Growing New Markets Prof. Markus Christen INSEAD Singapore May/June 2007 Prof. Markus Christen INSEAD Singapore May/June 2007

Growing New MarketsGrowing New Markets

Prof. Markus Christen

INSEAD SingaporeMay/June 2007

Prof. Markus Christen

INSEAD SingaporeMay/June 2007

Market Driving Strategies - May/June 2007© Prof. Markus ChristenSession 11 - 2

What They Did (2003-2004)

Agencies (existing target expanded value proposition)• Allowed regular banner at competitive rates

• Introduced a 100k Polite Banner (3 times greater file size than standard)

• Behavioral ads

Agencies - creative arm (expanded target same value proposition)• Set up a Creative Services Department (to understand needs and serve)

• Launched industry first Creative Spec Database with Validation Tool

• Enhanced Offline Ad-Demo Generator

• Led to the synchronized ad format (later)

Publishers (“new” target “expanded” value proposition)• VideoClip Module

• Video Strip


Did not accept any deals based on CPA or CPC!

What They Did


Developments (2003-2004)

Regular banners used primarily as a monitoring tool• a comparison to show you difference in effectiveness (“bait and switch”)

Direct Response• only if fit with interactive components not if desired with the pure

performance based pricing

E-Commerce/Corporate Sites• still slow, small part of business (eBay)

Promotions: primarily for new formats to end user• Volume Discounts: specific times of year (academy awards)• Many more deals with publishers – but those not heavily publicized


What Happened

2003 Results• Served more than 1400 total campaigns (40% increase)• Delivered more than 2 billion impressions • Revenues of $8.5 million (up 70%)• Operating margins still around 30%• Clients running multiple format campaigns increased 250%• $8 million in VC funding (Insight Venture Partners)

2004 Results:• Served more than 2,285 total campaigns (60% increase)• Delivered more than 5.5 billion impressions (up 180%)• Revenues of $14 million (up 65%)• Floating ads less than 30% of all impressions

Over 500 agencies use the Eyeblaster Platform; over 1,500 web publishers are Eyeblaster-enabled


What Happened

2005 Results• Revenues near $20million and operating profit of 28% • Served more than 32,000 ads• Served more than 3,100 campaigns

– While the number of campaigns increased by only 14%, the size of the average campaign increased significantly and more of these ads contained a video component

• Delivered more than 11 billion impressions – The average number of impressions per ad increased 50%

• Served more than 12,000 video ads– The percentage of ads containing video increased from 9% in 2004 to 38%

Firm• Global employee base grew to 114 by end of 2005 (48 in 2003, 75 in 2004)• New offices opened: Eyeblaster now operates in 16 offices in 11 countries• Increased client base of agencies, advertisers and publishers around the world

– More than 700 agencies (media and creative shops)– More than 1,200 publishers– More than 1,300 advertisers


Developments 2006

Eyeblaster dedicated time and investment to develop• More Video Solutions with Pre-Roll

– Pre-Roll is the online version of television commercial spots and can be placed before, between, and after online video content, providing more interactivity and measurable results than standard television ads.

• Synchronized ads– Several coordinated parts of the ad appear on the page (different locations, different times,

reflect a behavioral component)

• Gaming Initiatives and Gaming Survey– Started development of tools and access to enable rich media ads in the gaming environment– Eyeblaster also conducted a survey, to determine the attitudes of online gamers towards

watching video ads in the gaming environment (http://www.miniclip.com/)• 78% of the total respondent population said they would watch a short video in exchange for free game plays• 71% of total respondents do not find video ads intrusive in the free game environment

• Mobile Initiatives– Eyeblaster started investigating way to enable rich media ads on mobile devices

http://www.miniclip.com/




Competition

Point Roll purchased by Gannett for $100million (estimated 6 times revenues for past 12 months)

DoubleClick purchased by Click Holding (subsidiary of private equity investment) for $1.1Billion


Competition

Single Solution for All Rich Media

Broad Range of Formats & Features

Publisher Focused RM Programs &

Tools

Tiered Services & Expert Support

Video CapabilitiesTracking, Reporting &

AnalyticsIntegrated Ad Server

OfferingTemplitized Rich Media

Full Full Yes Yes Full Full Full Full

Gannett/PointRoll

Limited Limited Yes Yes Limited Limited Limited No

Klipmart Limited Limited No Yes High Limited Limited No

DoubleClick

Limited Limited No No Limited Full Proprietary only No

aQuantive Atlas Limited Limited No No Limited Full Proprietary only No


Online Advertising

What do you think the effectiveness of online advertising will be in 5 years?

Will rich media be eventually ignored?

Will consumers prefer to pay for content and not endure ads?

Can companies like eyeblaster keep coming up with new formats that will make us endure ads and not tune out?


Online Ad Spending Will More Than Double by 2009, Totaling $22.3 Billion

Source: eMarketer, 9//2005

$9.6

$12.9

$15.6$17.8

$20.2$22.3

$0

$5

$10

$15

$20

$25

2004 2005 2006 2007 2008 2009

Dollars in billions

Online Advertising Trends


Source: eMarketer, 2/2005

Broadband Penetration Continues to Increase:By 2008, More Than 50% of U.S. Households Will Have Broadband

36.2%

42.9%

49.8%56.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2005 2006 2007 2008

Percent of all US households



Source: eMarketer, 11/ 2005

In Billions

1.0

1.3

1.8

2.3

2.9

3.6

$0.0

$1.0

$2.0

$3.0

$4.0

2004 2005 2006 2007 2008 2009

Rich Media Spending Continues to Rise:Spending Will Grow an Average of 30% Each Year for The Next 4 Years



Source: eMarketer / Nielsen//NetRatings AdRelevance, DoubleClick, May 2005

Financial Services and Telecom Are Leading Categories for Rich Media Advertisers:

Financial Services 48.70Telecommunications 44.03

Web Media 33.75

Consumer Goods 20.21

Automotive 20.07

Retail Goods/Services 18.83

Entertainment 17.03

Travel 16.18Hardware/Electronics 13.12

Health 12.69Public Svcs 7.20Software 6.20

B2B 5.56

Rich Media Ad Impressions in The US, By Industry

(in billions)



Source: eMarketer, November 2005

Online Video Ad Spending in the US: 2004-2009 (in Millions)

$1,500

$1,050

$640

$385

$225

$1352004

2005

2006

2007

2008

2009

Online Video is On the Rise:Spending Will Total More Than $1.5 Million by 2009 – Up 11x from 2004



Source: OPA, Drivers & Barriers to Online Video Viewing, 2/2005

The Power of Rich Media and Video: Video Prompts Action

34%Checked out a related website

15%Requested more information

14%Went to a store to see the product

10%Forwarded an ad

9%Made a purchase

Of consumers who have seen a product advertised in an online video ad:



ContinuedImprovementValue Extraction

InnovationValue Creation

Market realities afterfirst generation

product

Launch

Innovation and Marketing


ValueProposition

Target Market

Do we need to change:

Communication StrategyGo-to-market StrategyPricing/revenue Strategy

Existing New

Existing

New

Where to Go After First Success?


Renowned leader inrich media

Best in providingdigital marketing solutionsacross multiple channels

Explain and create awareness for rich media

The out of banner ad platform

The rich media platform

The unified digital marketing solution

Change in Positioning

Documents

Growing New Markets Prof. Markus Christen INSEAD Singapore May/June 2007 Prof. Markus Christen INSEAD Singapore May/June 2007