SURVIVING MOBILE’S ROLLER COASTER FUTURE
Terence Kawaja
Why Are You Listening to an Investment Banker?
Unlearning What They Teach You on Wall Street
THE !RED SUIT
RULE!
Mobile Becomes a Greater Part of Everyday Life
Source: KPCB
Greatest Advertising Opportunity is Mobile…
Source: KPCB
Dollars vs. Time Spent in US
Mobile Opportunity
5% 12%
38%
25% 20% 19%
10%
45%
22%
4% 0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Print Radio TV Internet Mobile
Time Spent Ad Spend
…And Spend Continues to Increase
Source: KPCB
$8.8 $17.8
$32.7
$49.7
$69.1
$88.6
$108.9
2012 2013 2014 2015 2016 2017 2018
CAGR: 5
2%
Global Mobile Ad Spend ($BN)
This is going to be awesome!
10 9
19
22
19
22
18
-
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014*
Mobile M&A Deals Are Up
10 9
19
22
19
22
18
-
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014*
Mobile M&A Deals Are Up, But Few Scaled Exits
$100MM
$230MM
$350MM
$240MM
$321MM
$275MM
$675MM
7 of 110
DEALS
$190
$287
$170
$628
$342
$218
$0
$100
$200
$300
$400
$500
$600
$700
2008 2009 2010 2011 2012 2013
Mobile Ad Tech Funding Continues to Decrease
Source: BI Intelligence.
Mobile AdverFsing Financings ($ millions)
Layer Not a Channel
Digital Marketing Channels Search Display Social Video Mobile
?
Mobile is a Layer, Not a Channel Search Display Social Video
Data Collection
The Cookie-less World of Mobile
No Cookies?!
DEVICE ID
Cross-Screen is Now a Marketing Imperative
Logged in individuals Direct match of devices to people
Algorithmic match
Perfect Knowledge
DeterminisFc Matching
ProbabilisFc Matching
Types of Device Matching
Creates “Walled Gardens” of First Party Data…
…Continue Expansion Through 3rd-Party Networks
259% Growth
2014
$32.7 Billion
Other
22%
47%
Mobile Advertising is Concentrating
Source: eMarketer
2012
$8.8 Billion
Other
5%
53%
Marketers
The “Ad Tech Squeeze” Publishers
Commerce
Large Digital Players Are In-Sourcing Ad Tech
Bifurcated Market
CPI for LTV
App on App
The Two Worlds of Mobile Advertising
CPM / CPA
General Marketers
Apps Continue To Dominate Time and Revenue
$2 $3 $6
$14
$24
$38
$0
$10
$20
$30
$40
2008 2009 2010 2011 2012 2013
Mobile Web Apps
($ in billions) Mobile Revenue
Source: BI Intelligence
86% OF
TIME SPENT ON MOBILE
APPS ACCOUNT FOR
Increasingly More Expensive to Acquire Loyal Users Fiksu Cost Per Install Index
$0.82
$1.28
$1.01
$1.31
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
Jan-13 Jan-14
iOS Android
Source: BI Intelligence, FIiksu
34% INCREASE IN
COST PER LOYAL USER
OVER LAST YEAR
Freemium Apps Continue to Gain Traction
Source: KPCB
88% 90% 91% 92% 93% 94% 94%
12% 10% 9% 8% 7% 6% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014F 2015F 2016F 2017F
Free Paid
CPI for LTV
App on App
The Two Worlds of Mobile Advertising
Cost per Re-‐engagement CPM / CPA
General Marketers
CPI for LTV
App on App
The Two Worlds of Mobile Advertising
CPM / CPA
General Marketers
Inventing New Formats
CPI for LTV
App on App
The Two Worlds of Mobile Advertising
CPM / CPA
General Marketers
Source: Garnter, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates, eMarkter
US Mobile Video Viewers
Millions of View
ers
Mobile Video Explosion
ConnecFvity Entertainment ProducFvity
PASSIVE ACTIVE ATTENTIVE
Consumer Modality Matters
Mobile banner ads
are ineffective
…and disruptive ads annoy
the consumer
FACILITATIVE INTERRUPTIVE
Inform
aFve
Intolerable
Mobile-first native
formats are better for marketer
and consumer
Consumer in control –
unobtrusive ad
Experience within page; Engages the
consumer
Leverages data to effectively
target
Connects through various
touch points
Content Is Critical to Branding
Bridges Physical and Digital Worlds
CPI for LTV
App on App
The Two Worlds of Mobile Advertising
CPM / CPA
General Marketers
Mobile Bridges the Physical & Digital Worlds
…and Facilitates the Path to Purchase
Source: BIA/Kelsey
LocaFon
PersonalizaFon
FacilitaFon
Search 90% Take AcFon
70% Connect
66% Visit
36% Purchase
23% Review
ONLINE
OFFLINE
Connect online (Maps/Direc=ons, etc.)
Call
Visit Website
Visit Store
Online
In-‐store
Online-‐Review
WOM
52% 50%
26% 13%
50% 48%
21% 15%
Mobile Flattens the Purchase Funnel
Opportunity Ahead
Advertising $180bn
Digital Advertising$51bn
Sources: eMarketer, Forrester, Gartner, The Nilson Report, LUMA estimates
Programmatic $10bn
Reorienting the TAM Opportunity
Communications $1,2000bn Commerce
$4,430bn
eCommerce $305bn
mCommerce $58bn
Marketing $432bn MarTech
$181bn
Advertising $180bn
Digital Advertising $51bn
Programmatic $10bn
SaaS $17bn
Sources: eMarketer, Forrester, Gartner, The Nilson Report, LUMA estimates
Reorienting the TAM Opportunity
Payments $88bn
Strategic Buyer LUMAscape
Significant Recent Digital M&A Activity
LUMA’s Content Strategy: Substance and Fun!
Over 300,000 views!
Investment Banking. Evolved. New York – Palo Alto
lumapartners.com
Thank you.