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IAB Global Summit Discussion 
October 1, 2014
2 
I.Market Overview 
A.IPO and Public Markets 
B.M&A and VC Markets 
II.Selected Digital Media Trends 
III.Summary Thoughts 
Agenda
I. Market Overview
A. IPO and Public Markets
5 
(30%) 
(10%) 
10% 
30% 
50% 
Jan Feb Mar May Jun Jul Sep 
Bovespa 
(30%) 
(10%) 
10% 
30% 
50% 
Jan Feb Mar May Jun Jul Sep 
Nikkei 225 Hang Seng 
(30%) 
(10%) 
10% 
30% 
50% 
Jan Feb Mar May Jun Jul Sep 
FTSE 100 DAX 
(30%) 
(10%) 
10% 
30% 
50% 
Jan Feb Mar May Jun Jul Sep 
S&P 500 DJIA NASDAQ 
2014 YTD Global Market Performance 
Source: Capital IQ, as of September 25, 2014. 
0% 
U.S. Market Index Performance European Market Index Performance 
Latin American Asian Market Index Performance Market Index Performance 
+3% 
+5% 
+8% 
+8% 
+3% 
+12% 
+3%
6 
Market Value 2014 YTD Since 2008 
($ in billions) 
$392 7% 73% 
149 (19%) 250% 
39 (4%) 66% 
65 (4%) 58% 
201 41% NA 
219 32% NA 
(60%) 
(40%) 
(20%) 
0% 
20% 
40% 
60% 
80% 
100% 
U.S. Equity Market at a Glance 
Source: Capital IQ, as of September 25, 2014. 
U.S. Market Index Performance 
+30% Performance of Internet Bellwethers 
Strong Market Despite Some Skepticism 
• Anticipated correction yet to occur 
• Ukrainian and Israeli conflicts still 
unresolved; ISIS impact growing 
• 10-year Treasuries reaching lows 
2013 
+38% 
+27% 
2014 YTD 
+8% 
+8% 
+3%
7 
Digital Media Equity Market Performance 
Median Stock Price Performance of Digital Media Sectors 
• Performance has been very mixed: 82% of all Digital Media stocks  this year 
• 50% of all Digital Media IPOs  this year 
• AdTech has struggled 
Best Performing 
Internet Titans 
• +43% 
• +24% 
• +22% 
Best Performing 
Digital Marketing 
• +47% 
• 
• +31% 
Best Performing 
eCommerce 
• +95% 
• +50% 
• +46% 
Worst Performing 
Overall 
• -75% 
• -74% 
• -69% 
Median % Change 
2012 2013 2014YTD 
Digital Media +20.6% +59.7% (9.4%) 
Internet Titans +33.1% +87.4% (1.8%) 
Digital Marketing (31.2%) +29.3% (26.1%) 
eCommerce +23.4% +80.5% (5.6%) 
Market Indices 
S&P 500 +13.4% +29.6% +8.1% 
Dow Jones +7.3% +26.5% +2.9% 
Nasdaq +15.9% +38.3% +8.0%
8 
United States Latin America Europe Asia/Pacific Africa/Middle East 
$106.0 
$234.4 
$135.9 
$99.6 
$137.0 
$90.6 
2009 2010 2011 2012 2013 1H 2014 
Global IPO Volume 
($ billions) 
Source: Capital IQ; Renaissance Capital; Annual Global IPO Reviews. 
64% 
66% 
51% 
42% 
33% 
21% 
16% 25% 40% 38% 
6% 
12% 
19% 10% 
20% 
40% 
28% 
31% 
• Issuances are up in all geographies 
• The US IPO market has been particularly 
active
9 
0 
100 
200 
300 
400 
500 
$0 
$20 
$40 
$60 
$80 
$100 
$120 
Source: Renaissance Capital; Dealogic; EY Global IPO Trends, Factset. 
YTD as of September 25, 2014. 
U.S. and Global IPO Issuance and Deal Volume 
Global IPO Issuance 
IPO Deal Volume 
# of IPOs 
U.S. IPO Issuance 
# of IPOs 
IPO Deal Volume 
($ in billions) 
$ Volume # IPOs 
Alibaba 
0 
500 
1,000 
1,500 
2,000 
2,500 
$0 
$100 
$200 
$300 
$400
10 
Digital Media Sector IPO Performance 
($ in millions) Market Cap Price Performance 
Date Company Subsector IPO Size @ IPO Day 1 Since IPO 
2014 (12) 
Sep 18 Alibaba Group Holding Limited eCommerce $21,767 $167,620.4 38.1% 30.8% 
Jul 18 Globant S.A. Digital Agency 59 333.5 15.1% 29.7% 
Jul 17 TubeMogul, Inc. AdTech 44 200.8 64.3% 60.9% 
May 21 JD.com, Inc. Social 1,780 25,974.6 10.0% 39.8% 
May 19 TrueCar, Inc. eCommerce 70 639.3 5.6% 98.8% 
Mar 21 Borderfree, Inc. eCommerce 80 487.6 20.4% (17.3%) 
Apr 04 GrubHub Inc. eCommerce 193 1,934.0 33.8% 33.5% 
Mar 25 King Digital Entertainment plc Digital Content 500 7,086.0 (15.6%) (41.1%) 
Apr 02 The Rubicon Project, Inc. AdTech 102 520.7 32.3% (19.0%) 
Mar 06 Coupons.com Incorporated eCommerce 168 1,170.7 87.5% (22.2%) 
Mar 28 Everyday Health, Inc. Digital Content 100 415.5 (0.1%) (6.0%) 
Jan 24 Care.com, Inc. eCommerce 91 505.7 46.5% (51.9%) 
2014 Median 101 580.0 26.4% 11.9% 
2013 (11) 
Nov 14 zulily, Inc. eCommerce 253 2,685.4 63.7% 80.4% 
Nov 06 Twitter, Inc. Social 1,820 14,162.1 72.7% 97.9% 
Oct 29 Criteo SA Ad Tech 251 1,714.2 14.2% 12.2% 
Sep 19 Rocket Fuel Inc. Ad Tech 116 942.3 93.4% (47.2%) 
Aug 06 YuMe, Inc. Ad Tech 46 286.2 0.0% (45.0%) 
Jul 18 RetailMeNot, Inc. Retail 191 1,054.3 31.9% (20.7%) 
Jun 26 Tremor Video, Inc. Ad Tech 75 494.2 (15.0%) (74.3%) 
May 22 ChannelAdvisor eCommerce 81 286.6 31.7% 11.9% 
May 16 Marketo, Inc. Marketing Auto 79 465.2 77.7% 138.2% 
Mar 21 Marin Software Digital Marketing 105 432.8 16.1% (38.3%) 
Mar 04 Professional Diversity Social 21 29.1 (4.1%) (36.3%) 
2013 Median 105 494.2 31.7% (20.7%) 
Overall Median 102 520.7 31.7% (6.0%) 
Source: Capital IQ.
11 
15.0% 
21.0% 
26.2% 
27.3% 
29.7% 
32.1% 
33.1% 
35.8% 
42.1% 
44.2% 
48.3% 
(16.4%) 
10.8% 
17.2% 
21.0% 
23.0% 
24.2% 
76.1% 
QuinStreet, Inc. 
Bankrate, Inc. 
Constant Contact, Inc. 
ReachLocal, Inc. 
ChannelAdvisor 
Corporation 
ValueClick, Inc. 
Millennial Media Inc. 
…Digital Media Companies Going Public Today Have 
Higher Growth Profiles/Reasonable Valuations 
Public Comp Universe at End of 2012 
’12-’13 Revenue Growth 
2012 
Revenue 
Multiple 
2.5x 
2.5x 
13.8x 
0.6x 
2.8x 
4.1x 
1.0x 
Median: 22.0% 2.7x 24% 
NM 
35% 
NM 
NM 
21% 
28% 
6% 
EBITDA 
Margin 
Source: Capital IQ. 
2014 Digital Media IPOs 
’14-’15 Revenue Growth 
2014E 
Revenue 
Multiple 
1.7x 
1.2x 
3.5x 
5.9x 
19.5x 
3.5x 
2.8x 
10.8x 
2.1x 
2.2x 
2.3x 
1.6x 
Median: 32.1% 2.5x 20% 
EBITDA 
Margin 
NM 
NM 
NM 
8% 
54% 
14% 
NM 
32% 
7% 
20% 
20% 
39%
B. M&A and VC Markets
13 
0 
2,000 
4,000 
6,000 
8,000 
10,000 
12,000 
14,000 
16,000 
18,000 
20,000 
$0 
$500 
$1,000 
$1,500 
$2,000 
Source: Dealogic, Capital IQ. 
YTD as of September 25, 2014. 
U.S. and Global M&A Deal Volume 
Global M&A Deals 
Deal Volume 
# of Deals 
U.S. M&A Deals 
# of Deals 
Deal Volume 
($ in billions) 
$ Volume # Deals 
0 
10,000 
20,000 
30,000 
40,000 
50,000 
60,000 
$0 
$500 
$1,000 
$1,500 
$2,000 
$2,500 
$3,000
14 
Source: Capital IQ; Annual Global IPO Reviews. 
YTD as of September 25, 2014. 
Global M&A Deal Volume and VC Financings 
Global M&A Volume ($ billions) Global VC Financings ($ billions) 
33% 
23% 
37% 
31% 
23% 
35% 
29% 
22% 
39% 
32% 
21% 
39% 
26% 
23% 
45% 
36% 
29% 
29% 
24% 
37% 
27% 
13% 
61% 
18% 
22% 
38% 
29% 
16% 
35% 
37% 
$1,919 
$2,280 
$2,511 
$2,351 
$2,543 
$2,799 
$82.5 
$155.8 
$278.6 
$150.6 
$128.1 
$115.5 
United States Latin America and Caribbean Europe Asia/Pacific Africa/Middle East
15 
Source: Capital IQ, PwC National Venture Capital Association MoneyTree Report. 
YTD as of September 25, 2014. 
Annual M&A Deal Volume 
U.S. M&A and VC Markets 
($ in billions) 
Annual VC Financing Volume 
$711 
$800 
$982 
$908 
$1,150 
$1,263 
0 
2,000 
4,000 
6,000 
8,000 
10,000 
12,000 
14,000 
16,000 
18,000 
20,000 
$0 
$200 
$400 
$600 
$800 
$1,000 
$1,200 
$1,400 
# of Deals 
Deal Volume 
$ Volume # Deals 
$20 
$23 
$30 
$27 $28 
$23 
0 
500 
1,000 
1,500 
2,000 
2,500 
3,000 
3,500 
4,000 
4,500 
$0 
$5 
$10 
$15 
$20 
$25 
$30 
$35
16 
6.3% 
10.1% 11.2% 12.1% 
15.5% 15.0% 
0.0% 
5.0% 
10.0% 
15.0% 
20.0% 
25.0% 
30.0% 
35.0% 
2009 2010 2011 2012 20132014YTD 
24.9% 
22.6% 
26.1% 26.0% 
32.2% 
34.1% 
0.0% 
5.0% 
10.0% 
15.0% 
20.0% 
25.0% 
30.0% 
35.0% 
2009 2010 2011 2012 20132014YTD 
Sources: Thomson Reuters; Capital IQ. 
YTD as of September 25, 2014. 
Financial Sponsor M&A Activity 
U.S. Private Equity (% Total) Global Private Equity M&A (% Total) 
Top Global Private Equity Deals of 2014 (All U.S.) 
$4.2BN 
$4.2BN 
$3.6BN
17 
0 
100 
200 
300 
400 
500 
600 
$0 
$5 
$10 
$15 
$20 
$25 
$30 
2009 2010 2011 2012 2013 1H 
2014 
Sources: Thomson Reuters, Natural Venture Capital Association, July 2014. 
2014 Has Been a Good Year for U.S. Venture Backed Exits 
Total Disclosed M&A $ Value ($ billions) Total IPO $ Amount ($ billions) 
Deal Volume 
# of Deals 
($ in billions) 
$ Volume # Deals 
= 
0 
100 
200 
300 
400 
500 
600 
$0 
$5 
$10 
$15 
$20 
$25 
$30 
2009 2010 2011 2012 2013 1H 
2014
18 
Key Themes in the U.S. Digital Media M&A Market 
•AdTech Consolidation Continues…still too many companies 
•Enterprise Software Giants Continue to Build Out their Marketing Stack 
•A Few Traditional Strategics Get “Digital Courage” via M&A 
•Early M&A Deals in the “Internet of Things” 
•PE Firms Place $1 Billion+ Bets on Traditional Marketing Services Businesses
19 
Date Acquirer Size Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target 
Top U.S. Digital Media Deals – YTD 2014 
Feb. 2014 $19,500 NA NA 
Apr. 2014 3,305 19.0x NA 
Jun. 2014 2,600 13.1x 52.4x 
Sep. 2014 2,448 4.12x 12.4x 
Aug. 2014 1,827 30.9x 11.6x 
Sep. 2014 1,000 NA NA 
May 2014 1,000 32.3x NA 
Aug. 2014 970 NA 18x 
Sep. 2014 950 NA NA
20 
Internet “Titans” M&A in 2014 
Company 
# Deals in 2014 
Notable Deals 
12 
Mkt. Value ($bn) 
$40.7 
$369.2 
$37.6 
$138.6 
$69.0 
$3.4 
$181.5 
4 
3 
2 
Machine Translation Technology Division 
10 
28 
15
21 
Return of the Traditional Strategic Buyers 
May. 2014 
$1,000 
15.5x 
NA 
Mar. 2014 
950 
NA 
NA 
Sep. 2014 
950 
NA 
NA 
Jul. 2014 
422 
2.3x 
24.7x 
Mar. 2014 
360 
10.3x 
NA 
May. 2014 
310 
12.4x 
NA 
Jul. 2014 
281 
0.7x 
NA 
Apr. 2014 
205 
2.1x 
NA 
Aug. 2014 
160 
2.3x 
NA 
2014 
NA 
NA 
NA 
Date 
Acquirer 
Size 
Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target
22 
Key 2014 Digital Investment Themes 
•Niche eCommerce and Content Companies Still Getting Funded 
•Companies Doing Record-Breaking Late Stage Financings as Alternative to IPO 
•Ad Tech M&A Consolidation  Fewer Ad Tech Startups Doing Large Rounds 
•Data Analytics and Cloud Storage Continue to See Many New Entrants
23 
Notable 2014 Digital Private Financings 
Jun. 2014 
Mobile 
$1,400 
$18,400 
Aug. 2014 
Content 
500 
2,500 
Apr. 2014 
eCommerce 
475 
10,000 
Mar. 2014 
Mobile 
285 
1,100 
Mar. 2014 
Mobile 
250 
950 
May 2014 
Social 
200 
5,200 
May 2014 
Content 
160 
1,160 
Jan. 2014 
eCommerce 
157 
2,000 
Jun. 2014 
Content 
Not Disclosed 
150 
2,300 
Jul. 2014 
Content 
120 
1,000 
Jan. 2014 
eCommerce 
112 
912 
Mar. 2014 
Ad Tech 
100 
NA 
Sep. 2014 
Mobile 
100 
6,000 
Date 
Company 
Investors 
Size 
($ in Millions) 
Implied Valuation 
Sector
II. Digital Media Activity by Subsector
25 
Sector 
Ad Tech 
eCommerce 
Marketing Automation 
Internet of Things 
Mobile 
Traditional Advertising / Marketing Services
26 
Key Trends in Ad Tech 
•Recent IPOs have brought new life into the Ad Tech community 
‒Creating urgency to get scale 
‒Establishing clarity around value for high growth advertising stories 
•Noise level on Privacy/Cookie debate up; although still very exploratory in terms of going forward models 
•Programmatic ad buying is getting closer to being the “new norm” 
•Category leaders getting funding, but otherwise hard market for new capital 
•Convergence of marketing and advertising technologies not leading to considerable strategic activity yet
27 
Continuing Influence of RTB 
Sources: e-Marketer. 
Technology and transparency leading to greater buying efficiencies for advertisers 
U.S. Digital Display Ad Spend 
• Improved 
ROI 
• Growth of 
digital 
share of 
total ad 
spend 
23% 25% 27% 28% 29% 31% 
Digital % 
Overall Ad 
Spend:
28 
($ in Millions) 
Select Ad Tech M&A in 2014YTD 
Date Acquirer Size Revenue EBITDA 
Implied Enterprise Value to LTM 
Target 
Jul. 2014 $382 3.5x 21.0x 
Feb. 2014 408 6.5x NA 
Mar. 2014 360 10.3x NA 
May 2014 101 8.1x NA 
Apr. 2014 205 2.1x NA 
Aug. 2014 230 2.7x NA 
Jun. 2014 350 6.6x 44.0x 
May 2014 310 12.4x NA 
Jul. 2014 240 4.8x NA 
Sep. 2014 107 17.6x NA 
Oct. 2013 119 9.9x NA 
Jul. 2014 144 1.4x NA 
Jun. 2014 235 1.3x NA 
Jun. 2014 150 5.8x NA 
Mar. 2014 200 NA NA
29 
Sector 
Ad Tech 
eCommerce 
Marketing Automation 
Traditional Advertising / Marketing Services 
Internet of Things 
Mobile
30 
2012 2013 2014E 2015E 2016E 2017E 2018E 
Big Industry Growth Opportunity in eCommerce 
U.S. ($ Trillions) 
Source: eMarketer, April 2014; Goldman Sachs, “eCommerce Expected to Accelerate 
Globally in 2014”; Forrester Research , 2014 
■ eCommerce ■ Traditional Retail 
8% 11% 
$4.3 $4.5 
$4.7 
$4.9 $5.1 
$5.3 
$5.5 
7% 
Traditional 
Y/Y Growth (%) 
5.2 4.2 4.4 4.3 4.0 4.0 4.0 
eCommerce 
Y/Y Growth (%) 
16.0 15.9 16.1 15.6 14.8 13.7 12.6
31 
2012 2013 2014E 2015E 2016E 2017E 2018E 
Mobile Will Play an Increasingly Important Role 
U.S. ($ Billions) Global ($ Billions) 
■ Mobile Commerce ■ Desktop Commerce 
Source: Goldman Sachs, “eCommerce Expected to Accelerate Globally in 2014” 
14% 32% 11% 47% 
2012 2013 2014E 2015E 2016E 2017E 2018E 
24% 27% 
$545 
$638 
$752 
$882 
$1,024 
$1,179 
$1,346 
$179 
$208 
$241 
$279 
$320 
$364 
$410
32 
eCommerce M&A Dynamics 
•Early Days for eCommerce M&A 
•Complicated Because… 
−Logical Buyers = Traditional Retail, Trade at Low Multiples 
−Many eCommerce Companies Choose Growth Over Profits 
−Many Specialty Verticals Hit the “$100mm Wall” 
−Lots of VC/PE $$ Invested…Big EXIT Expectations 
•Role of Social eCommerce M&A – Not There Yet
33 
Select eCommerce M&A in 2014YTD 
Jul. 2014 $3,305 19.0x NA 
Feb. 2014 2,600 13.1x 43.3x 
Jul. 2014 970 NA NA 
Mar. 2014 422 2.3x 24.7x 
Jul. 2014 300 1.4x NA 
May 2014 281 0.7x NA 
Sep 2014 200 7.6x NA 
Apr. 2014 160 8.7x NA 
Aug. 2014 121 0.7x NA 
Oct. 2013 100 9.9x NA 
Sep. 2014 50 2.5x NA 
Jul. 2014 42 0.4x NA 
Date Acquirer Size(1) Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target
34 
Sector 
Ad Tech 
eCommerce 
Marketing Automation 
Traditional Advertising / Marketing Services 
Internet of Things 
Mobile
35 
Evolution of Marketing Software 
1995-2001 
2002-2007 
2009-2010 
2011-2014YTD 
Dotcom Bubble 
•Email and the Internet are in their introduction / growth stage, as mainstream adoption begins to occur. 
• Companies like Google, MSN, and Yahoo were launched in order to support the demand for email and internet content 
Dotcom Bubble Burst and the Emergence of Social 
•After the Dot.com bubble burst, there was a drought of funding for new internet businesses. 
• Shortly after, a new generation of companies were founded as people’s use of the internet evolved and became more integrated with their daily lives 
The Rise of the Devices 
•As social media consolidation occurs ad acquirers try to add critical capabilities to their own product suite 
Critical Mass in the Need for Data Automation 
& 
Do Not Call List 
Can-Spam Act 
Launched 
Key Acquisitions 
IPOs 
Launched 
Legislation 
Key Acquisitions
36 
Basics of Marketing Automation Lifecycle 
Lead Generation 
•Management 
•Scoring 
•Segmentation 
•Nurturing 
Measurement 
•Analytics 
•Tracking 
•Optimization 
Management 
•Campaigns 
•Monitoring 
•Surveys 
•Advertising 
•Personalization 
CALL 
MOBILE 
SEO 
EMAIL 
SOCIAL 
CRM
37 
Marketing is Becoming a Key Strategic Imperative 
CRM 
(Database) 
Marketing Automation 
Alignment 
Client  Sales 
Sales  Marketing 
CMO/CTO  CFO/CEO 
Key Objectives 
RPM 
(revenue performance management) 
•Identify, organize, and assign leads and prospects 
•Sophisticated conversion from lead to prospect 
•Integrated measurement across channels/touch points 
•Incorporate social channels (Campaign management vs. marketing tool management) 
•Cloud-based platform allows for rapid prototyping and ongoing development 
•Marketing viewed as revenue generator vs. cost center 
•Attribute marketing activities against financial performance 
•Plot most direct course through sales funnel to maximize marketing ROI
38 
Marketing Automation Ecosystem 
Site Optimization (4) 
Attribution (2) 
CRM (9) 
Email (8) 
Social Marketing (19) 
Mobile Marketing (8) 
Database Marketing (2) 
Web Analytics (3) 
Display/Search Retargeters (4) 
Demand Side Platform (4) 
Marketing Automation 
Predictive Analytics 
Personalization
39 
Marketing Automation Will Increasingly Be a Multi- Channel Story 
Email 
Social 
Mobile 
Web 
•Emerging marketing channel with highest growth in customer engagement 
•Considerable opportunities for growth and scale 
•Greatly increases conversion rates 
•Established channel, considerable optimization possibilities 
•Category has quickly scaled and developed comprehensive management capabilities 
•Many companies are centering digital “suite” capabilities around social capabilities 
•Email remains the most scalable and effective digital communication channel 
•Email providers leading innovation around the email channel
40 
Select Marketing Automation M&A in 2014YTD 
Apr. 2014 
$492 
2.6x 
NA 
Jul. 2014 
390 
NA 
NA 
Apr. 2014 
275 
3.4x 
NA 
Jul. 2014 
175 
4.4x 
NA 
Date 
Acquirer 
Size 
Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target
41 
Sector 
Ad Tech 
eCommerce 
Marketing Automation 
Internet of Things 
Mobile 
Traditional Advertising / Marketing Services
42 
142 
153 
147 
139 
10 
22 
43 
67 
1 
12 
40 
63 
2010 
2011 
2012 
2013 
Desktop/laptop 
Smartphone 
Tablet 
Mobile Timespend is Spread Broadly 
Average Timespend Per Day (minutes) 
Source: eMarketer, Jul. 2013. US Data 
Source: Experian Marketing Services. US Data 
0.0 
0.5 
1.0 
1.5 
2.0 
2.5 
3.0 
2009 
2010 
2011 
2012E 
2013E 
2014E 
2015E 
Desktops+Notebooks 
Smartphones+Tablets 
2013 Projected Inflection Point 
Mobile Usage > PC Usage 
(in billions) 
Note: Notebook PCs include Netbooks. Assumes the following lifecycles: Desktop PCs – 5 years: Notebook PCs – 4 years; Smartphones – 2 years; Tablets – 2.5 years. Source: Equity Research, 2012. Global data. 
Non-Talk Applications 
= 70% Of Timespend 
Global Installed Base 
Mobile = Most Important Broad Theme in 2014 
Text 
20% 
Browser 
14% 
Email 
9% 
Social 
16% 
Talk 
26% 
Games 8% 
Other 
7%
43 
Mobile Scalability is Increasing Dramatically 
Unprecedented Mobile Adoption Cycle 
Source: Digital Buzz Blog, Extreme Networks 
38 
13 
4 
3.5 
0.5 
50 
days 
35 
days 
Radio 
TV 
Internet 
Time It Took to Reach 50 Million Users (Years)
44 
Mobile Starting to Dominate as Primary Social 
Channel 
Source: DigiDay, 2014 
Share of Time Spent on Mobile 
15% 
48% 
April 2013 April 2014 
88% 
92% 
April 2013 April 2014 
72% 
93% 
April 2013 April 2014 
62% 
68% 
AJpurliyl 22001133 AJuplryi l2 2001144 July 2013 July 2014 
July 2013 July 2014 July 2013 July 2014
45 
Mobile is Becoming the Key Tool in Commerce 
Source: “Mobile In-Store Research,” Google and Shopper Marketing Council. 
90% 
Of Smartphone Shoppers Use Their Phone for Pre-Shopping Activities 
Of Smartphone Shoppers Use Their Devices to Help Shop While in a Store 
Shoppers Use Their Smartphones to Find Information Instead of Asking Store Employees 
Increase in Health & Beauty 
84% 
1 in 3 
Mobile Influences Path To Purchase 
Mobile Increases Median Basket Sizes 
Increase in Household Care 
Increase in Electronics 
Increase in Appliances 
50% 
34% 
25% 
40%
46 
Consumer Usage is Ahead of Mobile Ad Spend 
% of Time Spent in Media vs. % of Advertising Spending, USA 2013 
5% 
12% 
38% 
25% 
19% 20% 
10% 
45% 
22% 
4% 
Print Radio TV Internet Mobile 
% of Total Media Consumption 
Time or Advertising Spending 
Consumer Time Spent 
Ad Spend 
Source: Mary Meeker’s 2014 “Internet Trends”, Advertising spend based on IAB data for full year 2013. Print includes newspaper and magazine. 
$30B+ opportunity calculated assuming Internet and Mobile ad spend share equal their respective time spent share. 
Internet Ad = $43B 
Mobile Ad = $7.1B 
~$30B+ 
Opportunity 
in US
47 
Mobile Has Plenty of Room to Disrupt Traditional 
Advertising and Retail 
Mobile % of Time Spent vs. % Total Ad Spending vs. % Total Retail 
20% 
4% 
2% 
0% 
5% 
10% 
15% 
20% 
25% 
Consumer Time 
Spent 
Mobile Ad 
Spending 
Mobile 
Commerce 
Source: Mary Meeker’s 2014 “Internet Trends”, Advertising spend based on IAB data for full year 2013. Print includes newspaper and magazine. 
% of Total 
Consumption
48 
$1 Billion+ Vertical Based Mobile Categories 
Section/Leader Competitors Adjacent Verticals $BN Category 2014 Highlights 
•Exercise gamification 
•Convergence of mobile & wearables 
•Pandora only non-game top 10 iPhone app of 2013 
•“Pandora model” replicated in other content verticals 
•Top iOS app of 2013 
•9 of top 10 most downloaded apps are in gaming 
•Other privacy apps compete and specialty messaging apps gain traction 
•WhatsApp has >600mm active users 
•Proliferation of the “Uber model” into other transportation-related verticals 
Media & Entertainment 
Messaging 
Utilities 
Health & Wellness 
Gaming 
 
 
 
 

49 
Select Mobile M&A in 2014YTD 
Feb. 2014 $19,000 NA NA 
Feb. 2014 900 594x NA 
May 2014 360 NA NA 
Jul. 2014 100 2.3x 8x 
Feb. 2014 17 NA NA 
Aug. 2014 NA NA NA 
Aug. 2014 NA NA NA 
Date Acquirer Size Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target
50 
Sector 
Ad Tech 
eCommerce 
Marketing Automation 
Internet of Things 
Mobile 
Traditional Advertising / Marketing Services
51 
Lower cost of hardware development 
Ubiquity of wireless protocols and applications 
Digitization of the physical world 
Enabling factors for mass consumer adoption 
Key Themes 
Source: Cisco 
Connected Objects Around the World: 2014 – 2020 (billions of devices) 
“Internet of Things” = Key Growth Area for the Broader Technology Ecosystem 
14.4 
18.2 
22.9 
28.4 
34.8 
42.1 
50.1 
2014 
2015 
2016 
2017 
2018 
2019 
2020
52 
Select Internet of Things M&A in 2014YTD 
Jan. 2014 $3,200 NA NA 
May 2014 3,000 NA NA 
Jun. 2014 555 NA NA 
Aug. 2014 200 NA NA 
Jul. 2014 170 NA NA 
/ 
Date Acquirer Size Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target
53 
Sector 
© 2013 Gridley & Company LLC 
Ad Tech 
eCommerce 
Marketing Automation 
Internet of Things 
Mobile 
Traditional Advertising / Marketing Services
54 
Secular Shift in Ad Spend to Digital 
38.4% 38.3% 38.9% 38.7% 38.4% 38.2% 38.6% 
17.1% 
20.2% 
22.5% 24.8% 26.8% 28.3% 29.2% 
24.7% 
22.6% 
20.7% 
19.3% 18.1% 17.4% 16.6% 
9.9% 9.6% 9.3% 9.2% 9.0% 8.8% 8.5% 
5.8% 5.2% 4.5% 4.0% 3.6% 3.2% 2.9% 
4.0% 4.0% 4.1% 4.1% 4.1% 4.1% 4.1% 
0% 
10% 
20% 
30% 
40% 
50% 
60% 
70% 
80% 
90% 
100% 
2010 2011 2012 2013 2014 2015 2016 
TV Digital Print Radio Directories Outdoor 
U.S. Total Ad Spending Share 
$158.3 
$166.0 
$171.7 
$178.4 
$183.2 
$189.2 
2011 2012 2013 2014 2015 2016 
U.S. Total Ad Spending ($ in Billions) 
Sources: eMarketer..
55 
•Increased measurability and targeting capabilities 
•Multichannel creative applicability and execution 
Creative 
•Multi-channel integration 
•New “angles” in mobile, social, and eCommerce 
•Integration with ad measurement platforms 
Prod- uction 
•Efficient offshore models 
•Enable large scale production, driving revenue, at low cost 
•Develop in-house offshore teams, e.g. Digitas/Publicis 
Key Threats 
Key Thoughts 
Emerging Competitors 
Key Threats to Core Traditional Agency Services 
Vertical Oriented Solutions 
Mobile Oriented Solutions
56 
•Cheaper, real-time data collection 
•Plentiful peer reviews and social media 
Market Research 
•Online surveys replacing traditional focus groups 
•Social media (“likes”) becoming a proxy for survey data 
Media Buying 
•“Managed service technology” providers 
‒DSPs, DMPs and other ad tech tools 
•Ad Tech moving upstream, forging relationships directly with agency clients 
•Media buying agency claims face dramatic upheaval 
•The commoditization of DSPs 
‒Agency trading desks must build proprietary buying tech in order to compete 
•DMP begin to supply “research”-enabled RTB 
Key Threats to Core Traditional Agency Services (cont’d) 
Key Threats 
Key Thoughts 
Emerging Competitors
57 
PE Firms Invest in Traditional Advertising / Marketing Services 
Jun. 2014 
$4,200 
0.8x 
NA 
Jan. 2014 
1,840 
NA 
NA 
Apr. 2014 
446 
2.4x 
NA 
Jul. 2014 
NA 
NA 
NA 
Jan. 2014 
NA 
NA 
NA 
Mar. 2014 
NA 
NA 
NA 
Date 
Acquirer 
Size 
Revenue 
($ in Millions) 
EBITDA 
Implied Enterprise Value to LTM 
Target
III. Summary Thoughts
59 
Summary Thoughts 
•Digital Media Private Financings: Bigger Checks 
−Higher Valuations 
−An Increasing Number of $1billion+ Babies 
•Digital Media IPO’s: Lots of Exits in 2013 and 2014 
−Mixed Performance 
•Digital Media M&A: Good Deal Year with Many Solid Growth Themes 
−Variety to Size and Scale 
−Broadening Buyer Universe 
•Favorite Gridley 2015 Investment Themes: 
−Mobile 
−eCommerce Services 
−Ad Agency Disruption

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IAB Global Summit Discussion

  • 1. IAB Global Summit Discussion October 1, 2014
  • 2. 2 I.Market Overview A.IPO and Public Markets B.M&A and VC Markets II.Selected Digital Media Trends III.Summary Thoughts Agenda
  • 4. A. IPO and Public Markets
  • 5. 5 (30%) (10%) 10% 30% 50% Jan Feb Mar May Jun Jul Sep Bovespa (30%) (10%) 10% 30% 50% Jan Feb Mar May Jun Jul Sep Nikkei 225 Hang Seng (30%) (10%) 10% 30% 50% Jan Feb Mar May Jun Jul Sep FTSE 100 DAX (30%) (10%) 10% 30% 50% Jan Feb Mar May Jun Jul Sep S&P 500 DJIA NASDAQ 2014 YTD Global Market Performance Source: Capital IQ, as of September 25, 2014. 0% U.S. Market Index Performance European Market Index Performance Latin American Asian Market Index Performance Market Index Performance +3% +5% +8% +8% +3% +12% +3%
  • 6. 6 Market Value 2014 YTD Since 2008 ($ in billions) $392 7% 73% 149 (19%) 250% 39 (4%) 66% 65 (4%) 58% 201 41% NA 219 32% NA (60%) (40%) (20%) 0% 20% 40% 60% 80% 100% U.S. Equity Market at a Glance Source: Capital IQ, as of September 25, 2014. U.S. Market Index Performance +30% Performance of Internet Bellwethers Strong Market Despite Some Skepticism • Anticipated correction yet to occur • Ukrainian and Israeli conflicts still unresolved; ISIS impact growing • 10-year Treasuries reaching lows 2013 +38% +27% 2014 YTD +8% +8% +3%
  • 7. 7 Digital Media Equity Market Performance Median Stock Price Performance of Digital Media Sectors • Performance has been very mixed: 82% of all Digital Media stocks  this year • 50% of all Digital Media IPOs  this year • AdTech has struggled Best Performing Internet Titans • +43% • +24% • +22% Best Performing Digital Marketing • +47% • • +31% Best Performing eCommerce • +95% • +50% • +46% Worst Performing Overall • -75% • -74% • -69% Median % Change 2012 2013 2014YTD Digital Media +20.6% +59.7% (9.4%) Internet Titans +33.1% +87.4% (1.8%) Digital Marketing (31.2%) +29.3% (26.1%) eCommerce +23.4% +80.5% (5.6%) Market Indices S&P 500 +13.4% +29.6% +8.1% Dow Jones +7.3% +26.5% +2.9% Nasdaq +15.9% +38.3% +8.0%
  • 8. 8 United States Latin America Europe Asia/Pacific Africa/Middle East $106.0 $234.4 $135.9 $99.6 $137.0 $90.6 2009 2010 2011 2012 2013 1H 2014 Global IPO Volume ($ billions) Source: Capital IQ; Renaissance Capital; Annual Global IPO Reviews. 64% 66% 51% 42% 33% 21% 16% 25% 40% 38% 6% 12% 19% 10% 20% 40% 28% 31% • Issuances are up in all geographies • The US IPO market has been particularly active
  • 9. 9 0 100 200 300 400 500 $0 $20 $40 $60 $80 $100 $120 Source: Renaissance Capital; Dealogic; EY Global IPO Trends, Factset. YTD as of September 25, 2014. U.S. and Global IPO Issuance and Deal Volume Global IPO Issuance IPO Deal Volume # of IPOs U.S. IPO Issuance # of IPOs IPO Deal Volume ($ in billions) $ Volume # IPOs Alibaba 0 500 1,000 1,500 2,000 2,500 $0 $100 $200 $300 $400
  • 10. 10 Digital Media Sector IPO Performance ($ in millions) Market Cap Price Performance Date Company Subsector IPO Size @ IPO Day 1 Since IPO 2014 (12) Sep 18 Alibaba Group Holding Limited eCommerce $21,767 $167,620.4 38.1% 30.8% Jul 18 Globant S.A. Digital Agency 59 333.5 15.1% 29.7% Jul 17 TubeMogul, Inc. AdTech 44 200.8 64.3% 60.9% May 21 JD.com, Inc. Social 1,780 25,974.6 10.0% 39.8% May 19 TrueCar, Inc. eCommerce 70 639.3 5.6% 98.8% Mar 21 Borderfree, Inc. eCommerce 80 487.6 20.4% (17.3%) Apr 04 GrubHub Inc. eCommerce 193 1,934.0 33.8% 33.5% Mar 25 King Digital Entertainment plc Digital Content 500 7,086.0 (15.6%) (41.1%) Apr 02 The Rubicon Project, Inc. AdTech 102 520.7 32.3% (19.0%) Mar 06 Coupons.com Incorporated eCommerce 168 1,170.7 87.5% (22.2%) Mar 28 Everyday Health, Inc. Digital Content 100 415.5 (0.1%) (6.0%) Jan 24 Care.com, Inc. eCommerce 91 505.7 46.5% (51.9%) 2014 Median 101 580.0 26.4% 11.9% 2013 (11) Nov 14 zulily, Inc. eCommerce 253 2,685.4 63.7% 80.4% Nov 06 Twitter, Inc. Social 1,820 14,162.1 72.7% 97.9% Oct 29 Criteo SA Ad Tech 251 1,714.2 14.2% 12.2% Sep 19 Rocket Fuel Inc. Ad Tech 116 942.3 93.4% (47.2%) Aug 06 YuMe, Inc. Ad Tech 46 286.2 0.0% (45.0%) Jul 18 RetailMeNot, Inc. Retail 191 1,054.3 31.9% (20.7%) Jun 26 Tremor Video, Inc. Ad Tech 75 494.2 (15.0%) (74.3%) May 22 ChannelAdvisor eCommerce 81 286.6 31.7% 11.9% May 16 Marketo, Inc. Marketing Auto 79 465.2 77.7% 138.2% Mar 21 Marin Software Digital Marketing 105 432.8 16.1% (38.3%) Mar 04 Professional Diversity Social 21 29.1 (4.1%) (36.3%) 2013 Median 105 494.2 31.7% (20.7%) Overall Median 102 520.7 31.7% (6.0%) Source: Capital IQ.
  • 11. 11 15.0% 21.0% 26.2% 27.3% 29.7% 32.1% 33.1% 35.8% 42.1% 44.2% 48.3% (16.4%) 10.8% 17.2% 21.0% 23.0% 24.2% 76.1% QuinStreet, Inc. Bankrate, Inc. Constant Contact, Inc. ReachLocal, Inc. ChannelAdvisor Corporation ValueClick, Inc. Millennial Media Inc. …Digital Media Companies Going Public Today Have Higher Growth Profiles/Reasonable Valuations Public Comp Universe at End of 2012 ’12-’13 Revenue Growth 2012 Revenue Multiple 2.5x 2.5x 13.8x 0.6x 2.8x 4.1x 1.0x Median: 22.0% 2.7x 24% NM 35% NM NM 21% 28% 6% EBITDA Margin Source: Capital IQ. 2014 Digital Media IPOs ’14-’15 Revenue Growth 2014E Revenue Multiple 1.7x 1.2x 3.5x 5.9x 19.5x 3.5x 2.8x 10.8x 2.1x 2.2x 2.3x 1.6x Median: 32.1% 2.5x 20% EBITDA Margin NM NM NM 8% 54% 14% NM 32% 7% 20% 20% 39%
  • 12. B. M&A and VC Markets
  • 13. 13 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 $0 $500 $1,000 $1,500 $2,000 Source: Dealogic, Capital IQ. YTD as of September 25, 2014. U.S. and Global M&A Deal Volume Global M&A Deals Deal Volume # of Deals U.S. M&A Deals # of Deals Deal Volume ($ in billions) $ Volume # Deals 0 10,000 20,000 30,000 40,000 50,000 60,000 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000
  • 14. 14 Source: Capital IQ; Annual Global IPO Reviews. YTD as of September 25, 2014. Global M&A Deal Volume and VC Financings Global M&A Volume ($ billions) Global VC Financings ($ billions) 33% 23% 37% 31% 23% 35% 29% 22% 39% 32% 21% 39% 26% 23% 45% 36% 29% 29% 24% 37% 27% 13% 61% 18% 22% 38% 29% 16% 35% 37% $1,919 $2,280 $2,511 $2,351 $2,543 $2,799 $82.5 $155.8 $278.6 $150.6 $128.1 $115.5 United States Latin America and Caribbean Europe Asia/Pacific Africa/Middle East
  • 15. 15 Source: Capital IQ, PwC National Venture Capital Association MoneyTree Report. YTD as of September 25, 2014. Annual M&A Deal Volume U.S. M&A and VC Markets ($ in billions) Annual VC Financing Volume $711 $800 $982 $908 $1,150 $1,263 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 # of Deals Deal Volume $ Volume # Deals $20 $23 $30 $27 $28 $23 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 $0 $5 $10 $15 $20 $25 $30 $35
  • 16. 16 6.3% 10.1% 11.2% 12.1% 15.5% 15.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2009 2010 2011 2012 20132014YTD 24.9% 22.6% 26.1% 26.0% 32.2% 34.1% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2009 2010 2011 2012 20132014YTD Sources: Thomson Reuters; Capital IQ. YTD as of September 25, 2014. Financial Sponsor M&A Activity U.S. Private Equity (% Total) Global Private Equity M&A (% Total) Top Global Private Equity Deals of 2014 (All U.S.) $4.2BN $4.2BN $3.6BN
  • 17. 17 0 100 200 300 400 500 600 $0 $5 $10 $15 $20 $25 $30 2009 2010 2011 2012 2013 1H 2014 Sources: Thomson Reuters, Natural Venture Capital Association, July 2014. 2014 Has Been a Good Year for U.S. Venture Backed Exits Total Disclosed M&A $ Value ($ billions) Total IPO $ Amount ($ billions) Deal Volume # of Deals ($ in billions) $ Volume # Deals = 0 100 200 300 400 500 600 $0 $5 $10 $15 $20 $25 $30 2009 2010 2011 2012 2013 1H 2014
  • 18. 18 Key Themes in the U.S. Digital Media M&A Market •AdTech Consolidation Continues…still too many companies •Enterprise Software Giants Continue to Build Out their Marketing Stack •A Few Traditional Strategics Get “Digital Courage” via M&A •Early M&A Deals in the “Internet of Things” •PE Firms Place $1 Billion+ Bets on Traditional Marketing Services Businesses
  • 19. 19 Date Acquirer Size Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target Top U.S. Digital Media Deals – YTD 2014 Feb. 2014 $19,500 NA NA Apr. 2014 3,305 19.0x NA Jun. 2014 2,600 13.1x 52.4x Sep. 2014 2,448 4.12x 12.4x Aug. 2014 1,827 30.9x 11.6x Sep. 2014 1,000 NA NA May 2014 1,000 32.3x NA Aug. 2014 970 NA 18x Sep. 2014 950 NA NA
  • 20. 20 Internet “Titans” M&A in 2014 Company # Deals in 2014 Notable Deals 12 Mkt. Value ($bn) $40.7 $369.2 $37.6 $138.6 $69.0 $3.4 $181.5 4 3 2 Machine Translation Technology Division 10 28 15
  • 21. 21 Return of the Traditional Strategic Buyers May. 2014 $1,000 15.5x NA Mar. 2014 950 NA NA Sep. 2014 950 NA NA Jul. 2014 422 2.3x 24.7x Mar. 2014 360 10.3x NA May. 2014 310 12.4x NA Jul. 2014 281 0.7x NA Apr. 2014 205 2.1x NA Aug. 2014 160 2.3x NA 2014 NA NA NA Date Acquirer Size Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target
  • 22. 22 Key 2014 Digital Investment Themes •Niche eCommerce and Content Companies Still Getting Funded •Companies Doing Record-Breaking Late Stage Financings as Alternative to IPO •Ad Tech M&A Consolidation  Fewer Ad Tech Startups Doing Large Rounds •Data Analytics and Cloud Storage Continue to See Many New Entrants
  • 23. 23 Notable 2014 Digital Private Financings Jun. 2014 Mobile $1,400 $18,400 Aug. 2014 Content 500 2,500 Apr. 2014 eCommerce 475 10,000 Mar. 2014 Mobile 285 1,100 Mar. 2014 Mobile 250 950 May 2014 Social 200 5,200 May 2014 Content 160 1,160 Jan. 2014 eCommerce 157 2,000 Jun. 2014 Content Not Disclosed 150 2,300 Jul. 2014 Content 120 1,000 Jan. 2014 eCommerce 112 912 Mar. 2014 Ad Tech 100 NA Sep. 2014 Mobile 100 6,000 Date Company Investors Size ($ in Millions) Implied Valuation Sector
  • 24. II. Digital Media Activity by Subsector
  • 25. 25 Sector Ad Tech eCommerce Marketing Automation Internet of Things Mobile Traditional Advertising / Marketing Services
  • 26. 26 Key Trends in Ad Tech •Recent IPOs have brought new life into the Ad Tech community ‒Creating urgency to get scale ‒Establishing clarity around value for high growth advertising stories •Noise level on Privacy/Cookie debate up; although still very exploratory in terms of going forward models •Programmatic ad buying is getting closer to being the “new norm” •Category leaders getting funding, but otherwise hard market for new capital •Convergence of marketing and advertising technologies not leading to considerable strategic activity yet
  • 27. 27 Continuing Influence of RTB Sources: e-Marketer. Technology and transparency leading to greater buying efficiencies for advertisers U.S. Digital Display Ad Spend • Improved ROI • Growth of digital share of total ad spend 23% 25% 27% 28% 29% 31% Digital % Overall Ad Spend:
  • 28. 28 ($ in Millions) Select Ad Tech M&A in 2014YTD Date Acquirer Size Revenue EBITDA Implied Enterprise Value to LTM Target Jul. 2014 $382 3.5x 21.0x Feb. 2014 408 6.5x NA Mar. 2014 360 10.3x NA May 2014 101 8.1x NA Apr. 2014 205 2.1x NA Aug. 2014 230 2.7x NA Jun. 2014 350 6.6x 44.0x May 2014 310 12.4x NA Jul. 2014 240 4.8x NA Sep. 2014 107 17.6x NA Oct. 2013 119 9.9x NA Jul. 2014 144 1.4x NA Jun. 2014 235 1.3x NA Jun. 2014 150 5.8x NA Mar. 2014 200 NA NA
  • 29. 29 Sector Ad Tech eCommerce Marketing Automation Traditional Advertising / Marketing Services Internet of Things Mobile
  • 30. 30 2012 2013 2014E 2015E 2016E 2017E 2018E Big Industry Growth Opportunity in eCommerce U.S. ($ Trillions) Source: eMarketer, April 2014; Goldman Sachs, “eCommerce Expected to Accelerate Globally in 2014”; Forrester Research , 2014 ■ eCommerce ■ Traditional Retail 8% 11% $4.3 $4.5 $4.7 $4.9 $5.1 $5.3 $5.5 7% Traditional Y/Y Growth (%) 5.2 4.2 4.4 4.3 4.0 4.0 4.0 eCommerce Y/Y Growth (%) 16.0 15.9 16.1 15.6 14.8 13.7 12.6
  • 31. 31 2012 2013 2014E 2015E 2016E 2017E 2018E Mobile Will Play an Increasingly Important Role U.S. ($ Billions) Global ($ Billions) ■ Mobile Commerce ■ Desktop Commerce Source: Goldman Sachs, “eCommerce Expected to Accelerate Globally in 2014” 14% 32% 11% 47% 2012 2013 2014E 2015E 2016E 2017E 2018E 24% 27% $545 $638 $752 $882 $1,024 $1,179 $1,346 $179 $208 $241 $279 $320 $364 $410
  • 32. 32 eCommerce M&A Dynamics •Early Days for eCommerce M&A •Complicated Because… −Logical Buyers = Traditional Retail, Trade at Low Multiples −Many eCommerce Companies Choose Growth Over Profits −Many Specialty Verticals Hit the “$100mm Wall” −Lots of VC/PE $$ Invested…Big EXIT Expectations •Role of Social eCommerce M&A – Not There Yet
  • 33. 33 Select eCommerce M&A in 2014YTD Jul. 2014 $3,305 19.0x NA Feb. 2014 2,600 13.1x 43.3x Jul. 2014 970 NA NA Mar. 2014 422 2.3x 24.7x Jul. 2014 300 1.4x NA May 2014 281 0.7x NA Sep 2014 200 7.6x NA Apr. 2014 160 8.7x NA Aug. 2014 121 0.7x NA Oct. 2013 100 9.9x NA Sep. 2014 50 2.5x NA Jul. 2014 42 0.4x NA Date Acquirer Size(1) Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target
  • 34. 34 Sector Ad Tech eCommerce Marketing Automation Traditional Advertising / Marketing Services Internet of Things Mobile
  • 35. 35 Evolution of Marketing Software 1995-2001 2002-2007 2009-2010 2011-2014YTD Dotcom Bubble •Email and the Internet are in their introduction / growth stage, as mainstream adoption begins to occur. • Companies like Google, MSN, and Yahoo were launched in order to support the demand for email and internet content Dotcom Bubble Burst and the Emergence of Social •After the Dot.com bubble burst, there was a drought of funding for new internet businesses. • Shortly after, a new generation of companies were founded as people’s use of the internet evolved and became more integrated with their daily lives The Rise of the Devices •As social media consolidation occurs ad acquirers try to add critical capabilities to their own product suite Critical Mass in the Need for Data Automation & Do Not Call List Can-Spam Act Launched Key Acquisitions IPOs Launched Legislation Key Acquisitions
  • 36. 36 Basics of Marketing Automation Lifecycle Lead Generation •Management •Scoring •Segmentation •Nurturing Measurement •Analytics •Tracking •Optimization Management •Campaigns •Monitoring •Surveys •Advertising •Personalization CALL MOBILE SEO EMAIL SOCIAL CRM
  • 37. 37 Marketing is Becoming a Key Strategic Imperative CRM (Database) Marketing Automation Alignment Client  Sales Sales  Marketing CMO/CTO  CFO/CEO Key Objectives RPM (revenue performance management) •Identify, organize, and assign leads and prospects •Sophisticated conversion from lead to prospect •Integrated measurement across channels/touch points •Incorporate social channels (Campaign management vs. marketing tool management) •Cloud-based platform allows for rapid prototyping and ongoing development •Marketing viewed as revenue generator vs. cost center •Attribute marketing activities against financial performance •Plot most direct course through sales funnel to maximize marketing ROI
  • 38. 38 Marketing Automation Ecosystem Site Optimization (4) Attribution (2) CRM (9) Email (8) Social Marketing (19) Mobile Marketing (8) Database Marketing (2) Web Analytics (3) Display/Search Retargeters (4) Demand Side Platform (4) Marketing Automation Predictive Analytics Personalization
  • 39. 39 Marketing Automation Will Increasingly Be a Multi- Channel Story Email Social Mobile Web •Emerging marketing channel with highest growth in customer engagement •Considerable opportunities for growth and scale •Greatly increases conversion rates •Established channel, considerable optimization possibilities •Category has quickly scaled and developed comprehensive management capabilities •Many companies are centering digital “suite” capabilities around social capabilities •Email remains the most scalable and effective digital communication channel •Email providers leading innovation around the email channel
  • 40. 40 Select Marketing Automation M&A in 2014YTD Apr. 2014 $492 2.6x NA Jul. 2014 390 NA NA Apr. 2014 275 3.4x NA Jul. 2014 175 4.4x NA Date Acquirer Size Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target
  • 41. 41 Sector Ad Tech eCommerce Marketing Automation Internet of Things Mobile Traditional Advertising / Marketing Services
  • 42. 42 142 153 147 139 10 22 43 67 1 12 40 63 2010 2011 2012 2013 Desktop/laptop Smartphone Tablet Mobile Timespend is Spread Broadly Average Timespend Per Day (minutes) Source: eMarketer, Jul. 2013. US Data Source: Experian Marketing Services. US Data 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2009 2010 2011 2012E 2013E 2014E 2015E Desktops+Notebooks Smartphones+Tablets 2013 Projected Inflection Point Mobile Usage > PC Usage (in billions) Note: Notebook PCs include Netbooks. Assumes the following lifecycles: Desktop PCs – 5 years: Notebook PCs – 4 years; Smartphones – 2 years; Tablets – 2.5 years. Source: Equity Research, 2012. Global data. Non-Talk Applications = 70% Of Timespend Global Installed Base Mobile = Most Important Broad Theme in 2014 Text 20% Browser 14% Email 9% Social 16% Talk 26% Games 8% Other 7%
  • 43. 43 Mobile Scalability is Increasing Dramatically Unprecedented Mobile Adoption Cycle Source: Digital Buzz Blog, Extreme Networks 38 13 4 3.5 0.5 50 days 35 days Radio TV Internet Time It Took to Reach 50 Million Users (Years)
  • 44. 44 Mobile Starting to Dominate as Primary Social Channel Source: DigiDay, 2014 Share of Time Spent on Mobile 15% 48% April 2013 April 2014 88% 92% April 2013 April 2014 72% 93% April 2013 April 2014 62% 68% AJpurliyl 22001133 AJuplryi l2 2001144 July 2013 July 2014 July 2013 July 2014 July 2013 July 2014
  • 45. 45 Mobile is Becoming the Key Tool in Commerce Source: “Mobile In-Store Research,” Google and Shopper Marketing Council. 90% Of Smartphone Shoppers Use Their Phone for Pre-Shopping Activities Of Smartphone Shoppers Use Their Devices to Help Shop While in a Store Shoppers Use Their Smartphones to Find Information Instead of Asking Store Employees Increase in Health & Beauty 84% 1 in 3 Mobile Influences Path To Purchase Mobile Increases Median Basket Sizes Increase in Household Care Increase in Electronics Increase in Appliances 50% 34% 25% 40%
  • 46. 46 Consumer Usage is Ahead of Mobile Ad Spend % of Time Spent in Media vs. % of Advertising Spending, USA 2013 5% 12% 38% 25% 19% 20% 10% 45% 22% 4% Print Radio TV Internet Mobile % of Total Media Consumption Time or Advertising Spending Consumer Time Spent Ad Spend Source: Mary Meeker’s 2014 “Internet Trends”, Advertising spend based on IAB data for full year 2013. Print includes newspaper and magazine. $30B+ opportunity calculated assuming Internet and Mobile ad spend share equal their respective time spent share. Internet Ad = $43B Mobile Ad = $7.1B ~$30B+ Opportunity in US
  • 47. 47 Mobile Has Plenty of Room to Disrupt Traditional Advertising and Retail Mobile % of Time Spent vs. % Total Ad Spending vs. % Total Retail 20% 4% 2% 0% 5% 10% 15% 20% 25% Consumer Time Spent Mobile Ad Spending Mobile Commerce Source: Mary Meeker’s 2014 “Internet Trends”, Advertising spend based on IAB data for full year 2013. Print includes newspaper and magazine. % of Total Consumption
  • 48. 48 $1 Billion+ Vertical Based Mobile Categories Section/Leader Competitors Adjacent Verticals $BN Category 2014 Highlights •Exercise gamification •Convergence of mobile & wearables •Pandora only non-game top 10 iPhone app of 2013 •“Pandora model” replicated in other content verticals •Top iOS app of 2013 •9 of top 10 most downloaded apps are in gaming •Other privacy apps compete and specialty messaging apps gain traction •WhatsApp has >600mm active users •Proliferation of the “Uber model” into other transportation-related verticals Media & Entertainment Messaging Utilities Health & Wellness Gaming     
  • 49. 49 Select Mobile M&A in 2014YTD Feb. 2014 $19,000 NA NA Feb. 2014 900 594x NA May 2014 360 NA NA Jul. 2014 100 2.3x 8x Feb. 2014 17 NA NA Aug. 2014 NA NA NA Aug. 2014 NA NA NA Date Acquirer Size Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target
  • 50. 50 Sector Ad Tech eCommerce Marketing Automation Internet of Things Mobile Traditional Advertising / Marketing Services
  • 51. 51 Lower cost of hardware development Ubiquity of wireless protocols and applications Digitization of the physical world Enabling factors for mass consumer adoption Key Themes Source: Cisco Connected Objects Around the World: 2014 – 2020 (billions of devices) “Internet of Things” = Key Growth Area for the Broader Technology Ecosystem 14.4 18.2 22.9 28.4 34.8 42.1 50.1 2014 2015 2016 2017 2018 2019 2020
  • 52. 52 Select Internet of Things M&A in 2014YTD Jan. 2014 $3,200 NA NA May 2014 3,000 NA NA Jun. 2014 555 NA NA Aug. 2014 200 NA NA Jul. 2014 170 NA NA / Date Acquirer Size Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target
  • 53. 53 Sector © 2013 Gridley & Company LLC Ad Tech eCommerce Marketing Automation Internet of Things Mobile Traditional Advertising / Marketing Services
  • 54. 54 Secular Shift in Ad Spend to Digital 38.4% 38.3% 38.9% 38.7% 38.4% 38.2% 38.6% 17.1% 20.2% 22.5% 24.8% 26.8% 28.3% 29.2% 24.7% 22.6% 20.7% 19.3% 18.1% 17.4% 16.6% 9.9% 9.6% 9.3% 9.2% 9.0% 8.8% 8.5% 5.8% 5.2% 4.5% 4.0% 3.6% 3.2% 2.9% 4.0% 4.0% 4.1% 4.1% 4.1% 4.1% 4.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015 2016 TV Digital Print Radio Directories Outdoor U.S. Total Ad Spending Share $158.3 $166.0 $171.7 $178.4 $183.2 $189.2 2011 2012 2013 2014 2015 2016 U.S. Total Ad Spending ($ in Billions) Sources: eMarketer..
  • 55. 55 •Increased measurability and targeting capabilities •Multichannel creative applicability and execution Creative •Multi-channel integration •New “angles” in mobile, social, and eCommerce •Integration with ad measurement platforms Prod- uction •Efficient offshore models •Enable large scale production, driving revenue, at low cost •Develop in-house offshore teams, e.g. Digitas/Publicis Key Threats Key Thoughts Emerging Competitors Key Threats to Core Traditional Agency Services Vertical Oriented Solutions Mobile Oriented Solutions
  • 56. 56 •Cheaper, real-time data collection •Plentiful peer reviews and social media Market Research •Online surveys replacing traditional focus groups •Social media (“likes”) becoming a proxy for survey data Media Buying •“Managed service technology” providers ‒DSPs, DMPs and other ad tech tools •Ad Tech moving upstream, forging relationships directly with agency clients •Media buying agency claims face dramatic upheaval •The commoditization of DSPs ‒Agency trading desks must build proprietary buying tech in order to compete •DMP begin to supply “research”-enabled RTB Key Threats to Core Traditional Agency Services (cont’d) Key Threats Key Thoughts Emerging Competitors
  • 57. 57 PE Firms Invest in Traditional Advertising / Marketing Services Jun. 2014 $4,200 0.8x NA Jan. 2014 1,840 NA NA Apr. 2014 446 2.4x NA Jul. 2014 NA NA NA Jan. 2014 NA NA NA Mar. 2014 NA NA NA Date Acquirer Size Revenue ($ in Millions) EBITDA Implied Enterprise Value to LTM Target
  • 59. 59 Summary Thoughts •Digital Media Private Financings: Bigger Checks −Higher Valuations −An Increasing Number of $1billion+ Babies •Digital Media IPO’s: Lots of Exits in 2013 and 2014 −Mixed Performance •Digital Media M&A: Good Deal Year with Many Solid Growth Themes −Variety to Size and Scale −Broadening Buyer Universe •Favorite Gridley 2015 Investment Themes: −Mobile −eCommerce Services −Ad Agency Disruption