YP Mkt in asaTransition

7/30/2019 YP Mkt in asaTransition

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The Yellow Page Market in transition which

business models can profit besides Google?

prepared for b-to-v Core Croup Internet and Mobile

St. Gallen, March 2009


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Overview

1. Introduction

2. Market

3. Segments & Funding

. uccess u p ayers

5. Findin s & Discussion

6. About b-to-v

p. 2


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Growth of online e-advertising despite crises

p. 3


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Shift of advertising spend towards online media

p. 4


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Some major brands in German online publishing

p. 5


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Overview

1. Introduction

2. Market


. uccess u p ayers


6. About b-to-v

p. 6


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Local advertising Whats the occasion?

Consumers are searching...

66% t icall find what the need when

...but small business is not capitalizing.

Onl 44% of small businesses have a Web

searching on the Web, though 39% havetrouble finding specific businesses when

they are not adequately represented on

site.

Of those that do have a Web site, 61%

the Web.

92% of Internet users have researched a

product or service online, then purchased

marketing their Web site.

Of small businesses that have a Web site,

offline from a local business at least once.

71% of consumers feel the local business

of their site to acquire new customers is

only fair or poor.

29% feel they are fair to very bad. 82% say search engines were among the

7 o sma us ness owners e cate

10% or less of their overall budget tomarketing efforts.

businesses. Half of small business owners spend less

than 10% of their marketing budget on

Internet advertising, while 30% do no

p. 7

.

Source: Study by webvisible & Nielsen: The Great Divide 2008 (issued 2009)


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This is also true for the German-speaking market

p. 8


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it is reflected by website popularity

p. 9


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U.S. expects local ads shift towards digital media

p. 10


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U.S. expects interim decline of local media & ad spend

p. 11


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However, remaining spend will shift towards digital

p. 12


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Customer survey

Private consumers

Which of the followin advertisin resources

Small business owners as consumers

Which of the followin advertisin resources

do you turn to first to locate a local business?

50% Search Engines

do you turn to first to locate a local business?

41% Search Engines

24% Yellow Pages Directories

10% Internet Yellow Pages

31% Yellow Pages Directories

9% Internet Yellow Pages

3% White Pages Directories

4% Consumer Review Web Sites

2% Direct Mail

p. 13Source: Study by webvisible & Nielsen: The Great Divide 2008 (issued 2009)


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Customer survey - continued

Search is the most widely used tool for

finding a local business among consumers. Of

t ose surveye , sa searc eng nes(such as Google, Yahoo!, or MSN) were

among the many tools they used when

.

search clearly dominates among Internet

users, consumers use search in

combination with other local media.

49% Internet yellow pages

57% Yellow pages directories

82% Other search engines

53% Local newspapers

49% Television

37% Direct Mail



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Further information about searches



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Users like online in Europe, too

p. 16Source: FAZ (Jul 08)


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Also in Germany local search is a significant market

p. 17Source: FAZ (Jul 08)


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Overview

1. Introduction

2. Market


. uccess u p ayers


6. About b-to-v

p. 18


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Segmentation overview USA (some examples)

1. Yelp: USD 31m funding from Bessemer

Ventures, Benchmark Capital and DAGls

.

2. Insiderpages: Acquired by Citysearch

(previous USD 8.5m funding from Sequoiaorizon

t

3. Superpages.com: belongs to Idearc Media

(Market Cap: USD 10m)als

4. HomeAway: USD 459m funding from

Redpoint and Technology Crossover

Ventures.Verti

5. Rocketlawyer: USD 2m fuding from Lexis

Nexis

6. Angies List: USD 66m funding from BatteryOnline

Ventures, BV Capital, Lighthouse Capital,

among others.

7. Zillow.com: USD 87m funding from

p. 19

enc mar ap ta an egg ason, among

others.


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Segmentation overview Europe (some examples)

1. Gelbe Seiten: belongs to 16 regional

publishers and DeTeMedienls

2. Qype: USD 13m from WellingtonPartners, Partech International and

Advent Venturesorizon

t

3. Quoka.de: Leading classified portal

(acquired by Vorarlberger Medienhaus)

als

. .

(financed by private investors)

5. Blauarbeit.de: Auction portal for localVerti

serv ces nance y pr vate nvestors

6. Imedo: Portal around medical issues

(financed by privat investors)Online

p. 20


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Overview

1. Introduction

2. Market


. uccess u p ayers


6. About b-to-v

p. 21


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Selected Successful Horizontal Players in Europe

Leading review portal in Europe focussing on lifestyle venues

and restaurants

ore t an 5m un que users per mont

Funding: Series B over EUR 8m from Wellington Partners,

Partech International and Advent Ventures

Financials: EUR 1.5m revenue (2008e)

Germany's second largest directory assistance provider,

employing roughly 2,400 staff at10 locations in Europe. Its

" "

and is also a partner for many well-known mobile providers Market Cap: EUR 150m

Financials: EUR 178m sales and EBIT of EUR 31m (2008e)

(in the short-term declines in classic directory assistance

-

p. 22

local search)


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Successful local advertising player in the US

ReachLocal helps local businesses to attract customers via search

engine advertising and online yellow-pages marketing

Financials: USD 100m revenue

Integrated advertising solution for local business focussing on a)

search enginge marketing and syndication of listing, b) customized

websites and c lead mana ement throu h click-to-call

Funding: USD 25m from Bessemer Venture Partners, Draper Fisher

Jurvetson Growth and Jafco Ventures

Financials: USD 30m revenue

Further VC-funded players include in the US, among others,

p. 23

Not yet any major specialized players in Europe!


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Overview

1. Introduction

2. Market


. uccess u p ayers


6. About b-to-v

p. 24


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Is this an attractive industry?

Threat of new entrants:

High as large international players with

Bargaining power of suppliers:

Medium but decreasing as buyers will put

n ustry ocus, arge o ne p ayers w t

industry focus and well-known brands,

are likely to enter the market with

orwar t at many ot er supp ers are

available

Rivalry high as generalists and specialists

Bargaining power of buyer:

Medium but growing by the day as

have already occupied most of the

attractive niches and will continue to

battle for customers based on additional

cease to accept high prices for simple

ads; buyers will note that not everybody

position

Threat of substitutes:

they could advertise their company on

Google, Yahoo!, KennstDuEinen etc.

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Blueprint of an attractive invest

Core competences and success factors (and indicators towards promising

investments):

Focus on execution, i.e. sales towards long tail (call-center based, standardized

service portfolio, high degree of automatization), compare to KennstDuEinen

Known or at least self-explanatory brand name, if possible with a history (and

somewhat credentials) from the offline world, e.g. GoYellow

Strategic focus of a horizontal business model: Only attractive for established

player suffering from poor management

execution and focus on markets with premium leads (e.g. finance, law), most likelyin large yet immature markets like Spain

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Food for discussion

Will all business directories be killed by Google in the long-run?

,

M&A (last acquisitions: billiger.de, dialo)

offerings with partners, activities of GoYellow Media)

Given that Google relies on partners for the acquisition of local SMEs as thisactivity does not scale enough for Google itself how do efficient sales activities

look like?

Experiences with outbound call centers (conversion rates)

, .

Should vertical players extend their service offerings through closer

collaboration with online marketin services (SEM, SEO, customized website)? If

p. 27

so, should they build these know-how in-house or outsource it?


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Overview

1. Introduction

2. Market


. uccess u p ayers


6. About b-to-v

p. 28


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b-to-v at a glance

At the heart of what we do is the b-to-v Investorenkreis, an exclusive circle of

b-to-v renders exclusive services to members of the b-to-v Investorenkreis, e.g. it

enables the confidential sharin of investment o ortunities, su orts the

processing and structuring of deals, and helps to manage and control

investments

Admission to the b-to-v Investorenkreis is granted only to candidates who have

proven their business acumen, investment expertise, and personal integrity

Our approach gives entrepreneurs the unique opportunity to discuss their

ventures and financing needs with senior entrepreneurs, benefit from their

, ,

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Cornerstones of the b-to-v Investorenkreis

The b-to-v Investorenkreis has 54 members

. . , ,

telecom, clean tech), and have

founded > 100 companies

and have invested in > 1000 deals

sold > 300 realized > 100 IPOs

n sum, t e mem ers annua rect equ ty nvestments vo ume amounts to

EUR 20-25m

p. 30


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Co-Authors

Florian Schweitzer (Partner) co-foundedb-to-v and built its network of private

investors since 2000. He studied Business

Alexander Stoeckel (Investment Manger)holds an MBA from the University of

Oxford. Prior to b-to-v, he worked as fund-

Administration at the University of

St.Gallen.

of-fund manager and as executive

management assistant.

Sven Eppert (Investment Manager)studied Business Administration at the

-

and the Warsaw School of Economics.

Prior to b-to-v, he worked in asset

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managemen an n consu ng.


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b-to-v overview

BrainsToVentures AG

Blumenaustr. 36 / P.O. Box 142

CH-9004 St. Gallen

Dr. Jan Bomholt, Partner and co-founder

Dr. Christian Schtz, Partner

: +

F: +41 71 242 2001www.b-to-v.com

[email protected]

Florian Schweitzer, Partner and co-founder

Christoph Schweizer, Partner

Dedicated people 54 members of the Investorenkreis

Core personnel 8 investment professionals

Deal flow p.a. (average) 1,500 business plans

Deals done p.a. (average) 20

Investment strategy Opportunity driven

Geographical preferences Europe, USA and Asia

Financing stages Early stage, expansion stage, and later stage, as well as MBI and MBO projects

Most recent Exits Three IPOs (XING, Codfarmers, Fidor) and three trade sales (Cycleon, myBet, Plazes)

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