The Market Entry Strategy: The Spotlight Campaign 1
Executive Summary The Market Opportunity • Content is becoming the new spam • Lack of targeting creates unrealized value The Solution • The ability to target is the key to adoption • Acquiring a Data Analytics is needed Three Part Marketing and Sale sApproach • Sell Directly to Large Targets • Develop New partnerships • Leverage Cisco divisions e.g. Scientific Atlanta Results • Eos will become the standard platform • Deliver annual revenue of 1.7B in 5 years (1) Cisco SPL Marketing Campaign 2
WEB 2.0: Large market opportunity and many needs The Market • World-wide Web Reach = 1.3 billion users and growing • Aggregate Ad Market Ad = 1.8 trillion dollars • Content Growth = 56%per year (281 exabytes in 2011=10 18 ) The Problem The Consumer • How to get them what they want and filter the noise • Power of Me • Wants Connections not Sites The Solution • Spam-phobic • Provide information not data • Rely on Friends • Recognize the individual by a • Embrace new media one-to-one experience • Appeal to their needs 3
Spam Phobia: Their Pain Is Your Gain Site Publishers Advertisers Content Owners • Viewers on • Lack targeted • Need new ways to increase site traffic traditional social distribution sites non- methods to get • Want something to responsive to content out to sell and need content consumers relevant and timely • Needs to identify • Lost in the ads and content specific consumer increasingly crowded web 2.0 segments 4
Leveraging Capabilities: Cisco is well positioned Opportunities • Web 2.0 technologies are relatively new and growing • Large market for intelligent content delivery the creates for need for organization • Growing migration of traditional content providers on the internet. Strengths • Global and Respected Brand • B2B Solution Focus • Acquisition integration Excellence • Established Network Capabilities • Senior Level Industry Relationship 6
The Product: Functionality is the key to delivering on the vision Site Content Eos Functions Advertisers Publishers Owners White Label Solution √ Social Networking √ Social Media √ Content Management √ √ Content Ingest √ √ Content Syndication √ √ Analytics Engine √ √ √ Discovery Engine √ √ Analysis and the ability to target is the key to differentiation 7
Recommendation: Acquire Aggregate Knowledge High Efficiency • Aggregate Knowledge reports a top Click Through Rate of over 20% Large User Base • A Technology Company serving over 50 million people per month Turn Key Solution • Pique Discovery Engine Tracks User Behavior and Delivers Relevant Content Purchase Strategy • Target 150% of valuation 8
Recommendation: A Three Part Approach • Sell directly to major targets • Develop New Partnerships with Web Hosts • Leverage Existing Partners and Business Units to penetrate broadcasters 9
Part 1: Sell Directly to Major Targets Site Publishers • Increase adoption • Build Brand Equity Recognition Content Owners • Adoption of Eos will create a trickle down effect • With increased adoption, content owners and Advertisers advertisers will come. • Try to Buy 10
Part 2: New Partnerships with Web Hosts Site Publisher Value Web Host Value • More Hosting Features for • White Label Social Customers Network • Suitable Business • Advanced Analytics Data Features for Business Customers Consumer • Increased loyalty by the Consumer • Richer user experience • Hosts become channels • Take advantagedvantage of Long Tail • Site Publishers Crave Turn Key Solutions 11
Part 3: Leverage partners to penetrate TV broadcasting • Leverage Scientific Atlanta to introduce functionality into broadcasting • One-to-one targeting • Strong distribution partners • Utilize relationships with CIO and distribution channels • Target Time Warner to provide content • Build/Extend Eos brand to broadcasting 12
Revenue: Getting to the Money through the Long Tail Content Revenue Licensing Revenue Ad Placement Costs Site Publishers Advertising Revenue Content Owners Advertisers Content Syndication Costs 13
Pricing: Selling it in Three Tiers Benchmark Tier 1 - Enterprise • $10k - 100k/year • License Pricing Tier 2 - SMB Sites • $360 -1200/year Music • $0.99 ($0.05 to Eos) • Content Pricing Shows • $1.99+ ($0.05 to Eos) Pay Per Click • Ad Pricing • $0.30 ($0.15 to Eos) 14 http://www.kickdeveloper.com/api/
Estimating Revenues – 5 Year Projection 2008 2009 2010 2011 2012 Total Potential Site 3.9M 5M 6.6M 8.5M 11M Market Share 1% 2% 4% 6% 8% Tier 1 Licensing Revenue $0.3M $0.6M $0.9M $1.2M $1.5M Tier 2 Licensing Revenue $14M $37M $95M $185M $321M Content Revenue $2M $5M $13M $26M $45M Ad Revenue $59M $152M $396M $772M $1,339M Total Estimated Revenue $75M %195M $505M $985M $1,706M ROIC (38%) (6%) 69% 168% 298% 15
Phasing in EOS Month 12 + Month 1- 2 Month 8-12 Month 2- 4 Month 4 - 8 Phase 5 Phase 4 Phase 3 Phase 1 Phase 2 • Expand • Try to Buy • Expansion • Spotlight Marketing Partnerships • Buy • Integration Aggregate Knowledge 16
Going Forward: The EOS Vision for the Future • Webex extends to the • Eos™ broadcaster average web user installations bring Web 2.0 functionality to the • The entry point to bring TV masses Web 2.0 to the Enterprise 17
Summary: Paving the way… The Market • Information explosion = spam phobia • Opportunities lost due to unrealized connections The Solution • Eos™ is a vertically integrated platform that closes the chasm between stakeholders and consumers Spotlight Campaign • Leverage senior relationships to establish Eos ™ • Includes a top-down, bottom-up, and extension to related market to accelerate adoption Results • Establish Eos™ as the defacto standard • Value delivered to Cisco exceeds $1.7B at year 5 18
Q & A 20
Table of Contents Executive Summary The Long Tail ROIC Worse Case Web 2.0 Tiered Pricing Ad Revenue Comparison Spam Phobia Revenue Projection Market Analysis Power to Focus Phasing in Eos Internet Usage Statistics Leveraging Capabilities The Eos Vision Profit Growth The Product Summary Competitive Pricing Aggregate Knowledge Revenue Best Case Situation Analysis Three Part Approach ROIC Best Case Value from Purchase Sell Directly Revenue Base Case Social Network Advertising New Partnerships ROIC Base Case Social Advertising Growth Leverage Partners Revenue Worse Case Social Networking Growth Annotated Bibliography 21
Revenue Best Case 22
ROIC Best Case 23
Revenue Base Case 24
ROIC Base Case 25
Revenue Worst Case 26
ROIC Worst Case 27
Ad Revenue Comparison Eos $30 $5 $0 $40 • Minimum Entry Fee $5.00 $0.42 $0.43 $0.45 • Cost Per Click $0 $0.42/k $0.30/k $0.50 • Cost Per View • Relevancy? Search Search Partial Total • Engaged Audience? Yes Yes No Yes • Varied Locations? No No No Yes • Quality of Target? Med Med Low High 1 2 3 1) Yahoo! Advertiser Page 28 2) Google Adwords Page 3) Facebook Advertiser Page
Market Analysis What kind of markets are we talking about? Myspace/Facebook Aggregate Market Social site $1.8 Trillion Dollars advertising at $1.2 Worldwide 3 billion 1 Sponsored Content Digital Content Single episode can 44% of Chinese, bring $60 per 1k 18% US view visitors 2 content online 4 1) Generation MySpace is getting Fed UP 2) Smiles, Everyone 29 3 ) Web 2.0: Cisco’s Dan Scheinman unveils EOS, Entertainment Operating System 4) China’s very Different Internet Use
Internet Usage Statistics 30
Profit Growth • Web 2.0 Technologies experienced 7 % growth in profit from 2006-2007 7% increase Embryonic Shakeout Maturity Growth Decline 31
Competitive Pricing Platform Price Features Enterprise : $10k – 100k per year Analytics Engine, Content Cisco EOS Syndication, Discovery Engine, SMB Sites: $360 – 1200 per year Content Ingestion, Social Ad Pricing: $0.30 per click Networking $175-200 for single user license for Social networking, Collaboration Intel Enterprise 2.0 one yr. Tools $240 per yr for ads and $60 per yr for Social networking, Content Ning URL’s Management, Content Ingestion Platform is free. $2-5 for every 1,000 Content Syndication, Content KickApps views on pages (for advertisement Ingestion, Content Management control) Platform is free. Content Management, Content Brightcove Ingestion, Content Syndication Platform is free. Social Networking, Content Facebook Management 32
Situation Analysis 33
Achieving Value from Purchase Competitive Price • Creates distinctive competences Customer Brand Name Value Creation Satisfaction Differentiation 34
Social Network Advertising 35
Social Network Advertising Growth 36
Social Networking Growth 37
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