SURVIVING MOBILE’S ROLLER COASTER FUTURE

Terence Kawaja

Why Are You Listening to an Investment Banker?

Unlearning What They Teach You on Wall Street

THE !RED SUIT

RULE!

Mobile Becomes a Greater Part of Everyday Life

Source: KPCB

Greatest Advertising Opportunity is Mobile…

Source: KPCB

Dollars  vs.  Time  Spent  in  US  

Mobile  Opportunity  

5% 12%

38%

25% 20% 19%

10%

45%

22%

4% 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Print Radio TV Internet Mobile

Time Spent Ad Spend

…And Spend Continues to Increase

Source: KPCB

$8.8  $17.8  

$32.7  

$49.7  

$69.1  

$88.6  

$108.9  

2012   2013   2014   2015   2016   2017   2018  

CAGR:  5

2%  

Global  Mobile  Ad  Spend  ($BN)  

This is going to be awesome!

10 9

19

22

19

22

18

-

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014*

Mobile M&A Deals Are Up

10 9

19

22

19

22

18

-

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014*

Mobile M&A Deals Are Up, But Few Scaled Exits

$100MM

$230MM

$350MM

$240MM

$321MM

$275MM

$675MM

7 of 110

DEALS

$190

$287

$170

$628

$342

$218

$0

$100

$200

$300

$400

$500

$600

$700

2008 2009 2010 2011 2012 2013

Mobile Ad Tech Funding Continues to Decrease

Source: BI Intelligence.

Mobile  AdverFsing  Financings  ($  millions)  

Layer Not a Channel

Digital Marketing Channels Search Display Social Video Mobile

?

Mobile is a Layer, Not a Channel Search Display Social Video

Data Collection

The Cookie-less World of Mobile

No Cookies?!

DEVICE ID

Cross-Screen is Now a Marketing Imperative

Logged  in  individuals   Direct  match  of    devices  to  people  

Algorithmic  match  

Perfect  Knowledge  

DeterminisFc    Matching  

ProbabilisFc  Matching  

Types  of  Device  Matching  

Creates “Walled Gardens” of First Party Data…

…Continue Expansion Through 3rd-Party Networks

259%  Growth  

2014  

$32.7  Billion  

Other  

22%  

47%  

Mobile Advertising is Concentrating

Source: eMarketer

2012  

$8.8  Billion  

Other  

5%  

53%  

Marketers

The  “Ad  Tech  Squeeze”  Publishers

Commerce

Large Digital Players Are In-Sourcing Ad Tech

Bifurcated Market

CPI  for  LTV  

App  on  App  

The Two Worlds of Mobile Advertising

CPM  /  CPA  

General  Marketers  

Apps Continue To Dominate Time and Revenue

$2 $3 $6

$14

$24

$38

$0

$10

$20

$30

$40

2008 2009 2010 2011 2012 2013

Mobile Web Apps

($  in  billions)   Mobile  Revenue  

Source: BI Intelligence

86%  OF  

TIME  SPENT  ON  MOBILE  

APPS  ACCOUNT  FOR  

Increasingly More Expensive to Acquire Loyal Users Fiksu  Cost  Per  Install  Index  

$0.82

$1.28

$1.01

$1.31

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

Jan-13 Jan-14

iOS Android

Source: BI Intelligence, FIiksu

34%  INCREASE  IN    

COST  PER  LOYAL  USER  

OVER  LAST  YEAR  

Freemium Apps Continue to Gain Traction

Source: KPCB

88% 90% 91% 92% 93% 94% 94%

12% 10% 9% 8% 7% 6% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014F 2015F 2016F 2017F

Free Paid

CPI  for  LTV  

App  on  App  

The Two Worlds of Mobile Advertising

Cost  per  Re-­‐engagement  CPM  /  CPA  

General  Marketers  

CPI  for  LTV  

App  on  App  

The Two Worlds of Mobile Advertising

CPM  /  CPA  

General  Marketers  

Inventing New Formats

CPI  for  LTV  

App  on  App  

The Two Worlds of Mobile Advertising

CPM  /  CPA  

General  Marketers  

Source: Garnter, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates, eMarkter

US Mobile Video Viewers

Millions of View

ers

Mobile Video Explosion

ConnecFvity  Entertainment   ProducFvity  

PASSIVE   ACTIVE  ATTENTIVE  

Consumer Modality Matters

Mobile banner ads

are ineffective

…and disruptive ads annoy

the consumer

FACILITATIVE   INTERRUPTIVE  

Inform

aFve  

Intolerable  

Mobile-first native

formats are better for marketer

and consumer

Consumer in control –

unobtrusive ad

Experience within page; Engages the

consumer

Leverages data to effectively

target

Connects through various

touch points

Content Is Critical to Branding

Bridges Physical and Digital Worlds

CPI  for  LTV  

App  on  App  

The Two Worlds of Mobile Advertising

CPM  /  CPA  

General  Marketers  

Mobile Bridges the Physical & Digital Worlds

…and Facilitates the Path to Purchase

Source:  BIA/Kelsey  

LocaFon  

PersonalizaFon  

FacilitaFon  

Search  90%  Take  AcFon  

70%  Connect  

 

66%  Visit  

36%  Purchase  

23%  Review  

ONLINE  

OFFLINE  

Connect  online  (Maps/Direc=ons,  etc.)  

Call  

Visit  Website  

Visit  Store  

Online  

In-­‐store  

Online-­‐Review  

WOM  

52%   50%  

26%  13%  

50%   48%  

21%  15%  

Mobile Flattens the Purchase Funnel

Opportunity Ahead

Advertising $180bn

Digital Advertising$51bn

Sources: eMarketer, Forrester, Gartner, The Nilson Report, LUMA estimates

Programmatic $10bn

Reorienting the TAM Opportunity

Communications $1,2000bn Commerce

$4,430bn

eCommerce $305bn

mCommerce $58bn

Marketing $432bn MarTech

$181bn

Advertising $180bn

Digital Advertising $51bn

Programmatic $10bn

SaaS $17bn

Sources: eMarketer, Forrester, Gartner, The Nilson Report, LUMA estimates

Reorienting the TAM Opportunity

Payments $88bn

Strategic Buyer LUMAscape

Significant Recent Digital M&A Activity

LUMA’s Content Strategy: Substance and Fun!

Over 300,000 views!

Investment Banking. Evolved. New York – Palo Alto

lumapartners.com

Thank you.