At Cuíca Corporation, our vision is to revolutionize how products are promoted on the Internet. From the beginning, our primary goal has been to transform the process of buying and selling online advertising into a highly efficient and effective channel, which produces significant, return-on-investment (ROI) for e-commerce companies. Cuica wants to be the leader in online advertising promotion and we have created an end-to-end solution for e-commerce and promotion that addresses the shortcomings of today’s resource-intensive advertising infrastructure.
To that end, Cuíca has developed an open
marketplace, which we call the CuícaExchange that brings together buyers and
sellers of online advertising space – anyone, at anytime, from anywhere in the
world. CuícaExchange automates the current ad buying process and
optimizes the delivery, tracking and reporting of advertising promotions for
Traffic sites and Merchants. Cuíca’s premise is a consumer-centric one; we want
to serve advertising promotions, product or service specific, which are
delivered in-context to a relevant and qualified audience thereby increasing
the propensity for purchase. We
bring more revenues to Traffic sites while increasing the ROI of Merchants
promoting goods and services online.
Cuica is targeting large Traffic sites and Merchants in
high-traffic categories, such as ‘Sports’ and ‘Technology,’ initially and will
roll out the system to a broader range of categories shortly thereafter.
Cuíca has signed up leading Traffic sites and Merchants in
the ‘Sports’ category for our Beta Release Version 1.0, including:
Traffic
Sites |
Merchants |
IWon |
Fogdog |
Google |
PlanetOutdoors |
Asimba |
Gear |
Backflip |
Sports
Authority |
We are currently serving in-context product promotions from
two popular sports merchant sites to a top portal site and have demonstrated
exceptional results. We have met all
development deliverables on schedule and anticipate similar outcomes with
upcoming product milestones and release dates. We expect to release our first
live product, CuícaExchange Version 1.0, in Fall 2000.
Late last year, our significant experience in the online
advertising space made us realize there was a huge opportunity to reshape the
way that ads and promotions were being done on the Internet. The market as a whole is very large, with
U.S. online ad spending equaling $5.4 B in 1999 and expected to grow 20%
annually to $22 B by 2004.
US Online
Advertising market (by Forrester) |
|
|
§ $5.4 B in 1999 - 30 % Performance- based 339 Billion ads served 102 Billion ads performance-based § $22 B by 2004 - 50 % Performance- based 3,400 Billion ads served 2,818 Billion ads performance-based § There are no effective methods for measuring an ad’s performance. "Performance-based" means paying per sale. § Today, the average CPM rate is $35; average effective rate is $7.00 – Traffic sites are only 20 % sold. §
The average CPM is expected to go down to $23 by
2003, reducing the effective CPM rate to $5.75 – Traffic sites will be ~25%
sold. |
Top Internet portals, including Yahoo, MSN, and AOL, control over 50% of the online advertising market, primarily in the form of sponsorships and banner advertisements. DoubleClick, an ad infrastructure company, is the largest non-portal generator of online ad revenues but only commands 4% market share. Online ad spending by e-commerce companies is expected to continue to rise over the next 5 years; with no clear leader in the infrastructure space, we are confident that the marketplace is ripe for the Cuíca solution.
Today, banner advertising and sponsorships, with precipitously declining click-through rates of 0.4% and 0.1% respectively, are the main methods for advertising and promoting online. While banner advertising is the most widely used advertising technique, constituting 53% of all online ad spending, it is also the most ineffective (eAdvertising Report, 6/00). Furthermore, banner advertising lacks basic traction and campaign functions, including:
· Tracking an ad to a sale, using accurate and trusted methods
· Easily updating an ad to reflect the Merchant's latest promotion
· Placing an ad next to relevant content (i.e. place a Merchant’s offer for Tae Boxing Book next to a Washington Post article Kick Boxing).
As a result, only 6% of online
Merchants are satisfied with the banner’s ability to generate sales. More significant issues exist with today’s
advertising environment, including:
Companies in related areas, such as ad serving, have been acquired recently for $700+ M (AdForce and Flycast). Cuíca provides the infrastructure but also becomes the market maker of revenue share deals.
The competition, at this point, is highly fragmented with proprietary marketing solutions.
· While Ad Serving companies can serve up of banners that can be used for serving up promotions, they do not have the in-context placement or accurate tracking components.
· Affiliate tracking companies, such as LinkShare and BeFree, have tracking systems but no in-context promotion placement.
· ImpulseBuy (purchased by Inktomi) is a promotion/merchandising company that cannot match a Merchant's product/service with the specific content of Traffic Sites. Inktomi is currently focusing more on the Shopping engine and less on the merchandising segment of their system.
Cuíca will derive significant revenues from two primary sources:
· Per impression pricing of $0.50 CPM
Cuíca revenues are based on capturing 1 % of the U.S. online advertising market in 2001, growing to 5 % of that market in 2005. Our revenues will be:
|
2001 |
2002 |
2003 |
2004 |
2005 |
Promotions (in Billions) |
16 |
72 |
170 |
340 |
573 |
Gross Revenues (in Millions) |
$ 46 |
$ 154 |
$ 310 |
$ 573 |
$ 1,085 |
Net Revenues (in Millions) |
$ 12 |
$ 40 |
$ 81 |
$ 149 |
$ 283 |
Cuíca
5 Year Revenue Projections |
l Within the US online ad market, Cuíca market share estimates: 1 % in 2001 = 16 Billion promotions 5 % in 2005 = 704 Billion promotions ·
Net
Revenues: 23% Average Commission charged ·
Service
costs: These are related to the number of
promotions – using AdForce and DoubleClick current numbers. Expenses: Good portions of these are sales, marketing and customer support related. Again using AdForce and DoubleClick. |
Since Cuíca success depends on attracting both Traffic Sites and Merchants alike, the company plans to utilize existing market data to focus the sales efforts on the most lucrative segments of each group. Cuíca will pursue a strategy of first acquiring Merchant subscribers and then solicit its benefits, including the list of Merchant members, to Traffic Sites. With a Cuíca sales executive driving direct sales to Merchant sites combined with a focused, experienced telemarketing team, the company will first sign up 100 Merchants in the top categories and then signup 50 Traffic Sites in 2000.
Using a direct sales force integrated w/ a telemarketing team the company forecasts the following customer volumes:
|
2001 |
2002 |
2003 |
2004 |
Traffic Sites using Cuíca |
135 |
1,080 |
1,542 |
1,856 |
Merchant Sites Cuíca |
300 |
1,871 |
3,022 |
3,890 |
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While major portals continue to draw the most attention in the media, it is becoming increasingly clear that the partnerships with portals are not proving to have a high enough impact on Merchants' sales. In a recent Jupiter study, less than 5% of respondents said that they were likely to renew existing portal relationships upon expiration. More than a third of respondents, in turn, said that they were unlikely to renew the partnership.
CuícaExchange will revolutionize the way buyers and sellers
of online advertising space interact.
We bring more revenues to Traffic sites while increasing the ROI of
Merchants promoting goods and services online.
With the CuícaExchange, we will create a marketplace where:
A major advantage for Cuíca is our ability to target promotions to specific content and categories, what we refer to as ‘NanoTargeting.’ We believe that NanoTargeting will lead to higher consumer purchases because we are hitting the consumer with a product/service at the key point of interest, thereby increasing the propensity for purchase. NanoTargeting means we will target promotions with the same accuracy and relevance as Yahoo offers search results.
The relationship management system creates instant relationships between Merchants and Traffic Sites, providing automatic communication and notification regarding the most current promotions available. CuícaExchange can also be used to manage existing relationships between Merchants and Traffic Sites.
Cuíca’s service is easy to implement and does not require any hardware or software modifications. The company uses standard centralized ad-serving tags, used by thousands of web sites, and our proprietary algorithms deliver and track the right promotion to the right content across the Internet.
This is based upon centralized ad serving systems but adds a unique promotional taxonomy (e.g., Sports > Aerobic > Martial Arts > Tae Boxing) needed for targeted promotions/merchandising and not found in existing ad serving systems. This "in-context" approach is completely new and can be contrasted with the limited nature of key word targeting. Before Cuíca, the following page was highly unlikely to serve as an effective promotional forum – note the unused page real estate. Cuíca focuses not on the Banner Ad space but rather on the Sponsorship and adjoining areas.
With Cuíca, a focused Amazon call-to-action promo can be placed directly within the context of a related article/review. The system delivers the product offer on all the Washington Post pages tagged with the Cuíca tags and meeting the Sports > Aerobic > Martial Arts > Tae Boxing category.
Using this approach, Cuíca expects to increase Traffic sites' sold ad space by 25 % on pages where there is a Cuíca promotion because click-through rates will improve 100% over current sponsorship rates and revenue share deals will be based on accurately tracked sales at the Merchant site.
Cuíca also enables co-branding and co-promotion as illustrated by this example from the Merchant site.
Cuíca can serve both Traffic sites and Merchants pursuing
all types of online advertising vehicles – from banner ads, to sponsorships, to
affiliate programs, email and, most importantly, the future of online
advertising, promotional offers. While there are players in the delivery, monitoring/tracking and reporting of online
product promotions, Cuíca covers the needs throughout the online advertising
spectrum and our approach is more accurate and effective.
|
Cuíca |
AdForce/ DoubleClick |
ImpulseBuy |
BeFree/ LinkShare |
Open Exchange |
X |
|
|
X |
NanoTargeting |
X |
|
|
|
Dynamic Ad Serving |
X |
X |
|
|
Promotion Creation |
X |
|
|
|
Real-Time Tracking |
X |
X |
|
|
Promotions |
|
|
|
|
Banner Ads |
X |
X |
|
X |
Sponsorships |
X |
X |
|
|
Affiliates |
X |
|
|
X |
Dynamic Offers |
X |
|
|
|
Blow Out Inventory |
X |
|
X |
|
Since the promotional/merchandising arena is untapped, Cuíca will have first mover advantage in this growing segment. Thus, we believe that the Cuíca space will be remarkably free of any direct competition for the next 12-14 months. At that time, the online merchandising/promotion arena will be a coveted one and our valuation will increase significantly.
CEO & Founder - Eduardo F. Llach
· Previously Director of Product Marketing at AdForce
· Experience in e-Commerce w/ Netscape, Infoseek and Inktomi
· Managed $20 MM in revenues for Netscape working w/ Yahoo, Concentric & NewsEdge
· Defined Infoseek Store - Defined Inktomi shopping engine strategy - Proposed C2B acquisition
· Successfully launched, financed, grew and sold Acuris - 3D Models & Software company
· Grew over 100% in last two years. Number 2 in the market
· Led Engineering and Product Marketing teams in both Software and Internet ventures
VP, Engineering - Mario Chaves
· More than 17 years development experience w/ Intuit, Software Publishing and Babcock & Brown.
Acting CFO – Carole Hayworth
We
currently have 20 people working full-time on the project, including 12 people
in engineering, 4 in QA and the remainder in sales, marketing and
administration. Our seasoned team of Directors bring
valuable experience from key positions at well-known companies such as AdForce,
Intuit, The Learning Company, Applied Materials, and Pacific Data Images.
·
David
Kandasamy AOL/Netscape
·
Alex
Edelstein Inktomi, Netscape
·
DC
Cullinane Inktomi, Impulse
Buy
·
Brian
Totty Inktomi
·
Randy
Korba Amazon
·
Jim
Peek Sun Microsystems
·
Chris
Redlitz AdAuction
(Advisor)
·
Rick
Servaitis FOX TV
·
Dan
Searby MacLeod
Invest.,Proctor & Gamble
·
Peter Cross Bay
Networks
Cuíca secured $1 million in Angel financing ($4 M valuation) in March of this year Angel investors and advisors included prominent persons from Inktomi, Netscape, Sun, AdAuction, AdForce, FoxTV, Amazon, Proctor & Gamble and Nortel Networks. Beginning in June, we began discussions to raise Series B investment funding. Five venture capital firms have expressed interest in investing in Cuíca for the Series B round, which includes Doll Capital, W.R. Hambrecht, Bill Draper, Forte Capital, and one European firm. Two of these firms are currently conducting their due diligence.
We are looking for $5 - 6 million in venture financing which will cover operating expenses for the next 12 months. Assuming a reasonable growth curve, we are expecting to be cash positive by the spring of 2001. We are projecting gross revenues of $46 million ($12 million net revenue), with a net income of $3 million for our first 12 months of live operations of the service, with substantial growth projected for the following years.
·