2. Lynotech
Lynotech is a multiplatform audience knowledge system for premium publishers which
allows them to deliver targeted audiences directly to advertisers, provides useful user
insights to content creators and sales teams, and allows to build better services for users,
driving superior digital revenues for publishers.
Lynotech does what Google would do if it was a Premium Publisher.
3. The Problem
¤ Premium Publishers have lost approximately
50% of their overall advertising revenues in the American Newspapers have lost 55,6% of
past five years (2006-20011).
their advertising revenues in the past 5
¤ They haven’t been able to increase digital years (2006-2011).
revenues enough to compensate this fall.
Newspaper Assosiaciation of America
¤ In the offline world, advertising revenues
depend on Publisher’s brands and the size of
their audiences.
¤ In the online world, user’s knowledge is the key
driver for revenues.
Spanish newspapers have lost 51% of their
¤ Premium Publishers hardly know anything advertising revenues in the past 4 years.
about their users, therefore they still sell Infoadex
advertisement spaces, not audiences.
4. The Problem
¤ Other agents present in the display advertising
market value chain retain most of the final value
paid by advertisers, reducing Premium Publishers
revenues, by transforming advertising spaces into
online audiences and delivering it directly to the
market.
¤ Publishers can’t disintermediate the value chain to
increase their share of the market because they
don’t have advertising products demanded by
advertisers.
Terence Kawaja’s 2010 IAB presentation "Parsing the Mayhem: Developments in the Advertising
Technology Landscape.” outlined the distribution of revenue through the ad technology chain. Since
May 2010 the situation has gotten worse as there are more players in the game.
5. Lynotech’s Solution
Lynotech transforms user’s data generated by Premium Publishers into knowledge through state of
the art data processing technologies, and provides publishers with adequate interfaces to manage
that knowledge in order to enhance its value.
Each Publisher is owner of the user’s knowledge generated in its sites. Lynotech will help publishers
to use this knowledge to:
¨ Design their editorial strategies based on users insights to increase their audience and therefore
their influence.
¨ Create a higher value advertisement product that allows publishers to sell segmented audiences
instead of advertising spaces and develop new commercial strategies.
¨ Capture more market value and disintermediate the advertising selling ecosystem by creating a
bridge that reaches advertisers and agencies directly with premium targeted advertising
products.
6. Market Size
USA 2011 Europe 2010* Spain 2011
Premium
Publishers Internet Ad Revenue (m$) 31.896,55 22.713,15 1.141,24
Internet Total Available Market 11.100,00 7.495,34 550,44
Display Ad Revenue (m$) (34,8%) (33%) (48,23%)
Displays
Last Years Display Ad
Advertising 15% 21,10% 12,60%
Revenue Growth (%)
Market Size in
9.102,00 523,75
millions of Premium Publishers (m$) Not available
(Top 50: 90%) (Top 30: 95%)
dollars, Newspapers (m$) 3.249,40 Not available 148,40**
according to
the Interactive Sources:
IAB USA – Internet Advertising Revenue Report Full Year 2011: http://www.slideshare.net/pmereles/iab-internet-advertising-revenue-report-full-year-2011
Advertising IAB Europe – European Online Advertising Expenditure 2010 (2011 Report not available yet*): http://www.slideshare.net/pmereles/iab-
europe-2010
Bureau (IAB) IAB Spain – Estudio sobre Inversión Publicitaria en Medios Digitales: http://www.slideshare.net/IAB_Spain/estudio-de-inversin-en-publicidad-digital-total-
ao-2011-iab-spainpwc
data
Newspaper Association of America
**Deloitte–AEDE March 2012 Newspapers Digital Editions Ad Revenue x 12
7. Business Model
Lynotech charges Premium Additionally, Lynotech charges
Publishers a monthly fee Premium Publishers a percentage
according to the size of their of the advertisement revenues
audience.
achieved thanks to the user’s
knowledge provided.
8. Competition
Apparently, there are many competitors, but…
¨ They all fight to keep control of their piece of
cake and increase market’s opacity.
¨ They all keep user’s knowledge for themselves
in order to monetize it elsewhere.
¨ None of them really helps Publishers build
better audiences.
¨ None of them maximize advertising revenues
for Publishers, they maximize their own
revenues.
…none of them meets fully Premium Publishers needs.
9. Lynotech’s Advantage
None of the players in the market addresses this matter from a Premium Publishers
point of view: no agent meets fully their needs.
Publishers need to own their user’s knowledge in order to drive growth in the online
market:
¨ Delivering better contents to increase their online audiences.
¨ Delivering personalized services to increase user’s engagement.
¨ Delivering higher value products to advertisers (targeted audiences vs. spaces) to increase
their revenues per user.
¨ Disintermediating the current value chain to capture more market value.
¨ Developing new commercial strategies to maximize in-site audiences monetization.
10. Go To Market
¤ Lynotech already has an agreement with a premium local newspaper publisher
to develop and enhance it’s user’s knowledge technology: months 1-6.
Trojan Horse
¤ Lynotech will silently develop and polish the sales and editorial interfaces that
Strategy
will help publishers enhance their incomes and audiences: months 6-9.
¤ Lynotech will start testing targeted campaigns without advance: months 6-9.
¤ With results in it’s hands, Lynotech will try to impulse a wide agreement with
the Spanish Premium Publishers to add as many Editorial Groups as possible
Silent to it’s initiative, in order to avoid other online advertising agents
Concentration
countermeasures: months 9-12.
¤ At the same time, Lynotech will start to impulse similar editorial agreements
in different European markets and in the US.
11. Lynotech’s Team
¤ Paul de Mulder
¤ Guillermo Ramos
Freelance business consultant specialized in Economist with extensive experience in
media groups with four years of experience Venture Capital, Private Equity, Fundraising,
working in the industries transformation.
Strategy, Start Ups, Valuations and Business
Plans.
¤ Luis Fajardo
¤ José Rizo
IT Engineer specialized in Software Experienced IT/engineering professional
Development Management with five years of focused on Real Time System developments for
experience developing communication the Aerospace Industry.
systems and air navigation aids.
¤ Key Hire:
¤ Key Hire:
One Artificial Intelligence Specialist to help Two experienced coders in systems
polish the user’s knowledge system. Already integration to connect the user’s knowledge
Identified.
system with the rest of Lynotech’s tools.
12. First Steps
Lynotech has applied to Wayra, Telefonica’s startup accelerator program, which offers:
¤ Funding: Up to EUR 50,000 and alternative ways of funding, such as external VCs and internal
funds from other Telefonica’s ventures.
¤ Advisory: technical and specific advisors in topics like marketing, taxes, patents and intellectual
property, legal frameworks, business regulations and financial issues.
¤ Infrastructure and working space: world-class co-working space.
¤ Mentoring & Networking: a good opportunity to benefit from synergies and access to valuable
knowledge.
¤ Training: from top universities, technical and business schools
¤ Technical Development: regular talks and consultancy from Telefonica I+D engineers.
17. Introduction
In order to test Lynotech’s value proposition we’ve conducted several personal
interviews not only with potential customers but also with other significant players in
the digital advertising industry like Google and Agencies. We tried to find out if there is
a real need, what other needs hadn’t we identified, and the difficulties to get to the
market.
Potential customers quickly started talking about their necessities and how unsatisfied
they are with current solutions and what would they need in order to succeed, which
makes us think there is a big market opportunity. Other related players in the Industry
like Google or Agencies focused on the technical and environmental difficulties to carry
out our project, which we also think points out that there is an opportunity for our
differential approach.
18. Personal Interviews
European Display Advertising Ecosystem
Media Group
Agency
Local Newspaper
General Manager
Digital Manager
Ad Sales Manager
Google
19. Personal Interviews
¤ Google Manager
¤ Agency Manager
Guillermo Ramos and Paul de Mulder
Luis Fajardo, Guillermo Ramos and Paul de Mulder
May 4th 2012, Madrid. 1,5 h.
May 11th 2012, Madrid. 4 h.
¤ Premium Publisher
¤
Premium Publisher
National Media Group Corporative Director
Local Newspaper General Manager
Luis Fajardo, Guillermo Ramos and Paul de Mulder
Scheduled May 21st 2012 Via Google Hangout
May 11th 2012, Madrid. 1,5 h.
¤ Premium
Publisher
¤ Premium Publisher
Local Newspaper Advertising Sales Manager
Local Newspaper Digital Manager
May 17th 2012 Paul de Mulder, Valladolid. 1h
Scheduled May 21st 2012 Via Google Hangout
¤ Premium Publisher
¤ Amazon Data Warehouse Manager
Largest Spanish Blog Publisher CEO
Full team
Scheduled May 23rd 2012 Madrid
May 17st 2012, Via Google Hangout
20. Google Manager
¨ Local premium publishers may have a big opportunity with our approach: big online
advertising players don’t reach local advertisers and currently there is no online
advertising product for them.
¨ Local newspapers have the local audience and a local sales force, and Lynotech will
provide them with products suitable for local market.
¨ National premium publishers will have to fight against the rest of the players involved in
the online ad market (for example AdSense) for the same advertisers and with inferior
targeting technology but higher quality advertising inventory.
¨ The project is not technically easy, specially if we consider to allow different customers
share their data to drive higher incomes.
21. Agency Manager
¨ The market opportunity exists, as premium publishers have the necessity of increasing
their online advertising revenues and they’ll only achieve this by developing a system
that helps them know their users and start selling “audience” instead of “space”, and to
deliver better contents and services to their audiences to achieve higher user
engagement, better traffic, and more ads.
¨ There’s been several attempts to develop similar solutions for publishers, but current
advertising ecosystem has prevented them from succeeding as it reduces the part of the
market value they manage and capture, and therefore their profitability. Any similar
solution would be boycotted by current agents, leading to damages on premium
publishers short term incomes (not only in digital advertising but also in other medias
like paper).
22. Agency Manager
¨ Don’t let other market agents figure out Lynotech’s intentions to disintermediate the
display advertising market in order to avoid their pressures and countermeasures. He
suggests to keep a very low profile (zero promotion and communication to the market).
Refer to Lynotech’s solution as an audience analysis tool that helps premium publishers
gather users insights from their audiences to deliver better contents and new editorial
services.
¨ In order to impose to the market an advertising solution like the one proposed it’s
important to add as many premium publishers to the project as possible before it goes
live. It needs to become a standard as soon as possible and without advance in order to
protect publishers from any possible attacks from other agents involved.
23. National Media Group Corporative Director
¨ Publishers need a solution like the one proposed by Lynotech. Users knowledge will be critical for media
survival and publishers haven’t moved yet. There’s a market opportunity, but Lynotech has to move fast.
¨ Advertising market is depressed, so publishers are right now concerned about gaining audience and
influence, as these will be the drivers for revenues when the market grows and the economic crisis is
over. Lynotech should not only focus on advertising but also on helping publishers gain influence and
increase their audiences based on users insights: new services, better contents, etc.
¨ Proprietary data: every single user insights and data generated in premium publishers sites must be
owned by publishers. They must be the only ones to decide what to do with it, and Lynotech must offer
them different solutions for their different needs.
¨ It’s critical to be compliant with all European users privacy laws, or even more strict, as premium
publishers brand could be seriously damaged in case any privacy scandal takes place.
24. National Media Group Corporative Director
¨ Premium Publishers won’t buy developments, they’ll buy products, so its basic to go to the market with a
fully developed solution.
¨ Premium publishers may be willing to share data with other premium publishers as long as it drives
higher incomes for them, but it’s not fundamental in this point. That should be phase three, or four of
Lynotech’s road map.
¨ Lynotech’s proposal has a significant impact on media group’s workflows. It has editorial and
commercial implications that will force to change working methods in areas of the organization and
persons with aversion to change. In order to address this issue we need a very high commitment from
our customers.
¨ It would be very helpful to count with some of the Spanish traditional editorial shareholders as
Lynotech’s investors.
25. Local Newspaper Advertising Sales Manager
¨ Newspapers don’t have digital advertising products suitable for local advertisers.
¨ In their traditional paper business model, local advertisers represent the biggest part of their incomes
(even after the crisis), but nearly have no presence in their digital advertising because they cant offer
them access to specific audiences.
¨ They still sell digital advertising the same way than offline advertising, basically spaces, because they
can't do anything else. Therefore they agreed that Lynotech’s proposal would allow them to start selling
local digital advertising, recovering a great potential market, and stop managing spaces and start
managing audiences.
¨ In his own words, "I would buy this service tomorrow if it was possible". Data ownership was essential for
him, but also the commercial scorecard possibilities. He also pointed out that he would be very
interested in some type of exclusivity agreement for his territory, in order to surpass his competitors in
this new local digital market.
26. Amazon Data Warehouse Manager
¨ Lynotech’s value proposition makes sense not only for premium publishers, but it’s also a need for other
online players with digital advertising
¨ Lynotech should start with simple techniques and tools that can deliver great results in minimum time
(minimum viable product).
¨ There will always be time to develop a more complex solution, but it’s basic to reduce time to market.
¨ Try to use open source as much as possible.
¨ Semantic techniques are complex to develop, so we should consider it later on.
27. Lessons Learnt from the Interviews
¨ 1) Premium Publishers have the need of solution to their problems with Lynotech’s approach.
¨ 2) The market has already expelled a similar solution because they we’re born weak. We need
strong customers that can impose their standards to the market.
¨ 3) Keep a very low profile until the system is completely functional. Talk publicly about it as a
“content enhancer” for Publishers.
¨ 4) Try to add as many Premium Publishers you can in each market before going live.
¨ 5) Don’t focus only in using user’s knowledge to increase advertising sales. For Premium
Publishers gaining audience is at least as important as increasing revenues.
¨ 6) There will be some forces inside Premium Publishers opposing to Lynotech’s solution because
of the implications of the proposal and their aversion to change the way they work.
¨ 7) Publishers are interested in some sort of exclusivity period by territory.
28. Value Proposition Modifications
¨ According to the lessons learnt during the validation process with customers, and although it
was part of our value proposition, we’ve decided to give equal importance to helping Premium
Publishers increase and engage their audiences in order to help them deliver higher value
advertising products.
29. Strategy Modifications
¨ According to the lessons learnt during the validation process with customers, we’ve decided to
keep the lowest profile as possible in order to not alert other agents in the online display
advertising market.
¨ We’ve also decided to talk publicly about it as a “content enhancer” for publishers, keeping out of
the conversion our advertising intentions.
¨ We will approach traditional Premium Publishers shareholders for the first financing round due
to their market knowledge and their ability to act as really smart money in this market.
¨ We are considering guaranteeing an exclusivity period for our initial customers in their market
territories.
30. Conclusions
¨ The market opportunity exists, but we have to move fast. We have time, but we need to hurry up.
¨ We will pursue Lynotech’s value proposition for the OEP, and hopefully for the real market.
¨ We need to keep a low profile strategy to avoid other agent’s countermeasures.
¨ In early stages:
¤ our solution will be primary focused in tools integration instead of development in order to reduce
costs and time to market (minimum viable product).
¤ we will focus on helping publishers know and understand their users to increase their audience
rather than in advertising sales.
