07.11.2014 Views

Lessons from 10 Years on the Web Kevin P. Ryan - Tradedoubler

Lessons from 10 Years on the Web Kevin P. Ryan - Tradedoubler

Lessons from 10 Years on the Web Kevin P. Ryan - Tradedoubler

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

<str<strong>on</strong>g>Less<strong>on</strong>s</str<strong>on</strong>g> <str<strong>on</strong>g>from</str<strong>on</strong>g> <str<strong>on</strong>g>10</str<strong>on</strong>g> <str<strong>on</strong>g>Years</str<strong>on</strong>g> <strong>on</strong> <strong>the</strong> <strong>Web</strong><br />

KEYNOTE:<br />

<strong>Kevin</strong> P. <strong>Ryan</strong> CEO, AlleyCorp


My Experience<br />

DoubleClick<br />

President/CEO, 1996-<br />

2005<br />

HotJobs<br />

Investor/Director, 1999-<br />

2002<br />

TheLadders Investor, 2004-<br />

Brandalley Chairman, 2004-


And coming so<strong>on</strong>... Gilt


What People Were Saying in 1997<br />

When are you going to make m<strong>on</strong>ey?<br />

Top companies are making $$; e.g. Google,<br />

$3B+ (£1.57bn) profit in 2006<br />

Advertising will never work.<br />

Online ad revenues for 2006 up 34% to $16.8B in U.S.;<br />

Up 41% to £2.016bn in UK


What People Were Saying in 1997<br />

Why is it all junk <strong>on</strong> <strong>the</strong> Internet?<br />

The Internet changes <strong>the</strong> way we behave today.<br />

Startups can’t break through. The existing<br />

media companies are too powerful.<br />

Yahoo, Amaz<strong>on</strong>, eBay, MySpace, YouTube...


“Advertising will never work.”<br />

Source: PwC/IAB Internet Advertising Revenue Report (www.iab.net)


”The infrastructure will never support <strong>the</strong> load.”<br />

Internet Users 1995-2006<br />

1200<br />

<str<strong>on</strong>g>10</str<strong>on</strong>g>18 <str<strong>on</strong>g>10</str<strong>on</strong>g>93<br />

<str<strong>on</strong>g>10</str<strong>on</strong>g>00<br />

817<br />

Milli<strong>on</strong>s of Users<br />

800<br />

600<br />

400<br />

361<br />

513<br />

587<br />

719<br />

200<br />

16 36<br />

248<br />

147<br />

70<br />

0<br />

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006<br />

Sources: Internet World Stats, IDC, C.I. Almanac, Nua


What Are People Saying in 2007?<br />

• Is <strong>the</strong> Bubble back?<br />

• Advertising will slow down.<br />

• Advertising is too expensive.<br />

• Google is too powerful.<br />

• The IPO market is dead.<br />

• IPTV is coming.<br />

• Too many VCs, too much private equity.


1997 2007<br />

U.S. ad spend $270m<br />

(£8.1m in UK)<br />

U.S. ad spend $12b+<br />

(£2.7B+ in UK)<br />

Bandwidth prices<br />

$<str<strong>on</strong>g>10</str<strong>on</strong>g>00/Mbps<br />

Expensive Software<br />

Expensive Hardware<br />

IPTV is <strong>the</strong> future<br />

Mobile advertising<br />

is <strong>the</strong> future<br />

Bandwidth prices<br />

$20/Mbps<br />

Open source software<br />

Hardware almost free<br />

IPTV is <strong>the</strong> future<br />

Mobile advertising<br />

is <strong>the</strong> future


New Rules in C<strong>on</strong>tent/Services<br />

1. Costs have dropped.<br />

2. Market can always be segmented.<br />

• Very few winner-take-all products.<br />

• There are 250 cereals -- 50 granolas.<br />

3. If it takes me more than 1 minute to solve<br />

my problem <strong>on</strong>line…<br />

4. Changing technology creates<br />

4. Changing technology creates<br />

winner/loser opportunities.


Implicati<strong>on</strong>s of Dropping Costs<br />

• Video business models begin to make sense.<br />

• Easier and cheaper to launch a startup.<br />

• Niche businesses become feasible.<br />

• A sample of “mom” networking sites:


Niche Case Study:<br />

Opportunity:<br />

• Few major players in <str<strong>on</strong>g>10</str<strong>on</strong>g>-year-old CDN space<br />

Soluti<strong>on</strong>:<br />

• Low cost, high performance CDN, flexible<br />

business terms, internati<strong>on</strong>al coverage<br />

Result:<br />

• In <strong>on</strong>e year, 125+ clients throughout Europe and<br />

• In <strong>on</strong>e year, 125+ clients throughout Europe and<br />

<strong>the</strong> U.S.


Threats to Old Media<br />

Year Industry Threat<br />

1997 Magazines,<br />

yellow pages<br />

Internet yellow<br />

pages<br />

2000 Radio Napster<br />

2008? Newspapers Craigslist,<br />

Google


Product is Everything<br />

Product<br />

Old marketing<br />

• Marketing is becoming less important.<br />

• M<strong>on</strong>opoly of distributi<strong>on</strong> is g<strong>on</strong>e <strong>on</strong> <strong>the</strong><br />

Internet.<br />

• Marketers can’t c<strong>on</strong>trol <strong>the</strong> message --<br />

c<strong>on</strong>sumers have too much informati<strong>on</strong>.


Marketing/Agencies<br />

Static C<strong>on</strong>tent<br />

Video<br />

Keyword ads<br />

• Static c<strong>on</strong>tent growth is slowing but will still<br />

outpace all o<strong>the</strong>r media.<br />

• Video c<strong>on</strong>tent will grow <str<strong>on</strong>g>10</str<strong>on</strong>g>x over <strong>the</strong> next few<br />

years.<br />

• Easy m<strong>on</strong>ey is g<strong>on</strong>e in keyword advertising.


Where’s <strong>the</strong> Hype?<br />

Late 1990s --> Internet was over-hyped<br />

Today --> Internet is under-hyped<br />

• Growing faster than any o<strong>the</strong>r media.<br />

• Enormously profitable.<br />

• Huge internati<strong>on</strong>al opportunity -- less<br />

competitive markets.<br />

• Popular percepti<strong>on</strong> of Internet is partly<br />

• Popular percepti<strong>on</strong> of Internet is partly<br />

dictated by IPOs.


The Next <str<strong>on</strong>g>10</str<strong>on</strong>g> <str<strong>on</strong>g>Years</str<strong>on</strong>g> - The Good<br />

• Global Growth<br />

• Ad revenues will grow 2-3x<br />

• Subscripti<strong>on</strong> revenues, 5x<br />

• Mobile revenues, <str<strong>on</strong>g>10</str<strong>on</strong>g>x<br />

→ Growth rates outside U.S. higher than inside<br />

→ Growth rates outside U.S. higher than inside<br />

U.S.


U.S. Will Be Only PC-Dominated Country


The Next <str<strong>on</strong>g>10</str<strong>on</strong>g> <str<strong>on</strong>g>Years</str<strong>on</strong>g> - The Bad<br />

• Profits w<strong>on</strong>’t follow<br />

• Increased competiti<strong>on</strong> will force prices and<br />

profits down across <strong>the</strong> board<br />

• More companies launching every day<br />

• Recently, 68 start-ups debuted at <strong>the</strong><br />

Always On c<strong>on</strong>ference at Stanford


The Next <str<strong>on</strong>g>10</str<strong>on</strong>g> <str<strong>on</strong>g>Years</str<strong>on</strong>g> - The Ugly<br />

• Brutal c<strong>on</strong>solidati<strong>on</strong> in 2008/2009<br />

• Large media companies’ core businesses will<br />

deteriorate<br />

• They will snatch up <strong>on</strong>line assets before it<br />

• They will snatch up <strong>on</strong>line assets before it<br />

is too late


U.S. Media Cos. Are Already <strong>on</strong> a Spree<br />

Atom<br />

$200M<br />

Harm<strong>on</strong>ix<br />

$175M<br />

MySpace IGN<br />

$580M $650M<br />

iFilm Neopets<br />

Photobucket Newroo<br />

$50M $160M $300M ~$<str<strong>on</strong>g>10</str<strong>on</strong>g>M


The Ad Shift - U.S. Ad Revenue Growth<br />

Year-over-Year Q2 Growth<br />

26%<br />

-3%<br />

Online Media Cos.<br />

Google<br />

Yahoo<br />

Microsoft<br />

AOL<br />

Traditi<strong>on</strong>al Media<br />

Viacom<br />

CBS<br />

Time Warner, etc.<br />

Based <strong>on</strong> analysis by Silic<strong>on</strong> Alley Insider


The Ad Shift - U.S. Market Share<br />

• In <strong>on</strong>e year, 5 point shift in market share <str<strong>on</strong>g>from</str<strong>on</strong>g><br />

traditi<strong>on</strong>al media companies to <strong>on</strong>line media<br />

(Google, et al)<br />

Q2 2006<br />

Q2 2007<br />

25%<br />

($3.3B)<br />

30%<br />

($4.2B)<br />

75%<br />

($9.9B)<br />

70%<br />

($9.6B)<br />

Online<br />

Traditi<strong>on</strong>al


How I Find Opportunities<br />

(1) Pursuing innovative technology that can do<br />

something new<br />

(2) Providing lower cost structure<br />

(3) Transporting c<strong>on</strong>cept that has been d<strong>on</strong>e<br />

elsewhere in <strong>the</strong> world<br />

(4) Splitting a market, taking a variati<strong>on</strong> <strong>on</strong> an<br />

existing product<br />

(5) Spinning off a vertical


Opportunity to Innovate<br />

• Build a company around innovative<br />

technology that can do something new<br />

• QuickShop crawler: Finds 12x more stores<br />

than some of its competitors in <strong>the</strong><br />

comparis<strong>on</strong> shopping space


Opportunity to Import a Successful Model<br />

• Replicate c<strong>on</strong>cept that has been d<strong>on</strong>e<br />

somewhere else (e.g. highly successful in U.K.<br />

but hasn’t been d<strong>on</strong>e in <strong>the</strong> U.S., or vice versa)


Opportunity to Split a Market<br />

• Take a slightly different approach, focus <strong>on</strong><br />

• Take a slightly different approach, focus <strong>on</strong><br />

a market subset


Opportunity to Build out a Vertical<br />

• Spin off part of a<br />

successful model into<br />

its own niche offering.


<str<strong>on</strong>g>Less<strong>on</strong>s</str<strong>on</strong>g> <str<strong>on</strong>g>from</str<strong>on</strong>g> <str<strong>on</strong>g>10</str<strong>on</strong>g> <str<strong>on</strong>g>Years</str<strong>on</strong>g> <strong>on</strong> <strong>the</strong> <strong>Web</strong><br />

<strong>Kevin</strong> P. <strong>Ryan</strong><br />

CEO, AlleyCorp<br />

The ecosystem of <strong>the</strong> Internet is in perfect health.<br />

We have years of steady growth ahead of us in<br />

ecommerce, advertising and subscripti<strong>on</strong><br />

services.

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!