PROGRESS REPORT for INTERNET and SOCIAL MEDIA
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December 14, 2011 PRISM PROGRESS REPORT for INTERNET and SOCIAL MEDIA Making diffuse information about the Internet and Social Media crystal clear IN THIS ISSUE: Ø Twitter: Redesigned for the average user § Brands § Advertising § Location § Tweetdeck Ø Facebook: Updated App Leads Android § Messenger Usage Stagnates § Second Stand-alone App: “Nearby” Ø Android Passes 10 Billion Downloads § Rovio: Angry Birds in 2012 THE INFORMATION HEREIN IS ONLY FOR ACCREDITED INVESTORS AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933 OR Michael Pachter INSTITUTIONAL INVESTORS. (213) 688-4474 [email protected] Wedbush Securities does and seeks to do business with companies covered Yoni Yadgaran in its research reports. Thus, investors (212) 938-9924 should be aware that the firm may have a conflict of interest that could [email protected] affect the objectivity of this report. Investors should consider this report as only a single factor in making their 1000 Wilshire Blvd, • Los Angeles, CA 90017 investment decision. Please see page 213.688.8000 • www.wedbush.com 14 of this report for analyst MEMBER NYSE/FINRA/SIPC certification and important disclosure information. WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` About Wedbush Securities Private Shares Group The Private Shares Group of Wedbush Securities is a leader in providing research and trading to the rapidly growing industry of privately traded securities, with an emphasis on companies in the social media space. We assist companies in raising growth capital through traditional private placements and provide liquidity options for existing and former employees through tailored selling programs. We also work with Venture Capital, Private Equity and Hedge Fund investors to help them adjust their holdings in some of the most dynamic companies. We endeavor to understand the underlying industries of the private companies we trade, in order to help our clients make informed decisions about their investments. We provide discreet customized solutions for our institutional and accredited private clients through a team of professionals located in New York, Los Angeles and San Francisco. About Michael Pachter Michael Pachter is the Managing Director, Equity Research providing coverage across the Digital Media sector and Head of Research for the Private Shares Group. He has been recognized as StarMine’s “Top Earnings Estimator” year after year and “Best on the Street” by the Wall Street Journal. Michael brings over 20 years of experience as a financial professional to the Private Shares Group along with extensive knowledge across the social media sector in both public and private companies. Mr. Pachter holds an M.B.A. from the Anderson School at the University of California at Los Angeles, a juris doctor from Pepperdine University, an LL.M. in Taxation from the University of Florida, and a bachelor’s in Political Science from California State University, Northridge. About Yoni Yadgaran Yoni Yadgaran joined Wedbush over a year ago from Bank of America Merrill Lynch. Originally covering Internet & E- commerce within Equity Research, he later moved on to help pioneer the Private Shares Group’s Research efforts. Yoni is a CFA level 3 candidate and received a B.B.A in Finance from Baruch College. Contact Wedbush Securities Private Shares Group: Michael Pachter Tom Wyman Managing Director, Equity Research Managing Director, Private Shares Group Head of Research, Private Shares Group (415) 613-1454 | [email protected] (213) 688-4474 | [email protected] Twitter: @michaelpachter Yoni Yadgaran Kevin Cohen Research Associate, Private Shares Group Director of Trading, Private Shares Group (212) 938-9924 | [email protected] (213) 688-8089 | [email protected] Cyrus P. Pirasteh Managing Director Head of Equity Trading, Technologies & Operations (213) 688-6661 | [email protected] About Wedbush Securities Founded in 1955, Wedbush Securities is a leading investment firm that provides brokerage, clearing, investment banking, equities research, public finance, fixed income sales and trading, and asset management to individual, institutional and issuing clients. Wedbush currently ranks a top liquidity provider for NASDAQ, and was ranked #1 stock picker for 2010 by Barron’s. Headquartered in Los Angeles, with over 100 offices nationwide, Wedbush focuses on relentless service, client financial safety, continuity, and advanced technology. (www.wedbush.com) 2 | P a g e WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` Twitter: Redesigned Twitter launched a redesigned format for both its web and mobile offerings. Earlier this year the company reported reaching 100 million active users, over 50% of which log-in daily, and 40% logging in only-to-read tweets. The new changes are meant to generate content discovery in an attempt to increase adoption of the service by skeptics who often aren’t aware of the utility the platform provides. Reported application speed on the new Android and iOS app has been greatly improved (All Things Digital reports a 500% increase in the last three months), with additional user interface changes including a “Connect” tab in place of a “Replies”, and a new “Discover” tab where “Direct Messages” had once been. The “At” (@) and “Hashtag” (#) symbols have been rebranded as “Connect” and “Discover”, in order to reduce confusion over terminology among less experienced users. The mobile interface now has four distinct quadrants which remain mostly consistent throughout Twitter’s multiple platforms: ? Source: Company Site, Wedbush Securities · Home: The main tab remains mostly unchanged, with a redesigned follow button, some formatting changes to how tweets are displayed, and the ability to see replies to a tweet when clicked on. Rather than a dual pane interface, tweets that include media will expand in the stream, increasing engagement and reducing friction. · Connect: Segmented into “interactions”, which shows a user what others on the platform have done in relation to their own tweets (new followers, retweets, favorited tweets and additions to lists), while the second “mentions” segment shows instances where a user’s Twitter handle has been mentioned in a tweet. · Discover: Presents relevant stories (tweets around a topic that may interests a user based on location, popularity, and connections) in an interface that includes a picture and headline text, trending topics (designated by a #hashtag), a list of suggested accounts to follow based on user habits and previous follows, and a list of friends that are not being followed based on imported contacts. A Categories segment shows which accounts are prolific for particular topics (eg. @jimcramer and @FinancialTimes under business), in addition to a dedicated stream of relevant tweets under each category which can be accessed even if the tweets contributor has not been followed. · Me: Provides access to a user’s: Direct Messages, history of tweets and retweets, who is following them, who they are following, lists that are maintained, saved searches, and other account settings. Reviews of the app by power users express frustration over friction when switching between accounts and the additional step required when accessing Direct Messages. The overall reaction to the upgrade has generally been positive, however, as most users are pleased with the increased speed, ease of navigation and content discoverability. Throughout our coverage universe, we continue to see a common theme revolving around manipulating and reformatting content into more relevant and targeted streams. Twitter realizes the need to evolve the product beyond a simple RSS feed, and remains cognizant that the volume of data generated on its platform can overwhelm even its most experienced users. 3 | P a g e WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` Brands on Twitter In addition to an enhancing user experience, Twitter has expanded its offering for Brands. Earlier this year, the company disclosed that 20 – 40% of users follow a brand, and one of the first ten follows by a new user is a brand. Marketers will soon be able to customize their brand’s account profile with visuals (e.g., logo and tagline) that are prominently displayed on the top of the page in larger font sizes. Other new features include the ability to promote tweets that are deemed most engaging to followers, directly to the top of a profile page. The tweet that is promoted displays any photo or video that it is linked to directly in the stream. The company will be rolling out the new brands feature together with the upgraded website and will be making the tool available to all brands for free. Source: AllTwitter Brands can now embed tweets on their websites by inserting a simple line of code, allowing visitors to engage with the brand’s account directly from their website by clicking the Reply, Retweet and Favorite buttons. Source: AllTwitter Facebook rolled out a Subscribe Button for websites, which is similar in nature to a feature that Twitter added earlier this year, allowing users to follow a brand directly from a brands site. By pressing Subscribe on a brands website, a user will begin receiving public updates from that brand directly in their newsfeed. The new button will also notify friends upon subscription, potentially instigating a chain of subscriptions due to a single user. 4 | P a g e WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` Advertisers on Twitter The company announced an early 2012 rollout of a self serve ad product that would give advertisers’ access to Twitter ads on an automated platform; eliminating the need to for a sales rep. Twitter has been testing the product with a small number of partners according to reports by All Things Digital, and access to ad products has been limited to Promoted Accounts and Promoted Tweets. The platform would provide access to SMBs who cannot afford the $100,000 or more price tag on Promoted Trends, and are often purchasing quantities in smaller denominations than what the sales force offers.