1. The Yellow Page Market i transition – which
h ll k in ii hi h
business models can profit besides Google?
prepared for b-to-v Core Croup Internet and Mobile
St. Gallen, March 2009

2. Overview
1. Introduction
2. Market
3. Segments & Funding
4. Successful players
4 S f l l
5. Findings & Discussion
g
6. About b-to-v
p. 2

3. Growth of online e-advertising despite crises
p. 3

4. Shift of advertising spend towards online media
p. 4

5. Some „major brands“ in German online publishing
p. 5

6. Overview
1. Introduction
2. Market
3. Segments & Funding
4. Successful players
4 S f l l
5. Findings & Discussion
g
6. About b-to-v
p. 6

7. Local advertising – What’s the occasion?
Consumers are searching... ...but small business is not capitalizing.
– 66% typically find what they need when – Only 44% of small businesses have a Web
searching on the Web, though 39% have site.
trouble finding specific businesses when
– Of those that do have a Web site, 61%
they are not adequately represented on
spend less than three hours a week
the Web.
marketing their Web site.
– 92% of Internet users have researched a
– Of small businesses that have a Web site,
p
product or service online, then purchased
p
51% believe both the quality and ability
offline from a local business at least once.
of their site to acquire new customers is
– 71% of consumers feel the local business only “fair” or “poor.”
Web sites they visit are good or great.
– 78% of small b i
f ll business owners d di
dedicate
29% feel they are “fair” to “very bad.”
10% or less of their overall budget to
– 82% say search engines were among the marketing efforts.
many tools they use to find local
– Half of small business owners spend less
businesses.
than 10% of their marketing budget on
Internet advertising, while 30% do no
Internet advertising at all
all.
Source: Study by webvisible & Nielsen: The Great Divide 2008 (issued 2009)
p. 7

8. This is also true for the German-speaking market
p. 8

9. … it is reflected by website popularity
p. 9

10. U.S. expects local ads shift towards digital media
p. 10

11. U.S. expects interim decline of local media & ad spend
p. 11

12. However, remaining spend will shift towards digital
p. 12

13. Customer survey
Private consumers Small business owners as consumers
Which of the following advertising resources Which of the following advertising resources
do you turn to first to locate a local business? do you turn to first to locate a local business?
50% Search Engines 41% Search Engines
24% Yellow Pages Directories 31% Yellow Pages Directories
10% Internet Yellow Pages 9% Internet Yellow Pages
4% Local Newspapers 4% Local Newspapers
3% White Pages Directories 4% Consumer Review Web Sites
1% Television 2% White Pages Directories
2% Direct Mail
Source: Study by webvisible & Nielsen: The Great Divide 2008 (issued 2009)
p. 13

14. Customer survey - continued
Search is the most widely used tool for
finding a local business among consumers. Of
those surveyed, 82% said search engines
h d id h i
(such as Google, Yahoo!, or MSN) were
among the many tools they used when
seeking a local business. Although
business
search clearly dominates among Internet
users, consumers use search in
combination with other local media.
49% Internet yellow pages
57% Yellow pages directories
82% Other search engines
53% Local newspapers
49% Television
37% Direct Mail
Source: Study by webvisible & Nielsen: The Great Divide 2008 (issued 2009)
p. 14

15. Further information about searches
Source: Study by webvisible & Nielsen: The Great Divide 2008 (issued 2009)
p. 15

16. Users like “online” in Europe, too
Source: FAZ (Jul 08)
p. 16

17. Also in Germany local search is a significant market
Source: FAZ (Jul 08)
p. 17

18. Overview
1. Introduction
2. Market
3. Segments & Funding
4. Successful players
4 S f l l
5. Findings & Discussion
g
6. About b-to-v
p. 18

19. Segmentation overview – USA (some examples)
1. Yelp: USD 31m funding from Bessemer
Ventures, Benchmark Capital and DAG
als
Ventures.
Ventures
Horizonta
2. Insiderpages: Acquired by Citysearch
(previous USD 8.5m funding from Sequoia
Capital and Softbank)
H
3. Superpages.com: belongs to Idearc Media
(Market Cap: USD 10m)
cals
Vertic
4. HomeAway: USD 459m funding from
Redpoint and Technology Crossover
Ventures.
5. Rocketlawyer: USD 2m fuding from Lexis
Nexis
Online
6. Angie‘s List: USD 66m funding from Battery
Ventures, BV Capital, Lighthouse Capital,
among others.
7. Zillow.com: USD 87m funding from
Benchmark C i l and L
B h k Capital d Legg Mason, among
M
others.
p. 19

20. Segmentation overview – Europe (some examples)
1. Gelbe Seiten: belongs to 16 regional
publishers and DeTeMedien
als
Horizonta
2. Qype: USD 13m from Wellington
Partners, Partech International and
Advent Ventures
H
3. Quoka.de: Leading classified portal
(acquired by Vorarlberger Medienhaus)
cals
4.
4 Anwalt.de:
Anwalt de: Portal with lawyer listings
Vertic
(financed by private investors)
5. Blauarbeit.de: Auction portal for local
services (financed by private investors)
i (fi db i i )
Online 6. Imedo: Portal around medical issues
(financed by privat investors)
p. 20

21. Overview
1. Introduction
2. Market
3. Segments & Funding
4. Successful players
4 S f l l
5. Findings & Discussion
g
6. About b-to-v
p. 21

22. Selected Successful Horizontal Players in Europe
– Leading review portal in Europe focussing on lifestyle venues
and restaurants
– More than 5m unique users per month
M h i h
– Funding: Series B over EUR 8m from Wellington Partners,
Partech International and Advent Ventures
– Financials: EUR 1.5m revenue (2008e)
– Germany's second largest directory assistance provider,
employing roughly 2,400 staff at10 locations in Europe. Its
"11880" brand has a market share of some 37% in Germany
11880
and is also a partner for many well-known mobile providers
– Market Cap: EUR 150m
– Financials: EUR 178m sales and EBIT of EUR 31m (2008e)
(in the short-term declines in classic directory assistance
operations are increasingly being offset by ad financed online
ad-financed
local search)
p. 22

23. Successful local advertising player in the US
– ReachLocal helps local businesses to attract customers via search
engine advertising and online yellow-pages marketing
– Funding: USD 64m from Vantage Point Ventures and others
– Financials: USD 100m revenue
– Integrated advertising solution for local business focussing on a)
search enginge marketing and syndication of listing, b) customized
websites and c) lead management through click-to-call
click to call
– Funding: USD 25m from Bessemer Venture Partners, Draper Fisher
Jurvetson Growth and Jafco Ventures
– Financials: USD 30m revenue
Further VC-funded players include in the US, among others,
Not yet any major specialized players in Europe!
p. 23

24. Overview
1. Introduction
2. Market
3. Segments & Funding
4. Successful players
4 S f l l
5. Findings & Discussion
g
6. About b-to-v
p. 24

25. Is this an attractive industry?
– Threat of new entrants: – Bargaining power of suppliers:
High as large international players with Medium but decreasing as buyers will put
industry f
i d focus, l
large offline players with
ffli l ih forward that many other suppliers are
f d h h li
industry focus and well-known brands, available
are likely to enter the market with
– Rivalry high as generalists and specialists
relatively low barriers to entry (only costs)
have already occupied most of the
– Bargaining power of buyer: attractive niches and will continue to
Medium but growing by the day as battle for customers based on additional
buyers get more sophisticated and will services and price
cease to accept high prices for simple
ads; buyers will note that not everybody
can have a fully optimized search engine
position
– Threat of substitutes:
Medium to high as buyers are aware that
they could advertise their company on
Google, Yahoo!, KennstDuEinen etc.
p. 25

26. Blueprint of an attractive invest
Core competences and success factors (and indicators towards promising
investments):
– Focus on execution, i.e. sales towards long tail (call-center based, standardized
service portfolio, high degree of automatization), compare to KennstDuEinen
– Known or at least self-explanatory brand name, if possible with a history (and
somewhat credentials) from the offline world, e.g. GoYellow
– Strategic f
focus of a „horizontal“ business model: Only attractive f established
f for
player suffering from poor management
– Strategic focus of a „vertical business model: Attractive with exceptional
vertical“
execution and focus on markets with premium leads (e.g. finance, law), most likely
in large yet immature markets like Spain
p. 26

27. Food for discussion
– Will all business directories be killed by Google in the long-run?
– If so what would be their defense strategy given their strong brand awareness?
so,
– M&A (last acquisitions: billiger.de, dialo)
– More comprehensive local avertising solutions (compare stronger SEM
offerings with partners, activities of GoYellow Media)
– Given that Google relies on partners for the acquisition of local SMEs as this
activity does not scale enough for Google itself how do efficient sales activities
look like?
– Experiences of successful online sales approaches
– Experiences with outbound call centers (conversion rates)
– Experiences with street sales representatives etc
representatives, etc.
– Should vertical players extend their service offerings through closer
collaboration with online marketing services (SEM, SEO, customized website)? If
g ( , , )
so, should they build these know-how in-house or outsource it?
p. 27

28. Overview
1. Introduction
2. Market
3. Segments & Funding
4. Successful players
4 S f l l
5. Findings & Discussion
g
6. About b-to-v
p. 28

29. b-to-v at a glance
– At the heart of what we do is the b-to-v Investorenkreis, an exclusive circle of
entrepreneurial investors from Europe
– b-to-v renders exclusive services to members of the b-to-v Investorenkreis, e.g. it
enables the confidential sharing of investment opportunities, supports the
g pp , pp
processing and structuring of deals, and helps to manage and control
investments
– Admission to the b-to-v Investorenkreis is granted only to candidates who have
proven their business acumen, investment expertise, and personal integrity
– Our approach gives entrepreneurs the unique opportunity to discuss their
ventures and financing needs with senior entrepreneurs, benefit from their
experience,
experience their networks, and receive funding from them
networks
p. 29

30. Cornerstones of the b-to-v Investorenkreis
– The b-to-v Investorenkreis has 54 members
– Members come from various industry backgrounds (e g high tech internet
(e.g. tech, internet,
telecom, clean tech), and have
– founded > 100 companies
– and have invested in > 1’000 deals
– sold > 300
– realized > 100 IPOs
– In
I sum, th members’ annual direct equity investments volume amounts t
the b ’ l di t it i t t l t to
EUR 20-25m
p. 30

31. Co-Authors
Florian Schweitzer (Partner) co-founded Alexander Stoeckel (Investment Manger)
b-to-v and built its network of private holds an MBA from the University of
investors s ce 2000. He studied Business
esto s since 000. e stud ed us ess Oxford. Prior to b-to-v, he worked as fund-
,
Administration at the University of of-fund manager and as executive
St.Gallen. management assistant.
Sven Eppert (Investment Manager)
studied Business Administration at the
Catholic University Eichstätt Ingolstadt
Eichstätt-Ingolstadt
and the Warsaw School of Economics.
Prior to b-to-v, he worked in asset
management and in consulting.
t di lti
p. 31

32. b-to-v overview
BrainsToVentures AG
Blumenaustr. 36 / P.O. Box 142 Dr. Jan Bomholt, Partner and co-founder
CH-9004 St. Gallen
Dr. Christian Schütz, Partner
Contact T: 41
T +41 71 242 2000
Florian Schweitzer, Partner and co-founder
F: +41 71 242 2001
www.b-to-v.com Christoph Schweizer, Partner
info@b-to-v.com
Dedicated people 54 members of the Investorenkreis
Core personnel 8 investment professionals
Deal flow p.a. (average)
p g 1,500 business plans
p
Deals done p.a. (average) 20
Investment strategy Opportunity driven
Geographical preferences Europe, USA and Asia
Financing stages Early stage, expansion stage, and later stage, as well as MBI and MBO projects
Most recent Exits Three IPOs (XING, Codfarmers, Fidor) and three trade sales (Cycleon, myBet, Plazes)
p. 32