AdExchanger Industry Preview 2014

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Marketing & Tech Investment Landscape

presented by

Wilma Jordan, Founder & CEO

The Jordan, Edmiston Group, Inc.

January 21, 2014

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About JEGI

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

The Leading Independent Investment Bank

Serving the Media, Information, Marketing and Technology Sectors

Experience

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

Industry Leadership

JEGI 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 Focus

JEGI focuses primarily on executing sell-side assignments, conducting efficient, highly effective processes to meet the needs of the client and achieve maximum value.

Independence

JEGI 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.

Results

JEGI’s team-driven process achieves the highest transaction success rates and enthusiastic endorsements from the firm’s satisfied clients.

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JEGI – Leading The Market

#1

8

th

_{Consecutive Year}

JEGI – The Consistent Market Leader in Transactions Completed

Among the Sectors It Serves

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Industry-Leading Domain Expertise

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Media, Marketing and Technology M&A

Driven by Lots of Small Deals

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Industry Sector No. 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

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

1

Consulting Firms Becoming Marketing Services Firms

Non-Tech Companies Buying Tech Start-ups

5

2

Acqui-Hires

Continued Rise of Mobile Advertising

3

Building Out the “Stack”

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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

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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

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Acqui-Hires

2

 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

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Acqui-Hires

2

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

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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

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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.”

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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

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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

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5

Consulting 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.”

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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

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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?

Agencies

Publishers

Agencies

Content

Creators

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Predicting the Future

Predictions

2. Sponsorship spending estimated at

$20.6 billion in 2014

1

_{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

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Transitioning Advertising Model

PUBLISHER

ADVERTISER

CONSUMER

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Predicting the Future

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

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Predicting the Future

Thank you.

Wilma Jordan, Founder & CEO

The Jordan, Edmiston Group, Inc

.

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Marketing & Tech Investment Landscape

presented by

Wilma Jordan, Founder & CEO

The Jordan, Edmiston Group, Inc.

January 21, 2014