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Q3 2015 Market Report
LUMA partners
Digital Brief 005
2
Mobile
LUMA’s Singular Focus on Digital Media
Technology
Media
Marketing MarTech
DigitalContent
AdTech
Ø LUMA’sexpertiseisattheintersectionofMedia,MarketingandTechnology
Ø Atthisintersectionexists:§ DigitalContent: contentsites,MCNs,gamepublishers,aggregators
§ AdTech: display,search,video,mobile,social,contentmarketing/native,connectedTV
§ MarTech: data,analytics,salesandmarketingautomation,email,predictivetools,commercetechnology,shoppermarketing,payments
Ø Mobile proliferationhasamajorimpactonthesemarketsandLUMAisdeeplyknowledgeableonmobile
3
Overall Commentary on ConsolidationØ InoursecondMarketUpdate(clickhere
http://bit.ly/1QLvD8W),wereported55acquisitionsindigitalmedia,highlightedbystrategicbuyersinCommerce,AdTechandConsumerInternet
Ø Thedealswetrackinthisreportfallintooneoffourcategories:§ Large(over$500mm)§ Medium($100– $500mm)§ Small($20– $100mm)§ Sub$20mmexitsareconsideredtechandteamdeals,
capitulations,orundisclosed
44
25 21 18 16 14
1313
11 21 22
15 1618
18 23
0
10
20
30
40
50
60
70
Q32014 Q42014 Q12015 Q22015 Q32015
AdTech MarTech DigitalContent
U.S. Digital Media M&A Activity by Sector
#ofTransactions
Ø DigitalmediaM&AactivityacrossAdTech,MarTechandDigitalContentreachedsimilarlevelsfromlastquarter’shigh,makinganactivesummerofsignificantdeals
Source: LUMA Partners
55
MARKETINGTECH
CRMSOFTWARE
INTERNETORIGINALS TELCO
MARKETING
MEDIA
DATA
CONSUMERINTERNET
TECHSERVICES
COMMERCE
Right Time Decisioning of
Consumer Data
(Ad Tech and MarTech)
A Growing Robust Pool of Strategic Buyers
Ø Softwaresolutionsthatenabledecisioningofconsumerdataisacapabilitythatattractsdeeppocketedstrategicsfromawidevarietyofindustries
Ø ManycompaniesfromAdTechandMarTechhavedevelopedthesecapabilities
6
Ad Tech M&A Activity
Ø Observations§ AdTechM&Aactivityslowed
duringthesummer§ 6ofthe14dealsinvolvedvideo
andtelevisionAdTech,signalingtheconvergenceofTVandvideo
Ø LookingAhead– MobileAdvertising§ FollowingtheAOL– Millennial
Mediaacquisition,weexpecttoseemoreattentionbeingpaidtothefewscaledmobileAdTechcompaniesstillonthemarket
§ Locationandmobilevideotechnologywilldrivethemostinterestfrompotentialbuyers
#ofTransactions
Source: LUMA Partners
95 3 1 3
16
1615
15 11
0
5
10
15
20
25
30
Q32014 Q42014 Q12015 Q22015 Q32015
+$100M <$100M
7
Ad Tech – Notable DealsAcquirer Capital
RaisedEnterprise
Value Comments
N/A $238M AOL’sacquisitionofmobileadnetworkMillennialMediaisthemissing piecetoVerizon’scompleteadvertisingstrategy
$59.8M ~$100M ByacquiringBlackArrow,CrossMediaWorkswillbeabletoprovidedynamicad-insertiontoliveandvideo-on-demandTVcontenttoitsMVPDclients
$23.2M ~$100M ThecombinationofSupersonicandIronSourcecreatesamobileapp focusedadplatformwithcombinedrevenuesexpectedtoreach$450millionthisyear
$25M $176M WiththeacquisitionofUnruly,NewsCorpwillgainaccesstothecompany’sexpertiseinvideodistribution and Ad Techplatform foritslonglistofbrands
N/A $732M ThemergerwillformacomprehensivedataplatformthatcombinesComScore’s digitalaudiencedatawithRentrak’s census-baseddataonTV
Source: Capital IQ; Crunchbase
8
MarTech M&A Activity#ofTransactions
Ø Observations§ 3transactionsinvolvedfinancial
buyersacquiringmarketingtechnologycompanies
§ HGGCacquiredStrongview andEuropean-basedSelligent whilePermira acquiredeBayEnterprise
Ø LookingAhead– ConvergenceofMarTechandAdTech§ Salesforce andOraclerecently
announcedtighterintegrationswithAdTech/paidmedia
§ Weexpecttoseemoreoftheseintegrations/partnershipstoariseasthisnewtrendwillalsocontributetomoredealactivity
Source: LUMA Partners
2 3 15 3
11 1010
16 19
0
5
10
15
20
25
Q32014 Q42014 Q12015 Q22015 Q32015
+$100M <$100M
9
MarTech – Notable DealsAcquirer Capital
RaisedEnterprise
Value Comments
N/A $925M PermiraFundsacquiredeBayEnterprisewhichincludesfourdifferentdivisions:Magento,eBayMarketingSolutions,EnterpriseServicesandOperations
$35M $500M Advance/Newhouse, anaffiliateofAdvancePublications,hasacquired1010data,abigdatacompanythatsellsitsplatformtechnologytocompaniesfromretailtotelecom
$15M N/A TheacquisitionofMaxymizeraddsA/B/multivariatetestingtoitssuiteofCRMandmarketingautomationtools,providingacompetingofferingtoAdobeTarget
$29.2M N/A SocialmarketingplatformSpredfasthasacquireditscompetitorShoutlet inthesocialmarketingmanagementcategory
$38.1M N/A PrivateequityfirmHGGCacquiredemailmarketingcompanyStrongviewaswellasEuropeanmarketingautomationcompanySelligent
Source: Capital IQ; Crunchbase
10
Digital Content M&A Activity
Ø Observations§ Consolidationofdigitalmedia
andcontentisaccelerating§ 9dealsinvolvedtraditionaland
digital-nativepublishersacquiringmulti-channelvideonetworksandwebcontentsites
Ø LookingAhead– SocialCommerce§ Innovations,suchas“buy
buttons”willquicklyemergeonleadingsocialplatforms
§ Inthefutureweexpect“buybuttons”andseamlessshoppingtobecomeubiquitousacrossalltypesofapps
#ofTransactions
Source: LUMA Partners
4 37
37
11 1311
15
16
0
5
10
15
20
25
Q32014 Q42014 Q12015 Q22015 Q32015
+$100M <$100M
11
Digital Content – Notable DealsAcquirer Capital
RaisedEnterprise
Value Comments
N/A $290M SportsweargiantAdidasissteppingintotheringofdigitalfitnessandthequantifiedselfmovementwithitsacquisitionofRuntastic,apopularfitnesstrackingapp
$22.1M $230M Polyvore’spopularsocialcommerceplatformwillelevateYahoo’sdigitalpresenceacrosssocial,mobile,andnativeasthecompanyaddsmoretoitsMaVeNsofferings
N/A $575M ByacquiringPlentyofFishandits90millionusers,IACfurtherstrengthensitsportfolioofdigitaldatingpropertieswhichincludeMatch.com,Tinder,andOkCupid
N/A $100M Social-focusedpublisherViralNovawasacquiredbyZealotNetworkstobolsteritstotalaudienceforitsmarketingservicethatpromotesartists,contentandadvertisers
N/A $150M Snapchat’s acquisitionofLookseryanditsphotoeditingtechnologyrepresents thecompany’scontinuedinterestinimprovingitscoreproductthroughacquisitions
$55.6M $442M GermanpublisherAxelSpringeracquireddigitalnewspublisherBusinessInsidertobroadenitsinternationalaudienceanddiversifyitsEnglish-languagebrands
Source: Capital IQ; Crunchbase
12
Ad Tech – Q3 2015 Stocks Performance
Ø AdTechStocksCrash§ Afterararepositivequarterin
Q2,AdTechstocksplungedonaverage30%bytheendofQ3
§ MXPT andYUMEledtheAdTechcrash,eachlosingover50%ofitsmarketvalue
Ø AdTech’sOutlook§ Underwhelmingearningsand
loweredfutureguidancesparkedthedramaticAdTechselloff
§ Concernsaboutad-blockingwillweighonAdTechcompanies,particularlythosestilloperatingwithamediamodelgoingforward
Market Data as of 9/30/15
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
7/1/15 7/15/15 7/29/15 8/12/15 8/26/15 9/9/15 9/23/15
MM TUBE RUBI TRMR MXPT YUME FUEL CRTO NASDAQ
13
MarTech – Q3 2015 Stocks Performance
Ø MarTechSuffersItsWorstQuarteroftheYear§ MarTech stocksonaveragefell
nearly15%thisquarteraftergaining10%inthepriorquarter
§ BV,DWREandMRINeachdroppedover20%duringthisperiod
Ø Highlights§ Themarketingtechnologysector
wasnotimmunetotheoverallmarketdecline
§ AutomationSaaS leadersCRM,MKTOandHUBSareoftenthestrongestperformersbutcouldnotstaypositiveattheendofQ3
Market Data as of 9/30/15
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
7/1/15 7/15/15 7/29/15 8/12/15 8/26/15 9/9/15 9/23/15
CRM MKTO HUBS BV CTCT DWRE
JIVE MRIN LPSN SHOP NASDAQ
14
Key Startup Financings to WatchLead Investor Capital Raised Valuation Comments
~$100M $5B DigitalpaymentsstartupStripeisrollingout “Relay”,itsnewestproductthatallowsretailerstosellwithin3rd partyapps,asitexpandsinternationally
$50M N/A Radius,apredictivemarketingplatformthatcanidentifynewleadsforsalesteams,hasgrownitsrevenuebymorethan400%overthepastyear
$300M/$275M $1.2B/$1.3B DraftKingsandFanDuelareraising capitaltorampuptheirmarketinginordertocapturetherisinginterestandexcitementforfantasysportsbetting
$65M N/A Withitslatestroundoffunding,Jauntbecomesthemostfundedindependentvirtualrealitystartuptodate
$200M/$200M $1.5B/$1.0B BuzzFeed andVox Media, theupstartsleadingthewayindigitalpublishing,arejoiningtraditionalmedialikeComcasttowidenitsreachandaudience
$200M $1.7B HealthinsurancestartupOscarhassigned40,000patients inNYandNJandwilluseitslatestroundoffundingtoexpandtonewmarkets
$50M $1B With240Musers,Kik aimstosetitselfapartfromitsmessagingcompetitorsbyemulatingtheplatform focusofitsAsian counterpartslikeWeChat
Source: Crunchbase
1515
LUMA’s Recent Content
DigitalBrief003Q22015MarketReport
Ø InoursecondMarket Updatewereported75acquisitionsindigitalmedia,highlightedbystrategicbuyersinCommerce,AdTechandConsumerInternet
TheStateofDigitalVideoPresentedatVidCon 2015
Ø AtVidCon 2015wepresentedourviewsontheriseofthedigitalvideomarketanditssurgeagainsttraditionalTV
DigitalBrief004BacktoMadMen
Ø InourfourthDigitalBriefweexplainedwhatthefutureholdsforadagenciesandfivestrategiestheymaketakeinacompetitivemarketplace
1616
LUMA’s Recent M&A Deals
December'2011 September'2015
has$been$acquired$by
The$undersigned$acted$as$exclusive$financial$advisor$to$Unruly$Holdings$Limited,$Inc.
December'2011 September'2015
has$been$acquired$by
The$undersigned$acted$as$exclusive$financial$advisor$to$Millennial$Media,$Inc.
a$division$of
December'2011 September'2015
has$been$acquired$by
Principals$currently$at$the$undersigned$acted$as$exclusive$financial$advisor$to$Looksery,$Inc.
17
Millennial Media to be Acquired by AOLLUMA Partners acted as Exclusive Financial Advisor to Millennial MediaAnnounced September 3, 2015
$ Overview
acquiredby
September2015
adivisionof
Video&Ad&Tech&
Display&Ad&Tech& Content&
Video&Ad&Tech&
Display&Ad&Tech&
Mobile&Ad&Tech&
Content&
Ø MillennialMedia(NYSE:MM)istheleadingindependentmobilemarketplace,makingmobilesimplefortheworld’stopbrands,appdevelopersandmobilewebpublishers.Thecompany’suniquedataandtechnologyassetsenableitsadvertisingclientstoconnectwiththeirtargetaudiencesatscale.MillennialMediaalsodrivesmonetizationforitspublisheranddeveloperpartnersbyconnectingthemtonetworks,advertisersandanRTBexchange.
Ø AOLisamediatechnologycompanywithamissiontosimplifytheinternetforconsumersandcreatorsbyunleashingtheworld'sbestbuildersofcultureandcode.Asoneofthelargestonlinepropertieswithover350millionmonthlyglobalconsumersofitspremiumbrands,AOLisatthecenterofdisruptionofhowcontentisbeingproduced,distributed,consumedandmonetizedbyconnectingpublisherswithadvertisersonitsglobal,programmaticcontentandadvertisingplatforms.AOLisasubsidiaryofVerizon.
Ø On9/3/2015,AOLannouncedthatitwillacquirealloutstandingsharesofMillennialMedia(NYSE:MM)for$1.75pershareincash
Ø ThetransactionwilltaketheformofatenderofferfollowedbyaMerger
Ø Dealterms:Ø Equityvalue:$273millionØ Enterprisevalue:$244millionØ EV/LTMRevenue:0.8xØ EV/2015ERevenue(1):0.9x
StrategicRationale
(1)BasedonMillennial’s MidScenario,asdefinedinthe14D-9.
Ø ThisannouncementfollowstherecentacquisitionofAOLbyVerizonWireless,thenation’slargestwirelessnetwork
- WiththeacquisitionofAOL,VerizonacquiredsignificantcontentandAdTechcapabilities;howeveronekeypiecewasmissing,MobileAdTech
Ø MillennialMediawillprovideAOLwithsignificantmobilecapabilitiestoitsONEplatform,creatingthelargestopen,mobile-firstprogrammaticplatformonthemarket
Ø MillennialMediaisaheadoftwokeytrendsindigitaladvertising,theopportunityandgrowthinmobileadvertising,aswellastheshifttoprogrammatic
- Mobileadspendingisexpectedtoreach$40billionby2016(eMarketer,03/2015)- Mobilewillaccountfor69%ofprogrammaticadbuyingby2016(eMarketer,10/2014)
Ø Thisisaprimeexampleofongoinginterestindigitalmarketingfromnewentrants,includingTelco,ConsumerInternet,CRM/Software,andDatacompanies
- LUMAexpectsthistrendtocontinueasdeeppocketedbuyersseek“right-timedecisioning ofconsumerdata”
LUMA partners
$238million
18
Unruly to be Acquired by News CorpLUMA Partners acted as Exclusive Financial Advisor to Unruly Holdings LtdAnnounced September 16, 2015
StrategicRationaleØ ThroughtheacquisitionofUnruly,NewsCorpwillgainaccesstoUnruly’sexpertiseinvideo
distribution,uniqueadvertisingplatformandexperiencedtechnicalteam
Ø Comesatatimewhenmanypublishermodelsareshiftingfromfragmentedteamsforproduction,distributionandmonetization,toaunifiedsystemwheredataconnectsandpowerstheproduction,distributionandmonetizationstrategies
- Incumbentpublishershaveseennewentrantssuccessfullyleveragetechnologyanddatatoincreasepageviews,aswellasdrivehigherCPMs
Ø Unruly’sexpertiseindigitalvideodistribution,nativeadinsertion,andcontentoptimizationwillhelpNewsCorpgetaheadofthetrendtoutilizetechnologyanddataforpublishing
Ø RepresentsthefirstlargenativeadvertisingdealandputsNewsCorpatthenexusofnative,video,andprogrammaticadvertising,allofwhichareexpectedtogrowsignificantlyinthecomingyears
Ø AllowsUnruly’stoptieradvertisers,suchasDoveandT-Mobile,tobenefitfromNewsCorp’spremiumcontentanddistribution
Ø Unrulyistheadtechcompanythatgetsvideoswatched,trackedandsharedacrosstheOpenWeb.Positionedattheintersectofvideo,social,native&mobile,Unrulyusesemotionalaudiencedataanduser-friendlyvideoformatstomassivelyincreaseviewerengagement,brandperformance&publisherrevenues.Unrulyemploys200peopleacross15offices,withregionalHQsinLondon,NewYorkandSingapore.Itssuperpowerisemotionaladtech.Itssecretweaponispassionatepeopleonamissionto#DeliverWow.
Ø NewsCorporation(NASDAQ:NWS,NWSA;ASX:NWS,NWSLV)isaglobal,diversifiedmediaandinformationservicescompanyfocusedoncreatinganddistributingauthoritativeandengagingcontenttoconsumersthroughouttheworld.Thecompanycomprisesbusinessesacrossarangeofmedia,including:newsandinformationservices,bookpublishing,digitalrealestateservices,cablenetworkprogramminginAustralia,digitaleducation,andpay-TVdistributioninAustralia.
Data
Data
Data
Mone)za)on Produc)on
Distribu)on
Native
Programmatic
Video
$ OverviewØ On9/16/2015,NewsCorpannouncedthatit
wouldacquireUnrulyHoldingsLimitedØ NewsCorphasagreedtopay£58million
(approx.$90million)incashatclosingandupto£56million(approx.$86million)infutureconsiderationcontingentupontheachievementofcertainperformanceobjectives
Ø LedbyUnruly’sthreeco-founders,Unrulywilloperateasaseparatebusinessunit,reportingtoRebekahBrooks
LUMA partners
acquiredby
September2015
$176million
1919
LUMA’s Differentiated Value Proposition
Ø LUMAhasdevelopedadifferentiatedvaluepropositionbasedon:§ Focus§ Expertise§ ObjectiveCredibility§ Trust§ Performance
Ø LUMAhasbuiltadifferentiatedglobalbrand
Ø Weleverageourbrandtooptimizefinancialandstrategicobjectivesofselectqualityclients
LUMA partners
2020
A"Valua'on"Framework"for"the"Ad"Tech"Sector"
Color by Numbers:
May$2014$
DISCLAIMER: LUMA Securities, a wholly-owned subsidiary of LUMA Partners, has acted as co-managing underwriter for and may pursue underwriting or other advisory assignments with companies mentioned in this report or in the sector.!!
LUMA’s Content-Driven, Expert-Based Approach
ConferenceKeynotes
Publications(over1millionviews)
CorporateTeach-ins
LUMAscapes(over4millionviewsfrom196countries)DISPLAY MOBILE VIDEO SOCIAL NATIVE SEARCH MARTECH COMMERCE GAMING STRATEGIC
BUYERS
CompletedDeals
DigitalBriefs
December'2011
acquired)by
January'2011
acquired)by
=
acquired)by
December'2011
acquired)by
November'2012
=
acquired)by
October'2013
acquired)by
December'2013
= merged)with
March'2012
to)form
acquired)by
July'2014
a)subsidiary)of acquired)by
September'2014
acquired
December'2014
acquired)by
November'2014
acquired)by
March'2015
merged)with
May'2015
acquired)by
September'2015
a)division)of
acquired)by
September'2015
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