /
Platforms
/ / /
Optimization
Analytics
/ /
/
/ /
/
________________________________________________
Data
Blackstone
38
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Summary Observations in Digital Marketing M&A Strategic M&A is impacting every layer of the Digital Marketing stack.
The Digital Marketing Ecosystem Continues to Consolidate through Strategic M&A
Marketers realize inherent value from the consolidation of multiple point products into an integrated offering
Market solutions evolving toward integrated CMO dashboards for executing cross-channel campaigns Data, analytics, and automation are increasingly important components
Consolidation / M&A
Data / Analytics
Digital Marketing Strategic Activity is Concentrated Among a Relatively Small Number of Serial Acquirers
21 major market participants across 4 key sectors: Agencies, Software, Platforms, and Publishers
Others acquirers exist, but tend to make tuck-in buys in a sporadic fashion
Interest in Inorganic Expansion in the Digital Marketing Sector Has Broadened Beyond the Traditional Internet Platform Players
Google, Yahoo!, Microsoft, AOL, WPP, and Publicis formerly viewed as the end-game Strategic buyer ecosystem has broadened materially in recent years, most notably into the traditional horizontal software players
Source: Blackstone.
Blackstone
40
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
Digital Marketing M&A activity has grown steadily post-2008 levels, from both a volume and size perspective.
Transaction Volume
# of Deals YoY % Change
960 845 800 674 614 600 519
$36 $32
Transaction Value
Deal Value, $bn
1,000
90.0%
$75
$64
$125
758
60.0%
$60
$100
570
30.0%
$45
$75
0.0%
$30
$28
$27 $20
$50
(30.0%)
$15
$13
$16
$15
$25
$7
0 (60.0%)
$0
$5 $0
2003
2012
2002
2004
2005
2006
2007
2008
2009
2010
2011
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Number of Deals
________________________________________________
Note: Includes disclosed deal values only. Source: The 451 Group, Thomson Financial.
Blackstone
2012
41
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
A number of key players continue to consolidate the Digital Marketing stack through strategic M&A. Digital Marketing Stack
Digital Agencies Channels
Advertiser-Side
Search Display Video Mobile Social Email
Marketing Automation
Software
Platforms
Publishers
eCommerce Optimization SSPs Content
________________________________________________
Source: Blackstone.
Blackstone
42
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
2012(1)
Platforms
Consolidation / M&A
Data / Analytics
Publishers
Services
Digital Agencies
Search Display
Advertiser-Side
Software
Publisher-Side
________________________________________________
Source: The 451 Group, Capital IQ, company websites and news releases. (1) Data represents strategic transactions in the Digital Marketing sector only.
= 1 Transaction Blackstone 43
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
The Digital Marketing ecosystem has changed dramatically as various players have increasingly leveraged M&A as a strategic capability.
Buyers from Multiple Sectors are Converging on the Digital Marketing Opportunity
Agencies, Software, Platforms, and Publishers represent core segments of activity
it did not own Examples include Google buying into Display and Mobile, Adobe buying into Site Optimization and Video
R&D, key personnel, and expertise Those companies who have been consistent and successful acquirers have tended to perform well financially and in the equity markets
________________________________________________
Source: Blackstone.
Blackstone
44
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
A Wide Range of Activity in the Digital Marketing Landscape Exists Across Market Participants
Consolidation / M&A
Data / Analytics
Strategic activity in Digital Marketing varies widely by participant. WPP, Microsoft, Google, and Gannett lead their respective sectors in terms of the number of transactions completed.
Number of Digital Marketing Transactions by Strategic Buyer
(# of Deals, 2007-2012)
70 100 97 71 60
50
47
40 31 30 29
37
23 20 20 16 9 20 18 18 18
10
6 2 1
Agencies
________________________________________________
Software
Platforms
Publishers
Blackstone 45
Source: The 451 Group, Capital IQ, company websites and news releases.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Digital Marketing Strategic Activity Momentum by Buyer Two-Year Perspective (2011 2012)
Consolidation / M&A
Data / Analytics
________________________________________________
Source: The 451 Group, Capital IQ, company websites and news releases. Note: Position on timeline based on total number of transactions from 1/1/2011 to 12/31/2012 relative to peers within given sector. Size of circle represents the aggregate total enterprise value of transactions by each company from 1/1/2011 to 12/31/2012, relative to peers within given sector. Transactions with undisclosed enterprise value are assumed to contribute a size of $25mm to the aggregate total enterprise value.
Publishers
Platforms
Software
Agencies
Blackstone
46
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Valuation Trends
Consolidation / M&A
Data / Analytics
Valuations in Digital Marketing are driven by growth, scalability, scarcity, synergy potential / fit, and a competitive dynamic among the relevant buyer universe.
Divergence Exists in the Multiples Paid by Various M&A Participants
Platform and Software players have paid nearly 2x the multiple of Publishers and Agencies, on average
lower multiples
Software and platform companies tend to trade at high multiples due to above average growth prospects and higher profitability
premium
Other key valuation drivers include: fostering a competitive dynamic among relevant buyers, synergies, and defensive reasons
Source: Blackstone.
Blackstone
47
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
2012(1)
Consolidation / M&A
Data / Analytics
= $500 million
18x 16x
Summary Statistics Agg. Enterprise Value Avg. EV per Deal Median Multiple $18,923 $69 2.4x 19,921 398 5.2x 19,271 157 6.7x 4,059 99 3.5x $62,174 $127 4.4x
14x
12x 10x
8x 6x 4x 2x 0x 0 10 20 30 40 50 60 Total # of Transactions Software 70 80 90 100 110
Agencies
________________________________________________
Media Platforms
Publishers
Source: The 451 Group, Capital IQ, company websites and news releases. Note: Size of circle represents the aggregate total enterprise value of transactions by each company. Transactions with undisclosed enterprise value are assumed to contribute a size of $25mm to the aggregate total enterprise value. Facebook, IPG, and Omnicom excluded from graph due to unavailable transaction enterprise value data; total number of deals for Facebook, IPG, and Omnicom: 6, 29, and 31, respectively. (1) Data represents strategic transactions in the Digital Marketing sector only.
Blackstone
48
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Sector Observations Digital Marketing strategic M&A is concentrated along a number of key sectors and themes.
The Global Roll-up of Digital Agencies Continues
Acquisitions in the sector tend to be of relatively small agencies (<$100 million), by the major holding companies
WPP and Publicis represent serial acquirers in the space
Consolidation / M&A
Data / Analytics
On the Publisher Side, Consolidation Continues Among Content and Commerce Assets
Amazon, eBay, and Google have made strong and consistent moves in the eCommerce arena
AOL, Google, Gannet, and Hearst have been the predominant acquirers of Content assets
Oracle / Eloqua, IBM / Unica, Teradata / Aprimo recent examples; expect more to follow
________________________________________________
Source: Blackstone.
Blackstone
49
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Data / Analytics
The highest volume of Digital Marketing transactions exists in the Digital Agency, Mobile, Social, Data / Analytics, Content, and eCommerce sectors.
Number of Transactions by Target Sector
(# of Deals, 2007-2012)
280 70
60 50 40 30 23 20 20 12 10 0 7 14 8 49 272 66
3
Video
3
Display
2
Data / Analytics Networks Email
4 1
Ad Servers / Exchanges Optimization Content eCommerce SSPs
Social
Mobile
Search
Advertiser-Side
Marketing Automation
Digital Agencies
Publisher-Side
Services
________________________________________________
Software
Blackstone 50
Source: The 451 Group, Capital IQ, company websites and news releases.
Appendix
Appendix
Blackstone
52