Embedded

Specialized

Accomplished

Online Advertising Report
Winter 2014
Siemer & Associates
Siemer & Associates LLC is a global boutique merchant bank dedicated to offering candid insight and gu...
Table of Contents
Section I

Summary Observations

Section II

Online and Mobile Advertising Market

Appendix

Select S&A ...
SUMMARY OBSERVATIONS
S&A Market Observations
Clear trends have emerged in the M&A and capital raising environment for companies in the broad on...
Consolidation of Point Solutions toward Broader Offering
We believe that the market will coalesce around broad, all-encomp...
Consolidation of Point Solutions toward Broader Offering
The current ecosystem has become “over-segmented” without offerin...
Consolidation of Point Solutions toward Broader Offering
The resulting consolidation will see only a handful of players re...
Additional Emerging Trends
Certain sub-themes within the online and mobile advertising markets are continuing to develop

...
ONLINE & MOBILE ADVERTISING TRENDS
Real-Time Bidding
Online ad buying has rapidly evolved from insertion orders (one-to-one negotiations for specific invento...
Real-Time Bidding Continues to See Robust Adoption
Consolidation of point solutions will drive growth in the RTB market, w...
Private Exchanges and Real-Time Bidding
Private ad exchanges are a way for publishers to participate in real-time, auction...
Increasing Concern Around Bot-Driven Traffic
Impression fraud has long been an issue in the online advertising industry, t...
Increasing Concern Around Bot-Driven Traffic
There is a consensus among industry professionals that blacklisting suspect s...
Emerging Mobile Ad Solutions
The past year has seen the emergence of the Universal Buyside SDK, or “Meta DSPs”

Large mobi...
Internet Giants Positioned to be Powerful Data Platforms
Major players are best positioned to leverage massive user data a...
DMP Trends
DMPs have become fragmented as well – there is a need for a DMP for DMPs / DSPs to emerge
– Validate and “clean...
DMP Trends
Generally Supported Applications by Existing DMPs

Priority Applications for Future DMPs

Targeted Media Buying...
Emergence of Native Advertising
Native Advertising is gaining further traction as a preferred form of marketing for brands...
Native Advertising Trends
Exact use and definition of native advertising continues to evolve in eyes of advertisers and pu...
Native Advertising Trends
Native Advertising: Pros
Publishers

Social Networks

Brands & Agencies

Users opt-in to content...
APPENDIX
SELECT S&A AD TECH EXPERIENCE
Mogreet Case Study
Mogreet Acquired by
payvia in May 2013

Mogreet is a leading mobile marketing company, providing mobile...
TapIt! Media Group Case Study
TapIt! Media Group Acquired by
Phunware in December 2012

TapIt! is a leading global indepen...
Select Siemer Ventures Ad Tech Exits

has been acquired by

has been acquired by

has been acquired by

has been acquired ...
Select Siemer Ventures Ad Tech Investments

Social media advertising and
promotional platform

Multi-channel digital distr...
Select Siemer Ventures Ad Tech Investments

Integrated services platform for
mobile

Player engagement platform

Hispanic ...
PUBLIC & TRANSACTION COMPARABLES
S&A Market Observations
Social and mobile ad companies with strong technology, unique publisher access and ad formats, hig...
Public Online Advertising Valuation Comps
(figures in millions of $USD, except per share)

Company Name
Online Media & Adv...
Public Online Advertising Valuation Comps
(figures in millions of $USD, except per share)

Company Name
Mobile Media & Adv...
Selected Online Advertising Acquisitions
(figures in millions of $USD)

Date Announced
11/15/2013
11/05/2013
11/01/2013
10...
Selected Online Advertising Acquisitions
(figures in millions of $USD)

Date Announced
10/04/2012
10/02/2012
09/25/2012
09...
Selected Online Advertising Acquisitions
(figures in millions of $USD)

Date Announced
11/09/2011
10/31/2011
10/18/2011
10...
Selected Mobile Advertising Acquisitions
(figures in millions of $USD)

Date Announced
12/03/2013
09/09/2013
08/13/2013
04...
Selected Mobile Advertising Acquisitions
EV / LTM

(figures in millions of $USD)

Date Announced
04/19/2011
03/12/2011
03/...
Select Transaction Case Studies
Acquires

Acquires

Date Announced: September 9, 2013

Date Announced: August 7, 2013

Tar...
Select Transaction Case Studies
Acquires

Acquires

Date Announced: August 13, 2013

Date Announced: July 15, 2013

Target...
Selected Online Advertising Private Placements
Date

Company

Nov. 2013

Signpost

Nov. 2013

Multichannel

Nov. 2013

Run...
Selected Online Advertising Private Placements
Date

Company

A

Amount
Raised ($M)
68.3

Insight Venture Partners

NA

35...
Selected Online Advertising Private Placements
Date
May 2013
May 2013

Apr. 2013

Apr. 2013
Apr. 2013

Apr. 2013
Apr. 2013...
Selected Online Advertising Private Placements
Date

Company

Mar. 2013

Demandbase

Mar. 2013

Zamplus
Technology

Mar. 2...
Selected Online Advertising Private Placements
Date

Company

Description

Draper Fisher Jurvetson, Norwest Venture
Partne...
Selected Online Advertising Private Placements
Date
Jan. 2013
Jan. 2013
Jan. 2013
Jan. 2013
Jan. 2013

Company

Provides s...
RECENT AD TECH IPOS
Tremor Video (TRMR)
IPO Date:

6/26/13

Founded: 2005

Company Size: 287 Employees

IPO Price:

$10.00

CEO: William Day

...
Rocket Fuel (FUEL)
IPO Date:

9/19/13

Founded: 2008

Company Size: 552 Employees

IPO Price:

$29.00

CEO: George John

T...
Marin Software (MRIN)
IPO Date:

3/21/13

Founded: 2006

Company Size: 424 Employees

IPO Price:

$14.00

CEO: Chris Lien
...
YuMe (YUME)
IPO Date:

8/6/13

Founded: 2004

Company Size: 329 Employees

IPO Price:

$9.00

CEO: Jayant Kadambi

Total R...
Millennial Media (MM)
IPO Date:

3/28/12

Founded: 2006

Company Size: 437 Employees

IPO Price:

$13.00

CEO: Paul Palmie...
Criteo (CRTO)
IPO Date:

10/29/13

Founded: 2005

Company Size: 700 Employees

IPO Price:

$31.00

CEO: Jean-Baptiste Rude...
Contact Information

Siemer & Associates, LLC ● Member FINRA/SIPC
1333 2nd Street, Suite 600
Santa Monica, CA 90401
Phone:...
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Siemer online advertising winter 2014 master

  1. 1. Embedded Specialized Accomplished Online Advertising Report Winter 2014
  2. 2. Siemer & Associates Siemer & Associates LLC is a global boutique merchant bank dedicated to offering candid insight and guidance to digital media, software and Internet companies throughout their business life cycles. Composed of industry veterans who have worked both inside and out of technology enterprises, S&A has successfully completed more than 50 transactions that aggregated over $3 billion in sell-side mandates and surpassed $1.5 billion in equity capital. Headquartered in Los Angeles with offices in London, Singapore and Hong Kong, S&A offers exceptional corporate capital raising, financial advisory services and M&A, specializing in complex cross-border transactions. Committed to expanding the international technology ecosystem, Siemer & Associates promotes innovative entrepreneurs through its relationship with early-stage investment firm, Siemer Ventures, and its incubator, WaveMaker Labs. One of the most active investment funds in Southern California, Siemer Ventures supports close to 100 active portfolio companies and makes an average of 20-30 new investments each year in digital media and software startups. Based in Singapore, WaveMaker Labs is an "approved technology incubator" under the Technology Incubation Scheme (TIS) of the Singaporean government's National Research Foundation (NRF). 2
  3. 3. Table of Contents Section I Summary Observations Section II Online and Mobile Advertising Market Appendix Select S&A Ad Tech Experience Public and Transaction Comparables Ad Tech IPO Trends 3 Winter 2014 Online Advertising Report
  4. 4. SUMMARY OBSERVATIONS
  5. 5. S&A Market Observations Clear trends have emerged in the M&A and capital raising environment for companies in the broad online and mobile advertising markets Only a handful of ad tech businesses have truly gained scale and / or differentiation in the marketplace − Not enough revenue / profit in the market to accommodate the many solutions that have been funded  Every dollar of agency spend nets a publisher $0.45 on average  Remainder gets cut up among trading desks, DSPs, exchanges, networks, data suppliers, data aggregators, ad verification, tag management, retargeters, optimization, SSPs, etc. − Too many point solutions funded, leading to overlap amongst relatively undifferentiated offerings  consolidation is likely to increase Agencies used to be able to manage multiple vendors – now they want to consolidate vendor relationships Twitter’s acquisition of MoPub, in addition to recent acquisitions over the summer made by Criteo, Media6Degrees, X+1, and Yahoo, highlight the extent to which cross-device targeting capabilities have become a key aspect of differentiation in the eyes of buyers and investors Mobile remains among the most active areas of the ecosystem with incumbents now seeking to fill the gaps in their offering with those who have already achieved significant scale − Programmatic demand-side features (i.e., real-time bidding platforms), and auction-based exchange platforms for mobile are of particular interest, especially those directly integrated with media buying desks 5 Winter 2014 Online Advertising Report
  6. 6. Consolidation of Point Solutions toward Broader Offering We believe that the market will coalesce around broad, all-encompassing platforms serving either the buy-side or sell-side of the ecosystem Currently, a host of solutions, ranging from trading desks, demand-side platforms and data management platforms service the buy-side, while an array of publisher tools and supply-side platforms currently service the sell-side Consolidation on the supply-side is likely to lead to platforms that have the following attributes: − Access to both premium publishers and ad networks − Multiplatform/multichannel (video, social, mobile) − Integration of both behavioral and contextual targeting Due to the inefficiencies and costs of fragmentation, S&A sees the buy-side ecosystem eventually being served by consolidated dynamic ad intelligence platforms − Such a platform will centralize all major features and functionalities valued by media buyers, including:  Centralized ad server  Optimization of campaign creative for multiple formats and channels  Re-targeting capabilities  Data management, analytics and reporting capabilities 6 Winter 2014 Online Advertising Report
  7. 7. Consolidation of Point Solutions toward Broader Offering The current ecosystem has become “over-segmented” without offering real differentiation DSP SSP DMP INFRASTRUCTURE Source: LUMA Partners 7 Winter 2014 Online Advertising Report
  8. 8. Consolidation of Point Solutions toward Broader Offering The resulting consolidation will see only a handful of players reach the size and / or scale to pursue a meaningful exit, with other large Ad Tech players or large online media companies stepping up and playing the role of consolidators This trend has begun to play out in earnest, with several large acquisitions occurring over the past year such as Twitter’s acquisition of MoPub, Millennial Media’s acquisition of Jumptap, and AOL’s acquisition of Adap.tv More recently, and indicative of continuing consolidation, Neustar acquired Aggregate Knowledge, a DMP, while digital workflow specialist Centro acquired SiteScout, a DSP, to offer alongside their existing programmatic display ad server − Centro has already signaled their intention to acquire a data management platform (“DMP”) in 2014 to enable easy use of predictive analytics for both guaranteed buys and RTB on a single platform Other potential consolidators within the Ad Tech space include: Company Capital Raised Investors Comments RocketFuel $107.9M (IPO, Sep 2013 ) Mohr Davidow, Summit, Northgate, Nokia • Multichannel DSP AppNexus $75.0M (Jan 2013) TCV, Venrock, Tribeca • DSP Videology $68.3M (May 2013) NEA, Comcast, Valhalla, Pinnacle, Catalyst • Video Ad DSP Turn $61.1M (Aug 2012) Norwest, Trident, Shasta, Focus • DSP TubeMogul $53.2M (Jun 2013) NSV, Knights Bridge, Trinity, Northgate, SingTel • Video Ad DSP PubMatic $45.0M (Jun 2012) August, DFJ, Nexus, Helion • SSP 8 Winter 2014 Online Advertising Report
  9. 9. Additional Emerging Trends Certain sub-themes within the online and mobile advertising markets are continuing to develop Mobile / Tablet App Download Marketing is becoming more sophisticated with the rise of Universal Buyside SDK solutions − Attribution is a key issue and platforms enabling tracking of app downloads are seeing significant investor interest − App marketing throughout the lifecycle of app usage is emerging as a theme – peak monetization of user believed to occur at time of install and follows a lifecycle from there − App user “reactivation,” “re-engagement” driving more creative in-app ad formats and driving higher CPIs Native advertising is gaining further traction as a preferred ad format to engage online with customers especially on mobile, where intrusive banners have proven difficult to monetize − Native changes the online advertising ecosystem by creating new opportunities for both publishers (new inventory) and advertisers (new ways to connect and create awareness) − While effectiveness is currently rated based on measuring engagement, exact metrics and expectations continue to evolve Awareness around impression fraud has become more prominent with several companies attempting to quantify lost ad spend − Integral Ad Science (formerly AdSafe) is one such firm seeking to evaluate and advise on ad safety, and estimates that impression fraud costs approximately $6.0bn a year 9 Winter 2014 Online Advertising Report
  10. 10. ONLINE & MOBILE ADVERTISING TRENDS
  11. 11. Real-Time Bidding Online ad buying has rapidly evolved from insertion orders (one-to-one negotiations for specific inventory) to programmatic buying (real-time bidding) Real-time buying allows advertisers to buy inventory for a defined target audience instead of just buying pre-defined display slots online Advertisers bid against each other for inventory through a process in which they determine if the combined publisher data on users and inventory matches their desired criteria − This occurs in the split-second it takes to load the image on the user’s web page − This process allows advertisers to bid on individual ad impressions to targeted users rather than pre-defined slots There are two major benefits to Real-Time Bidding: − Increased Effectiveness: Purchasing inventory on an impression basis allows advertisers to maximize their effectiveness as advertisers value impressions on a highly relative basis − Increased Efficiency: Efficiency is also increased as advertisers are able to target specific audiences across multiple websites Real-time bidding ad spend will increase nearly 75.0% this year – well above the overall online ad growth rate of 17.1% Ad Opportunity Arises Ad Request Sent Out by Publisher Data from Impression Sent Out Value of Impression Calculated Bids Formed and Evaluated Winning Ad Published Source: Wall Street Research, eMarketer 11 Winter 2014 Online Advertising Report
  12. 12. Real-Time Bidding Continues to See Robust Adoption Consolidation of point solutions will drive growth in the RTB market, which is expected to grow from $1.9bn in 2012 to $8.0bn by 2016 $10,000.0 160.0% 148.9% $7,975.0 120.0% $6,645.5 97.0% $6,000.0 75.0% $4,000.0 $3,408.1 $5,112.2 80.0% 50.0% 43.8% $1,947.5 $2,000.0 $396.2 $0.0 4.1% 1.5% 2010A 35.9% 25.8% 3.1% 5.2% 7.8% 49.8% 40.0% 30.0% 20.0% 16.0% $986.0 8.9% Growth Rate Real-Time-Bidding Ad Spend (in $ mm) $8,000.0 10.2% 11.6% 12.3% 0.0% 2011A Real-Time Bidding 2012A Y / Y Growth 2013E RTB as a % of Total Display 2014E 2015E 2016E RTB as a % of Total Online Advertising Source: Wall Street Research, eMarketer 12 Winter 2014 Online Advertising Report
  13. 13. Private Exchanges and Real-Time Bidding Private ad exchanges are a way for publishers to participate in real-time, auction-based selling without allowing third party ad networks and other vendors to eat into their margin Because exchanges are third-party marketplaces and publishers are forced to surrender control of their inventory, large portions of revenue generated go to the various vendors across the tech stack rather then the agency or the publisher To retain more revenue, some publishers are setting up private exchanges for their online inventory, and by managing their own “premium inventory” they can maintain and guarantee a higher price Through private exchanges, sellers can maintain control over their most valuable inventory, but take advantage of RTB auctions to create competition for each impression sold, thereby increasing eCPMs without the overhead and inefficiencies of manual, direct sales Recent examples of private exchanges include: − Hearst, a private magazine publisher, created a private ad exchange 12 months ago and generates 19.0% of its real-time bidding ad sales through the platform − News Corp. created a private exchange for all digital inventory, rather than allocating only a portion to the exchange as is typical Downsides of private exchanges: − Complicates concerns as to whether the publisher is cannibalizing premium inventory − Concern that buyers who might have bought direct will buy cheaper inventory listed in the exchange Source: Wall Street Research, eMarketer 13 Winter 2014 Online Advertising Report
  14. 14. Increasing Concern Around Bot-Driven Traffic Impression fraud has long been an issue in the online advertising industry, though lately buyers, sellers and vendors have sought to quantify the problem Despite efforts by ad verification companies – including Integral Ad Science, DoubleVerify, Spider.io, WhiteOps and Solve Media – to expand their respective responses to combat bots that leave phony impressions, their attempts are hindered by a lack of regulatory action and complacency by some marketers and publishers concerned about the appearance of losing scale Advertisers will turn to platforms that have massive ad inventory but that can also offer guarantees against rip-offs; there are only a handful of them – with Facebook atop the list − Facebook Exchange (“FBX”) is effectively fraud-free as brands bid, in real-time, to retarget users on Facebook based on their browsing history − FBX stands out from traditional exchanges because it functions more like a curated department store than a bazaar, i.e., not just anyone can dump ad inventory into their exchange, thus removing the possibility of participation by the people who control botnets In the wake of Yahoo’s steady decline in the display ad business, Facebook has emerged as the only real rival to Google’s dominance of the online ad space − If the fraud fears persist, the two giants will likely consolidate their lead even more at the expense of the other exchanges − In Facebook’s case, it will further squeeze out the smaller ad-tech companies that have helped it build its exchange Source: Wall Street Research, GigaOM, Digiday, NY Times 14 Winter 2014 Online Advertising Report
  15. 15. Increasing Concern Around Bot-Driven Traffic There is a consensus among industry professionals that blacklisting suspect sites would be counterproductive, thus fraud-prevention vendors are well-positioned as key players in the ecosystem in order to help buyers understand and identify when the ‘consumer’ is not actually human Estimated Impression Fraud by Format Type Exchanges: 25% Networks: 20% Publisher Direct: 2% Total Advertising: 15% Bid Requests: 30% Source: Integral Ad Science, AdExchanger In-Banner Video: 40% Pre-Roll: 3% % Fraudulent Impressions 15 Winter 2014 Online Advertising Report
  16. 16. Emerging Mobile Ad Solutions The past year has seen the emergence of the Universal Buyside SDK, or “Meta DSPs” Large mobile app advertisers work with multiple DSPs or networks in order to reach and target against as broad an audience as possible; in a mobile app environment this presents a unique challenge In order to track effectiveness and attribution, DSPs and networks need to have their SDKs installed in the mobile app being advertised. As a result, mobile apps often integrate multiple buyside SDKs in their apps, causing end-user performance issues A Universal Buyside SDK allows mobile app developers to replace all buyside SDKs with a single “universal” SDK connecting to multiple networks / DSPs via API integrations, minimizing end-user performance issues Early focus for Universal Buyside SDKs was on attribution; now moving into trafficking, RTB, consolidated buying across multiple DSPs – the emergence of the “Meta DSP” − Over time, media buyers will use “Meta DSPs” to adjust and execute advertising budgets The emergence of this category of companies will drive more ad dollars into the mobile app ecosystem − Increased buy-side transparency − Smaller mobile ad networks and DSPs will have an easier time reaching scale − Re-targeting on mobile becomes a reality now − No longer needing to build SDKs, the large online (desktop) DSPs can now allocate spend to mobile more easily 16 Winter 2014 Online Advertising Report
  17. 17. Internet Giants Positioned to be Powerful Data Platforms Major players are best positioned to leverage massive user data and footprint to track and target users for advertising across devices and on- and off-network Twitter, Facebook and Google and potentially others with as large a user base (with unique login data) are positioned to use this data to monetize not just within their own network but "off-network" as well − Twitter's acquisition of MoPub affords them the opportunity to target users within MoPub's network of mobile apps and sites with data on those users mined from Twitter's data feeds − Facebook has just resumed activity on its own off-Facebook ad network after a nine month hiatus − Google is, unsurprisingly, aggressively moving toward having its users adopt Google+ when interacting with its suite of services including YouTube and Photos, in an effort to be able to track these users as they use these services in desktop and mobile environments Additionally, Google AdID is a way of creating a unique identifier / cookie that is uniquely tied to Google login data which could disrupt the entire environment for DSP players − This allows them to track their users not only within Google's network, but within any publisher site - desktop online or mobile - that is using Google for monetization or any of its social widget tools (i.e., Google+). − Additionally, publishers using DFP will be in this network of targetable users − Even if not within the targetable universe, third-party cookie information on such users can be used to generate a unique Google AdID which will allow Google to target that user for the time being until or unless an AdID is generated with Google specific data 17 Winter 2014 Online Advertising Report
  18. 18. DMP Trends DMPs have become fragmented as well – there is a need for a DMP for DMPs / DSPs to emerge – Validate and “cleanse” data from multiple DMPs / DSPs – Provide mediation across various DMPs / DSPs in order to maximize targeting accuracy, reach – Provide integrated DCO, tag management, ad verification capabilities as part of solution Key trend is the separation of the data layer from the execution layer in the marketing stack – Brands want to leverage learnings of their audience profiles and customer data and apply that to all marketing and consumer touch-points – online and offline Biggest opportunity for growth lies in ability to use accurate data profiles across all consumer marketing channels – Huge opportunity in using data to inform offline media buying – Important areas of focus also include social, video and mobile Current implementation efforts are focused on the core purpose of targeted media buying Long-term potential for DMPs to be integrated into core business software systems to facilitate datadriven decision making on sales, product development and financial management DMPs will also garner interest from large e-commerce players given the higher value that their data has for retargeting users who are looking to transact – DMPs in emerging markets are additionally being evaluated as foundational platforms to build out international affiliate and merchant businesses 18 Winter 2014 Online Advertising Report
  19. 19. DMP Trends Generally Supported Applications by Existing DMPs Priority Applications for Future DMPs Targeted Media Buying 82.0% Customer Insight Development Customer Insight Development 78.0% 93.0% Targeted Media Buying 90.0% Channel Optimization 45.0% Campaign Channel Attribution Campaign Channel Attribution 44.0% Multichannel Integration & Optimization 84.0% Emerging Channel Deployment 84.0% Channel Optimization 83.0% Multichannel Integration & Optimization 40.0% Advertising Yield Optimization 37.0% CRM Program Optimization 36.0% Site Content Optimization CRM Program Optimization 32.0% Creative Content Optimization 32.0% Emerging Channel Deployment Creative Content Optimization Site Content Optimization 23.0% 0% 20% Advertising Yield Optimization 40% 86.0% 60% 80% 0.0% 76.0% 73.0% 69.0% 59.0% 20.0% 40.0% 60.0% 80.0% 100.0% Survey conducted by IAP & Winterberry Group 19 Winter 2014 Online Advertising Report
  20. 20. Emergence of Native Advertising Native Advertising is gaining further traction as a preferred form of marketing for brands to engage more directly with customers and target audience − Breaks down the previous constraints created by traditional banner ads − Merges both paid and owned media into a form of converged media Native changes the online advertising ecosystem by creating new opportunities for both publishers (new inventory) and advertisers (new ways to connect and create awareness) − Brands want to leverage learnings of their audience profiles and customer data and apply that to all marketing and consumer touch-points – online and offline US Publishers that Offer Native Advertising on Their Site Likelihood Marketers Spend on Native Advertising in Next 6 Mo. 60% 17% Considering offering one this year 10% 73% 48% 50% 40% No 30% 20% Yes, currently 27% 17% 8% 10% 0% Very Likely Somewhat Likely Not Very Likely Not At All Likely Source: Wall Street Research 20 Winter 2014 Online Advertising Report
  21. 21. Native Advertising Trends Exact use and definition of native advertising continues to evolve in eyes of advertisers and publishers − While perhaps new in some circumstance such as promoted “tweets” or pins, some traditional publishers see native advertising as simply a new title for activities they’ve been undertaking for several years. − “Native” vs. Advertorial vs. sponsored/branded/custom content While effectiveness is currently rated based on measuring engagement, exact metrics and expectations continue to evolve Definitions of Native Advertising According to US Publishers Integration into the design of the publisher's site and lives on the same domain 93% Content provided by, produced in conjuction with or created on behalf of advertisers that runs within the editorial stream 79% 10% Editorial value to the reader and conforms to the reader's expectations 68% Contextually relevant, nonstandard advertising units Highly automated advertising content such as sponsored stories, publisher tweets, etc 17% 86% Clear delineation and labeling as advertising content Content marketing such as sponsored games, infographics, sites, etc. % of US Digital Professionals Buying Native Mobile Ads 73% 64% 61% 54% Considering offering one this year No Yes, currently Source: BusinessInsider, eMarketer 21 Winter 2014 Online Advertising Report
  22. 22. Native Advertising Trends Native Advertising: Pros Publishers Social Networks Brands & Agencies Users opt-in to content/pull strategy    New revenue streams    Life/reach/efficacy of owned media   Better paid-owned-earned media integration  Higher engagement  Strong potential for mobile platforms   Potential for deeper behavioral/contextual data   Reinforce or even improve UX   Amplification beyond fans/followers     Social Networks Brands & Agencies Native Advertising: Cons Publishers Scale/labor-intensive X Lack of landscape clarity, still evolving X Metrics/KPIs not fully defined X X X X X X Requires strong content ability Education/training required X X X Sales team training/pushback (more complex sales cycle) X Transparency/disclosure issues X X X Voice, context, environment, authenticity X X X Source: Wall Street Reporter 22 Winter 2014 Online Advertising Report
  23. 23. APPENDIX
  24. 24. SELECT S&A AD TECH EXPERIENCE
  25. 25. Mogreet Case Study Mogreet Acquired by payvia in May 2013 Mogreet is a leading mobile marketing company, providing mobile video and rich media messaging capabilities. S&A was retained by Mogreet as its exclusive financial advisor in evaluating strategic alternatives for the Company. S&A conducted a highly targeted solicitation process and approached a select group of potential acquirers deemed to be a strong strategic fit. S&A introduced Mogreet to payvia. Payvia has the largest direct carrier connected messaging and mobile payments platform in the U.S., covering 120mm unique mobile users and processing billions of mobile messages every year. payvia’s mobile payments and authentication platform works with merchants and developers to integrate a customized smart checkout experience. has been acquired by Mogreet’s mobile video marketing platform, which delivers high quality video to virtually any mobile phone, will provide payvia’s clients with tools to drive customer acquisition and revenue generation. The combined entity will be the only fully integrated end-to-end product solution for mobile engagement and payments to enterprises of all sizes. Leveraging its strong relationships and expertise in the mobile space, S&A generated a "home run" outcome for Mogreet and found the perfect partner for the business to scale its technology. 25 Winter 2014 Online Advertising Report
  26. 26. TapIt! Media Group Case Study TapIt! Media Group Acquired by Phunware in December 2012 TapIt! is a leading global independent mobile advertising platform. S&A was retained by TapIt! as its exclusive financial advisor to evaluate strategic alternatives for the Company. S&A conducted a highly targeted outreach process and approached a select group of potential acquirers deemed to be a strong strategic fit for the Company. S&A introduced TapIt! to Phunware and CEO, Alan Knitowski. Phunware is a leading fully integrated services platform enabling brands to engage, manage and monetize users on mobile. Phunware clients include major film and TV studios and highly visible brands such as the NFL, NASCAR, CBS, NBC Universal, The CW, ESPN, E!, OWN and Univision. Phunware issued an LOI to acquire TapIt! in November 2012 and the S&A team worked diligently to drive the acquisition to a close in late December 2012. has been acquired by Through the acquisition of TapIt!, Phunware will now be able to provide mobile advertising as part of its Mobile-as-a-Service (MaaS) monetization platform for iOS and Android mobile publishers. Leveraging its strong relationships and expertise in the mobile space, S&A was able to generate a "home run" outcome for TapIt! and find the right home for the business to allow it to scale its activities by leveraging Phunware's large development resources and access to sales channels into premier brands and advertisers. 26 Winter 2014 Online Advertising Report
  27. 27. Select Siemer Ventures Ad Tech Exits has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by 27 Winter 2014 Online Advertising Report
  28. 28. Select Siemer Ventures Ad Tech Investments Social media advertising and promotional platform Multi-channel digital distribution platform Marketing automation for local businesses Natural language search and analytics Audience analytics and crosschannel connection platform Social video distribution and seeding platform Publisher loyalty tools and offerings Lead generation for financial advisory firms Native advertising platform 28 Winter 2014 Online Advertising Report
  29. 29. Select Siemer Ventures Ad Tech Investments Integrated services platform for mobile Player engagement platform Hispanic targeted advertising platform Collaboration platform for marketers and agencies Social sharing tools for user aquisition Integrated online media and ad network Mobile demand side platform 29 Winter 2014 Online Advertising Report
  30. 30. PUBLIC & TRANSACTION COMPARABLES
  31. 31. S&A Market Observations Social and mobile ad companies with strong technology, unique publisher access and ad formats, high engagement and scaleability are attracting significant interest from strategic buyers and investors Mobile Online Strategic Interest / Priority Social SMS / MMS Marketing In-App Display In-App Video CPI Marketing Agency FB Game Ads Local / SMB Self-Serve Platforms Native Search RTB Auction Exchanges DSPs Ad Networks Affiliate Networks Display Low Interest / Valuation 31 High Winter 2014 Online Advertising Report
  32. 32. Public Online Advertising Valuation Comps (figures in millions of $USD, except per share) Company Name Online Media & Advertising AOL Inc. Apple Inc. Blinkx plc Criteo SA Demand Media, Inc. Digital Generation, Inc. Facebook, Inc. Google Inc. IAC/InterActiveCorp Marin Software Incorporated Microsoft Corporation Naspers Ltd. Renren Inc. Rocket Fuel Inc. Sohu.com Inc. Tremor Video, Inc. ValueClick, Inc. Yahoo! Inc. YuMe, Inc. Video Platforms Akamai Technologies, Inc. Amazon.com Inc. Brightcove, Inc. Limelight Networks, Inc. Netflix, Inc. Youku Tudou Inc. Source: Capital IQ and S&A proprietary research Share Price as of 1/9/2014 $45.97 543.46 3.41 31.90 5.50 13.39 58.23 1,141.23 70.33 10.68 35.76 101.38 3.36 62.29 78.55 5.01 22.80 41.02 7.74 Mean Median $46.68 401.92 11.33 2.22 340.99 33.55 Mean Median Market Cap Enterprise Value (EV) EV / CY 2013E Revenue EBITDA EV / CY 2014E Revenue EBITDA LTM Annual Revenue Growth $3,536.5 485,065.8 1,359.9 1,764.0 493.7 374.7 147,916.6 381,270.6 5,858.1 348.5 298,523.3 40,135.8 1,272.8 2,044.4 3,007.9 248.8 1,522.1 41,612.4 247.1 $3,474.4 461,435.8 1,289.3 1,726.8 437.2 700.9 139,163.6 333,671.6 5,755.8 243.9 235,114.3 42,291.2 364.3 1,946.0 2,497.2 152.5 1,662.5 39,880.3 184.2 1.5x 2.7x 5.6x NA 1.1x 1.8x 18.2x 5.6x 1.9x 3.2x 2.8x NA 2.1x 8.4x 1.8x 1.2x 2.9x 9.0x NA 7.4x 8.3x 37.6x NA 5.0x 6.0x 30.8x 15.5x 9.8x NM 7.4x NA NM NM 10.0x NM 7.6x 26.3x NA 1.4x 2.5x 4.5x NA 1.1x 1.8x 13.4x 4.8x 1.8x 2.6x 2.7x NA 2.3x 4.6x 1.5x 1.0x 2.7x 8.8x NA 6.8x 7.8x 29.1x NA 5.0x 5.7x 23.1x 12.9x 8.4x NM 7.5x NA NM NM 8.4x NM 7.1x 25.3x NA 3.3% 9.2% 49.9% 0.0% 10.8% -2.4% 48.2% 23.8% 16.4% 34.5% 11.1% 30.4% 20.3% 0.0% 29.6% 0.0% 24.7% -4.1% 0.0% $78,686.4 $2,526.2 $70,656.0 $2,221.6 4.4x 2.8x 14.3x 9.0x 3.6x 2.5x 12.3x 8.1x 17.0% 13.7% $8,354.6 183,972.4 326.0 215.9 20,206.3 5,606.5 $7,788.3 179,326.4 291.9 104.7 19,571.3 5,083.3 5.0x 2.4x 2.7x 0.6x 4.5x 10.3x 11.4x 35.7x NM 44.4x 56.0x NM 10.2x 26.4x NM NM 34.9x 68.2x 15.2% 22.5% 27.2% -1.1% 17.1% 88.1% $48,217.2 $4,340.3 $46,877.8 $4,040.1 2.7x 2.5x 30.5x 35.7x 18.3x 18.3x 15.9% 18.8% 32 4.4x 2.0x 2.3x 0.6x 3.8x 7.3x 2.3x 2.1x Winter 2014 Online Advertising Report
  33. 33. Public Online Advertising Valuation Comps (figures in millions of $USD, except per share) Company Name Mobile Media & Advertising Acotel Group SpA Hipcricket, Inc. InternetQ PLC Kongzhong Corp. Mandalay Digital Group, Inc Millennial Media Inc. Ad Agencies The Interpublic Group of Companies, Inc. MDC Partners Inc. Omnicom Group Inc. Publicis Groupe SA WPP plc Share Price as of 1/9/2014 $29.64 0.30 5.11 9.12 3.10 7.36 Mean Median $17.52 26.03 71.51 89.51 21.98 Mean Median Market Cap Enterprise Value (EV) EV / CY 2013E Revenue EBITDA $121.9 46.3 198.6 382.6 96.9 781.7 $101.3 42.8 191.4 225.0 89.2 660.5 NA 1.4x NA NA 4.2x 2.5x NA NM NA NA NM NM $271.3 $160.2 $218.4 $146.3 2.7x 2.5x NM NM $7,292.6 1,228.8 18,403.9 19,086.6 29,620.9 $8,439.6 1,865.2 21,585.9 20,024.4 34,533.9 1.2x 1.6x 1.5x NA 1.9x 9.5x 11.7x 9.9x NA 11.0x $15,126.5 $18,403.9 $17,289.8 $20,024.4 1.5x 1.5x 10.5x 10.5x EV / CY 2014E Revenue EBITDA NA 0.0x NA NA 1.9x 1.6x 1.2x 1.6x 1.1x 1.5x 1.4x NA 1.8x 1.5x 1.5x LTM Annual Revenue Growth NA 0.0x NA NA 15.9x 23.7x 17.4% 15.4% 36.9% -3.2% 184.0% 42.9% 13.2x 15.9x 48.9% 27.1% 8.4x 10.5x 9.5x NA 10.4x 1.4% 11.2% 2.4% 10.9% 4.4% 9.7x 10.0x 6.1% 4.4% Source: Capital IQ and S&A proprietary research 33 Winter 2014 Online Advertising Report
  34. 34. Selected Online Advertising Acquisitions (figures in millions of $USD) Date Announced 11/15/2013 11/05/2013 11/01/2013 10/25/2013 10/01/2013 08/05/2013 08/05/2013 07/17/2013 07/16/2013 07/15/2013 07/02/2013 07/01/2013 04/17/2013 04/09/2013 03/13/2013 03/12/2013 03/11/2013 02/28/2013 02/14/2013 12/31/2012 12/28/2012 12/21/2012 12/16/2012 12/07/2012 10/15/2012 10/10/2012 Target Emediate SiteScout Digital Window Aggregate Knowledge 41st Parameter / AdTruth Adap.tv, Inc. Grab Media Wireless Developer Agency Everyscreen Media AD-X IgnitionOne Adaptive Media, Inc. Digital Broadcasting Corp Dedicated Media, Inc. Tru Measure OLX, Slando.ru Amaze Atlas DMT Volt Media Media Whiz TapIt! Media Group Massive Media Ströer Interactive, freeXmedia Carview ZAO Begun Vertis Acquirer Cxense Centro Zanox NeuStar Experian AOL Blinkx [x+1] Media6Degrees (nka: Dstillery) Criteo ABS Capital Partners; Persimmon Capital Mimvi, Inc. Alloy Digital LIN Media The McClatchy Company Avito.ru St Ives Marketing Services Facebook Alphabird Australia Matomy Media Group Phunware Meetic Ströer Media Yahoo Japan Vieli Enterprises Quad/Graphics Implied EV $10.0 40.0 NA 119.0 324.0 405.0 10.7 NA NA NA NA 2.6 NA NA NA 570.0 37.9 NA NA 10.0 23.0 24.6 71.1 0.7 30.6 267.0 EV / LTM Revenue EBITDA NA NA NA NA NA NA NA NA NA NA 3.5x NA 1.0x NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 1.4x NA NA NA NA NA 0.1x NA NA NA NANA NA NANA NA NA 0.1x NANA NA NA NA Source: Industry estimates, Capital IQ and S&A proprietary research 34 Winter 2014 Online Advertising Report
  35. 35. Selected Online Advertising Acquisitions (figures in millions of $USD) Date Announced 10/04/2012 10/02/2012 09/25/2012 09/10/2012 08/21/2012 07/12/2012 07/04/2012 06/29/2012 06/26/2012 06/04/2012 05/31/2012 03/23/2012 03/14/2012 01/31/2012 12/31/2011 12/28/2011 12/26/2011 12/22/2011 12/15/2011 12/06/2011 12/05/2011 11/22/2011 11/21/2011 11/14/2011 11/14/2011 11/14/2011 Target Iris Associates Viewdle Synaptic Digital Sou Yi Lian Mei Network Technology BLiNQ Media Aegis Group Tro Media LookSmart Adverline Onet.pl OrangeSoda Beyond D TVC Group RealGravity RJ Palmer Call Genie GMO Searchteria Krush Sou Yi Lian Mei Network Technology Panache Enswers Nami Media Interface Webxu Media Mr. Youth LesPAC Acquirer Weare 2020 Motorola Mobility Definition 6 Network Technology Gannett Digital Marketing Dentsu Inc. Beyond Investments Platinum Management Financière Adverline Ringier Axel Springer Media Deluxe Beyond International The Economist Group Scripps Networks Interactive MDC Partners VoodooVox GMO AD Partners Boston Seed Capital, Raptor Ventures Network Technology 24/7 Media, Inc. KT LIN TV incuBeta Intelligent Marketing Webxu LBi International Mediagrif Interactive Technologies Implied EV $3.9 45.0 25.0 11.2 40.0 4,764.2 8.2 9.4 64.9 404.5 26.7 3.3 10.7 28.3 25.0 2.8 5.2 4.5 16.0 NA 39.9 8.3 12.0 31.9 40.0 71.3 EV / LTM Revenue EBITDA NA 13.3x NA NA NA NA 1.6x 3.8x NANA NA 2.6x 14.8x 2.1x 20.5x NM NM 2.1x 18.9x NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 15.0x NA NA NA NA NA 1.7x NA NA NA 5.8x 8.2x Source: Industry estimates, Capital IQ and S&A proprietary research 35 Winter 2014 Online Advertising Report
  36. 36. Selected Online Advertising Acquisitions (figures in millions of $USD) Date Announced 11/09/2011 10/31/2011 10/18/2011 10/06/2011 09/20/2011 09/13/2011 09/06/2011 08/30/2011 08/18/2011 08/08/2011 08/01/2011 07/24/2011 06/15/2011 06/13/2011 06/13/2011 05/23/2011 05/16/2011 04/25/2011 04/11/2011 04/07/2011 03/12/2011 03/02/2011 02/14/2011 02/04/2011 01/31/2011 Target Prime Visibility Media Group interclick Auditude, Inc. smartclip AG Sometrics AdoTube Digital & Direct Communications chors, EyeWonder CC Media IndieClick Media Group Dotomi Adperio MediaMind AdMeld ACTSoft BzzAgent 5to1 Aspen Marketing Services Tatto Burst Media Adenyo Juno Internet Business.com Reply! GoViral Limited Source: Industry estimates, Capital IQ and S&A proprietary research Acquirer Blinkx Yahoo! Adobe Systems Adconion Media Serve Virtual Enterprises Exponential Interactive Sapientnitro Digital Generation APN News & Media Demand Media ValueClick Matomy Media Group Digital Generation Google NEOWIZ Games DunnhumbyUSA Yahoo! Epsilon Data Management Ozura World Blinkx Motricity Axel Springer Resource Nation Saints Capital AOL Mean Median 36 Implied EV $36.0 250.9 NA NA 30.0 19.6 64.0 58.3 12.6 13.0 278.2 30.0 422.7 400.0 14.3 60.0 26.4 345.6 60.0 30.1 139.5 53.4 10.5 10.0 91.7 $157.9 $30.1 EV / LTM Revenue EBITDA 1.2x NA 2.0x 23.6x NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 5.6x NA 0.6x NA 5.0x 28.5x NA NA NA NA NA NA NM NM 1.4x NA NA NA 0.8x NM 10.6x NM NA NA NA NA NA NA 7.4x NA 3.7x 14.6x 2.1x 14.8x Winter 2014 Online Advertising Report
  37. 37. Selected Mobile Advertising Acquisitions (figures in millions of $USD) Date Announced 12/03/2013 09/09/2013 08/13/2013 04/26/2013 04/25/2013 04/26/2013 04/11/2013 04/11/2013 03/26/2013 02/14/2013 01/15/2013 12/28/2012 10/17/2012 10/10/2012 10/01/2012 08/10/2012 08/06/2012 05/23/2012 05/14/2012 03/16/2012 03/05/2012 11/14/2011 08/03/2011 07/20/2011 04/21/2011 Target Rhythm NewMedia MoPub Jumptap E-surfing Media Parse Wavii mia Pulse Summly Skyfire Labs Redmas TapIt! Media Group SPiRE, Inc ThinkNear e-machi town Howmark Mobile Innity Corporation MobSmith Buongiorno Social Hour Amobee Mobile Interactive Group HipCricket JAGTAG Greystripe Acquirer Blinkx Twitter Millennial Media China Telecommunications Corp Facebook Google Mandalay Digital Group LinkedIn Yahoo Opera Software Adsmovil Phunware motionBEAT Telenav Hikari-Tsushin MOKO.mobi DA Consortium The Rubicon Project DOCOMO Deutschland PlayPhone SingTel Velti Augme Technologies Augme Technologies ValueClick Implied EV $65.0 350.0 261.3 242.1 85.0 30.0 8.2 90.0 30.0 155.0 NA 23.0 23.0 22.4 25.9 4.9 20.4 10.0 336.0 51.5 321.0 62.2 55.8 6.1 70.6 EV / LTM Revenue EBITDA 4.7x NA NA NA 4.1x NM NA NA NA NA NA NA NA NA NA NA NA NA 12.0x NA NA NA NA NA NA NM NA NA 0.2x 2.2x 2.4x NA 1.6x 16.9x NA NA 1.1x 11.4x NA NA 10.7x NA 3.1x NA 6.7x NM 4.3x NA 2.8x NA Source: Industry estimates, Capital IQ and S&A proprietary research 37 Winter 2014 Online Advertising Report
  38. 38. Selected Mobile Advertising Acquisitions EV / LTM (figures in millions of $USD) Date Announced 04/19/2011 03/12/2011 03/03/2011 09/30/2010 01/20/2010 01/05/2010 11/09/2009 Target Where Adenyo Adsparq Mobclix AdMarvel Quattro Wireless AdMob Acquirer Mean Median Revenue 7.9x 10.6x NA NA 2.6x 6.9x 12.5x EBITDA NA NM NA NA NA NA NA $114.7 $55.1 eBay Motricity Mobivity Holdings Velti Opera Software Apple Google Implied EV $135.0 139.5 $7.4 54.1 23.0 275.0 582.2 4.9x 4.1x 10.2x 11.4x Source: Industry estimates, Capital IQ and S&A proprietary research 38 Winter 2014 Online Advertising Report
  39. 39. Select Transaction Case Studies Acquires Acquires Date Announced: September 9, 2013 Date Announced: August 7, 2013 Target Description: MoPub is an ad serving platform for mobile application publishers to manage their ad inventory on iOS and Android devices. Target Description: Adap.tv offers a technology platform that automates the process of buying and selling video advertising on the Web, mobile devices and connected TVs. Implied Enterprise Value: $350.0mm Implied Enterprise Value: $405.0mm Implied EV / Revenue Run-Rate Multiple: 3.5x Implied EV / Revenue Multiple: 3.5x Deal Commentary / Rationale: Deal Commentary / Rationale:    Twitter’s acquisition of MoPub capitalizes on the explosion in mobile device usage and the industry-wide shift toward programmatic and RTB   The combination of AOL On video network and Adap.tv will give AOL an end-to-end solution and video stack for publishers and advertisers, including monetization  Twitter intends to incorporate MoPub’s technology into its own ad platform, allowing advertisers to easily automate and serve their ad buys while also significantly expanding their reach AOL features a considerable amount of premium video content (in-house or distributed through content partnerships) AOL will be able to offer its unsold inventory to be monetized via the Adap.tv Exchange Twitter now has the scale in mobile to offer retargeting of its users as they traverse the desktop/different mobile web and within apps 39 Winter 2014 Online Advertising Report
  40. 40. Select Transaction Case Studies Acquires Acquires Date Announced: August 13, 2013 Date Announced: July 15, 2013 Target Description: Jumptap, Inc. operates a mobile audience targeting platform that provides audience-centric advertising solutions to reach mobile users in the United States and internationally. Target Description: AD-X offers real time analysis reports via dashboard or API to integrate into a system. It analyses advertising effectiveness in driving downloads. Implied Enterprise Value: $261.3mm Implied EV / Revenue Multiple: NA Implied Enterprise Value: $12.6mm Implied EV / LTM Revenue Multiple: 4.1x Deal Commentary / Rationale: Deal Commentary / Rationale:    40 The AD-X acquisition is intended to address the major lacking component (mobile) in their platform capabilities on their path to an IPO  The Jumptap deal was likely driven by the rise of online DSPs / RTB platforms and the pressure the online branded advertising networks are seeing, which has led to a continuing decline in eCPMs The combination of AD-X and Criteo will give mobile marketers the ability to target and deliver relevant ads across smartphones and tablets, and then track results  Millennial Media adds expertise in programmatic buying, third-party data and performance marketing as it looks to build a mobile advertising platform capable of competing with Google and Facebook AD-X is one of the earliest providers of a universal SDK solution and has 120+ advertisers including, eBay, Expedia and Priceline Winter 2014 Online Advertising Report
  41. 41. Selected Online Advertising Private Placements Date Company Nov. 2013 Signpost Nov. 2013 Multichannel Nov. 2013 Run Oct. 2013 Revenew Oct. 2013 Komli Media India Sep. 2013 YD Group B.V. Sep. 2013 Revenew Aug. 2013 Jebbit Jul. 2013 Adtheorent Description Spark Capital Partners, OpenView Venture Partners, Scout Ventures NA Amount Raised ($M) 10.0 Dmitry Fedotov, Hong Kong Government, Kevin Ng NA 3.0 Verizon Ventures A 1.5 IllinoisVENTURE, Tgap Ventures, Allos Ventures B 5.0 Draper Fisher Jurvetson, Norwest Venture Partners, Peepul Capital, Nexus Venture Partners, Helion Venture Partners Partech International, Active Venture Partners, SGECR IllinoisVENTURES, Tgap Ventures, Allos Ventures NA 29.8 NA 6.1 A 6.0 Boston Seed Capital, Data Point Capital NA 1.3 Mogility Capital, OmniCapital Group, Verizon Ventures NA 4.9 Round Investors Operates an online advertising platform that connects local businesses with new customers in the United States Aids marketers in automating online advertising with its cloud-based advertising manager Offers on-demand access to digital ad inventory and optimization techniques Enables a network of manufacturers, resellers and industry groups to promote brands Offers solutions across lead acquisition, targeting, rich media, audience measurement and brand measurement Provides performance display advertising technology and services Enables a network of manufacturers, resellers and industry groups to promote brands Creates brand awareness among college students Develops real-time bidding-enabled mobile ad networks Round 1 Does not include some undisclosed funding Source: Industry estimates, Capital IQ and S&A proprietary research 41 Winter 2014 Online Advertising Report
  42. 42. Selected Online Advertising Private Placements Date Company A Amount Raised ($M) 68.3 Insight Venture Partners NA 35.8 OpenView Venture Partners NA 5.0 Battery Ventures, Western Technology Investment, Javelin Venture Partners Crede CG NA 8.0 NA 3.4 Hummer Winblad Venture Partners, Iris Capital, Sequoia Capital, General Catalyst Partners, Conde Nast Americas C 9.0 CommonAngels, Kirshenbaum Bond Senecal, Neu Venture Capital, New Atlantic Ventures, RRE Ventures Accel Partners, Samsung Venture Investment Corporation, Cox Media Group Ventech, Isai Gestion Description NA 5.0 NA 20.0 B 4.0 Round Investors Jul. 2013 Affec.Tv Improves the relevancy of online advertisements Octopus Investments Limited Jul. 2013 Mediaspectrum Jul. 2013 Balihoo Provides a cloud technology platform for mobile advertising Provides web-based local marketing automation technology and services to brands with local marketing needs Jun. 2013 Boost Media Jun. 2013 Jun. 2013 Interntainment Media Flite Jun. 2013 Yieldbot May 2013 Collective May 2013 StickyADStv Operates a platform that enables advertisers to optimize advertisments Engages in developing technologies and social media platforms Develops a cloud-based advertising platform that enables advertisers, publishers and marketers to deliver campaigns Provides relationship mapping in an analytical and graphical nature of visitor intent Provides multi-screen advertising solutions Operates an online video advertising network Round 1 Does not include some undisclosed funding Source: Industry estimates, Capital IQ and S&A proprietary research 42 Winter 2014 Online Advertising Report
  43. 43. Selected Online Advertising Private Placements Date May 2013 May 2013 Apr. 2013 Apr. 2013 Apr. 2013 Apr. 2013 Apr. 2013 Apr. 2013 Apr. 2013 Company Round Investors Round North Atlantic Capital, Spark Capital Partners, Foundry Group New Enterprise Associates, Comcast Ventures, Valhalla Partners, Catalyst Investors, Pinnacle Ventures Iris Capital, Tiger Global Management, Jabbar Internet Group NA Amount Raised ($M) 6.0 D 68.3 NA 3.0 Meditor Group Limited, Violette Company Limited Institutional Venture Partners, Sequel Venture Partners, General Catalyst Partners, Costanoa Venture Capital Northzone Ventures, Conor Venture Partners NA 3.0 B 25.0 B 3.0 iTech Advisors A 3.5 Avalon Ventures A 5.8 NA 10.0 Description Triggit Offers a toolset that enables advertisers to optimize advertisements Videology Provides online video advertising solutions via the Videology Addressable Audience Platform Ikoo Media Provides a digital advertising solution for various advertising campaigns and options Phorm Offers solutions for engaging in behavioral online advertising DataLogix Develops and delivers purchase-based audiences models targeting to drive online and offline sales Sticky AB Provides a platform to make sure that display advertisements are seen Garpun Develops online and management tools for digital agencies and coporate advisors Nanigan Operates an application programming interface for Facebook advertisements Moment Systems Provides digital advertising solutions for advertisers and agencies Redpoint Ventures, CBC Capital, WPP Digital, KPCB China 1 Does not include some undisclosed funding Source: Industry estimates, Capital IQ and S&A proprietary research 43 Winter 2014 Online Advertising Report
  44. 44. Selected Online Advertising Private Placements Date Company Mar. 2013 Demandbase Mar. 2013 Zamplus Technology Mar. 2013 Innovid Mar. 2013 AdzCentral Mar. 2013 OpenX Mar. 2013 Wantr Mar. 2013 Turn Feb. 2013 Virool Feb. 2013 Samba D Amount Raised ($M) 15.0 NA 20.0 Sequoia Capital, T-Venture Holding GmhH, Genesis Partners, Vintage Investment Partners C 11.0 Electric Sheep, Digital Media Partners A 3.2 Samsung Venture Investment, Accel Partners, Index Ventures, SAP Ventures, Mitsui, Presidio Ventures SEED Capital Denmark and Other Angels E 25.0 NA 0.6 NA NA 3.6 Draper Fisher Jurvetson, Menlo Ventures, Phenomen Ventures, #DominateFund, Various Investors, Thomvest Ventures Initial Capital, 500 Startups, e.Bricks Digital, Rhodium NA 6.6 NA 0.5 Description Round Investors Provides business contact and lead generation solutions for B2B marketing and sales professionals Provides professional data service solutions to the digital advertising industry Provides interactive video advertisment solutions that enable advertisers and publishers to add interactive elements Provides advertising technology tools and expertise to improve clients’ digital media spending Provides integrated enterprise digital and mobile advertising technology Altos Ventures, Sigma Partners, Sutter Hill Ventures, Scale Venture Partners, Adobe Ventures, Costanoa Venture Capital Intel Capital, Northern Light Venture Capital Allows users to discover products and shop online Delivers real-time insights for advertising agencies and marketers Operates as a viral video advertising network Provides content management and distribution solutions online Round 1 Does not include some undisclosed funding Source: Industry estimates, Capital IQ and S&A proprietary research 44 Winter 2014 Online Advertising Report
  45. 45. Selected Online Advertising Private Placements Date Company Description Draper Fisher Jurvetson, Norwest Venture Partners, Peepul Capital, Nexus Venture Partners, Helion Venture Partners Seedfund NA Amount Raised ($M) 29.8 NA 3.0 August Capital, Morgenthaler, Onset Ventures, QuestMark Partners, Thayer Ventures NA 20.0 Time Warner Investments, Avalon Ventures, Union Square Ventures Bain Capital Ventures NA 6.0 A 15.0 Cava Capital, Extreme Venture Partners, Verizon Communications, Webb Investment Network, Advancit Capital Mark Cuban, David Cohen, Scott Banister, Peter Weck, Tod Sacerdoti, Don Hutchison, Jared Kopf, Jason Seats, William Lohse, Savan Devani, Shriraj Gaglani, I/O Ventures Bayern Kapital, LBBW Venture Capital, HighTech Gründerfonds, Mountain Super Angel, BayBG Bayerische Beteiligungsgesellschaft Atlas Venture, Flybridge Capital Partners, Infocomm Investments, Menlo Ventures, Thomvest Ventures NA 1.5 NA 0.8 NA 5.0 NA 27.0 Round Investors Oct. 2013 Komli Media India Feb. 2013 Banyan Netfaqs Feb. 2013 Adara Media Feb. 2013 Simulmedia Feb. 2013 Persado Feb. 2013 LocalResponse Offers solutions across lead acquisition, targeting, rich media, audience measurement and brand measurement Provides media, marketing, and digital advertising services Provides an audience platform for digital advertisers to reach highly-targeted traveler and hospitality audiences Provides a digital advertisement platform for linear television Provides marketing persuasion technology solutions Operates a social advertising platform Feb. 2013 VidIQ Provides YouTube video marketing suite Feb. 2013 Crealytics Specializes in performance search engine marketing Jan. 2013 DataXu Provides multi-channel demand side platform for online, video, and mobile advertisers Round 1 Does not include some undisclosed funding Source: Industry estimates, Capital IQ and S&A proprietary research 45 Winter 2014 Online Advertising Report
  46. 46. Selected Online Advertising Private Placements Date Jan. 2013 Jan. 2013 Jan. 2013 Jan. 2013 Jan. 2013 Company Provides social marketing-as-a-service programs ADmantX Provides advertising solutions based on semantic technology Wanderful Media Provides a local search platform where consumers can find the best local deals Adyoulike Provides interactive advertising formats to global brands and agencies Optimal Provides audience-based advertising technologies AppNexus Jan. 2013 Celtra Jan. 2013 PinYou Jan. 2013 Prosper Marketplace B 1.0 NA 5.0 Banexi Ventures Partners A 1.2 Silicon Valley Bank, Siemer Ventures, WGI Group, Neu Venture Capital, DoubleRock, Signal Ventures, The Social Internet Fund, Social Starts, Stonnington Asset Allocation Technology Crossover Ventures, Venrock, Tribeca Venture Partners B 4.5 D 75.0 NA 27.0 NA 20.0 NA 20.0 Round Investors Extole Jan. 2013 C Amount Raised ($M) 7.6 Description Offers cloud-based real-time advertising platform for global ad networks and demand-side platforms Provides a web-based self-service platform for advertising optimization Operates as a digital advertisement wireless network technology company Operates as a peer-to-peer lending marketplace to originate loans and notes Shasta Ventures, Norwest Venture Partners, Redpoint Ventures, Trident Capital Atlante Ventures, Mezzogiorno NA Thomvest Ventures, Atlas Venture, Flybridge Capital Partners, Menlo Ventures CBS Capital, Vangoo Investment Partners, Fude Capital Accel Partners, Draper Fisher Jurvetson, CrossLink Capital, Sequoia Capital, Atlanticus Holdings, Omidyar Network, Volition Capital, Tomorrow Ventures. QED Partners Median Round $6.0 1 Does not include some undisclosed funding Source: Industry estimates, Capital IQ and S&A proprietary research 46 Winter 2014 Online Advertising Report
  47. 47. RECENT AD TECH IPOS
  48. 48. Tremor Video (TRMR) IPO Date: 6/26/13 Founded: 2005 Company Size: 287 Employees IPO Price: $10.00 CEO: William Day Total Revenue: $125.5mm Proceeds Raised: $69.8mm Stock Price Equity Value Closing Price at Day 1 $8.50 $420.1 $395.6 3.5x Closing Price at 1 Month $8.67 $428.5 $403.0 3.6x Closing Price at 3 Month $10.04 $497.4 $634.9 5.2x Year-End Closing Price $5.80 $288.0 $191.8 Description: Provides technology-driven video advertising solutions that enable brand advertisers to engage consumers in various Internetconnected devices Enterprise EV/LTM Value Rev 1.5x VC Investors & Owners: Canaan Partners, Draper Fisher Johnson, EDB Investments, European Founders Fund Management, Flybridge Capital Partners, General Catalyst Partners, Keating Capital, Masthead Venture Partners, Meritech Capital Partners, Relay Ventures, SamStella, SAP Ventures, Triangle Peak Partners, W Capital Partners Historic Stock Price: From IPO to Year-End Public Commentary “The company has seen a substantial increase in demand for in-stream ads, but also recently launched a bidding and buying feature available through its video advertising platform called VideoHub Connect. Even more interesting, the company has formed partnerships with video inventory suppliers such as DoubleClick AD Exchange, LiveRail, and SpotXchange. The ability to grab some of the huge growth in RTB should boost an already robust growth rate. The recent second-quarter results showed a strong 41% growth rate as advertisers and brands continue to push forward with video ads that offer a higher level of interactivity with the consumer. Tremor generated a gross margin of 46.5% or roughly in line with Rocket Fuel.” -Wall Street Research $12 $10 $8 $6 $4 $2 6/26/2013 08/02/2013 09/10/2013 10/16/2013 11/21/2013 12/31/2013 Sources: Capital IQ, Yahoo Finance, CrunchBase, The Street 48 Winter 2014 Online Advertising Report
  49. 49. Rocket Fuel (FUEL) IPO Date: 9/19/13 Founded: 2008 Company Size: 552 Employees IPO Price: $29.00 CEO: George John Total Revenue: $231.7mm Proceeds Raised: $107.9mm Stock Price Equity Value Closing Price at Day 1 $56.10 $1,822.9 $1,822.8 11.4x Closing Price at 1 Month $64.93 $2,109.8 $2109.7 13.2x Closing Price at 3 Month $56.83 $1865.2 $1766.8 9.1x Year-End Closing Price $61.49 $2,018.2 $1,919.7 Description: Provides artificial-intelligence digital advertising solutions built on its real-time optimization engine and computational infrastructure to deliver measurable digital advertising campaigns Enterprise EV/LTM Value Rev 9.8x VC Investors & Owners: Comerica Bank, Cross Creek Advisors, DLA Piper, Labrador Ventures, Mohr Davidow Ventures, Nokia Growth Partners, Northgate Capital Group, Summit Partners, Western Technology Investment, Wilson, Sonsini, Goodrich & Rosati Historic Stock Price: From IPO to Year-End Public Commentary “Most market analysis agrees that demand for all forms of digital advertising is going to explode over the next few years whether mobile, social, or video. The companies that can bridge that conversion will make huge gains for shareholders…one potential winner could be Rocket Fuel based on recent results. MAGNA Global forecasts that the real-time bidding, or RTB, segment of the market will explode from roughly $4 billion spent in 2012 to $16 billion by 2016….The CAGR rate and the recent growth rates in excess of 100% is what drove the IPO of Rocket Fuel to double during the first day of trading. The other ad tech stocks are seeing more modest growth in the 30% range that hasn't attracted investors seeking the extremely fast growth companies. In addition, Rocket Fuel is involved in the intersection of key buzzwords of Artificial Intelligence and Big Data that likely grabbed the attention of investors.” -Wall Street Research $70 $60 $50 $40 $30 $20 9/19/2013 10/09/2013 10/29/2013 11/18/2013 12/9/2013 12/30/2013 Sources: Capital IQ, Yahoo Finance, CrunchBase, The Street 49 Winter 2014 Online Advertising Report
  50. 50. Marin Software (MRIN) IPO Date: 3/21/13 Founded: 2006 Company Size: 424 Employees IPO Price: $14.00 CEO: Chris Lien Total Revenue: $76.7mm Proceeds Raised: $97.7mm Description: Operates a cloud-based digital advertising management platform for large-scale advertising campaigns Stock Price Equity Value Enterprise EV/LTM Value Rev Closing Price at Day 1 $16.26 $502.6 $481.9 8.1x Closing Price at 1 Month $14.61 $451.6 $430.9 7.2x Closing Price at 3 Month $10.41 $324.0 $214.5 3.4x Year-End Closing Price $10.24 $334.1 $229.5 3.2x VC Investors & Owners: Amicus Capital, Benchmark Capital, CrossLink Capital, DAG Ventures, Temasek Capital, Triangle Peak Partners Historic Stock Price: From IPO to Year-End Public Commentary “As digital advertising becomes more complex, Marin offers a solution that allows advertisers to manage across different platforms, including Google and Facebook, from one entry point. The cloud-based platform allows those advertisers to measure, manage, and optimize their advertising investments while also saving time and improving outcomes. Currently, the platform generates 90% of revenue from search, but mobile is quickly becoming an additional focus with the increased complexity due to fragmentation among devices and operating systems. The company reached 584 active advertisers during its 2013 second quarter, compared to 487 in the same period last year. The solid growth and subdued stock price should attract more investors in the months ahead. Not to mention, the stock lock-up period from the IPO ended on September 18, providing less fears of massive insider dumping.” -Wall Street Research $18 $16 $14 $12 $10 $8 3/21/2013 05/16/2013 07/12/2013 09/06/2013 10/31/2013 12/27/2013 Sources: Capital IQ, Yahoo Finance, CrunchBase, The Street 50 Winter 2014 Online Advertising Report
  51. 51. YuMe (YUME) IPO Date: 8/6/13 Founded: 2004 Company Size: 329 Employees IPO Price: $9.00 CEO: Jayant Kadambi Total Revenue: $156.6mm Proceeds Raised: $42.9mm Recent Acquisition: Crowd Science on January 15, 2013 Stock Price Equity Value Closing Price at Day 1 $9.00 $286.2 $260.4 2.1x Closing Price at 1 Month $8.16 $260.8 $314.1 2.4x Closing Price at 3 Month $8.00 $255.7 $309.0 2.3x Year-End Closing Price $7.45 $238.0 $175.0 Description: Provides technology-driven video advertising solutions which enables brand advertisers to find and target audiences across Internet-connected devices and digital media properties Enterprise EV/LTM Value Rev 1.2x VC Investors & Owners: Accel Partners, DAG Ventures, Felicis Ventures, FLOODGATE, Intel Capital, Khosla Ventures, Menlo Ventures, Samsung Venture Investment Corporation, TransLink Capital, WestSummit Capital Historic Stock Price: From IPO to Year-End Public Commentary $14 YuMe’s PQI already provides composite inventory grading for factors such as video player size, content association and device type, while improving brand lift, video completion rate (VCR) and a number of other measures, including fraud detection. However, this latest improvement will give advertisers additional transparency into inventory quality. This is all possible because of the software YuMe embeds across its inventory partner screens – the YuMe SDK. $12 $10 -Wall Street Research $8 $6 8/6/2013 9/6/2013 10/6/2013 11/6/2013 12/6/2013 Sources: Capital IQ, Yahoo Finance, CrunchBase, The Street 51 Winter 2014 Online Advertising Report
  52. 52. Millennial Media (MM) IPO Date: 3/28/12 Founded: 2006 Company Size: 437 Employees IPO Price: $13.00 CEO: Paul Palmieri Total Revenue: $264.3mm Proceeds Raised: $111.2mm Recent Acquisition: Jumptap on August 13, 2013 Stock Price Equity Value Closing Price at Day 1 $25.00 $1,872.3 $1,855.5 17.9x Closing Price at 1 Month $18.97 $1,420.7 $1,404.0 13.5x Closing Price at 3 Month $12.75 $970.1 $1,040.1 9.0x Year-End Closing Price $7.27 $772.2 $651.0 Description: Provides mobile advertising solutions for advertisers and developers in the Unites States and internationally Enterprise EV/LTM Value Rev 3.0x VC Investors & Owners: Acta Capital, Bessemer Venture Partners, Charles River Ventures, Columbia Capital, New Enterprise Associates Historic Stock Price: From IPO to Year-End Public Commentary “[Millennial] guided to between $80 million and $85 million in third quarter 2013 for the combined entity, yet it was unwilling to break out the Millennial only portion. This raised concerns among analysts that the company was struggling to reach growth targets…The reason it might not matter is the company guided between $340 million to $350 million for the full year. Considering the combined companies generated $230 million in revenue for 2012, the growth forecast of at least 48% should appease investors. Either the Millennial part will continue strong growth or the new Jumptap programmatic platform will boost the growth rate…Not to mention, one has to wonder if all these expected growth gains were coming from Jumptap why it would agree to a stock based buyout at a low revenue multiple.” -Wall Street Research $30 $25 $20 $15 $10 $5 3/28/2012 9/4/2012 2/11/2013 7/21/2013 12/28/2013 Sources: Capital IQ, Yahoo Finance, CrunchBase, The Street 52 Winter 2014 Online Advertising Report
  53. 53. Criteo (CRTO) IPO Date: 10/29/13 Founded: 2005 Company Size: 700 Employees IPO Price: $31.00 CEO: Jean-Baptiste Rudelle Total Revenue: $594.9mm Proceeds Raised: $233.7mm Recent Acquisition: AD-X Limited on July 15, 2013 Stock Price Equity Value Closing Price at Day 1 $35.39 $1,957.0 $1,907.6 4.2x Closing Price at 1 Month $36.10 $1996.3 $1,959.1 3.7 Closing Price at 3 Month NA NA NA NA Year-End Closing Price $34.20 $1,819.2 $1,854.0 Description: Provides pay-per-click performance display advertising solutions by enabling e-commerce companies to leverage large volumes of granular data to engage and convert their customers Enterprise EV/LTM Value Rev 3.5x VC Investors & Owners: Adams Street Partners, Bessemer Venture Partners, Elaia Partners, Fourvest Sarl, IDInvest Partners, Index Venture Associates IV Limited, Index Ventures, SAP Ventures, Softbank Capital, YJ Capital Historic Stock Price: From IPO to Year-End Public Commentary “Criteo is one of a number of companies, including Google and Facebook, to benefit from the on-line ad boom, the result of major companies following their audience to the web and away from newspapers and magazines… The company developed a technology known as "re-targeting" which catches users who have visited a shopping website without buying anything, and then showing them ads for similar items on other sites to tempt them back… Criteo has roughly doubled its revenues every year since 2010 to reach 271.9 million euros in 2012. It made a profit of 800,000 euros last year but swung to a loss of 4.9 million in the first six months of 2013 because of increased investments. -Reuters $40 $35 $30 $25 10/29/2013 11/13/2013 11/28/2013 12/13/2013 12/28/2013 Sources: Capital IQ, Yahoo Finance, CrunchBase, The Street 53 Winter 2014 Online Advertising Report
  54. 54. Contact Information Siemer & Associates, LLC ● Member FINRA/SIPC 1333 2nd Street, Suite 600 Santa Monica, CA 90401 Phone: (310) 861-2100 Fax: (310) 861-2125 www.siemer.com

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