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A new consolidation wave in internet marketing services
Daan Witteveenpartner Deloitte – leader Technology Fast50
© 2010 Deloitte Touche Tohmatsu2
What will we discuss today?
TrendsOnline Marketing
ConsolidationDrivers
What can we expect?
Who will be leading?
© 2010 Deloitte Touche Tohmatsu
So what`s the Buzz?
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SEA
Display Advertising
Interactive Advertising
eCPC
CPL
CPM
CPC
SEO
Affiliate marketing
Viral marketing
Email marketing
Comparison
CPA
© 2010 Deloitte Touche Tohmatsu
Behind the scenes…..
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Media
TV
Affiliates
Display
SEO
…
Procurement
Contact
Analytics
Check-out
Fulfilment
...
Merchant
Visit Creating Need Making Sale AfterSale
© 2010 Deloitte Touche Tohmatsu
Drivers for online consolidation in online marketing
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• Internet becomes core to the business
• Preferred suppliership (~IT)
• No single optimal solution best of breed & integrated solutions
• Platform costs (cost border sharing)
• Shift towards per performance based
• Shift from traditional media budget to sales costs
• High growth value creation opportunity
© 2010 Deloitte Touche Tohmatsu
Consolidation
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Dea
l siz
e in
EU
R m
ln
0
200
400
600
800
2008 Compete Inc., USA Taylor Nelson Sofres Plc., UK
2010 Mitchell Com. Ltd., Australia Aegis Group Plc., UK
2010 Razorfish Inc., USA Publicis Group SA, France
2009 AdMob Inc., USA Google Inc., USA
2008 D+S Europe AG, Germany Pyramus S.a r.I, Luxembourg
Home run exits
Playing field??
Selection of online marketing deals over the last 24 months
© 2010 Deloitte Touche Tohmatsu
Horizontal and Vertical integration in the Online Value chain
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Merchant
Online Marketing
I & M services
Ad agencies
Publishers
Telecom / CDN
PE
© 2010 Deloitte Touche Tohmatsu
Selection of consolidators
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Pure Play Online Marketing Information and Marketing ServicesJan 2010Experian A-Care SystemsDec 2008Bisnode Wer Liefert WasMarch 2008Taylor Nelson Sofres Compete
PublishersAug 2009Axel Springer & PubliGroup Digital Window
Telecom / CDNDec 2009Limlight Networks EyewonderAug 2009France Telecom Unanimis
Private EquityJan 2010TA Associates eCircleApril 2008Apax D+S Europe
Advertising Agencies
Aug 2010Rentabiliweb EdencastJuly 2010Aegis Group Mitchell Com. GroupJune 2010Interpublic Group D.L.K.W. & Partners Ltd.Nov 2009Google AdMobJuly 2009 Hi Media AdLINK MediaJuly 2008 Google ZAO Begun RussiaJune 2008 Hi Media Mobil TrendApril 2008 LBI Int. Special Ops Media
Aug 2009 Publicis Razorfish
© 2010 Deloitte Touche Tohmatsu
While the online marketing industry is maturing, new start-ups drive innovation
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TVMagazines
Newspapers
Radio
Games
Internet Music
BillboardsOnline Marketing
Introduction Growth Maturity Decline
Typical strategy
Build portfolio of ‘real options’: limited investments that can be grown fast when succesful
Create group of synergistic businesses
Either consolidate the sector, exit earlyor concentrate on profitable niches
Strategic objective
Build portfolio of assets Capture synergy within group
Consolidate market
Key screening criterium
Upside potentialLeveraging core’s competences
Revenue and cost synergies
Cost synergies
© 2010 Deloitte Touche Tohmatsu
Who will take the lead in internet marketing services?
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Most likely
• Internet marketing pure plays (Zanox, Getupdated, Google, Value Click …)
• Advertising agencies (Publicis,Omnicon …)
• Media companies (Axel Springer, Sanoma …)
Expected new entrants:
• Call centers
• Procurement players
• Private Equity (buy & Build)
© 2010 Deloitte Touche Tohmatsu
Disclaimer: Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.
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