LUMA Partners presents the "LUMA Digital Brief 001 - The Good, the Bad & the Ugly of Digital Advertising".

1. LUMApartners
Digital Brief
001
The Good, the Bad & the Ugly
of Digital Advertising

2. BAD: Digital Supply / Demand Imbalance
SUPPLY
DEMAND
>
2,500 companies
200 companies

3. UGLY: Digital Supply / Demand Imbalance
SUPPLY
DEMAND
2,500 companies
200 companies
LUMApartners150 priori3zed
50 priori3zed
>
90+% FAILURE RATE

4. What’s the Good News?
3 Things:
1. Secular Organic Growth
2. Changing Business Models
3. Scaled Exits

5. GOOD: Significant Growth in Digital Market
Source: eMarketer
($ in billions)
$0
$50
$100
$150
$200
$250
$300
2012
2014
2016
Digital0Ad0Spend
Total0Ad0Spend
$100
$0
$50
$200
$250
$150
US Ad Spend
US Digital Ad Spend
CAGR
35%
CAGR
10%

6. GOOD: Exceptional Growth in Programmatic
Source: eMarketer
($ in billions)
$0
$50
$100
$150
$200
$250
$300
2012
2014
2016
Digital0Ad0Spend
Total0Ad0Spend
US Digital Ad Spend
ProgrammaAc
CAGR
53%
CAGR
216%
$20
$0
$10
$40
$50
$30

7. Programmatic as a Business Model
Media
Low
40-50%
Gross Margins
I/O Based Spend
SaaS Software
High
70-80%
Gross Margin
Contractual Spend
5 – 10 x REVENUE MULTIPLE 0.5 – 2 x
BUSINESS MODEL
DRIVERS
GROWTH
OPERATING
LEVERAGE
PREDICTABILITY

8. Programmatic Changes the Media Business Model
Programmatic
High Growth
70-80%
Gross Margin
Predictable Spend
4 – 8 x

9. WARNING: LUMA Decks Usually Call for More M&A

10. AD TECH
CRM SOFTWARE
INTERNET GIANTS
ECOMMERCE
TELCO
MARKETING
MEDIA
DATA
REALLY GOOD: A Growing Pool of Strategic Buyers
CONSUMER INTERNET
TECH SERVICES
Right Time
Decisioning of
Consumer Data
(Ad Tech and
MarTech)

11. AD TECH
CRM SOFTWARE
INTERNET GIANTS
ECOMMERCE
TELCO
MARKETING
MEDIA
DATA
CONSUMER INTERNET
TECH SERVICES
Right Time
Decisioning of
Consumer Data
(Ad Tech and
MarTech)
NEW
ENTRANTS
REALLY GOOD: A Growing Pool of Strategic Buyers

12. New York – Palo Alto
lumapartners.com