Presentation: Video killed the Radio Star. Will Mobile Kill the Desktop?

Search Insider Summit 2013Search Insider Summit 2013

Addressing the Mobile OpportunityAddressing the Mobile Opportunity

Neil A. DoshiManaging Director, Internet Research415.762.4880 | [email protected]@neildoshi

Robert J. CoolbrithVice President, Internet Research415.762.4890 | [email protected]

December 11, 2013

For important disclosures, please see slide 52.

Agenda

Overview

CRT’s Online Advertising Forecasts

Twitter – Product Overview

CRT’s Proprietary Twitter User Survey

3

PC/Mac

Internet Access Before 2007…

Internet Access in 2010…

4

Smartphone

Internet Access Today…

5

Smartphone

Source: IDC, CRT Capital Group LLC estimates

Growth In Smartphones► 1 out of 7 people in the world will have a Smartphone by the end of this year

► We expect Smartphones to grow around 47% this year and 35% next year

► Android will have dominant share for the forseeable future

► We expect Android share of new units to grow from 49% in 2011 to 81% in 2014

► iOS share should come down, from 19% in 2011 to 14% in 2014

6

Source: CRT Capital Group LLC estimates, IDC

Growth In Tablets► We expect tablets to grow 50% in 2013 this year to 177M units world wide

► Apple should still have the leading market share at 45%, but Android is gaining

► By 2014, we expect Android to have ~55% market share in tablets

7

46%

7%

16% 15% 16%

43%

23% 22%

10%

3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

TV Print Internet Radio Mobile

Time Spent Ad Spend

Ad Spend Allocation vs. Time Spend Across Platform

► Time Spent and Ad Spend are similarly allocated across TV and Radio

► Ad Spend on Print is greater than Time Spent on Print

► We believe Print will continue to be a source of Ad Funds for mobile

Source: eMarketer, IAB, comScore, CRT Capital – across 2012 and 2013

Agenda

Overview


Twitter – Product Overview


9

Online Advertising Outlook

10

► CRT U.S. Online Advertising Forecast 12% CAGR to $57B in 2016E

► We’re Bullish on Mobile Advertising and Select Segments of Display AdvertisingCAGR

($M) 2011A 2012A 2013E 2014E 2015E 2016E 2012-2016Total U.S Ad Revenue $31,736 $36,596 $41,647 $46,708 $51,925 $57,023 12% YoY Change 22% 15% 14% 12% 11% 10%

Search $14,757 $16,944 $19,259 $21,185 $22,879 $24,481 10% YoY Change 26% 15% 14% 10% 8% 7% % of Tota l 47% 46% 46% 45% 44% 43%Classifieds $2,571 $2,379 $2,022 $1,719 $1,461 $1,242 YoY Change -1% -7% -15% -15% -15% -15% % of Tota l 8% 7% 5% 4% 3% 2%Lead Generation $1,555 $1,725 $1,852 $1,963 $2,061 $2,144 YoY Change 19% 11% 7% 6% 5% 4% % of Tota l 5% 5% 4% 4% 4% 4%Mobile $1,587 $3,403 $5,586 $8,100 $10,935 $13,669 42% YoY Change 148% 114% 64% 45% 35% 25% % of Tota l 5% 9% 13% 17% 21% 24%Email $222 $156 $109 $76 $54 $37 YoY Change 58% -30% -30% -30% -30% -30% % of Tota l 1% 0% 0% 0% 0% 0%Display Related Ads $11,044 $11,988 $12,819 $13,665 $14,535 $15,450 7% YoY Change 15% 9% 7% 7% 6% 6% % of Tota l 35% 33% 31% 29% 28% 27%

Banner Ads $6,823 $7,722 $8,511 $9,192 $9,743 $10,230 YoY Change 14% 13% 10% 8% 6% 5% % of Tota l 22% 21% 20% 20% 19% 18%

Rich Media $1,301 $1,116 $837 $603 $422 $325 YoY Change -17% -14% -25% -28% -30% -23% % of Tota l 4% 3% 2% 1% 1% 1%

Sponsorships $1,111 $845 $589 $412 $289 $202 YoY Change 42% -24% -30% -30% -30% -30% % of Tota l 4% 2% 1% 1% 1% 0%

Digital Video $1,809 $2,306 $2,882 $3,459 $4,081 $4,693 19% YoY Change 39% 27% 25% 20% 18% 15% % of Tota l 6% 6% 7% 7% 8% 8%

Source: IAB, PricewaterhouseCoopers and CRT Capital Group LLC estimates


11

► Display Ad Market: We’re Focused On Select Pockets Of Growth Video, Native, Programmatic

► Online Video Cord Cutting Picking Up Steam, Still Favorable Supply/Demand Dynamics

► Native FB NewsFeed and other “Native” Ad Products Demonstrating Extraordinary Advertiser ROI

► Programmatic Continued Headwinds For Web 1.0 Media (e.g., YHOO, AOL); Some Web 2.0 Publishers (e.g,. FB) & Some Ad Tech Intermediaries (e.g., GOOG) Likely to Benefit


CAGR($M) 2011A 2012A 2013E 2014E 2015E 2016E 2012-2016Total U.S Ad Revenue $31,736 $36,596 $41,647 $46,708 $51,925 $57,023 12% YoY Change 22% 15% 14% 12% 11% 10%






CAGR($M) 2011A 2012A 2013E 2014E 2015E 2016E 2012-2016Total U.S Ad Revenue $31,736 $36,596 $41,647 $46,708 $51,925 $57,023 12% YoY Change 22% 15% 14% 12% 11% 10%







12

► CRT U.S. Mobile Advertising Forecast 42% CAGR to $13.7B in revenue in 2016E

► Expect Strong Growth Across Mobile Search, Display and Video/Other

► Strong Audience Growth Dynamics

► Monetization Improving Over Time

CAGR($M) 2011A 2012A 2013E 2014E 2015E 2016E 2012-2016U.S. Mobile Ad Revenue $1,587 $3,403 $5,586 $8,100 $10,935 $13,669 42% YoY Change 148% 114% 64% 45% 35% 25%

Mobile Search $603 $1,429 $2,402 $3,564 $4,921 $6,288 45% YoY Change 169% 137% 68% 48% 38% 28% % of Total 38% 42% 43% 44% 45% 46%

Mobile Display $873 $1,532 $2,402 $3,321 $4,265 $5,057 35% YoY Change 127% 75% 57% 38% 28% 19% % of Tota l 55% 45% 43% 41% 39% 37%

Mobile Video & Other $111 $442 $782 $1,215 $1,750 $2,324 51% YoY Change 247% 298% 77% 55% 44% 33% % of Tota l 7% 13% 14% 15% 16% 17%


Mobile Search - Google

13

► We expect Google to generate $8.7B in Mobile revenue this year

► Mobile Search could approach $4.7B, up 44% YoY.

► Mobile Display could approach $1.8B, up 36% YoY. Interestingly, 40% of YouTube video views are now coming from mobile devices.

► Enhanced campaigns should help drive CPC pricing parity with desktop over time, thus acting as an accelerator for growth in Google’s Mobile revenue

► In terms of search query share, we believe that Google has ~90%+ mobile query share

Source: CRT Capital Group LLC

$0.7 $1.6 $3.3

$4.7 $5.8 $6.9 $7.9

$0.2 $0.7

$1.4

$2.1

$2.7 $3.2

$3.6

$0.3 $0.7

$1.4

$1.8

$2.2

$2.4

$2.6

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

2010A 2011A 2012A 2013E 2014E 2015E 2016E

Google Mobile - Search Google Mobile - Play Google Mobile - Display

Mobile Social - Facebook

14

► We expect FB to generate $3B in Mobile Ad revenue this year, as we show in the chart below

► In 2011, FB had $0 in Mobile Ad revenue vs. Google which had $2.3B

► Growth has come from FB increasing ad loads throughout 2012 and 2013

► Q2 and Q3 saw strong demand from DR advertisers as FB improved its tools and analytics

► Advertisers may need to focus on quality as FB limits growth of ad load going forward

Source: CRT Capital Group LLC

Mobile Social - Twitter

15

► We expect Twitter to generate $580M in revenue this year, or about $430M in Mobile Revenue

► As of Q3, Mobile Revenue was 73% of total ad revenue

► We believe it is still early days for Twitter in terms of monetization

► Twitter could bridge the gap between real-time, TV, and communications – we believe that this could be a big opportunity for advertisers

Source: CRT Capital Group, LLC

$7 $78

$269

$579

$1,013

$1,436

$M

$200M

$400M

$600M

$800M

$1,000M

$1,200M

$1,400M

$1,600M

2010A 2011A 2012A 2013E 2014E 2015E

Worldwide Advertising Services Revenue

Agenda

Overview


Twitter Overview


16

Social+Mobile Can Be A Powerful Marketing Tool

17

Source: CRT Capital Group

Facebook Twitter

1.19B monthly active users

73% on mobile

Connect with your friends

232M monthly active users

75%+ on mobile

Connect with your interests

Engagement

Likes / FollowsConversion

Brand Campaigns

Direct Response

Campaigns

Reach

Twitter Ads – Promoted Products

18

Source: Twitter, CRT Capital Group

Promoted Account

Promoted Trend

Promoted Tweet

Promoted Tweets

19

► Advertisers can “promote” selected Tweets within their Twitter account , similar to Page Post Ads on Facebook

► Promoted Tweets are an effective way to:Increase the exposure of a brand’s Tweets Serve unique messaging to specific audiences to drive engagement

► Pricing based on Cost per Engagement (CPE)Engagements represent clicks, retweets, favorites, etc.Over 90% of engagements are generally clicks


Lead Gen Cards

20

► Allows users to easily express interest in your offer

► Can expand Tweet and view offer within the Timeline with the user’s information pre-filled

► Captures email for marketing follow up


Promoted Accounts

21

► Generate new Followers for your Twitter account

► Target users via pre-defined categories (e.g. parents)

► Pricing based on Cost per Follower (CPF)


Promoted Trends

22

► Drive brand awareness at scale

► Target U.S. or global

► 10th “Trend” listed at the top of the daily trends list

► Flat fee for a 24-hour period


Twitter Amplify

232323

► Nexus between television and Twitter

► Real-time, dual-screen sponsorships and in-Tweet video clips (e.g. instant replays from advertisers like the NBA during games)

► Advertisers include: A&E, MLB, Discovery, PGA, Vevo


Twitter Tailored Audiences

24

► Twitter’s take on Facebook’s Custom Audiences

► Allows cookie matching (Facebook introduced a similar feature in October)

► Data partners include Adara, AdRoll, BlueKai, Chango, DataXu, Dstillery, Lotame, Quantcast, ValueClick, and [x+1]

► Beta customer results:

► HubSpot saw 45% lift in engagement rates

► Krossover saw 74% decrease in cost per customer acquisition

► New Relic saw 195% lift in conversion rates


Agenda

Overview


Twitter Overview


25

CRT’s Twitter Survey

26

► CRT conducted a proprietary survey in conjunction with Survey Monkey for to learn about the service from a Consumer’s perspective

► We reached out to over 7,000 Internet users, and 1,676 people indicated that they use Twitter

► Survey was conducted from October 17th to October 22nd 2013

► We wanted to test the following

► What do Twitter users do on Twitter?

► How engaged are they with the service?

► What do users think about Ads on Twitter?

► Are people really watching TV and Tweeting?

► What could Twitter do to improve the service?

Twitter Survey – Frequency of Usage

27

15%

20%

24%

41%

Extremely often

Quite often

Moderately often

Slightly often

How often do you use Twitter?

► 35% of Twitter users are heavy users

► 65% of users are “casual” or “casual+” users

Source: CRT Capital Group, LLC, n= 1,676


28

0%

15%

26%

28%

None

Once during the last month

Several times a day

Few times a week

During the last month, how many times have used Twitter?


► 28% of users go to Twitter few times a week

► 26% of users go to Twitter several times a day


29

18%

35%

48%

…Less than last year

…About the same

…More than last year

In the past month, have you used Twitter…


► Over 80% of Twitter users are using the service the same or more than last year

► 48% are using Twitter more than they did last year, which indicates to us that people are finding value in the service and are not getting tired of it


30

2%

6%

6%

24%

63%

…Go down significantly

…God down moderately

…Go up significantly

…Go up moderately

…Stay about the same

Over the next twelve months, do you think your Twitter usage will…


► ~93% said they plan to use Twitter the same or more over the next year

Twitter Survey – Use Case

31

6%

7%

10%

13%

14%

17%

33%

Once a day

More than once a month

More than once a day

More than once a week

Once a week

Once a month

Almost never

How often do you tweet?


► 33% of Twitter users consume information only, and never tweet. Twitter Voyers!

► But that doesn’t hide the fact that a majority (63%) do actually tweet


32

4%

16%

19%

20%

41%

Following brands and/or products

Connecting with friends and colleagues

Following celebrities and/or athletes

Broadcasting messages, thoughts, or opinions

Reading/consuming news and information

What do you use Twitter most for?


► 41% of users access Twitter to get real-time information

► Only 4% follow brands or products – something that marketers will need to contend with


33

10%

23%

31%

36%

140 Characters is too little to make my point

Therea re too many ads

Hard to find tweets from my followers

I'm not really sure how to use Twitter

What do you dislike most about Twitter ?


► The Shocker #1! 36% of Twitter users don’t really know how to use Twitter! This is an issue, and we believe that Twitter could easily address this with more education, a quick tutorial when signing up, and helping you narrow your interests

► Twitter also needs to do a better job of helping users search for specific tweets from the firehose/…


34

47%

42%

32%29% 28% 28%

18%15%

14%12%

9%

5% 5%3% 2%

Share content (blogs,

articles, etc)

Follow Celebrities

Share information about local

events

Have a conversation

Share content/info

from a live event

Support causes and charities

Use hashtags to start a new topic, event,

etc

Share photos Share good deals,

coupons, etc

Make new friends

Share videos Track stocks Join or host a Tweet

Create a poll for input

Share music

What do you like best about Twitter ?


► Sharing/viewing content and following celebs seem to be the most popular activities on Twitter


35

70%

61%

33% 32%

19%

8%4%

2%

12%

Tweeted Re-Tweeted Shared pictures Shared an article or video clip

Logged into another site w/ Twitter account

Shared a file Shared music Exchanged a business card

Other

In the past month, while using Twitter, have you…


► The most popular action on Twitter is Tweeting and Re-Tweeting

► Surprisingly, people are sharing pics and videos on the site as well


36

5%

9%

27%

59%

Greater than 500

201-500

51-200

Less than 50

How many Twitter followers do you have?

7%

14%

35%

44%

Greater than 500

201-500

51-200

Less than 50

How many people do you follow on Twitter?


► Followers are not necessarily friends

► Most users sers have less than 50 followers and follow less than 50 people!

► Average Facebook user has over 200 friends

Twitter Survey – Competition

37

10%

16%

16%

24%

34%

89%

Other

Tumblr

Snapchat

Google+

Instagram

Facebook

What other social media sites do you use regularly?


► FB and Instagram top the charts

► More people use Google+ than Snapchat!

Twitter Survey – Competition

38

8%

11%

21%

22%

38%

I use Twitter a moderatly more

I use Twitter a lot more

I use Twitter about the same

I use Twitter moderately less

I use Twitter a lot less

How much do you use Twitter vs. the other social sites?


► 60% use Twitter less than other social sites

► 40% use Twitter same or more

► Twitter is more for snacking on info than keeping up with friends/family

6%

7%

9%

15%

63%

Significantly worse

Somewhat worse

Significantly better

Somewhat better

About the same

How are the quality of ads on Twitter compared to the ads on Facebook?

Twitter Survey – Advertising

39


► 87% of users find ads on Twitter to be better quality than ads on FB…


40

14%

86%

Yes

No

Have you clicked on a Twitter Ad?


► …But people are still not engaging with ads


41

14%

52%

Companies/brands that tweet me about deals, promos, etc.

Useful links in the tweet that take me to their site

What types of ads do you engage with on Twitter?

Source: CRT Capital Group, LLC, n= 228

► Of those who clicked on an ad, 52% like relevant links

► Brands ads and promos are not too popular right now


42

15%

16%

69%

Very interesting/relevant

Not very interesting/relevant

Somewhat interesting/relevant

How interesting/relevant are the ads you see on Twitter?

Source: CRT Capital Group, LLC, n= 228

► 84% of users find ads on Twitter to be engaging and interesting!


43

13%

41%

46%

No

Yes

Yes but with reservations

If Twitter could improve the relevancy of the ads, would you be open to having Twitter show

you more ads?


► 87% of users would be open to seeing more ad load on Twitter!!!

► This is the first time we’ve ever seen this type of response

► Indicates to us that the ad load on Twitter is very light right now, and Twitter could step up monetization on this front

Twitter Survey – Twitter & TV

44

7%

15%

29%

49%

A lot of the tiime

Often

Once in a while

Almost never

How often do you use Twitter while watching TV?


► 51% of Twitter users access the service while watching TV, but 49% don’t

Twitter Survey – Twitter & TV

45

7%

10%

37%

46%

Yes, and related to the ads played while watching the show

Yes, buy un-related to the ads played during the show

I don't remember

No

Have you seen an ad on Twitter while watching TV?


► Amplify is still in early stages

Key Takeaways

46

► Twitter is still in its early stages with regards to rolling out advertising products

► Twitter needs to do a better job of educating users and marketers about the benefits of the service, and how to take advantage of the real-time interest graph

► Most Twitter users are using Twitter the same or more than last year

► Over 85% of Twitter users said they plan to use Twitter the same or more over the next year

► People find the ads on Twitter to be relevant and interesting, but most people haven’t clicked on an ad

► 87% of users would be ok with Twitter showing more ads if those ads were relevant and interesting

► 51% of users access Twitter while watching TV, but most of them haven’t seen an ad on Twitter while watching TV

► We believe that marketers and agencies put Twitter in the experimental budget bucket; Once tools, analytics, and APIs improve, we could see more budget moving to Twitter

Questions?

47

Neil A. DoshiManaging Director, Internet Research415.762.4880 | [email protected]@neildoshi

Robert J. CoolbrithVice President, Internet Research415.762.4890 | [email protected]

Presentation: Video killed the Radio Star. Will Mobile Kill the Desktop?

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Transcript of Presentation: Video killed the Radio Star. Will Mobile Kill the Desktop?