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The Kelsey Group November 28-30, 2007 Industry Overview 1:00 pm – 1:45 pm Neal Polachek, CEO, The Kelsey Group Matt Booth, SVP and Program Director Interactive.

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Presentation on theme: "The Kelsey Group November 28-30, 2007 Industry Overview 1:00 pm – 1:45 pm Neal Polachek, CEO, The Kelsey Group Matt Booth, SVP and Program Director Interactive."— Presentation transcript:

1 The Kelsey Group November 28-30, 2007 Industry Overview 1:00 pm – 1:45 pm Neal Polachek, CEO, The Kelsey Group Matt Booth, SVP and Program Director Interactive Local Media Peter Krasilovsky, Program Director and Senior Analyst Next Session: Keynote Address

2 Introduction – The Kelsey Group  TKG is an independent Analyst and Advisory firm covering:  Global Yellow Pages and Directories: Print and Internet  Search: Local, Social, Mobile and Video  Marketplaces: Verticals, Classifieds and Transactions  Data drawn from quantitative user and SMB research  Forecasts based on quantitative data and industry knowledge  Recommendations founded on data, forecasts and industry experience and insight  Advisory services, consulting, conferences, reports

3 The Kelsey Group Analyst Team – Expansion Driven by 360 Client Feedback  Michael Boland – New Technologies  Matt Booth – Search/Ad Models  John Kelsey – Cofounder and Chairman  Peter Krasilovsky – Marketplaces, Verticals  Charles Laughlin – Yellow Pages – Print/Online  Bobbi Loy-Luster – Client Inquiry  Steve Marshall – Consulting and Research  Michael Taylor – Sales Channel Analytics  Princeton team – Al Hou, Nanci Karas, Pam Kelsey, Kathleen Passarelli, Eileen Pacheco, Sheila Steinmuller

4 TKG in 2007  Advisory support for investment banks, private equity and venture capitalists seeking to understand the local space  Blog coverage is much enhanced and expanded   Added three new FT professionals – Peter Krasilovsky, Steve Marshall and Michael Taylor  Proprietary research expanded internationally  We have added a new coverage area called Marketplaces: Verticals, Classifieds and eCommerce to address the needs of many of our existing clients and many new emerging companies around the world

5 The Kelsey Group Equation If The Kelsey Group = Local And Local = Community Then Community = The Kelsey Group

6 At the End of the Day “A Global Community”

7 A Wide and Deep Community  Over 250 companies are represented  60 percent of attendees at first Kelsey Group conference  30% are CEO, President, Chairman, Founder, Managing Director, Principal  25% are senior vice presidents or vice presidents  20 percent are director level.  More than 20 countries are represented

8 No Shortage of M&A within the Community FindWhat = Miva Ingenio Inc. = AT&T (pending) Espotting = Miva Interchange = = WebSite Pros SME Global Solutions = Webvisible = Intuit Ask Jeeves = IAC Digital Envoy = Landmark Communications Dex Media = RHD = PremierGuide = HomeGain, Inc. = Classified Ventures Planet Discover = Gannett = AT&T American Town Network = Idearc Media InfoSpace = Dogpile Judy's Book = Asset Sale = RHD InsiderPages = IAC IPIX = AdMission Click Forward = Yellow Book USA OpenList = Marchex Backfence = Out of business DCCI = Telemetrics IntelliSeek = NielsonBuzz Metrics Voicestar = Marchex i411 Inc. = Intelligenx = Out of business Quigo Inc. = AOL (pending) Switchboard = Idearc Media

9 And People Stay a Part of the Community Simon Greenman = European Directories Mark Cannon = Auto By Tel Peter Hutto = Erron Silverstein = Yellow Bot Andrew Shotland = LocalSEOGuide Dick Larkin = Weblistic Jim Larrison = Adify Jen Dulski = Fatdoor Peter Krasilovsky = The Kelsey Group David Galvan = Topix Hilary Schneider = Yahoo Chamath Pailhapitiya = Facebook Kara Nortman = IAC Brendan Benzing = InfoSpace Anna Zornosa = Dealix Tim Lambert = SpotRunner Geoff Avard = Sensis Johnson Goh = SPH Rod Diefendorf = Idearc Media (pending) Matt Booth = The Kelsey Group Safa Rashtchy = Retired Jim Riesenbach = Auto By Tel Pat Marshall = Yellow Book USA Udi Manber = Google Ted Meisel = Veoh Networks Mark Pincus = Mark Pincus Blog Andrew Day = World Directories Paul Levine = AdBrite

10 34,000 Air Miles... 2 Hemispheres

11 Many Big Questions... What is Google Doing in Local? Is Yahoo back on track? Portals – friend or foe of YP? Can YP and Classifieds Integrate? How do we Verticalize and Localize? Mobile – is it real now?

12 A Global Perspective Trends in Australia similar to U.S. market – fragmentation, mobile expectations exceed mobile results, classifieds and directories boundaries blurring

13 A Global Perspective In Singapore and Asia, emerging vertical sites to capture deep, comprehensive content and then build supporting ad models

14 A Global Perspective In Israel, 110% mobile penetration; YP publisher builds out comprehensive user experience across the Internet and in print

15 A Global Perspective In Riga, Latvia – European DA and Telco operators gather to address the emerging “free” ad sponsored DA proposition

16 A Global Perspective In Amsterdam, classifieds operators debate the virtues of “free” v. “paid” listings and the eventual marrying of UGC and classified listings

17 A Global Perspective At Geodomain Expo, operators explore the integration of “local search” into their tourist oriented sites

18 Today, Tomorrow and Friday 650 attendees gather at ILM ’07/SES Local to explore the real opportunities just now emerging in the local space

19 Looking Ahead TKG and SES collaborate in Chicago – December 4 - 6

20 Looking Ahead TKG and SES again collaborate at SES London – February 19 – 21, 2008

21 $585B Global Advertising Market – 2007

22 By 2011 – $711B Advertising Market

23 Significant Share Shift


25 By 2011 – $134B Global Internet and YP Advertising Market

26 Global Display Ad Forecast Sources: JP Morgan, The Kelsey Group (2007) Total Pages Viewed per month (B) CAGR: Pages viewed per day / user 2.4%; Total Pages viewed 10.5%

27 Global Forecast: More Consumers Searching More Frequently Sources: JP Morgan, The Kelsey Group (2007) Searches (M) CAGRs: Search 8.4%; Queries 11.4% (2006-2010)

28 Revenue Per Search Sources: JP Morgan, The Kelsey Group (2007) Revenue Per Search US RPS 7.1% CAGR, International 11.6% (2006-2010)

29 Source: JP Morgan, Kelsey Group (2007) Like Yellow Pages, Search is a Directional Media that Offers Superior Targeting Summary In 2006, Search accounted for 3.2 percent of the usage but $8.6 billion in revenue. Internet browsing and resulting display ad revenue, conversely, accounted for nearly 97 percent of the usage but only $5.9 billion in revenue. This comparison between Internet search usage and browse usage shows the power of directional media in terms of revenue generated. Percent Consumer Search vs. Browse Revenue Generates from Search vs. Browse US Search vs. Browse: Comparison Usage & Revenue

30 Print Yellow Pages is Losing References and Advertisers Source: Census, Kelsey 2006, YPA US Off-line Travel Agencies (Locations 000) Bars = Off-line Locations Line = Print YP Revenues

31 © 2007 The Kelsey Group Notable Shift: SMBs Use of Specialized Directories Summary Usage of “Specialized” directories (both print and online) jumped in the last 6 months. Defined as “Specialized directory for your specific business, industry or location” Source: Kelsey Group (2007)

32 © 2007 The Kelsey Group Notable Shift: SMBs Online Usage Summary SMBs continued to increase spend on online media and performance-based advertising. PPC is a significant sift over past surveys. Source: Kelsey Group (2007)

33 Composite of Consumer Usage per Month (2007e) Source Kelsey Group (2007) Internet Search is now the front door for consumers. This trend will compound overtime as search engines push into local search.

34 Comparing Average Page Views Shows Search Growth Effect Search engines are indexing more pages. Consumers are using search to find local information. This trend is driving less usage per user session of IYPs and local search engines (company removed) Average Page views Per User (2000 and 2006) Local Search Company

35 YP Sales Channels Control Local Advertisers Summary Yellow Page companies dominate the advertiser landscape. They are very effective sales organizations. The Advertiser Relationship

36 If…  Consumers are looking at more content  Search is the front door to access information  Search + targeting are driving verticalization  SMB behavior and spend is changing to match  Yellow Page sales channels have the most existing local advertisers but not front door internet traffic...

37 Then – Conclusions and Predictions  2008 will be the year of multi-channel expansion driven by Yellow Page companies  Move advertisers across multiple platforms like Ad Sponsored DA, Mobile, IYP, Search, etc.  Call-tracking will unify platforms  Yellow Pages will begin the move to Value Based Pricing in under-developed headings  Effort to grow ad base and content

38 Con’t... Conclusions and Predictions  SEO / SEM ‘Landing Page Optimization’ will become central to all local efforts  Platforms will be ubiquitous  Verticalization will accelerate  Consumer and expert reviews will continue to grow in importance  Mobile will become the next search product  Push current advertisers into mobile experience

39 We’ve Gone Thru the First 2 Generations of Local Online Advertising 1st Generation 1995-2001: ‘City Guide Era.’ Up-sells from traditional media and cream skimming from them. Large advertisers are Low Hanging Fruit. 2nd Generation 2001-2006: + ‘Online Classifieds and Search.’ Search Boosts Value of Local; begins disruptive change. Add Medium Sized Advertisers.

40 Now Arriving….The Third Generation of Local Online Advertising 3 rd Generation 2006-Present: + Verticalization, GeoTargeting and New Channels More Focus and Value; Increases marketing spend by local business; “Localizing” and user generated content. Mobile and TV. Add Small Advertisers (VOLUME) + National Advertisers

41 At ILM: 07….Directional New dimensions to connecting Buyers and Sellers CitySearch, RHDi,,YellowBot, ZipLocal Intuit, Merchant Circle ShopLocal, Krillion,,

42 At ILM: 07….Verticalization Auto by tel, Yahoo Zillow, NCI, Homethinking Marchex

43 At ILM: 07….Social and News Driven User Generated Content Propels Initiatives Facebook, Mahalo City Voter, Pegasus The LA Times, New West

44 At ILM: 07….National Bringing National Players to the Local Level Buyers and Sellers GM Planworks, Centro, Atlas Consorte Media TMP

45 At ILM: 07….Mobile and Phone Extensions Anytime, anywhere is everything Ingenio/AT&T Skyhook Wireless, E-Enable, Idearc media, Yahoo Mobile People Google, Nokia

46 At ILM: 07….Money Injection of Money Moves some things faster than others  Veronis Suhler Stevenson, Hummer Winblad, IAC

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