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June 21, 2012www.jegi.com
Since 1987
2012 SIIA Strategic and Financial ConferenceNew York, NY
The End of The World As We Know It: Innovation & Growth in Digital Services
2
Discussion Agenda
2
What to Do?
It’s The End of The World As We Know It
Waves of Innovation, Unprecedented Opportunities
3
It Feels Like This Some Mornings...
4
Uncertain Environment
Depressing Economic Data
4
0
20
40
60
80
100
120
140
160
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Unemployment Rate Consumer Confidence Index
5
Greece Debacle
Uncertain Environment
5
6
Uncertain Environment
Media Bellwether Stocks Stagnant…
6…While Widely Anticipated New Issues Sink
‐30%
‐20%
‐10%
0%
10%
20%
30%
40%
Time Warner Inc.
The McGraw‐Hill Companies, Inc.
Thomson Reuters Corporation
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Facebook, Inc.
Groupon, Inc.
Zynga
IPO Now
7
Uncertain Environment
7
Political Gridlock
8
Uncertain Environment
Imminent Alien Invasion
9
Uncertain Environment
9
Isn’t this the “New Normal”?
10
Uncertain Environment
The World is Always on the Brink of Disaster
11
Discussion Agenda
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What to Do?
It’s The End of The World As We Know It
Waves of Innovation, Unprecedented Opportunities
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Waves of Innovation
Unprecedented pace of change creating new opportunities
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Socialization of
EVERYTHING
Mobile App Ecosystems
Cloud Storage
and Processing
Ecommerce Innovation
Technology Merges
with Marketing
13
Waves of Innovation
Explosive growth of Social Media
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Users upload 72 hrs of video each minute
Hosts 140 billion photos, will add 70 billion this year
• Between the dawn of civilization through 2003 5 Exabytes of information was created
• Now that much information is now created every 2 days
Eric Schmidt, Google
400 million Tweets per day
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Socialization of EVERYTHING
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Entertainment
News
Games
eCommerce
...the social graph is changing industry after industry....
Business Networking
Waves of Innovation
What’s Next?
15
• Big players are trying to adapt to social media marketing• Shifting marketing spend from traditional channels to below the line• Brands becoming the content creators – rise of content marketing• Traditional media companies and ad agencies racing to stay relevant
Socialization of EVERYTHING
15
Waves of Innovation
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Socialization of EVERYTHING
16
Waves of Innovation
1717
Waves of Innovation
Socialization of EVERYTHING
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Mobile Ads & Apps Explosion
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• 1 in 7 searches now on mobile; mobile search increased 4x in 2011• US mobile ads to reach $2.6 billion in 2012 and grow at 43% CAGR to 2016• Smart devices exploding courtesy of Apple – but here comes Microsoft
Source: Gartner
Global Mobile App & Ad Revenue(2008-2011E, Billions)
$0
$5
$10
$15
2008 2009 2010 2011E
Mobile Advertising Mobile Apps
Waves of Innovation
First 6 Quarters Cumulative Unit Shipments (Millions)
Source: Apple
‐
10
20
30
40
50
60
Q1 Q2 Q3 Q4 Q5 Q6
iPod iPhone iPad
$0.7B
$12B
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Cloud Computing Spending
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$17$23
$33$43
$61
$87
2008 2009 2010 2011 2012 2013
Cloud Computing Spending(2008‐2013, $ Billions)
Source: Deloitte, Cloud Computing Forecasting Change
• Mass efficiency driving into all business models
• Exponential leap in always‐on processing power
• Massive amounts of data generated and collected in real time
• Analytics providing ground breaking real‐time business insights
What does this mean?
Waves of Innovation
20
Email Alternatives Comparison($/User/Month)
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
On PremiseExchange
ExchangeOnline
Power, Space,Cooling
Staffing
Archiving Software
Storage Hardware& Software
Client Software
Server Hardware
SaaS Fee
Gmail
Source: Wikibon, Securely Moving to the Cloud
• Basic utilities like email drop to 25% of conventional price
• Organizational simplicity with less staffing
• Unprecedented flexibility for companies and applications
Cloud Computing Cost Efficiency
Waves of Innovation
$28.39
$12.50
$7.47
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21
Ecommerce Innovation
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Technology Merges with Marketing
• Smartphones have become direct‐response tools in consumer’s pockets
• This is changing the way we shop
Implications to Retailers
• CRM platforms must track customers across all channels
• Marketing must be tracked and optimized across all channels
Waves of Innovation
Source: KPCB, Internet Trends
0%
5%
10%
15%
20%
Q12010
Q12012
eCommerce Y/Y Growth
Mobile Commerce as % of Ecommerce
US Ecommerce (2010-2012 1Q)
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Discussion Agenda
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What to Do?
It’s The End of The World As We Know It
Waves of Innovation, Unprecedented Opportunities
...Companies Refocus On Their Customers
23
M&A to Focus on the Customer
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2424
• Creates a comprehensive social relationship platform for consistent brand experiences and customer service across all channels/media
• Seeking social data management and analytics capabilities
• Rising demand by consumers to engage with brands across multiple social channels
• CMOs looking for integrated social marketing platforms
• Cloud‐based social marketing and engagement platform
• Helps customers amplify their social community engagement
• Develop campaigns across social networks/devices and publish content that drives leads
M&A to Focus on the Customer
2525
• Cross‐channel marketing via suite of customer‐centric marketing services to better connect clients with their customers
• Leading provider of data, analytics
• Demand quickly growing for more data‐driven/complex marketing
• Marketers moving away from channel marketing to personalized data‐driven conversations
• Pioneer in interaction management technologies
• Enables marketers to create fully integrated, cross‐channel conversations through mobile, Web, social, email channels
M&A to Focus on the Customer
2626
• Rolling out standard e‐circular platform in local markets nationwide
Consortium led by:
• Valuable legacy FSI/circular business
• New competitors challenging with local deals and coupons
• Local and national retailers demanding new channel
• Local online e‐circulars platform, deep expertise in handling various types of offers
• Strong technology base and newspaper relationships
M&A to Focus on the Customer
2727
• Amazon packers working with Kiva robots may be able to fulfill 3‐4 times as many orders per hour
• Expect Amazon to offer warehouse logistics to other retailers
• Historically competing on breadth of products and price
• Rising share of units shipped sold by other merchants via Amazon infrastructure
• Success with Amazon Web Services in making own infrastructure available to others
• Makes robots used in shipping centers to simplify operations and reduce costs
• Handling technology and sophisticated software
• Fulfills the need for rapid order fulfillment
M&A to Focus on the Customer
2828
• Defends and extends Facebook dominance in photo sharing and expands reach beyond Facebook‐controlled social graphs
• Social networking behemoth
• Fast‐growing mobile arena demands innovation
• Photo sharing across social graph critical to early popularity
• Breakthrough mobile photo‐sharing app
• Grew 35 million consumers to quickly share photos
M&A to Focus on the Customer
29
• Challenged to deliver software for how enterprise users will work in the future
• Sharing files, new types of messaging, managing work flow
• Stiff competition from low‐cost software providers
29
• Adds more social‐related features to Microsoft Office to better compete against Google
• “Facebook of the workplace” –creates private social networks within companies
• File‐sharing tools and software with free social‐networking features
• 4 million+ corporate users
M&A to Focus on the Customer
30
M&A State of Play
Record M&A Volume, Driven by Mid-Size Deals
30
Strategic buyers active• Strong balance sheets – U.S. non‐
financials hold $2+ trillion in cash
PE firms reengaging• ~ $400 billion investable capital• Financing gradually rebounding
31
M&A State of Play
Digital Sectors Lead The Charge
31
Industry SectorNo. of Deals
Value (millions)
No. of Deals
Value (millions)
No. of Deals
Value
B2B Online Media & Technology 17 $182 23 $2,838 (26%) (94%)
B2C Online Media & Technology 70 $1,540 78 $3,357 (10%) (54%)
Business‐to‐Business Media 9 $63 4 $15 125% nm
Consumer Magazines 16 $83 7 $1,421 129% (94%)
Database & Information Services 20 $3,862 11 $564 82% nm
Education Information, Technology & Training 12 $516 12 $463 0% 12%
Exhibitions & Conferences 14 $258 6 $34 133% nm
Marketing & Interactive Services 145 $3,081 57 $1,922 154% 60%
Mobile Media & Technology 30 $682 23 $469 30% 46%
Total 333 $10,267 221 $11,081 51% (7%)
Media, Information, Marketing Services & Technology M&A Activity
2012 2011
January ‐March January ‐ March % Change
32
Discussion Agenda
32
What to Do? ...Companies Refocus On Their Customer
It’s The End of The World As We Know It
Waves of Innovation, Unprecedented Opportunities
A Few Predictions
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Predictions
33
3434
...It’s Not The End of the World
Prediction #1
(but it is the end of the world as we know it)
35
Prediction #2
Retail Transformation
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… And online purchases surpass offline retail...as the distinction between online, mobile and retail disappears...
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Prediction #3
The Long-Term Value of Facebook is Zero...
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...unless they get your credit card information
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Prediction #4
AppScape
37
A really smart person will develop the “AppScape” which will create one common interface to pull all relevant info from the 800 apps on your iPhone...Sound familiar?
Marc AndreesenAppScape
38
Prediction #5
Google Will Buy Oregon and British Columbia
38
… just to mess with Microsoft
Beauty, eh!
JEGI likes this.
39
Prediction #6
Obama and Romney tie and become Co-Presidents
39
...because that model works really well
Since 1987
June 21, 2012www.jegi.com
150 East 52nd Street 18th FloorNew York, NY 10022
Phone: (212) 754‐0710Fax: (212) 754‐0337
The End of The World As We Know It: Innovation & Growth in Digital Services
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