LUMA's State of Digital Marketing at DMS West 17
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![Advertising’s Issues Have Real Consequences
“We didn’t see a reduction in
[P&G’s] growth rate. The spending
we cut was largely ineffective.”
Jon Moeller, CFO, P&G](https://image.slidesharecdn.com/sodmdmsw17-171117173828/75/lumas-state-of-digital-marketing-at-dms-west-17-35-2048.jpg?cb=1666785427)
LUMA's State of Digital Marketing at DMS West 17
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LUMA's State of Digital Marketing at DMS West 17
- 1. Menlo Park, CA November 2017 STATE OF DIGITAL MARKETING
- 2. Agenda 1. Market Update 2. Ad Ecosystem Considerations 3. Industry Trends
- 4. +20% +56% Ad Tech & MarTech LTM Performance Source: Capital IQ, market data as of 11/10/2017 -10% 0% 10% 20% 30% 40% 50% 60% Ad Tech MarTech NASDAQ
- 5. The IPO Window Has Reopened… Somewhat Q2’17Q3’16 Q4’16 Q1’17Q1’16 Q2’16 Q3’17 Q4’17
- 6. The IPO Window Has Reopened… Somewhat Q2’17Q3’16 Q4’16 Q1’17Q1’16 Q2’16 Q3’17 Q4’17 • Offering Amount: $131 MM • Offer Price: $16.00 (Priced above the expected range of $13.50 – $15.50) • Nov. 15th Closing Share Price: $18.00 (+13%) • Market Cap: $734 MM • Enterprise Value: $595 MM • EV / LTM Rev: 5.8x IPO NYSE: SEND
- 8. The Market Manifestation of Ad Tech’s Challenges Source: Capital IQ, market data as of 9/1/2017 -100% -50% 0% 50% 100% 150% Millennial Media Tremor Video YuMe Rocket Fuel TubeMogul MaxPoint Interactive NASDAQ
- 9. The Market Manifestation of Ad Tech’s Challenges Source: Capital IQ, market data as of 9/1/2017 -100% -50% 0% 50% 100% 150% Millennial Media Tremor Video YuMe Rocket Fuel TubeMogul MaxPoint Interactive NASDAQ $1.00 $2.08 $0.37
- 10. The Market Manifestation of Ad Tech’s Challenges Source: Capital IQ, market data as of 9/1/2017 -100% -50% 0% 50% 100% 150% Millennial Media Tremor Video YuMe Rocket Fuel TubeMogul MaxPoint Interactive NASDAQ $1.00 $2.08 $0.37
- 11. The Great Ad Tech Cleanup Ø By Q1 2018, all public I/O business model ad tech companies will be gone from the markets leaving only platform companies Ø This remaining cohort should make for better comps for platform businesses seeking an IPO Average LTM Revenue Multiple: 0.6x Average LTM Revenue Multiple: 3.4x 0.8x 0.3x ND 0.7x 0.7x 2.2x NM 0.8x 7.1x DSP I/O-Based Ad Tech Companies Acquired Remaining Platform Ad Tech Companies (1) Divested I/O business, rebranded SSP platform as Telaria. (2) Revenue multiple metric represents net revenue. Source: Capital IQ, market data as of 11/10/2017. (1) (2) (2) (2)
- 12. M&A Remains the Primary Source of Exits Source: LUMA 14 11 20 12 14 10 13 4 22 22 18 14 22 20 21 20 27 24 23 19 28 30 28 26 29 32 26 0 10 20 30 40 50 60 70 80 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Ad Tech MarTech Digital Content 13 6 9 13 13 11 7 10 17 # of Transactions Over $100M
- 13. M&A Remains the Primary Source of Exits Source: LUMA 14 11 20 12 14 10 13 4 22 22 18 14 22 20 21 20 27 24 23 19 28 30 28 26 29 32 26 0 10 20 30 40 50 60 70 80 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Ad Tech MarTech Digital Content 45 Deals Over $100M in the Last Year 13 6 9 13 13 11 7 10 17 # of Transactions Over $100M
- 14. 2017 M&A: Active Market <$1 Billion $310M $308M $400M ND $341M ND $404M $108M $300M $147M $135M ~$100M $240M$119M $350M
- 15. 2. Ad Ecosystem Considerations
- 16. Digital Media Continues its Rapid Growth Source: eMarketer 36% 49% 33%40% Monetization 20172012 Usage Time Spent Across Media in U.S. Total Ad Spend in U.S. Digital TV Other ($ in billions) $37 $43 $50 $60 $72 $83 $128 $128 $126 $123 $124 $124 $0 $30 $60 $90 $120 $150 $180 $210 2012 2013 2014 2015 2016 2017 Digital Other Ad Spend
- 17. But the Duopoly is Taking Nearly All of the Growth Source: eMarketer, IAB, Company Filings, LUMA *Google Advertising Revenue reflects Advertising Revenue Ex-TAC ($ in billions) U.S. Digital Ad Spend 35% 39% 40% 41% 40% 42% 41% 41% 0% 4% 5% 6% 7% 11% 14% 19% 35% 43% 45% 47% 47% 52% 55% 60% Share % Total % Google U.S. Advertising Revenue* Facebook U.S. Advertising RevenueU.S. Digital Ad Spend ~90% ~10% U.S. Incremental Ad Spend $23 $26 $32 $37 $43 $50 $60 $72 $0 $20 $40 $60 $80 2009 2010 2011 2012 2013 2014 2015 2016
- 18. But the Duopoly is Taking Nearly All of the Growth Source: eMarketer, IAB, Company Filings, LUMA *Google Advertising Revenue reflects Advertising Revenue Ex-TAC ($ in billions) U.S. Digital Ad Spend 35% 39% 40% 41% 40% 42% 41% 41% 0% 4% 5% 6% 7% 11% 14% 19% 35% 43% 45% 47% 47% 52% 55% 60% Share % Total % Google U.S. Advertising Revenue* Facebook U.S. Advertising RevenueU.S. Digital Ad Spend ~90% ~10% U.S. Incremental Ad Spend $23 $26 $32 $37 $43 $50 $60 $72 $0 $20 $40 $60 $80 2009 2010 2011 2012 2013 2014 2015 2016
- 19. The New Goliath: Amazon Source: Statista $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $135,987 $1 CAGR 76% Amazon Revenue ($ in millions)
- 20. The Retail Armageddon is Here… …And Amazon is thriving +284% -71% Source: Capital IQ, market data as of 11/10/2017 -88% -19% +6% -32% -100% -50% 0% 50% 100% 150% 200% 250% 300% Amazon Kroger Macy's Sears Target Walmart S&P 500
- 21. 25 28 40 44 54 63 80 0 10 20 30 40 50 60 70 80 90 12/13 6/14 12/14 6/15 12/15 6/16 3/17 Prime Drives Amazon’s Booming Business Source: Statista $2,486 $544 Non-Prime Average Spend per Customer (past 12 months) Amazon Prime Subscribers (millions)
- 22. a Search Take Action Connect Visit Purchase Review Search Amazon Prime Purchase Review 1 2 55% of shoppers go to Amazon first to search products Secondary Search Source: Bloomreach Amazon is Displacing Search for Commerce
- 23. More Touchpoints than Traditional Retailers
- 24. Source: eMarketer $76B U.S. TV Ad Spend $83B 63% 37% U.S. Digital Ad Spend 5% 95% The Digital Market Opportunity is Huge
- 25. Source: eMarketer U.S. TV & Digital Ad Spend 31% 69% $155B And About to Get a Lot Bigger!
- 26. DATA INTERNET ORIGINALS TECH SERVICES TELCO INTERNATIONAL PRIVATE EQUITY MARKETING CONSUMER INTERNET COMMERCE ADVERTISING TECH ENTERPRISE SOFTWARE MEDIAAd Tech / MarTech Companies Large Strategic Buyers Attracted to the Sector
- 27. Maturation of Ad Tech and MarTech Venture Capital* Private Equity *Data as of 5/18/17. Source: Pitchbook, LUMA ($ in millions) External Community Business $0 $2,000 $4,000 $6,000 $8,000 $10,000 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018 2019 2020 $0 $2,000 $4,000 $6,000 $8,000 $10,000 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018 2019 2020
- 28. $0 $2,000 $4,000 $6,000 $8,000 $10,000 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018 2019 2020 External Community Business Maturation of Ad Tech and MarTech Venture Capital* Private Equity *Data as of 5/18/17. Source: Pitchbook, LUMA ($ in millions) Early Innovation Adoption Maturation Maturity
- 29. The Much Needed Consolidation Is Happening 2013 20172013 2017 121 Acquired109 Acquired 69 New Companies 76 New Companies Source: LUMA ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQACQACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ ACQ Net Consolidation is Here
- 30. Market Dynamics Favor a Select Few Players N D D Ø Numerator larger: the total addressable market is growing rapidly as dollars shift to digital and programmatic and TV spend becomes addressable The result will be substantial wealth creation for a few companies Ø Denominator smaller: the number of sustainable, scaled companies with omni-channel capabilities is shrinking as the sector matures, rationalizes and consolidates N
- 31. provided we don’t blow it
- 32. Digital Advertising Supply Chain Challenges 1. Transparency 2. Measurement 3. Latency 4. Privacy 5. Viewability 6. Fraud 7. Adverse Context 8. Ad Blocking 9. Digital Duopoly 10. Fragmentation TRUST
- 33. Digital Advertising Supply Chain Challenges 1. Transparency 2. Measurement 3. Latency 4. Privacy 5. Viewability 6. Fraud 7. Adverse Context 8. Ad Blocking 9. Digital Duopoly 10. Fragmentation
- 34. Lifecycle of a Media Impression M E D I A I M P R E S S I O N Bot Impression (Fraud) Ad Blockers No Ad Served MARKETER LOST VALUE MARKETER PAYS PUBLISHER PAID Ad Served CONSUMER SEES Engagement Impression Only PUBLISHER LOST VALUE Conversion Viewability Standards Not Viewable Viewable
- 35. Advertising’s Issues Have Real Consequences “We didn’t see a reduction in [P&G’s] growth rate. The spending we cut was largely ineffective.” Jon Moeller, CFO, P&G
- 36. Need to Limit Vulnerability to Exogenous Forces iOS AD FRAUD
- 37. GDPR as an Opportunity “Another area where we will differentiate is around GDPR, which is not just a European problem. It is a US brand problem as well if you deal with European customers.” Marcus Ruebsam, SVP, SAP $350M Acquisition
- 38. MarTech Healing Ad Tech MarTechIndustry Ads.txt Fraud Viewability Verified
- 39. IDENTITY PLANNING ACTIVATION MEASUREMENT ATTRIBUTION DATA INGESTION Paid MediaEmail Website CREATIVE / AD SERVING The CMO Needs Holistic Marketing Solutions MarTech AdTechIDENTITY
- 40. 3. MarTech Industry Trends
- 42. The Right Time The Right PersonThe Right Message Optimize the Customer Experience
- 43. Ad Tech MarTech Drive More Revenue Fraud-free Viewable Verified Identity Data Orchestration The Right Time The Right PersonThe Right Message Optimize the Customer Experience
- 45. Orchestration Marketing Orchestration: Data + Identity + A.I. CRM / Data Hub Identity
- 46. Marketing Orchestration: Data + Identity + A.I. CRM / Data Hub
- 47. Marketing: Channel-Centric with Data Silos CRM DMP E-Commerce Platform Email Service Provider Web Analytics Call Center
- 48. Key Market Need: Single View of the Customer Source: “Marketing Technology 2017 – It’s More than Just the Stack,” eMarketer, 3/2/17 Marketer Survey: Importance of a Single Customer View 31% 39% 23% 6% Extremely Important Very Important Important Not Important
- 49. Key Market Need: Single View of the Customer Source: “Marketing Technology 2017 – It’s More than Just the Stack,” eMarketer, 3/2/17 Only 5% of respondents have a single platform to manage data across channels
- 50. Emails Sent/Opened Call Center Interactions Social Mentions Ads Served/Clicked Categories Browsed Products Viewed Cart Abandoned What is the Customer Record? Device IDs Brand Affinities Household Income Opt In / Opt Out Customer Segment Yes No Size XXL Name Address Purchase History Email #
- 51. WHO OWNS THE CUSTOMER RECORD?
- 52. The Customer Record B2B B2C ?
- 53. The Customer Record B2B B2C Customer Data Platform Artificial Intelligence / Machine Learning
- 54. Introducing the CDP Category on the MarTech LS CDP
- 55. The Customer Data Platform Collects & Models Unifies Segments Syndicates Email Mobile Social Website Commerce Advertising IoT Deal Seeker High Value New VisitorUnique ID: 138AB125 Name: John Doe Email: jd@gmail.com Last Purchase: 11/17/17 Attributes: Male / Athlete
- 56. Orchestration Marketing Orchestration: Data + Identity + A.I. CRM / Data Hub Identity CDP
- 58. Marketing Orchestration: Data + Identity + A.I. CRM / Data Hub Identity Orchestration Sensei
- 59. Marketing Orchestration: Data + Identity + A.I. CRM / Data Hub Identity Orchestration Sensei When companies claim they're in A.I., 'most of the time it's just nonsense'. Mark Hurd, CEO, Oracle November 14, 2017
- 60. B2B MARKETING
- 61. B2B Marketing Key Trends: 1. Account Based Marketing - Right Message at Right Time to Right Accounts 2. Predictive Analytics - Identify Prospects - Intelligent Lead Scoring 3. Convergence of MarTech & Sales Tech MQL Raw Leads MQL Lead Accepted Meeting Proposal Negotiation Close DMS West 16
- 62. ABM on the SalesTech LUMAscape
- 64. Marketing Clouds Created through M&A Launches Cross- Device Data Coop Beta Launches Core Services Launches Oracle ID Graph Launches Digital Marketing Network Launches Universal Behavior Exchange Launches Predictive Decisions 2010 2011 2012 2013 2014 2015 2016 20172009 Launches Experience Cloud
- 65. The Marketing Cloud Problem
- 66. The Marketing Cloud Problem
- 67. "Marketing tech is actually a unique segment within all of enterprise software… this market really favors best-of-breed. In all other software segments, there's actually a structural advantage to buying an integrated suite. You wouldn't go buy a general ledger system and an AP system from two different vendors… But in marketing, you want to buy the best social system, you want to buy the best AB testing. Why? That incremental conversion lift matters. It drives dollars.” Neeraj Agrawal The Case for Best-of-Breed
- 68. $1.0B $1.2B $1.4B $1.6B $2.0B $0.4B $0.5B $0.7B $0.9B $1.2B 2013 2014 2015 2016 2017E Adobe Marketing Cloud Revenue Salesforce Marketing Cloud Revenue Marketing Cloud Revenue by Company The Case for the Marketing Cloud CAGR 26% * Represents ExactTarget 2013 revenue guidance ** Annualized from last six months revenue of 2017 Source: Company filings Marketing Cloud Revenue Marketing Cloud Revenue CAGR 14% * **
- 69. Operations & Collaboration Content Management Data & Analytics Partner Seller Data & Ops Customer Our Customer Cisco’s “Digital Engagement” Tech Stack
- 70. Cisco’s “Digital Engagement” Tech Stack
- 71. Marketing Clouds or Best-of-Breed? YES
- 72. Investment Banking. Evolved. New York | Palo Alto