A Perspective on Market Leadership  in Today’s Market July 20, 2011
<ul><li>Agenda </li></ul><ul><li>Introduction </li></ul><ul><li>Case Studies to Support Our View </li></ul><ul><li>Gridley...
I. Introduction
Introduction <ul><li>Industry leaders today are highly vulnerable </li></ul><ul><li>Increasingly tough to compete with new...
Unprecedented Value Being Created Year Founded Current Valuation IPO Status 2002 2004 2006 2007 2007 2007 2008 $9.7 Billio...
II. Case Studies to  Support Our View
Traditional Ad Agencies  vs.  Performance Based Marketing
Traditional Ad Agencies vs. Perf. Based Marketing Revenue Multiple ($BN) 0.0x $0 $200 5.0x 10.0x 40.0x $70 $30 Valuation $...
“ Traditional Ad Agencies” includes Aegis Group, Harte-Hanks, Havas, The Interpublic Group of Companies, Omnicom Group, Pu...
Comparative M&A Activity – 2009-2011YTD Traditional Ad Agencies vs. Perf. Based Marketing $575MM $530MM $390MM $750MM $420...
1  Investment 2006 2007 2008 2010 1 YTD 2011 2009 2005 M&A Case Study Winners’ Circle: Google
Traditional Media  vs.  Social Networks
Traditional Media vs. Social Networks Comparative Valuations Revenue Multiple ($BN) Valuation 0.0x 5.0x 20.0x 50.0x $0 $90...
Traditional Media vs. Social Networks 5 Year Stock Performance 2011E Revenue Growth “ Traditional Media” includes CBS, Com...
Consumers Are Changing, Leading to Accelerating Subscription Declines… Post WWII boom, circulation increased 15% from 1950...
…  And Disruption of Traditional Models Bankrupt Newspapers
Emerging Digital Content Models Source: TechCrunch, CapIQ  <ul><li>Local + demo targeted + commerce </li></ul><ul><li>Emai...
Traditional Retail  vs.  E-Commerce
Traditional Retail vs. E-Commerce 0.0x 4.0x 8.0x 12.0x ($BN) $0 $200 $100 $50 Valuation Revenue Multiple $1.4 $3.4 $14.7 $...
Traditional Retail vs. E-Commerce 5 Year Stock Performance 2011E Revenue Growth “ Traditional Retail” includes Barnes & No...
Traditional Retail vs. E-Commerce Comparative M&A Activity – 2009-2011YTD $2.2BN $560MM $300MM $270MM $1.8BN * $2.4B $1.2B...
M&A Case Study Winners’ Circle: Amazon Zappos 7/22/2009 $895M Woot 6/30/2010 $110M Quidsi 11/08/2010 $545M “ Traditional R...
M&A Case Study Winners’ Circle: eBay In store scanner Nearby Used, online Online retail Nearby Used, online Online retail ...
III. Gridley’s Advice  for the Audience
Unprecedented Agents of Change Open Source Open Architecture Cloud Computing New Business Models
Drivers of Influence The Network Science Curation Incentives Location Acknowledgment Tweet “ Like” New Content Consumption...
Advice to the Audience – Private Companies <ul><li>Unprecedented opportunity for new leadership  </li></ul><ul><li>Clear, ...
Advice to the Audience – Public Companies <ul><li>Traditional leaders – You are more vulnerable than you think  </li></ul>...
Advice to the Audience – VC / PE Investors <ul><li>&quot;Jump In – The Water's Fine&quot; </li></ul><ul><li>Be careful abo...
Questions? Linda Gridley Gridley & Company LLC 10 East 53 rd  Street, 24 th  Floor New York, NY 10022 212.400.9720 tel 212...
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Linda Gridley's 2011 Perspective on Market Leadership in Today’s Market

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Industry leaders today are highly vulnerable. It is
increasingly difficult to compete with new, innovative entrants. There is an unprecedented opportunity for new leaders to emerge across all sectors of Information Services.

In this presentation Linda compares valuations of traditional ad agencies to performance-based marketing, traditional media to social networks, and traditional retail to ecommerce.

Then she offers some sage advice to the audience.

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  • Linda Gridley's 2011 Perspective on Market Leadership in Today’s Market

    1. 1. A Perspective on Market Leadership in Today’s Market July 20, 2011
    2. 2. <ul><li>Agenda </li></ul><ul><li>Introduction </li></ul><ul><li>Case Studies to Support Our View </li></ul><ul><li>Gridley’s Advice for the Audience </li></ul>
    3. 3. I. Introduction
    4. 4. Introduction <ul><li>Industry leaders today are highly vulnerable </li></ul><ul><li>Increasingly tough to compete with new, innovative entrants </li></ul>Unprecedented opportunity for new leaders to emerge across all sectors of Information Services
    5. 5. Unprecedented Value Being Created Year Founded Current Valuation IPO Status 2002 2004 2006 2007 2007 2007 2008 $9.7 Billion IPO May 2011 Not Filed Yet Filed July 2011 Filed June 2011 $70.0 Billion $7.7 Billion $1.0 Billion $2.9 Billion $20.0 Billion $30.0 Billion Not Filed Yet Not Filed Yet Not Filed Yet
    6. 6. II. Case Studies to Support Our View
    7. 7. Traditional Ad Agencies vs. Performance Based Marketing
    8. 8. Traditional Ad Agencies vs. Perf. Based Marketing Revenue Multiple ($BN) 0.0x $0 $200 5.0x 10.0x 40.0x $70 $30 Valuation $14.2 $13.3 $9.4 $5.8 $3.0 $1.4 $2.0 $0.5 $0.5 $0.6 $1.4 $0.6 $0.9 $0.4 $0.4 $30.0 $5.4 $212.3 $191.7 $70.0 Comparative Valuations Emerging Threats Traditional Ad Agency Ad Tech
    9. 9. “ Traditional Ad Agencies” includes Aegis Group, Harte-Hanks, Havas, The Interpublic Group of Companies, Omnicom Group, Publicis Groupe, Valassis (excludes MDC Partners) “ Performance-Based Ad Tech” includes Adobe, Constant Contact (since IPO on 10/02/2007), Google, MediaMind, QuinStreet (since IPO on 2/10/2010), ValueClick 5 Year Stock Performance 2011E Revenue Growth Comparative Performance Traditional Ad Agencies vs. Perf. Based Marketing
    10. 10. Comparative M&A Activity – 2009-2011YTD Traditional Ad Agencies vs. Perf. Based Marketing $575MM $530MM $390MM $750MM $420MM $400MM $275MM Notable Acquisitions over $100MM by Traditional Ad Agencies Notable Acquisitions over $100MM by Performance Based Marketing Co.’s $348MM $1.6BN & NA $345MM $200MM Source: CapIQ, Gridley estimates
    11. 11. 1 Investment 2006 2007 2008 2010 1 YTD 2011 2009 2005 M&A Case Study Winners’ Circle: Google
    12. 12. Traditional Media vs. Social Networks
    13. 13. Traditional Media vs. Social Networks Comparative Valuations Revenue Multiple ($BN) Valuation 0.0x 5.0x 20.0x 50.0x $0 $90 $30 $60 2.5x 35.0x $70.0 $17.5 $9.7 $7.7 $73.2 $65.7 $37.3 $7.7 $0.2 $9.9 $39.7 $3.1 $1.2 $3.3 $18.3 Traditional Media Social Networks
    14. 14. Traditional Media vs. Social Networks 5 Year Stock Performance 2011E Revenue Growth “ Traditional Media” includes CBS, Comcast, Gannett, Liberty Interactive, The McClatchy Company, The New York Times Company, News Corp., Scripps Networks Interactive, Time Warner, Walt Disney Co., and The Washington Post “ Social Networks” includes LinkedIn (since IPO on 5/18/2011) Comparative Performance
    15. 15. Consumers Are Changing, Leading to Accelerating Subscription Declines… Post WWII boom, circulation increased 15% from 1950-1970 Subscribers go online, circulation decreased 5% from 1995-2002 US Newspaper Circulation Volume (MM) Huge shift in consumption, 16% decrease from 2004-2009 Source: Newspaper Association of America
    16. 16. … And Disruption of Traditional Models Bankrupt Newspapers
    17. 17. Emerging Digital Content Models Source: TechCrunch, CapIQ <ul><li>Local + demo targeted + commerce </li></ul><ul><li>Email drives high engagement </li></ul><ul><li>Acquired JackPaul Holdings, Inc., an online retailer for apparel, shoes, and accessories, on May 13, 2010 </li></ul><ul><li>High quality UGC content +real-time + community </li></ul><ul><li>Professional Q&A community, further lowers constraints for professionals to share domain knowledge </li></ul><ul><li>Received $11MM in funding from Benchmark Capital in March 2010, valuing the company at ~$86MM </li></ul><ul><li>Crowdsourced + global perspective at local level </li></ul><ul><li>Submission, acceptance and placement of content all technology driven </li></ul><ul><li>Raised $3MM in a round of funding led by VantagePoint Venture Partners in January 2010; acquired by Datran Media Corp. in May 2011 for an undisclosed amount </li></ul>
    18. 18. Traditional Retail vs. E-Commerce
    19. 19. Traditional Retail vs. E-Commerce 0.0x 4.0x 8.0x 12.0x ($BN) $0 $200 $100 $50 Valuation Revenue Multiple $1.4 $3.4 $14.7 $7.9 $1.0 $8.4 $2.0 $0.6 $185.2 $101.2 $34.6 $34.9 $42.4 $10.4 $0.4 Comparative Valuations Traditional Retail E-Commerce
    20. 20. Traditional Retail vs. E-Commerce 5 Year Stock Performance 2011E Revenue Growth “ Traditional Retail” includes Barnes & Noble, Costco, Gap, Safeway, Sears Holdings, Target, and Wal-Mart “ E-Commerce” includes Amazon.com, Blue Nile, eBay, Mercadolibre (since IPO on 08/09/2007), Netflix, Overstock.com, Shutterfly (since IPO on 9/28/2006), and Travelzoo Comparative Performance
    21. 21. Traditional Retail vs. E-Commerce Comparative M&A Activity – 2009-2011YTD $2.2BN $560MM $300MM $270MM $1.8BN * $2.4B $1.2B $895MM $545MM $350MM Top Acquisitions by Traditional Retail Agencies Top Acquisitions by Ecommerce Agencies Source: CapIQ, Gridley estimates * Represents Target acquiring Zellers’ 220 retail locations in Canada
    22. 22. M&A Case Study Winners’ Circle: Amazon Zappos 7/22/2009 $895M Woot 6/30/2010 $110M Quidsi 11/08/2010 $545M “ Traditional Retail” includes Barnes & Noble, Costco, Gap, Safeway, Sears Holdings, Target, and Wal-Mart
    23. 23. M&A Case Study Winners’ Circle: eBay In store scanner Nearby Used, online Online retail Nearby Used, online Online retail Virtual goods Local Merchants / SMB Any product Discover Pay Mobile Location based service Retailer At Home
    24. 24. III. Gridley’s Advice for the Audience
    25. 25. Unprecedented Agents of Change Open Source Open Architecture Cloud Computing New Business Models
    26. 26. Drivers of Influence The Network Science Curation Incentives Location Acknowledgment Tweet “ Like” New Content Consumption Behavior Reflects this Transformation Tag Check-in Content Enlightenment Play Watch Read Converse Opine Review Rank Revenue Acclaim Loyalty Intelligence
    27. 27. Advice to the Audience – Private Companies <ul><li>Unprecedented opportunity for new leadership </li></ul><ul><li>Clear, differentiated capabilities are key </li></ul><ul><li>Buyers will pay premiums for market leaders and experienced teams </li></ul><ul><li>Scale and successful client case studies are key </li></ul><ul><li>Watch for new buyers to emerge </li></ul>
    28. 28. Advice to the Audience – Public Companies <ul><li>Traditional leaders – You are more vulnerable than you think </li></ul><ul><li>Think strategically about innovation and M&A </li></ul><ul><li>Tremendous value being created, competitive dynamics are changing </li></ul><ul><li>Watch out for disruptive business models </li></ul>
    29. 29. Advice to the Audience – VC / PE Investors <ul><li>&quot;Jump In – The Water's Fine&quot; </li></ul><ul><li>Be careful about amount of $ invested </li></ul><ul><li>$250MM+ exits aren't easy! </li></ul><ul><li>Look for new strategic buyers to emerge </li></ul><ul><li>Different companies require different exit strategies </li></ul>
    30. 30. Questions? Linda Gridley Gridley & Company LLC 10 East 53 rd Street, 24 th Floor New York, NY 10022 212.400.9720 tel 212.400.9717 fax Twitter: @gridleyco www.gridleyco.com

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