Native Advertising Outlook and Beyond
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Transcript of Native Advertising Outlook and Beyond
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The Internet & Native Advertising
A Wall Street Perspective
Ron Josey
Sr. Analyst, Internet SectorSr. Analyst, Internet Sector
JMP Securities
212.906.3528
But First -- What Gets Us Excited About The Internet?6 Key Driversy
1. MOBILE Fundamentally changing Internet usage & monetization
2. ONLINE ADV Newer ad formats are accelerating growth
3 SOCIAL E i th h i th di
5. MOBILE PAYMENTS Smartphones replacing wallets
4. VERTICAL MARKETPLACES Win / Win / Win
3. SOCIAL Empowering the consumer; changing the paradigm
2
6. SAME DAY DELIVERY Expands a retailer’s reach
Native Advertising Outlook for 2014 and Beyond
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Mobile: Time Spent On Apps Now Exceeds Desktop!
3Source: comScore
…Resulting In Incremental Internet Usage
381
112
970
800
1,000
1,200
nute
s
Time Spent on Digital Media By Platform
99% growth in total minutes online, led
by 360% growth from Smartphones
405477
83
381
488
200
400
600
Billi
on M
in
4
0June 2010 US June 2013 US
Desktop Smartphone TabletSource: comScore, JMP Securities
Native Advertising Outlook for 2014 and Beyond
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Consumers Are Adopting The Mobile Web
Company Select Mobile Stats / Commentary
Facebook Mobile Ad Revs: $1.3 billion (59% of total revenue); 1 billion mobile MAUs
Yelp 61 million mobile monthly unique visitors, +52% Y/Y, ~46% total; 60% of searches from mobile
Zillow 2/3 of traffic from mobile; Mobile visits +100% Y/Y; 460M homes viewed on mobile
AOL Mobile usage: +80% Y/Y; Mobile ad revs: 100+% Y/Y; 50% of clients req x-screen campaignsAOL Mobile usage: +80% Y/Y; Mobile ad revs: 100+% Y/Y; 50% of clients req. x-screen campaigns
Priceline.com $8B in gross mobile transactions on Booking.com in 2013, up from $1B in 2011
Google ~40% of YouTube's videos viewed from mobile
eBay 61.3% of total customer adds from mobile representing 6.5 million new customers
Amazon com 50+% of Amazon holiday shoppers used mobile
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Amazon.com 50+% of Amazon holiday shoppers used mobile
Expedia 125M cumulative mobile app downloads; 20+% of transactions from mobile
Yahoo 430 million mobile monthly unique visitors, +30% Y/Y; Tumblr mobile monthly users +71% Y/Y
Source: Company reports
And We Are Living In An Increasingly Connected WorldTesla PayPal’sTesla
Model SAndroid WearPayPal s Beacon
Nike PlusFitBit
6
Disney’s MyMagic+
Source: Motorola, Tesla, eBay, FitBit, Disney, Nike
Native Advertising Outlook for 2014 and Beyond
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Creating Significant Advertising OpportunitiesWe Project U.S. Internet Ads To Reach ~$50B in 2014
7
Source: JMP Securities
…Driven by Mobile, Video, Social, & Native
Rich Media
Search
Digital Video
Mobile
Lead Generation/E-mail
Classifieds / Auctions
Banner AdsMobile and Video are the fastest growing advertising areas and Native Ads (as well as Social) are embedded in them throughout
8
-20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Sponsorship
U.S. Online Advertising Spend Three-Year CAGR (2013-2016)
Source: JMP Securities
Native Advertising Outlook for 2014 and Beyond
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Yet The Market Is Still Catching Up To Mobile
42.2%
38.4%
24.8%25.0%
30.0%
35.0%
40.0%
45.0% 2013 Consumer Time Vs. Ad Spend
21.5% 20.9%
9.9%
5.4%4.5%
12.2%
20.0%
5.0%
10.0%
15.0%
20.0%
25.0%
9
0.0%TV Digital (ex-mobile) Print Radio Mobile
Spend TimeSource: eMarketer
So what is Native Advertising?
• Native Ads are naturally embedded into a sites content stream and while clearly marked as an advertisement, they are found to be more impactful than traditional banner ads.
• Naturally embedded within content
• Are targeted and contextually relevant ads
Said another way -- Native Ads are:
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• Deliver higher conversion rates
• And are perfectly suited for social and mobile environments
Native Advertising Outlook for 2014 and Beyond
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Mobile Native Ad examplesFacebook Twitter GoogleFacebook Twitter Google
11Source: Facebook, Twitter, Google
Yahoo!’s New Splash Ads & Pinterest’s Promoted PinsPinterest Promoted PinsYahoo! Splash Adp
12Source: Pinterest, Yahoo!
Native Advertising Outlook for 2014 and Beyond
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What Internet Leaders are Saying About Native Ads
“News Feed ads have significantly higher engagement… We want to get to a state where the ad content is getting as good as the organic content”
“I firmly believe that native advertising can be every bit as good as the content itself”
“Showing native ads on mobile can actually increase revenue per page view [vs. traditional display ads]”
- Yahoo! CEO Marissa Mayer
“folks who engaged with promoted Tweets, brand favorability was 30% higher, purchase intent was 50% higher”
“you can reply, favorite, retweet a promoted Tweet … ads perform better when they are content first”
13Source: Company reports
What Does The Data Say?
14
Native Advertising Outlook for 2014 and Beyond
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Native Ads Have Higher Conversion Rates
15Source: Yahoo!
Native Ads are More Engaging...
16Source: Sharethrough, IPG Media labs, 2013
Native Advertising Outlook for 2014 and Beyond
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…More Social…
17Source: Sharethrough, IPG Media labs, 2013
…41% of Brands and 34% of Agencies are using Native Ad formats
18Source: Hexagram and Spada, 2014
Native Advertising Outlook for 2014 and Beyond
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…With Awareness The Top Objective for Native Ads
19Source: Sharethrough and eMarketer, September 2013
Effective Ad Formats Impact On Results
20
Native Advertising Outlook for 2014 and Beyond
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2Q13: Facebook’s Inflection Point Thanks To Native & Mobile…Stock followed suit
80.0
40 0
50.0
60.0
70.0
ck
Pri
ce
10.0
20.0
30.0
40.0
FB
Sto
c
FB ad revenue growth significantly reaccelerates
Creating an inflection point in the stock
21Source: Thomson Reuters and JMP Securities
Mobile Adoption Rewarded With GrowthCompany Data Current ValuationCompany Data Current Valuation
2014E Revenue ’13-’14 Growth Market Cap EV/Rev 2015 EV/EBITDA 2015 TTM Stock Return
Facebook $12.0B 52.7% $167.6B 9.6x 15.6x +154%
Twitter $1.3B 190.9% $23.7B 16.1x 70.0x +44%
Yahoo! $4.5B 2.7% $35.8B 0.6x 1.9x +35%
AOL $1.8B -0.4% $3.3B 1.1x 5.6x +8.6%
22Source: Thomson Reuters and JMP Securities
S&P 500 +19.7%
Native Advertising Outlook for 2014 and Beyond
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THANK YOU
Ron Josey
Sr. Analyst, Internet Sector
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© 2014 JMP Securities LLC
Sr. Analyst, Internet Sector
JMP Securities
212.906.3528
Google Inc (GOOG)JMP Securities currently makes a market in this security.
F b k I (FB)
JMP Research Disclosures
Facebook, Inc (FB)JMP Securities currently makes a market in this security.
Amazon.com, Inc (AMZN)JMP Securities currently makes a market in this security.
Priceline.com Inc (PCLN)JMP Securities currently makes a market in this security.
eBay Inc (EBAY)JMP Securities currently makes a market in this security.
Yahoo! Inc (YHOO)( )JMP Securities currently makes a market in this security.
Expedia, Inc (EXPE)JMP Securities currently makes a market in this security.
Yelp (YELP)JMP Securities currently makes a market in this security.
Zillow, Inc (Z)JMP Securities currently makes a market in this security.JMP Securities was manager or co-manager of a public offering of securities for the Company in the past 12 months, and received compensation for doing so.
AOL Inc (AOL)AOL Inc (AOL)JMP Securities currently makes a market in this security.
TrueCar, Inc (TRUE)JMP Securities currently makes a market in this security.JMP Securities was manager or co-manager of a public offering of securities for the Company in the past 12 months, and received compensation for doing
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Native Advertising Outlook for 2014 and Beyond