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Welcome to the inaugural Thayer Spotlight Series Newsletter of 2016. Our goal is to not only provide you with a behind-the-scenes look at the progress our companies are making, and how Thayer's investments are building value, but to also shed light on the segments of the hospitality and travel spaces in which they operate.

We begin the year with a look at ADARA, one of Thayer's earliest investments and a company poised for exceptional growth through 2017. We hope you'll find the information here valuable and look forward to your continued interest and engagement!
In This Issue: Spotlight on ADARA

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ADARA partners with global travel companies and transforms their loyalty, search and booking data into actionable marketing knowledge that allows clients, including brand marketers and travel suppliers, to better understand, reach and engage customers through advertising. The ADARA platform is fueled by first party data from more than ninety global travel brands, including United, Delta, Hyatt, Marriott and Hertz. The platform not only aggregates customer data from the travel brands but also connects the data to eliminate issues with fragmentation and incompleteness. This rich and expanding traveler profile dataset, which now covers more than 350 million monthly uniques, nine billion annual searches and 500 million annual transactions, gives travel suppliers and other marketers the ability to develop and deploy pinpoint targeted digital campaigns across multiple channels that are relevant and timely. ADARA analytics also gives travel companies the ability to gain instant access to forward-looking booking and search activity in order to produce greater customer insight, more effective decision-making capability and enhanced revenue optimization strategies. Adara charges premium fees for its products and services and shares revenue with its travel brand partners. 

A 2012 addition to the Thayer portfolio and led by veteran technology CEO Layton Han, Adara has raised $67 million across five rounds including investment from August Capital, QuestMark, ONSET and World Innovation Lab (WiL), a Japanese venture fund with capital from Japanese corporations such as ANA, Sony, NTT Group, JVC Kenwood, Nissan, Daiwa Securities, Mizuho Bank, Seven Bank and others. ADARA will finish this year with a gross revenue run-rate of just under $100 million and expects to achieve gross revenues in excess of $200 million in 2017, its projected exit year. Thayer's investments, through its first fund, were made at a blended basis of less than $70 million presenting an opportunity for a 7 to 12 x's ROI by 2018. 
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The Pain Point

Effective marketing is exceedingly complicated, especially digital marketing where today's multi-screen consumer utilizes many digital identifiers including email accounts, device IDs, cookie IDs, IP addresses, and social handles. To make matters even more complicated, many of these identifiers remain disparate and decoupled, making it very challenging to deploy a consistent and coordinated multi-channel effort. While many sophisticated marketing departments score high on collecting raw customer data, usefulness to predict customer activity through analytics has been limited by data fragmentation and incompleteness. At the same time, data is the primary driver of global digital and mobile marketing growth, which expects to exceed more than $250 billion by 2017. 

Retail and financial services data have historically been the source for insights on segmentation and purchase behavior. Many digital marketing and analytics companies have leveraged these data sources to build useful tools for digital marketing and advertising. In 2009, ADARA realized that travel data was quickly becoming a superior source for insights given the number of features that are not found in other verticals including the velocity of complementary purchases, e.g., buy air-need hotel, predictive and repeated patterns, global scale (60% of travel purchased online in Europe alone) and spend. To illustrate the point, recent ADARA research found that three in four business travelers do more than half of their shopping online and are 3.5 x's more likely to have spent more than $1,000 online in the past six months, as compared to non-travelers.  

ADARA predicted that although travel suppliers understood the value of their data, they also struggled with the tools and techniques to mine actionable insights for their business and to monetize the data in controlled ways. ADARA posited that travel suppliers might be willing to partner in the monetization of their data if its use and exposure were controlled and if the partnership would enable opportunities to augment their data thereby enabling better knowledge of the customers. ADARA further envisioned unlocking traveler profile data from across the global travel spectrum to create network effects that would accrue benefits to travel suppliers. As a result of this strategy, Delta Airlines, United Airlines and Marriott Hotels entered into partnership with ADARA in 2011 starting a gradual turning of the proverbial flywheel. Today, ADARA's partners include more than 20 global airlines, 10 of the world's largest hotel chains, the top GDS's, many OTA's and other major travel brands and the network effect (driven by data sharing that enables partners to augment their customer profiles) is beginning to emerge.
 

The resulting global data set, some 300 million global traveler profiles driving 350 million monthly uniques, is a goldmine for companies interested in digital marketing. The relative wealth of travel buyers, combined with their preference for online purchasing, is now enabling travel data to emerge as the new gold standard in predictive marketing for many top marketers. For example, high-end luxury retailers can use travel data to pinpoint individuals flying first class as can a wireless operator marketing local data and voice plans before travelers go abroad. The richness of the data provides greater insights into consumers for marketers-helping them to deliver targeted messages to specific, high-value audiences. For the travel suppliers, the targeting benefits are equally as compelling and in many cases the most effective campaigns in their digital marketing arsenal.
 
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ADARA Products

ADARA's core products are built on a technology platform they call Magellan. The Magellan platform's real-time loyalty, booking and search data provides global travel brands and independent operators with a range of tools to run digital campaigns. Magellan's self-service functionality, for example, offers an easy-to-use, intuitive advertising interface for agencies working with independent hoteliers. The platform also extends beyond the web to engage buyers on mobile phones, tablets, social media and video. With Magellan, marketers can reach targeted audiences with relevant, timely messages across devices, with accurate performance tracking and attribution.

In May of 2015, ADARA introduced its new Predictive Analytics product suite. CEO Layton Han announced the products by stating that, "Predictive Analytics in travel represents a huge global opportunity that is expected to expand exponentially over the next decade, potentially reaching $2.5 billion by 2022. With access to unique transactional data, ADARA is positioned to provide deeper insight into the complete consumer travel funnel. We continue to evolve our offerings that enable our partners to make smarter, more profitable business decisions, using the best data sets available. Our customers have told us that what they want is the ability to 'see around the corner' and build their businesses predictively. With these new products, they can."

Analytics not only represents a massive and high margin addressable market opportunity for ADARA but also helps to incorporate "data analytics and big data" into their offerings, which has been a favored category for investors, in addition to its original "ad tech" model, which has become a somewhat undervalued investment category. In addition, the insights gleaned by ADARA's Predictive Analytics boosts value to all marketplace participants, thereby, increasing the pace of network effect.

The ADARA Predictive Analytics products include the following: (1) Competitive Benchmarking - purchase path metrics that allow travel providers to measure their performance against competitors and defined industry standards, (2) Customer Value Benchmarking - a complete 360 view of the travel journey and profile that brings together disparate data in ways that have never been done before - providing holistic, share-of-wallet insights into all aspects of customers and their potential, and (3) Attribution Analysis - the ability to track and attribute actual purchases to the right marketing source.
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ADARA Data Partners

Finally, ADARA's Magellan platform would not work if it did not create real value for the travel suppliers that provide the data. In addition to seamless implementation that gives partners complete control over their data, ADARA never retains personally identifiable information about customers and always protects customer privacy. With exposure mitigated, ADARA generates significant new revenue stream for data partners, while also providing the ability to augment data with insights to create highly cost-effective marketing channel.  In fact, many of ADARA's largest and longest partners recycle most of their revenue share back into marketing/ advertising campaigns powered by the Magellan platform.  
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ADARA Today

ADARA has developed significant intellectual property assets and the task of aggregating and organizing billions of data points (across disparate and decoupled sources) into coherent profiles is no small part of the IP portfolio. The company has constructed a world-class team of 40 engineers and data scientists and spent years building the infrastructure and components that drive Magellan. Today the ADARA team manages a platform that consumes 12 billion behavioral events and 240 million travel transactions daily and a historical transaction database that is currently greater than 170 billion discrete events. A global company with more than 170 employees and sales offices in San Francisco, Chicago, New York, Dublin, London, Barcelona, Dubai, Singapore and (soon) Tokyo, ADARA is an example of a maturing Thayer portfolio company trending to generate handsome returns for our investors. With forward looking 2017 gross revenues forecasted near $200 million and a global data business at the early stages of penetration in Japan and China, ADARA will enjoy many exit options, including an IPO. Thayer Ventures enjoyed early access to ADARA; investing in the Company's Series A offering and with reserves utilized for investment in its Series B. 

Layton and the team at ADARA are encouraged by the opportunities emerging in their business. With exclusive agreements in place with several of  their largest partners and the only truly global travel centric dataset, ADARA is well positioned to dominate the winner-take-most dynamics emerging in travel data products. As network effect accelerates and the value of ADARA's dataset, along with the insights derived from it, increases for both data partners and marketers, it is hard to imagine a more protected competitive advantage. The global digital marketing tide is rising and ADARA's moat is deep and wide indeed. We look forward to watching this company reap the fertile fields it has sown.
 Phone: 415.782.1414  I  Email:  laura@thayerventures.com 
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