carnegie mellon university msec 2004 leading provider of e-marketing tools sep. 23, 2003 s. cho, c....

Carnegie Mellon University MSEC 2004

Leading provider of e-Marketing tools

Sep. 23, 2003S. Cho, C. Lu, J. Park,

J. Weinberg, C. Yang, H. Yang



OUTLINE

• Brief History

• Business Strategy

• Business Model

• Financials

• Competitive Structure

• Value Chain

• SWOT

• Information Technology


Brief History (1)Brief History (1)1995~1997 : Starting Business to revolutionize Internet advertising

1995 • Poppe Tyson formed DoubleClick as its new media division.• Kevin O'Connor and Dwight Merriman started Internet Advertising Network

(IAN); e-mail White Pages directory

1996 • Poppe Tyson bought IAN and merged its know-how with DoubleClick's client

network and O'Connor became CEO of the new DoubleClick. • Developed DART (Dynamic Advertising Reporting and Targeting)• Partnership with AltaVista

1997• Launched DoubleClick Direct, a results-based advertising network


Brief History (2)Brief History (2)

1998~2000 : IPO & Broadening services through acquisitions growth

1998• IPO and expanded its client network from 60 Web sites to 1,300.

1999• NetGravity was merged with DoubleClick's Technology Solutions

division• Branched out into database marketing by acquisition Abacus Direct

(90 million buyer profiles and 1,800 merchants) • Became the target of a Federal Trade Commission privacy

investigation into its data-collection methods.

2000 • Began working with regulators to develop online privacy policies.


Brief History (3)Brief History (3)2001~ present: : Rethinking its strategy and restructuring

2001• Acquired @plan, FloNetwork, and L90's ad-serving software• IPO DoubleClick Japan • Launched Diameter and Internet marketing research• Laid off more than 350 employees in 2000 and 2001

2002• Refocused on providing e-marketing tools and technology • Sold Media business, email List Services and acquired

MessageMedia

2003• Recast as marketing technology company • 1,500 advertisers and publishers, 300 email marketers and 1,800

Abacus Alliance members


Business Strategy

• Vision : Leading provider of e-Marketing tools

• Mission : “Making marketing work better”

• Help clients acquire new customers cost effectively. • Help clients retain and grow profitable customer

relationships.


Business Model – Infomediary

Marketers

Ad Agencies Web Publishers

• Marketing solutions• Marketing Data



Clicks


Business Model - products and services (1)

• Full Suite of Marketing Solutions

(Source: DoubleClick.com)


Business Model - products and services (2)

Marketing Automation Increase the efficiency of marketing

planning, tracking, and analysis

MediaVisor,

DoubleClick

Ensemble

Online Advertising Offer ad management and serving solutions for marketers, agencies and web publishers

Site Directory

DART (DFA, DFP)

Email Marketing Help clients manage and grow powerful email programs and enable high performance.

DARTmail Premier

Self Service

Strategic Services

Direct Marketing Help marketers target the potential consumers, lower the costs and increase the performance

Abacus Catalog

Alliance

Abacus BtoB Alliance

Marketing Analytics Help clients measure performance within and across channels.

ChannelView

SiteAdvance

Data Management Provide marketers with the tools to

harness customer data for effective campaigns.

Database marketing

Apllications Database

marketing Strategy


Total operating revenue

67,926138,724

258,294

505,611

405,647

300,198

123,610

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

• Operating revenue sources

- Technology: internet marketing solutions

- Data: data analysis, research and collection

- Media: internet advertisement sales

Financials – Operating revenues

(in thousands)

Projected:$250,000


Operating revenue sources

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

1997 1998 1999 2000 2001 2002 2003 Q2

Technology Data Media

68.8%

31.2%

• Technology = 68.8%

• Data = 31.2%

• Media = 0% (sold by the end of 2002)

Financials – Revenue sources


• Operating expense sources

- Sales and marketing

- General and administrative

- Product development: in-house building up

Total operating expenses

42,01384,503

209,853

329,218

511,669

341,198

74,307

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Financials – Operating expenses

(in thousands)

Projected:$150,000


• Sales and Marketing = 54.5%

• General Administration = 23.2%

• Product development = 22.3%

Operating expense sources

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1997 1998 1999 2000 2001 2002 2003 Q2

Sales and Marketing General and Administration

Product development

Financials – Expense sources


• From 2003, the net income was converted to positive

• From 2001, the restructuring expenses were increased

Net income

(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

Financials – Net income

(in thousands)


Competitive structure

• Solution S/W providers• Almost no suppliers• Due to in-house Solution

Suppliers

• Several competitors• DoubleClick dominates the market share

Buyers

Threat of Substitute

Entry Barriers

• Offline advertising• Traditional database system

• Solution technology • (patent such as DART)• Data expertise• Global network• Financial barriers

• Advertisers• Web-publishers• Direct marketers


Value chain

Inbound Logistics

Operations OutboundLogistics

Marketingand Sales

Services

• Cookies• Customer data

•Product development•Database management

• Technical solutions• Data products

• Sales• Marketers• Ad Agencies• Web Publishers

• Customer Training• Call center

Information Technology(DART, MediaVisor, Abacus, Ensemble, ChannelView)

Human Resource ManagementSales and Marketing 37%, Engineer 19%, Technician 29%, Staff 15%


SWOTStrengths Weaknesses

Opportunities

Threats

• Reliable & scalable technology• Large Database• Full suite of customer driven solutions • First mover – brand name• Global presence – 30 countries • Financial strength • Marketing experts

• Short term contracts• Revenue structure • Short experiences in the international market• Not proven business model• Relies on internet infrastructure

• Privacy issue• Opt-out option• Intense competition• Poor perception of the effectiveness of online ads• Regulations in spamming• Rapid change of business environment

• Online Ad spending growing• Increasing broadband users• Growing niche media usage• The amount of time and money spent online is growing


Information Technology – IT use

• Business resources

Information TechnologyBusiness

• Internet, Cookies

• Online banner

• Value added

• Data storage

• Database management system

• IT solutions

- DART, Ensemble, Abacus etc

• Targeted banner advertisement

• Global Internet

• E-Mail, Banner Ads, Usage stats

• Movie files, etc.• Distribution / Service


Information Technology – Strategic lever

Distinctive and Strategic technology

• Analyzing and gather click stream data

(Source: ConsumerReports.org)


Information Technology – Risks and Benefits

Risks

• Privacy issue

Benefits

• Better advertising: targeting, tracking and reporting

• Can offer comprehensive IT solutions from Database management to marketing plans and campaigns.

“ This Monday, we revealed that the Federal Trade Commission (FTC) began a voluntary inquiry into our ad serving and data collection practices,” - Kevin Ryan, President of DoubleClick Inc., Feb. 17, 2000. -

“ Web users have lost privacy with the drop of a cookie..” – Will Rodger, USATODAY.com-


Q & A


Thank you!

carnegie mellon university msec 2004 leading provider of e-marketing tools sep. 23, 2003 s. cho, c....

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