System1 Group Plc · LSE:SYS1
System1 — Investor Day (April 2022)
47 slides from System1's investor day presentation, Apr 27, 2022
Slide 1: Capital Markets Day
Capital Markets Day The World’s Marketing Decision-making Platform
Slide 2: John Kearon, Chief Executive Officer
John Kearon Chief Executive Officer As CEO, JK has steered System1 from a start-up in 2000 to where it is today, shaking up traditional market research with fresh innovative thinking and game-changing methods. Before System1, JK founded an innovation agency, Brand Genetics, after being Planning Dire
Slide 3: The Case for
The Case for Assertion Thesis World-beating prediction / improvement methodologies Unique, step-change improvement in product value for customers Innovation and investment to maintain this product lead Prediction and Improvement market dynamics are very favourable Defensible through IP, Branding, Cu
Slide 4: The Case for
The Case for Assertion Thesis World-beating prediction / improvement methodologies Unique, step-change improvement in product value for customers Innovation and investment to maintain this product lead Prediction and Improvement market dynamics are very favourable Defensible through IP, Branding, Cu
Slide 5: Slide 5
Slide 6: Fame Fluency
Fame Fluency If a brand comes If lrecognise readily to mind, a brand quickly, it’s a good choice. it’s a good choice. If | feel good about a brand, it’s a good choice. REFLECTS CUS 4 ue CHARGE REMIUM ase aN 4
Slide 7: Predicting share gain from emotional response
Predicting share gain from emotional response. 1.70 8 -- 8 -- 8 -- 8 - 8 -- Share of Voice Amplifier 20 - 30 ++ 10 + See Lemon, by Orlando Wood, IPA 2019, for further details
Slide 8: ESOV and the emotional multiplier explain market share growth
ESOV and the emotional multiplier explain market share growth. Quantity of advertising Quantity and quality of advertising (TV ESOV) (TV ESOV x Star rating) Annual value market-share predictions for the UK Cereal category. Graph above left shows ability of basic ESOV to SOM gain model to predict act
Slide 9: System1: Don't guess. Test.
System Don’t guess. Test. venoy Associated with Greater Attention Music with dis2éinible melody @ Something out ofthe ordinary @ One scene unfolding with progtession @ Aclear sense.of place @ e Voiceover @ Sblit-screen effect Abstracted product © Audio repetition e Words obtruding Freeze-frame effec
Slide 10: Attention & Recall is dramatically increased with right-brained advertising
Attention & Recall is dramatically increased with right-brained advertising Spontaneous Brand Recall (%) 24 26 28 41 28 38 238 Minutes of attention per 1000 valuable 138 impressions 87 80 72 38 Facebook Twitter YouTube Research commissioned by System1 and conducted by Lumen. Ads tested in-feed on Fa
Slide 11: Right-brain campaigns more likely to drive broad/lasting effects
Right-brain campaigns more likely to drive broad/lasting effects Average number of very large business effects Video campaigns ordered on skew towards number of right brain features How right-brain campaigns drive very large business effects Base: 43 IPA campaigns (137 ads) 2016-2020 See Look out, b
Slide 12: Innovation & investment to maintain this product lead
Innovation & investment to maintain this product lead Product Platform Database Innovation Fully automated Now 78,000 ads TYA Profit Projector June 2021 UK 95% by December 21 TYA Pro Reports Fully automated TYB Pro Reports Now c.6000 brands November 2021 TYB Predictions Q2 22 Fully automated Now c.5
Slide 13: James Gregory, Chief Operating Officer
James Gregory Chief Operating Officer As COO, James sets and delivers our operational strategy. He leads our transformation to a platform business, translating complexity into clear customer-focused solutions. He brings 15 years of leadership experience in strategy, operations, and change management
Slide 14: The Case for
The Case for Assertion Thesis World-beating prediction / improvement methodologies Unique, step-change improvement in product value for customers Innovation and investment to maintain this product lead Prediction and Improvement market dynamics are very favourable Defensible through IP, Branding, Cu
Slide 15: Building high quality customer experience into our self-service platform
Building high quality customer experience into our self-service platform …
Slide 16: …underpinned by world-class Creative Guidance
…underpinned by world-class Creative Guidance
Slide 17: We have the largest database of Ads in the UK and US
We have the largest database of Ads in the UK and US Tested within 24 hours of airing Test Your Ad Premium Database 80000 70000 60000 50000 40000 30000 20000 10000 0 FY18 FY19 FY20 FY21 FY22 UK Ads US Ads
Slide 18: 2000-2020 Highly bespoke market research operating model
2000-2020 | Highly bespoke market research operating model Very manual, adding time, cost and complexity Traditional Manual Bespoke Market Research Operating Model Project Management Set up Programming Panel Data processing Reports Creative respondents Guidance Forward translation Back translation K
Slide 19: 2021-2022 Highly automated 'Test Your…' Platform operating model
2021-2022 | Highly automated ‘Test Your…’ Platform operating model Better, Faster, Cheaper, and Hugely Scalable Market Leading Automated ‘Test Your…’ Platform Operating Model Project Management Set up Programming Panel Data processing Reports Creative respondents Guidance Forward translation Back tr
Slide 20: The research market is facing challenges
The research market is facing challenges Respondent supply vs demand Market Context Consolidation of sample providers Challenges to respondent quality
Slide 21: However, our surveys are appealing to respondents
However, our surveys are appealing to respondents Short LOI 5m:04s Survey Appeal High IR 77% Respondent engagement 87%
Slide 22: Win-win partnership with a sample supplier
…additionally, we can create a win-win Partnership with a sample supplier For supplier High, consistent test volumes Highly appealing and engaging content Partnership with For System1 a sample supplier Priority access to sample supply Higher sample quality Beneficial financials
Slide 23: Jon Evans, Chief Growth Officer
Jon Evans Chief Growth Officer As CGO, Jon is accountable for our product proposition, marketing and sales, reaching for the Stars and catching them. An experienced commercial leader with a track record of delivering substantial brand growth. He brings a lot of experience on the client-side creating
Slide 24: The Case for
The Case for Assertion Thesis World-beating prediction / improvement methodologies Unique, step-change improvement in product value for customers Innovation and investment to maintain this product lead Prediction and Improvement market dynamics are very favourable Defensible through IP, Branding, Cu
Slide 25: Advertising
$43bn $1000bn $1700bn 10% Idea testing $4.4bn 48% 1 Star ads = zero ROI $4.4bn 4% Ad pre-tests $1.6bn 0.16% Ad prediction spend $1.6bn 10% Brand track $4.4bn $480bn wasted investment $4.4bn 100% 3-5 Star ads = +ROI 10x Ad predict = 1/6% $16bn $.0bn Waste + profitable growth Market Research Future re
Slide 26: Target CMO's and partner with creative and media agencies
Target CMO’s and partner with creative and media agencies Owner & CEO Media Deliver long term Reach as many people profitable growth with the right creative CMO Ad Agency Finance Create 5 Star advertising Predict & measure the for my brand value of ad investment Insight Provide the means to better u
Slide 27: Half the money I spend on advertising is wasted
“Half the money I spend on advertising is wasted; …the trouble is, I don’t know which half.” John Wanamaker US department store merchant 1838 - 1922
Slide 28: Why System1 is set for success
Why System1 is set for success 1 2 3 4 5 We understand We predict We improve We deliver data We employ the & promote your your faster best, so your effectiveness effectiveness effectiveness & more effectiveness is better than anyone better than better than effectively than better than anyone anyone
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Slide 30: New commercial organisation is set up to achieve rapid growth
New commercial organisation is set up to achieve rapid growth Chief Growth Officer Jon Evans SVP New General Director of New General General Chief of Staff & Marketing Business & VP Customer Manager Business & Manager Manager UK, Sales Director Global Partnerships Development Linkedin Partnerships A
Slide 31: We have built a £10m data business in 2 years
We have built a £10m data business in 2 years with the majority of that being created in the past 12 months Data Revenue £ Million 5.3 4.5 1.4 0.1 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 32: The success of Test Your Ad sets us up for Test Your Idea & Test Your Brand
The success of Test Your Ad sets us up nicely for Test Your Idea & Test Your Brand Revenue by Product £ million 6.0 TYA TYB TYI 5.0 4.0 3.0 2.0 1.0 0.0 FY21 H2 FY22 H1 FY22 H2
Slide 33: The majority of data sales are now coming from new customers
The majority of data sales are now coming from new customers No.1 UK Advertiser, No.1 UK Broadcaster, World’s No.1 B2B platform, World’s No.1 laptop manufacturer, World’s No.2 sportswear brand Source of Revenue £ million 6 Pre-existing New since Apr-20 5 4 3 2 1 0 FY21 H2 FY22 H1 FY22 H2
Slide 34: Most new business through partnerships with agencies and media platforms
The most significant source of new business has been through partnerships with advertising agencies and media platforms Test Your Ad Partnership Revenue £ Million 2.4 1.5 0.8 0.3 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 35: As we grow partnerships data sales, consultancy will follow
As we grow partnerships data sales (prediction) consultancy will follow (improvement) Test Your Ad Data vs Consultancy Revenue £ million 2.5 Data Consultancy 2 1.5 1 0.5 0 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 36: Our Top 5 Test Your Ad customers all subscribe to the Premium database
Our Top 5 Test Your Ad customers all subscribe to the Premium database Test Your Ad Premium Subscription Revenue £ million 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 FY21 H1 FY21 H2 FY22 H1 FY22 H2
Slide 37: Your Cousin from Boston
YOUR COUSIN FROM BOSTON
Slide 38: The winning Superbowl Ad of 2022 was tested with System1
The winning Superbowl Ad of 2022 was tested with System1
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Slide 40: The winning Christmas Ad of 2021 was tested with System1
The winning Christmas Ad of 2021 was tested with System1
Slide 41: Chris Willford, Chief Financial Officer
Chris Willford Chief Financial Officer As CFO, Chris is our laser-sharp gatekeeper of the money, helping the Executive Team ensure the right amount of money is spent on the right things and looking after stakeholders. Chris built his career with blue-chip consumer businesses: Unilever, British Airwa
Slide 42: The Case for
The Case for Assertion Thesis World-beating prediction / improvement methodologies Unique, step-change improvement in product value for customers Innovation and investment to maintain this product lead Prediction and Improvement market dynamics are very favourable Defensible through IP, Branding, Cu
Slide 43: Growth in expenditure in FY22 due to focused investment in platform strategy
Growth in expenditure in FY22 due to focused investment in platform strategy
Slide 44: We intend to maintain our investment in the platform
We intend to maintain our investment in the platform… and have the resources to do this Net cash up £2.2m YoY after £0.6m buyback Shareholders Equity £m 12 8 7 10 6 8 5 6 4 3 4 2 2 1 0 0 YE 21 INT 22 YE 22 FY20 FY21 FY22 unaudited Cash net of borrowing Borrowing
Slide 45: Defensible through IP, Branding, Customer & Supplier relationships
Defensible through IP, Branding, Customer & Supplier relationships Star, Spike, Fluency Predictions Test Your Automated Prediction Fame, Feeling, Fluency FaceTrace® Trademarks Mark Territory Mark Territory “System1” UK and EU “System1 Group” UK, EU, USA etc “System1 Research” UK, EU, USA etc “FaceTr
Slide 46: Summary
Summary Data platform strategy is on track Prioritising growth while protecting profitability Maintaining expenditure on people, platform and partnerships Which means back-weighted profit delivery in FY23 Building and defending our IP robustly Strong capital and cash position
Slide 47: Thank you. Questions & Answers
Thank you. Questions & Answers