The story about dreams, bubbles and money

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The story about dreams, bubbles and money
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Its all about money... Half the money I
spend on advertising is wasted. The trouble is,
I don't know which half.

• 1870
• John Wanamaker,
• a Christian merchant from Philadelphia,
• father of modern advertising (Wikipedia),
• the inventor of price tag

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...or even more - about efficiencyThe
worldwide advertising industry around 430
billion USD in revenues in 2007 (estimated by
ZenithOptimedia)..and waste (messages to wrong
audience or none at all) 220 billion USD (Greg
Stuart, IAB)

• Thanks to the power of the internet,
  advertising is becoming less wasteful and its
  value more measurable.
• The Economist, July 2006

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The winner is coming!

• Internet adspend will overtake radio in 2008
• Internet will grow 6 times faster than
  traditional media in 2006-2009 and increase the
  share from 5,8 to 8,7 (other version from
  6,1 to 9,5)
• The forecast of internet ad share for 2007 is
  5,2 (other version - even 7,5)
• The Internet already attracts more than 10 of
  adspend in several EU countries
• All of the fastest-growing markets are in the
  Middle East and CEE
• Data by ZenithOptimedia

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...back to old Europe, 2006

• Data by European Interactive Advertising
  Association, Europe Online

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Now lets talk about Baltics2006

• The total number of population 7 million
• The total number of internet users 2,95 million
• The total size of advertising market 319,5
  million EUR
• The average ad spendings per capita 45,6 EUR
• The total size of internet market 12,4 million
  EUR
• The share of online advertising is 3,9 growth
  76
• Online advertisers manage to spend 4,2 EUR on
  every Internet user
• The same figure in some other CEE countries
  Romania0,78 Poland 5,17 Russia 5,1,
• ...and old Europe Germany 35,7 UK 82,4 ?
• ... OK, we still have an option to grow fast!

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Some features of Baltic online admarket

• Start in Y1999-2000 by news portals
• Introduction of standards, common to whole
  advertising industry
• No hits, hosts audience instead
• Commonly accepted measurement system
• Data compatible to tradional media
• Internet media a natural ingredient of media
  mix
• No banner networks, no internet agencies
• Availability of personalized solutions
• Quite large concentration of ad market in arms of
  very few players
• Click on the banner isnt a king

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What about Web 2.0?
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A short lesson of geographyThe largest countries
by population

• China 1,322 billion
• India 1,17 billion
• USA 303,3 million
• Indonesia 231,6 million
• MySpace over 200 million accounts
• Brasil 187,5 million

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Phenomena of community sitesTila Tequila

• Birth name Tila Nguyen,
• Born in 1981 in Singapore,moved to Houston,
• Glamour model, popstar,
• Has over 1,7 million friends on MySpace....
• Its more than population of Estonia

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Some questions appear...

• 1,7 million virtual friends... How often you
  manage to meet each of them, have a cup of beer
  or just a phone talk?
• An average user on web.de generates around 150
  pageviews monthly. On German community sites 10
  times more... How valuable are these clicks?
• Where is the business?

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...and some answers

• Fox Interactive Media (largely consists of
  MySpace) lost 73 million in Q3 2006
• By News Corp. the fiscal year of FIM, ended on
  June 30, 2007, turned a profit of 10 million
  on revenue of 550 million
• The margin is ...1,8

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...and some answers

• In July 2006 Yahoo came to Facebook with a bid of
  1bn USD in cash
• Two monthes later Mark Zuckerberg (23), the
  founder and head of Facebook, has rejected the
  offer. (Wired, WSJ)
• In October 2007 Microsoft took a 240 m stake in
  Facebook which puts a value of the site of 15
  bn (FT)
• ...no Net Profit yet

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...and some answers

• Xing.de is the German business community
  network, run by Open Business Club AG, has 1,7
  million registred members
• Market capitalization as of 31.12.2006 159,4
  million EUR
• Total revenues for 01.07.2006 31.12.2006 -
  6,377 million EUR
• Net Loss 1,566 million EUR

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For comparison DELFI2006

• Total sales revenues 5,771m EUR
• Forecast2007 8 mEUR
• EBITDA 1,999 m EUR margin 34,6
• Forecast2007 3mEUR
• Net Profit after taxes 1,534m EUR
• Delfi controls around 45 of Baltic online ad
  market
• Recent change of shareholders Express group
  bought Delfi for 54m EUR

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What is the future?

• Old news portals vs Web 2.0 is it really
  dinosaurs vs rockets? Who will survive? Both?
• ...or maybe were facing a new bubble like it was
  with dotcom business in Y2000?

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... Or maybe its just a virus?

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Thank you!