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How can revenue diversification help the advertising market

How can revenue diversification help the advertising market. OME Madrid, 25 th of February 2010. Hi-media Group - Strictly Confidential. Agenda. Section 1 : A need for revenue diversification 1.1 Stop the addiction 1.2 Fight the myth of free 1.3 Look forward paid content.

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How can revenue diversification help the advertising market

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  1. How can revenue diversification help the advertising market OME Madrid, 25th of February 2010 Hi-media Group - Strictly Confidential

  2. Agenda Section 1: A need for revenue diversification1.1 Stop the addiction1.2 Fight the myth of free 1.3 Look forward paid content Section 2: Paid content to help the advertising market2.1 On Ad Pricing2.2 On taking better upside of the Video opportunity Hi-media Group - Strictly Confidential

  3. A need for revenue diversification Section 1 1.1 Stop the addiction 1.2 Fight the myth of free 1.3 Look forward paid content Hi-media Group - StrictlyConfidential

  4. 1.1 On line media are addicted to advertising Hi-media Group - Strictly Confidential

  5. Other media have escaped the dependence on the one single source of revenue • Media • Cable and satellite TV • Press • TV • Radio • Web • Revenue Mix • Subscription + Advertising • Subscription+Advertising • Call TV+ Direct sales +Advertising • SMS games+ Events/show production+ Advertising • Advertising+Advertising 5 Hi-media Group - Strictly Confidential

  6. 1.2 It is naïve and dangerous 6 Hi-media Group - Strictly Confidential

  7. “On line content is free” : myth and duplicity Internet access is not free : • €30 per month on average in Europe. On the Internet, there are 2 winner categories and one big loser: • access providers bill the users. • search engines aggregate content for free and trust 50% of the ad market. In cable TV, cable operators share revenue with content producers. 7 Hi-media Group - Strictly Confidential

  8. “On line content is free” : dangerous Advertising cycle exists : 2008/2009 :Global Advertising market crash 2000/2001 : Internet crash Source: IAB US except for 2009 8 Hi-media Group - Strictly Confidential

  9. “On line content is free” : naïve Online content for which consumers are most likely to pay are : • Movies • 46%of worldwide consumers would consider to pay for it • Select videos such as current television shows • 42%of worldwide consumers would consider to pay for it • Music • 41%of worldwide consumers would consider to pay for it • Games • 35%of worldwide consumers would consider to pay for it Users are ready to pay for content Source: Nielsen, february 2010, “A global perspective on Paying for Content Online” 9 Hi-media Group - Strictly Confidential

  10. 1.3 Paid content is an obvious solution 10 Hi-media Group - Strictly Confidential

  11. It already represents a decent market Worldwide Mobile Payment Revenues • $8 billion in 2009 France Mobile Payment Revenues • €400 million in 2009 Worldwide Mobile Payment Revenues (in $ billion) Sources: France: Arkeon Finance, 01/27/2010; Worldwide: JuniperfromInnopay « Mobile Payments 2010 » 11 Hi-media Group - Strictly Confidential

  12. With already existing global players • + 55 countries covered 12 Hi-media Group - Strictly Confidential

  13. With a strong upside for publishers Micropayment participate to increase the overall ARPU of content websites From 25% to 100% growth opportunity 13 Hi-media Group - Strictly Confidential

  14. Case Study Ad Network + Micro-payment solution On RTL’spremium content or service Hi-media Group - Strictly Confidential

  15. Paid content to help the advertising market Section 2 2.1 On Ad Pricing 2.2 On taking better upside of the Video opportunity 15 Hi-media Group - Strictly Confidential

  16. 2.1 Publishers with more revenue streams can build more consistent price policy 16 Hi-media Group - Strictly Confidential

  17. A challenging pricing model so far US – Internet Ad revenues by Pricing Model 2004-2009 Source: IAB US 17 Hi-media Group - Strictly Confidential

  18. Publishers to monitor inventory and prices If revenues are more diversify, publishers can refuse ads at low prices and inventory won’t be expanding ad infinitum Total pages viewed (in billions) US - Online Display Advertising Average Advertising Network CPMs US websites Source: PubMatic, « PubMaticAdPrice Index Quartely Report Q4 2008 » Source: JP Morgan and company reports, « online AdvertisingForecast » 18 Hi-media Group - Strictly Confidential

  19. To increase ad efficiency The number of ads displayed grows too fast vs usage of individuals: Reluctance to ads is showing progress: • Cookie washers • Ad blockers • Behavioral Targeting facing regulation challenge US - Online Display Advertising Impressions per page Source: JP Morgan and company reports, « online AdvertisingForecast » 19 Hi-media Group - Strictly Confidential

  20. 2.2 And take better profit of the ad video opportunity 20 Hi-media Group - Strictly Confidential

  21. Video : the winner of convergence “2010 will be the year where the use of, and differences between TV and online video are beginning to blur which will drive the growth of streaming video market” Hi-media Group - StrictlyConfidential

  22. Video usage • Social network (Peer to Peer video) • By 2014, 45% of global mobile internet users will be accessing social networks from their mobile devices. • Mobile (Mobile TV, Mobile Video) • By 2014, 1/3 of worldwide mobile users (500 million) will subscribe to mobile video services, equal to 8.5% of all mobile subscription services (Source: Pyramid Research) • Mobile video traffic will jump by 20 times by 2014 in the US (Source: Coda Research Consultancy’s) • Catch-up TV • 52% of internet users have watched TV on the internet in 2009(Source: Accenture, % for mature markets, "Mobility Takes Center Stage: The 2010 Accenture Consumer Electronics Products and Services Usage Report," ) 22 Hi-media Group - Strictly Confidential

  23. Online Video AudienceA strong online video audience that is still growing • An explosion in online video consumption in 2009: • US: Video streams up 12% reaching 10.7 billion videos(dec. 09 vs dec.08, Nielsen) • France: Videos viewed grew 141%reaching 5.4 billion videos (sept.09 vs sept.08, ComScore) • UK : Videos viewed grew 47% reaching 4.7 videos(april 09 vs apr.08, ComScore) Almost more than 2/3 of european internet users have watched online video in 2009: Source: Universal McCann, "Power to the People: Social Media Tracker Wave 4," July 30, 2009 Internet Users Who Watch Online Video (2009) 23 Hi-media Group - Strictly Confidential

  24. Online Videoadvertisingspending Videowillbe the major driver of Display advertising • Online video format will take 17% of Display Ad Spending in 2013 in the US and 22% in Europe. • US Online video ad spending will almost triple (x 2.8, +183%) in the next 4 years: • reaching €2437 million in 2013 • vs display growth: +83% • European Online video ad spending will triple (+205%) in the next 4 years: • reaching €986 million in 2013 • vs display growth: +41% Western Europe - Online’s share of ad spending by format x 3 • Source: ForresterResearch Internet Advertising Model, Q4 2008 24 Hi-media Group - Strictly Confidential

  25. Online Video ads examplesIn-stream video ads 25 Hi-media Group - Strictly Confidential

  26. Video enhanced by Behavioral Targeting • Definition • Behavior Targeting is a tool that identifies online consumers’ areas of interest and then serve advertisements that match user interests, subsequently increasing user retention and profitability Advertising can be made as relevant and useful as possible 26 Hi-media Group - Strictly Confidential

  27. BehavioralTargeting solutions in Europe • Which Behavioral Targeting Solutions? In blind model(Ad Network) Sales House Platform/Provider • Which category of Advertisers use this technology? • FMCG / IT / Telecom / Fashion / Travel / Media • Behavioral targeting, Discovery targeting/Retargeting 27 Hi-media Group - Strictly Confidential

  28. Key figures In the United States, by 2012 behavioral advertising spending will reach 23% of the total display spending.(Source : faberNovel, ImediaConnection) The emergence of online video will most likely drive BT growth : Online video’s presence on the web is increasing at a rapid pace. Since video ads are high priced and as advertisers invest more in them, they will likely use behavioral targeting to ensure the efficiency of their investments. 28 Hi-media Group - Strictly Confidential

  29. Conclusion • If • Prices are monitored by healthy publishers • Behavioral Targeting features are well set Online Video Advertising is to Beat TV Advertising Rapidly 29 Hi-media Group - Strictly Confidential

  30. Thank you ! Any questions ? Hi-media Group - Strictly Confidential

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