AdExchanger – Industry Preview 2014 · Case Study – Twitter Acquires MoPub for $350 million ......

Marketing & Tech Investment Landscape

presented by

Wilma Jordan, Founder & CEOThe Jordan, Edmiston Group, Inc.

January 21, 2014

AdExchanger – Industry Preview 2014

2AdExchanger – Industry Preview 2014

About JEGI

The Jordan, Edmiston Group, Inc. (“JEGI”)

The Leading Independent Investment Bank Serving the Media, Information, Marketing and Technology Sectors

ExperienceFounded in 1987, JEGI has completed more than 500 transactions, spanning media, information, marketing and technology companies.

Industry LeadershipJEGI has deep relationships among global, middle-market and emerging media, information, marketing

and technology companies, enabling it to anticipate trends and provide valued advice.

Primary FocusJEGI focuses primarily on executing sell-side assignments, conducting efficient,

highly effective processes to meet the needs of the client and achieve maximum value.

IndependenceJEGI is committed to the success of each client assignment, with no sales and trading, lending or private equity investing to conflict with the firm’s advisory clients' priorities.

ResultsJEGI’s team-driven process achieves the highest transaction success rates and

enthusiastic endorsements from the firm’s satisfied clients.


JEGI – Leading The Market

#1 8th Consecutive Year

JEGI – The Consistent Market Leader in Transactions Completed Among the Sectors It Serves

*Source: 451 Group


Industry-Leading Domain Expertise

27 Transactions in 2012/13; Over $2 Billion in Enterprise Value

In each transaction listed above, JEGI’s client is mentioned first.


Media, Marketing and Technology M&A Driven by Lots of Small Deals

M&A Overview


Industry SectorNo. of Deals

Value (millions)

No. of Deals

Value (millions)

No. of Deals

Value

B2B Online Media & Technology 57 $601 84 $11,957 (32%) (95%)

B2C Online Media & Technology 219 $6,197 252 $10,088 (13%) (39%)

Business‐to‐Business Media 34 $452 34 $411 0% 10%

Consumer Magazines 37 $1,703 43 $277 (14%) 515%

Database & Information Services 69 $6,029 59 $11,450 17% (47%)

Education Information, Technology & Training 81 $6,954 64 $5,255 27% 32%

Exhibitions & Conferences 64 $3,751 50 $874 28% 329%

Healthcare Information & Technology 209 $10,458 156 $10,461 34% (0%)

Marketing & Interactive Services 479 $45,079 485 $20,501 (1%) 120%

Mobile Media & Technology 145 $7,398 124 $3,468 17% 113%

Total 1,394 $88,623 1,351 $74,742 3% 19%Source: JEGI Transaction Database

Media, Information, Marketing & Technology M&A Activity

2013 2012

January ‐December January ‐ December % Change

Marketing Services & Technology –Remains Most Active M&A Sector

M&A Volume and Value by Sector


Five “Hot” Trends Driving Marketing/Tech M&A

1

Consulting Firms Becoming Marketing Services FirmsConsulting Firms Becoming Marketing Services Firms

Non-Tech Companies Buying Tech Start-upsNon-Tech Companies Buying Tech Start-ups

5

2 Acqui-HiresAcqui-Hires

Continued Rise of Mobile AdvertisingContinued Rise of Mobile Advertising3

Building Out the “Stack”Building Out the “Stack”4


Non-Tech Cos Buying Tech Start-ups

Retail – traditional retailers actively acquiring technology, to compete with e-commerce sites, such as Amazon

• Walmart (Walmart Labs), Target, Staples and others are already actively acquiring

Technology start-ups enable expanded customer reach, to a younger demographic

Customer loyalty is key – interaction and personalization important

To help boost sales and customer interaction

• Companies collecting vast amounts of data (big data) need to acquire the tools to analyze and utilize the data

Companies have developed Labs to house acquisitions – key is the ability to retain talent

1

Key Trends


Non-Tech Cos Buying Tech Start-ups

1

Recent examples of non-tech companies acquiring tech start-ups:

Monsanto acquired Climate Corporation (big data weather tech) for $930 million

Under Armour bought MapMyFitness (fitness tracking app) for $150 million

Staples acquired e-commerce personalization company Runa

First Data acquired mobile loyalty start-up Perka and mobile payments start-up Clover

E.W. Scripps acquired Newsy (delivers news via devices) for $35 million

Ford Motors bought Livio, an in-car music app, for $10 million

Live Nation acquired Meexo, a mobile start-up for connecting people more meaningfully

Walmart acquired Tasty Labs, a social software developer

Securing Talent & Technology to Compete


Acqui-Hires2

Corporations, especially high-growth digital media/marketing/tech companies (e.g., Google, Facebook, Apple, Yahoo!, Twitter) acquiring for talent

Typically, valuation based on price per head – mostly cash deals, possibly some stock, but earn-outs usually avoided

• “Talent deals are a horribly expensive way to get talent – 10 to 100 times as much as we’d pay a recruiter. But it’s a necessity.” David Sobota, Director, Corp Dev, Google

Companies prefer acqui-hires of companies that have not raised much capital…VCs/investors need to get a decent return

Companies focused on making acquisitions work and have institutionalized the process of integrating acquisitions

• “For every deal we do, the sponsor on the corp dev team has to do a check-in 30 days in to catch stuff early, and also six-month and one-year look-backs.” Jessica Verrilli, Corp Dev Principal, Twitter

Talent Acquisition


Acqui-Hires2

Recent examples of acqui-hires:

Facebook acquired SportStream, social sports app enables users to connect over games

Yahoo acquired Ptch, a social media application that enables users to create short videos

Yahoo acquired Quik.io, a three-person app that sends videos, music, etc. to iPad

Square acquired Viewfinder, a NY-based photo sharing app

Square acquired Evenly, a four-person mobile payments app

Twitter acquired Locomatix, real-time stream and analytic data processing

Apple acquired SnappyLabs, a one-man photo technology app

Google acquired Behavio, allows mobile devices to sense and react to human behavior

Securing Talent to Compete


Continued Rise of Mobile Advertising

3

Global mobile ad market growing 57% in 2014, to $26.3 billion

Facebook’s share of global mobile ad revenue continues to expand, but Google still the “800 pound gorilla” – more than 50% of global mobile ad revenue

US mobile ad spending forecasted to grow 56% this year, to $15 billion

Source: eMarketer

Mobile – A Very Hot Market

Global Mobile Ad Spend


Continued Rise of Mobile Advertising

Target Overview: Mobile ad exchange helps mobile publishers manage ad inventory

Twitter Rationale Driving significant revenue from mobile; deal vaults Twitter to forefront of race to combine

effective targeting and mobile ad-buying• Pre-acquisition, Twitter expected to account for nearly 2% of 2013 global mobile Internet ad revenue1

3

Case Study – Twitter Acquires MoPub for $350 million

Insider View“We look at this deal as a big bet on the mobile ecosystem, which is growing incredibly quickly…mobile advertising is in the early stages, and Twitter and MoPub together give us the opportunity to help drive what mobile advertising becomes.”

Kevin Weil, VP, Revenue, Twitter

1 eMarketer


Building Out the “Stack”4

It’s All About Enterprise Marketing Management

DAM/MAM

WCM

CRM

MCM

CEM

Analytics

BI

EMM Stack High rate of technology adoption by CMO’s – a tremendous market opportunity for enterprise technology vendors

The “Stack” comprises systems that help marketers manage and measure ongoing interactions with their customers

Rapid technology adoption within marketing function has significantly impacted marketing services providers

Business Intelligence

Analytics

Customer Experience Mgmt

Multi-Channel Marketing

Customer Relationship Mgmt

Web Content Mgmt

Asset Management

EMM STACK


Building Out the “Stack”4

$30 Billion in M&A Value, 2010 to 2013

Three of largest transactions in media/marketing/technology for 2013 were marketing automation deals to help enterprise software companies build the marketing stack

Salesforce acquired ExactTarget for $2.5 billion

Oracle bidding for Responsys for $1.6 billion

Adobe acquired Neolane for $600 million


5Consulting Firms Becoming

Marketing Services Firms

Acquisitions of marketing services firms bring needed talent to consulting firms (e.g., digital strategists, designers, analysts, technologists)

Marketing services provide creative/new capabilities for consulting firms (e.g., customer experience, customer interaction, design, measurement, targeting, insights)

Marketing services enable consulting firms to offer clients a more holistic group of services (a key differentiator) and higher levels of customer satisfaction and loyalty

Consulting firms able to keep more revenue in-house – providing more actionable services to clients, expanding market share and growth

Investing in Marketing Services for Growth

Insider View

“These sophisticated digital creative strategists, when coupled with PwC’s broad range of global business and industry consultants, strengthen our ability to deliver holistic, end-to-end business transformation around the world.”

Miles Everson, PwC US Advisory Leader


Consulting Firms Becoming Marketing Services Firms

5

Recent examples of consulting firms acquiring marketing services groups:

PWC acquired BGT, a digital creative consultancy

PWC acquired Ant’s Eye View, community building and management

Deloitte acquired Banyan Branch, a digital and social media agency

Deloitte acquired Ubermind (mobile app developer) for $50 million

Accenture acquired Fjordnet, digital design services

Accenture acquired Acquity Group (e-commerce and digital mark services) for $285 million

IBM acquired Urbancode, push out updates via mobile, social, cloud, etc.

IBM acquired Tealeaf, mobile commerce analytics

KPMG acquired Link Analytics, big data analytics solutions

Keeping More Revenue In-House


Predicting the Future

Predictions

1. Lines continue to blur, as publishers become agencies; agencies become content creators and sometimes publishers; and brands are content creators

Can Everyone Play Well in the Sandbox?

AgenciesPublishers

Agencies Content Creators

Brands Publishers



Predictions

1 JP Morgan

2.Sponsorship spending estimated at $20.6 billion in 20141 and will continue to have a major impact on advertising

3.

Native advertising (60% of Facebook’s revenues in 2013) is the major driver of advertising spend for the foreseeable future


Transitioning Advertising Model

PUBLISHERADVERTISER CONSUMER

BRANDVOICE



Predictions

4.By 2016, programmatic will drive an estimated 35% of all digital advertising spend

…and, finally…

5.Over the next few years, large corporations ($250+ million of revenue) will drive M&A, further consolidating emerging marketing and tech companies



Thank you.


Marketing & Tech Investment Landscape

presented by


January 21, 2014

AdExchanger – Industry Preview 2014

AdExchanger – Industry Preview 2014 · Case Study – Twitter Acquires MoPub for $350 million ......

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