Internet Advertising Market Update 3Q 2014...Confidential 3 • Innovation in the Internet Advertising ecosystem is being driven by emergence and confluence of mobile, video, social

Confidential

Internet Advertising Market Update

3Q 2014

Member FINRA

2Confidential

Capital Markets – U.S. Internet Advertising companies continue to outpace their international counterparts and outperform the NASDAQ, S&P 500, and MSCI Europe indexes.

Trading Multiples – U.S. Internet Advertising companies are trading at a median LTM revenue multiple of 2.5x, while International Internet Advertising companies are trading at a median LTM revenue multiple of 4.5x.

M&A Activity – M&A activity slowed in 3Q 2014 from its highs earlier this year, with 41 deals, though deal value reached a high of $3.3B. Notable transactions include Alliance Data Systems’ acquisition of Conversant ($2.3B), Facebook’s acquisition of LiveRail ($382M), and Rocket Fuel’s acquisition of [x+1] ($230M).

Investment Activity – Investment volume and aggregate values also slowed in 3Q 2014, from 71 to 61 investments and $1.1B to $478M in value. Notable investments were led by AppNexus ($85M) and Hootsuite ($60M).

Executive Summary

3Confidential

• Innovation in the Internet Advertising ecosystem is being driven by emergence and confluence of mobile, video, social and programmatic, causing market participants to scramble to adapt to evolving customer demands

• Current view of the Internet Advertising landscape remains overly complex requiring unnecessary differentiation, confusing customers

• Expect marketers to gravitate to broader integrated platforms that improve effectiveness and efficiency of media planning, buying and selling online advertising

• As a result, we expect continued consolidation as leaders assemble more complete solutions from companies that are actually products / point solutions

• However, because larger, usually public, buyers often require scale, we expect to see more private to private transactions in 2014 as companies seek to improve competitive positioning and path to liquidity

Key Themes for Internet Advertising in 2014

4Confidential

Capital Markets Performance

Since 2012, U.S. Internet Advertising companies (+80.6%) have outperformed the NASDAQ (+69.6%), S&P 500 (+54.1%), and MSCI Europe (+30.1%) indexes, along with their international counterparts (+46.9%).

NASDAQ:+69.6%

MSCI Europe: +30.1%

S&P 500: +54.1%

Int'l. Internet Advertising Companies: +46.9%

_______Source: Capital IQ; refer to public comps for constituents

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00% U.S. Internet Advertising Companies: +80.6%

5Confidential

11.4x

4.5x

2.9x

6.6x

2.3x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

LTM Revenue Multiple

Internet Advertising Comparable Public Companies

International Internet Advertising Companies

U.S. Internet Advertising Companies

5.4x

8.5x

1.8x

3.7x

11.3x

4.0x

2.5x 1.5x

3.6x

2.0x2.5x

0.8x 0.5x 0.5x0.1x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0xLTM Revenue Multiple

Median:2.5x

Median:4.5x

_______Source: Capital IQ; companies arranged by descending enterprise value

6Confidential

Public Trading Comparables: Internet Advertising

_______Source: Capital IQ

Trading Metrics($ in millions, except per share data) Stock

Price 52-Week Price Range Market Enterprise EV / Revenue EV / EBITDA

Company Ticker 09/30/14 Low High Cap. Value LTM CY 2014E CY 2015E LTM CY 2014E CY 2015E

U.S. COMPANIES

Google Nasdaq:GOOGL $588.41 $418.00 $614.44 $401,749 $351,761 5.4x 5.3x 4.5x 18.1x 13.4x 11.2x

Yahoo! Nasdaq:YHOO 40.75 31.70 44.01 40,956 39,428 8.5x 9.0x 8.8x NM 32.1x 30.5x

IAC/InterActive Nasdaq:IACI 65.90 50.14 80.64 5,347 5,384 1.8x 1.8x 1.6x 10.5x 10.4x 8.2x

Conversant Nasdaq:CNVR 34.25 18.62 35.17 2,223 2,204 3.7x 3.6x 3.3x 11.1x 10.5x 9.5x

Marketo Nasdaq:MKTO 32.30 22.02 45.00 1,488 1,377 11.3x 9.5x 7.1x NM NA NA

comScore Nasdaq:SCOR 36.41 25.71 39.78 1,222 1,209 4.0x 3.7x 3.2x 45.7x 18.1x 14.7x

Constant Contact Nasdaq:CTCT 27.14 21.08 33.74 898 758 2.5x 2.3x 2.0x 22.4x 12.6x 10.1x

RocketFuel Nasdaq:FUEL 15.80 14.29 71.89 635 466 1.5x 1.2x 0.8x NM NA 33.0x

Rubicon Project NYSE:RUBI 11.73 8.76 23.20 468 362 3.6x 3.0x 2.3x NM NM 41.8x

Jive Software Nasdaq:JIVE 5.83 5.76 13.33 418 326 2.0x 1.9x 1.6x NM NM NA

Marin Software NYSE:MRIN 8.60 7.30 12.84 299 220 2.5x 2.2x 1.9x NM NA NA

Sizmek Nasdaq:SZMK 7.74 7.70 13.25 235 142 0.8x 0.8x 0.7x 7.3x 6.0x 4.3x

QuinStreet Nasdaq:QNST 4.15 4.10 9.62 184 139 0.5x 0.5x 0.5x 12.4x 9.8x 5.5x

Marchex Nasdaq:MCHX 4.15 3.92 12.84 169 94 0.5x 0.5x 0.7x 9.6x 5.7x 6.8x

ReachLocal Nasdaq:RLOC 3.61 3.60 14.27 106 41 0.1x 0.1x 0.1x NM NA 4.2x

High 11.3x 9.5x 8.8x 45.7x 32.1x 41.8x

Mean 3.2x 3.0x 2.6x 17.1x 13.2x 15.0x

Median 2.5x 2.2x 1.9x 11.8x 10.5x 9.8x

Low 0.1x 0.1x 0.1x 7.3x 5.7x 4.2x

INTERNATIONAL COMPANIES

Baidu Nasdaq:BIDU 218.23 140.66 231.41 76,514 72,874 11.4x 9.1x 6.5x 29.6x 27.2x 18.9x

Yahoo! Japan TSE:4689 3.80 3.71 6.09 21,646 17,348 4.5x NM 4.3x 8.2x NA 8.0x

Rakuten TSE:4755 11.51 9.88 16.80 15,212 15,635 2.9x 2.9x 2.6x 13.7x 13.3x 10.8x

Yandex Nasdaq:YNDX 27.80 21.70 45.42 8,931 8,850 6.6x 6.3x 5.1x 17.5x 15.3x 12.2x

Criteo Nasdaq:CRTO 33.65 25.16 60.95 2,128 1,813 2.3x 5.1x 3.8x 31.2x 24.5x 14.5x

High 11.4x 9.1x 6.5x 31.2x 27.2x 18.9x

Mean 5.5x 5.9x 4.5x 20.1x 20.1x 12.9x

Median 4.5x 5.7x 4.3x 17.5x 19.9x 12.2x

x Low 2.3x 2.9x 2.6x 8.2x 13.3x 8.0x

7Confidential

Public Operating Comparables: Internet Advertising (Cont.)

_______Source: Capital IQ

Operating Metrics($ in millions, except per share data)

LTM Revenue Growth LTM Revenue EBITDA

Company Ticker As Of '13A-'14E '14E-'15E GM LTM CY 2014E CY 2015E LTM CY 2014E CY 2015E

U.S. COMPANIES

Google Nasdaq:GOOGL Jun 2014 11% 18% 58% $65,142 $66,678 $78,876 $19,424 $26,195 $31,500

Yahoo! Nasdaq:YHOO Jun 2014 (1%) 2% 72% 4,622 4,368 4,466 773 1,227 1,294

IAC/InterActive Nasdaq:IACI Jun 2014 1% 10% 70% 2,978 3,038 3,329 514 518 657

Conversant Nasdaq:CNVR Jun 2014 8% 8% 67% 594 619 670 198 210 233

Marketo Nasdaq:MKTO Jun 2014 51% 33% 64% 122 145 193 (42) NA NA

comScore Nasdaq:SCOR Jun 2014 14% 15% 70% 305 327 377 26 67 82

Constant Contact Nasdaq:CTCT Jun 2014 16% 15% 72% 307 331 380 34 60 75

RocketFuel Nasdaq:FUEL Jun 2014 68% 50% 49% 315 404 608 (17) NA 14

Rubicon Project NYSE:RUBI Jun 2014 42% 30% 82% 99 119 154 (8) NA 9

Jive Software Nasdaq:JIVE Jun 2014 20% 15% 62% 161 174 201 (57) 3 NA

Marin Software NYSE:MRIN Jun 2014 28% 19% 63% 89 99 118 (27) NA NA

Sizmek Nasdaq:SZMK Jun 2014 14% 13% 66% 168 184 209 20 23 33

QuinStreet Nasdaq:QNST Jun 2014 (8%) 4% 14% 283 275 286 11 14 25

Marchex Nasdaq:MCHX Jun 2014 20% (22%) 37% 180 183 143 10 16 14

ReachLocal Nasdaq:RLOC Jun 2014 (6%) 4% 50% 514 484 505 (7) NA 10

INTERNATIONAL COMPANIES

Baidu Nasdaq:BIDU Jun 2014 53% 40% 64% 6,416 7,976 11,189 2,462 2,680 3,848

Yahoo! Japan TSE:4689 Jun 2014 NA NA 83% 3,889 NA 4,070 2,113 NA 2,170

Rakuten TSE:4755 Jun 2014 8% 13% 100% 5,473 5,335 6,019 1,141 1,179 1,448

Yandex Nasdaq:YNDX Jun 2014 27% 24% 71% 1,335 1,404 1,737 505 578 726

Criteo Nasdaq:CRTO Jun 2014 (41%) 33% 36% 777 359 478 58 74 125

8Confidential

Internet Advertising M&A Activity Pullback From 2014 Highs

_______Source: 451 Group; includes transactions with disclosed, estimated, undisclosed transaction valuesTop 3 acquisitions with disclosed transaction values

Average LTM Revenue Multiple 2011 2012 20137.8x 6.7x 6.1x

Top 3 Acquisitions by Quarter ($M) – Target / Acquirer

4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Efficient Frntr. / Adobe($400)

iContact / Vocus($179)

Buddy Media / Salesforce

($689)

Wildfire / Google($350)

Eloqua / Oracle($956)

Channel Intel / Google($125)

ExactTarget / Salesforce($2,500)

DG (assets) / Extreme Reach

($485)

Valassis / Harland Clarke

($1,947)

BlueKai / Oracle($420)

Vocus / GTCR($413)

Conversant / ADS

($2,216)

Interclick / Yahoo!($270)

BeeAd / ebuzzing

($13)

Demandforce / Intuit

($424)

SPEED FC / Navarre

($50)

Pardot / ExactTarget

($96)

AfterDownload / ironSource

($28)

Hybris / SAP

($1,341)

Adap.tv / AOL

($465)

Responsys / Oracle

($1,608)

FreeWheel / Comcast($320)

Silverpop / IBM

($235)

LiveRail / Facebook

($382)

Auditude / Adobe($120)

Kontexto / Sargas($10)

Vitrue / Oracle($325)

TigerLead / Move($22)

ClickMotive / DealerTrak

($62)

Akamai(asset) / MediaMath

($25)

Neolane / Adobe($600)

Locu / GoDaddy

($70)

Dealer.com / DealerTrack

($987)

Klout / Lithium Tech.

($200)

Adconion / Amobee($235)

[x+1] / Rocket Fuel

($230)

28 29 30 30 27

18

31 34 34

51 53

42

$1,014

$2,207 $2,226

$477

$1,180

$191

$4,810

$1,167

$1,138$3,049

$845

$3,305

0

10

20

30

40

50

60

0

1,000

2,000

3,000

4,000

5,000

6,000

4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

# Deals$ in millionsDeal Volume Deal Value ($M)

9Confidential

Top Acquirers in Internet Advertising Market

Buyer # Acquisitions Total Value ($M) Targets

Google 7 1,025.0 Admeld, Adometry, Channel Intelligence, Incentive Targeting, mDialog, Wildfire, Zave Networks

Yahoo! 7 335.5 5to1.com, AdMovate, Flurry, Interclick, Luminate, Palaran, Ztelic

Oracle 5 3,308.7 BlueKai, Eloqua, Involver, Responsys, Vitrue

Adobe 5 1,178.0 Auditude, Demdex, Efficient Frontier, Neolane, Search Discovery

Facebook 5 382.0 LiveRail, Microsoft Corporation (Atlas Advertiser Suite Assets), Onavo, Pryte, Threadsy

Top Acquirers by Volume – Five or More Acquisitions, 2011 – Present

Buyer Total Value ($M) Targets

Salesforce 3,515.0 Buddy Media, ExactTarget, Radian6

Oracle 3,308.7 BlueKai, Eloqua, Involver, Responsys, Vitrue

Alliance Data Systems 2,300.0 Conversant

Vista Equity Partners 1,985.1 Digital Technology International, Misys

Harland Clarke 1,947.0 Valassis

SAP AG 1,381.0 Hybris, KXEN, SeeWhy

Adobe 1,178.0 Auditude, Demdex, Efficient Frontier, Neolane, Search Discovery

DealerTrack Holdings 1,048.5 ClickMotive, Dealer Dot Com

Google 1,025.0 Admeld, Adometry, Channel Intelligence, Incentive Targeting, mDialog, Wildfire, Zave Networks

DG 597.6 EyeWonder, MediaMind Technologies, Peer39, Republic Project

AOL 539.1 Adap.tv, goviral

IBM 500.1 Now Factory, The Silverpop Systems, Tealeaf Technology, Inc.

Extreme Reach 485.0 DG

Top Acquirers by Total Transaction Value – $450M or More, 2011 – Present

_______Source: 451 Group

10Confidential

On September 11, 2014

ACQUIRED

Transaction Overview:• $35 per share acquisition consideration cash and stock of Conversant by

Alliance Data Systems, representing an EV of $2.2 billion• The offer represents a 31 percent premium to Conversant’s $26.67 share

price at close before the announcement• Conversant had $573 million LTM revenue and $798 million LTM EBITDA,

putting the TTM revenue multiple at 3.7x and EBITDA multiple at 11.6x

Target Description:• Provides online advertising and marketing services, including ad serving,

affiliate marketing, display advertising, lead generation and digital coupons, for businesses. Also operates an online advertising network for marketers and ad publishers.

Transaction Commentary:• According to Ed Heffernan, CEO of Alliance Data, “The strategic and

cultural fit of the two companies is ideal. Importantly, the acquisition ‘bulks up’ Alliance Data in digital marketing, which is experiencing the fastest secular growth.”

• According to John Giuliani, Conversant’s chief executive, “Gaining access to the huge data-driven platforms at Alliance Data will allow the combined entity to offer clients an end-to-end solution across all channels.”

Internet Advertising Market: M&A Case Study

_______Source: 451 Group; Acquirer Press Release, Company Website

11Confidential

On August 4, 2014

ACQUIRED

Transaction Overview:• Perfect Market had over 210 million monthly unique visitors across

publishing platform partners and 1.4+ billion monthly page views• Audience ranked 2nd among independent networks in the United States• Perfect Market had 25 employees at the time of acquisition• Notable investors in Perfect Market included Comcast Ventures, Idealab,

Rustic Canyon Ventures, Trinity Ventures, and Tribune

Target Description:• Provides digital marketing SaaS to Web publishers and advertising firms,

enabling users to manage, optimize and monetize large libraries of digital content

Transaction Commentary:• According to Adam Singolda, CEO of Taboola, “With Taboola-X and the

introduction of full page monetization opportunities, publishers will be able to drive even stronger monetization results across all platforms.”

• According to Julie Schoenfeld, Perfect Market’s chief executive, “We’re excited to join forces with Taboola to help even more publishers in the market by expanding our product offerings to mid-market publishers for the first time.”

• Headwaters MB represented Perfect Market in this transaction

Headwaters Case Study: Sale of Perfect Market, Inc. to Taboola, Inc.

_______Source: 451 Group; Acquirer Press Release, Company Website

12Confidential

Internet Advertising Investment Volume Slightly Declined

_______Source: PitchBook; includes transactions with disclosed, estimated, undisclosed transaction valuesTop 3 investments with disclosed investment values

Top 3 Investments by Quarter ($M)

4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Marketo($50)

Marin ($35)

BazaarVoice($104)

Dianping.com($60)

ignitAd($65)

AppNexus($75)

Brand Ntwk($68)

Droga5($225)

Komli Media ($30)

Appforma($80)

CampaignMontor($250)

AppNexus($85)

ExactTarget($40)

eMarketer($25)

AVITO.ru($75)

Criteo($39)

HubSpot($35)

Infusionsoft($60)

BrightEdge($43)

Videology($68)

BrightTag($27)

Turn($80)

MediaMath($176)

Hootsuite($60)

Radiate Media($22)

Unruly($25)

XL Marketing($70)

Say Media($27)

Emailvision($30)

AVITO.ru($50)

MarketShare($38)

SugarCRM($40)

Vungle($19)

Integral Ad($30)

AdRoll($70)

xAd($50)

# Investments

60 60

72

56

69 71

85

63

45

59

71

61

$360

$277

$700

$360

$432

$519 $488

$554

$268

$459

$1,071

$478

0

10

20

30

40

50

60

70

80

90

0

200

400

600

800

1,000

1,200

4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014

$ in millions

Investment Volume Investment Value ($M)

13Confidential

Top Investors in Internet Advertising Market

_______Source: PitchBook; number of investments may include follow-on investments in same target

Investor Investments Targets

500 Startups 26AdStage, BackType, Boostable, BrandCont, Capseo, Central Mayoreo, Conekta, Crowdrally, Ginzamarkets, Iterable, LocBox, MarketVibe,OwnLocal, PostRocket, Privy, Regresa Pronto, ShareRoot, Skimbit, Spinnakr, Unbounce Marketing, Vid Network, Virool, Vungle

First Round Capital 2133Across, Altruik, AppNexus, DoubleVerify, Elicit, Flurry, Handshakez, Jirafe, Moat, Nomi, Say Media, SinglePlatform, Solve Media,VigLink

SV Angel 20Booshaka, Boostable, Custora, Heap, Moat, Nomi, NowSpots, Pipewise, SocialFlow, SteelHouse, TellApart, TT Labs, Tubular Labs,Vungle, WibiData, Wish, Yext

Draper Fisher Jurvetson 194INFO, AdXpose, Flurry, ignitAd, InsightSquared, iSocket, Komli Media, PubMatic, Servio, StrikeAd, SugarCRM, Tremor Video,Virool, Yodle

Sequoia Capital 17 AgilOne, Dianping.com, Flite, HubSpot, Innovid, Kahuna, Kenshoo, Kontera Technologies, Lattice Engines, Taykey

Greycroft Partners 1633Across, Elicit, Media Armor, Netsertive, Nomi, Performance Horizon Group, Radiate Media, Resonate Networks, Skimbit,SteelHouse, TagMan

Accel Partners 14 AdRoll, AVITO.ru, Collective, Dealer.com, ,Genius.com, LocBox, MoPub, myThings, Nomi, OpenX Software, YuMe, BEBB

Battery Ventures 14 BrightEdge Technologies, ExactTarget, Kontagent, Lotame Solutions, Marketo, Smarter Remarketer, Sprinklr, Tapad, Tealium

Intel Capital 12 [x+1], BrightEdge Technologies, Delivery Agent, HookLogic, Movable Inc, Sprinklr, Vizury, YuMe, Zamplus Technology

Atlas Venture 11 Bluetrain Mobile, DataXu, InsightSquared, Integral Ad Science, Privy, Unbounce Marketing

New Enterprise Associates 11 BloomReach, Compass Labs, Lattice Engines, Millennial Media, Say Media, SugarCRM, TrackMaven, Videology, WibiData

Bertelsmann Digital Media Investments

11 Adomic, Content Fleet, CrowdTwist, Deal United, Regiohelden, Semasio, SensorTower, Skimbit

SoftTech VC 10 iSocket, Kahuna, Rapleaf, StrikeAd, TurnHere, VigLink, Vungle

Y Combinator 10 AdGrok, BackType, Boostable, Custora, Heap, LocalOn, Orankl, Reebee, TT Labs, Virool

Top Investors by Volume, 2011 – Present

14Confidential

Top Seed and Series A Investors in Internet Advertising Market


500 Startups 22AdStage, BackType Boostable, Capseo, Central Mayoreo, Conekta, Crowdrally ,Iterable, LocBox, MarketVibe, PostRocket, Privy,Regresa Pronto, ShareRoot, Spinnakr, Unbounce Marketing, Vid Network, Virool, Vungle

SV Angel 13 Booshaka, Boostable, Custora, Heap, Moat, Nomi, NowSpots, Pipewise, SocialFlow, TT Labs, Tubular Labs, Vungle

First Round Capital 10 Altruik, Elicit, Handshakez, Jirafe, Moat, Nomi, Say Media, SinglePlatform, Solve Media

Y Combinator 10 AdGrok, BackType, Boostable, Custora, Heap, LocalOn, Orankl, Reebee, TT Labs, Virool

Lerer Hippeau Ventures 6 Bloglovin, Bottlenose, GraphEffect, Moat, Tubular Labs

RRE Ventures 6 Bloglovin, Pontiflex, SinglePlatform, SocialFlow, Yieldbot

TechStars 6 AdYapper, Bizible, MarketVibe, Mobintent, Simple Energy, SimpleRelevance

Betaworks 6 Bloglovin, Namo Media, SocialFlow, Teleportd

Atlas Venture 5 Bluetrain Mobile, InsightSquared, Privy, Unbounce Marketing

CommonAngels 5 InsightSquared, Linkable Networks, Yieldbot

Draper Associates 5 Autopilot, MomentFeed, Vungle

ff Venture Capital 5 Bottlenose, Elicit, Movable Inc, Parse.ly

Founder Collective 5 BackType, Custora, GraphEffect, Moat, ThriveHive

Greycroft Partners 5 Elicit, Media Armor, Nomi, TagMan



15Confidential

Top Series B and C Investors in Internet Advertising Market


Sequoia Capital 10 AgilOne, Dianping.com, Flite, Innovid, Lattice Engines, Taykey

Battery Ventures 8 BrightEdge Technologies, Kontagent, Sprinklr, Tapad, Tealium

Greycroft Partners 6 Netsertive, Resonate Networks, Skimbit, SteelHouse, TagMan

First Round Capital 6 33Across, DoubleVerify, Moat, Solve Media, VigLink

Intel Capital 6 BrightEdge Technologies, HookLogic, Movable Inc, Sprinklr, Vizury

Draper Fisher Jurvetson 5 ignitAd, InsightSquared, iSocket, Servio

Ignition Partners 5 Dianping.com, Moz, Visible Technologies

New Enterprise Associates 5 BloomReach, Compass Labs, Lattice Engines, Videology, WibiData



16Confidential

Top Series D+ Investors in Internet Advertising Market


Norwest Venture Partners 8 Act-On Software, Komli Media, True[x] Media, Turn

Draper Fisher Jurvetson 7 4INFO, AdXpose, Flurry, Komli Media, PubMatic, SugarCRM, Tremor Video, Yodle

Focus Ventures 5 Delivery Agent, Marin Software, Turn

Menlo Ventures 5 DataXu, Flurry, YuMe

SAP Ventures 5 Criteo, Marin Software, OpenX Software, Tremor Video

Accel Partners 5 AdRoll, Genius.com, OpenX Software, YuMe

Institutional Venture Partners

6 AdRoll, Buddy Media, Marketo, xAd, Yext

Crosslink Capital 4 Flurry, Marin Software

First Round Capital 4 33Across, AppNexus, Flurry

Panorama Capital 4 33Across, JiWire, Zoove

Scale Venture Partners 4 BrightRoll, Demandbase, HubSpot

Trident Capital 4 BrightRoll, JiWire, Turn



17Confidential

On September 4, 2014

INVESTED IN

Transaction Overview:• $50 million Series D funding of xAd led by Institutional Venture Partners in a

combined equity and debt offering, with participation from Emergence Capital Partners, SoftBank Capital, and Silicon Valley Bank

• Post-money valuation in range of $235M to $250M

Target Description• Global location marketplace focused on driving in-store traffic and sales via

accurate and data-rich ad targeting solutions. Media is served specific to a user’s location.

Transaction Commentary:• According to the company, xAd more than doubled revenue in 2013 ending the

year on a $65M run rate while maintaining profitability. The company also grew its national client base by more than 300% and increased staff by 75%. Growth remains over 100% in 2014 according to CEO Dipanshu Sharma.

• Quoting CEO Sharma on the recent investment: “The ad tech space continues to be a volatile space in the public market. Despite that we were able to raise a very good valuation, more than most public companies.“

• Funding will be used to continue rapid global growth, support its new international offices in UK, Canada, and Germany, and more quickly develop new products and features within the xAd marketplace.

Internet Advertising Investment Case Study

_______Source: Forbes, PitchBook, Company website

18Confidential

15+ Years of Internet Advertising Success

IPO

Lead Manager

IPO

Lead Manager

IPO

Lead Manager

HAS ACQUIRED

Fairness Opinion to the Buyer

IPO

Co-Manager

HAS BEEN ACQUIRED BY

Financial Advisor tothe Seller

_______Certain transactions executed by Headwaters TMT bankers at prior firms

Current Pipeline














A DIVISION OF






Internet Advertising

Local Online Marketing Solutions

Sell-Side Advisor

Project Rocket

Mobile Marketing

Automation Platform

Sell-Side Advisor

Project Dynamite

19Confidential

Recent Technology, Media & Telecom Awards and Nominations








A DIVISION OF



A PORTFOLIO COMPANY OF


Headwaters Technology, Media & Telecom (TMT) team has won the

6th Annual International M&A Advisor Consumer Services Deal of the Year award and

back-to-back M&A Advisor TMT Deal of the Year awards

2012 TMT DEAL OF THE YEAR <$100M

2012 WINNER

CONSUMER SERVICESDEAL OF THE YEAR



2014 FINALIST

THE 13th ANNUAL

2014 FINALIST

THE 13th ANNUAL

2013 WINNER

THE 12th ANNUAL

CORPORATE / STRATEGIC ACQUISITION OF THE YEAR

20Confidential

Contact Us

www.headwatersmb.com

John BatdorfManaging Director

Head of Software & Internet

Investment Banking

Office: (415) 926-7454

Cell: (415) 847-8805

[email protected]

135 Main St

Suite 800

San Francisco, CA 94105

21Confidential

Disclosure: This newsletter is a periodic compilation of certain economic and corporate information, as well ascompleted and announced merger and acquisition activity. Information contained in this newsletter should notbe construed as a recommendation to sell or buy any security. Any reference to or omission of any reference toany company in this newsletter should not be construed as a recommendation to buy, sell or take any otheraction with respect to any security of any such company. We are not soliciting any action with respect to anysecurity or company based on this newsletter. The newsletter is published solely for the general information ofclients and friends of Headwaters MB, LLC. It does not take into account the particular investment objectives,financial situation, or needs of individual recipients. Certain transactions, including those involving early stagecompanies, give rise to substantial risk and are not suitable for all investors.

This newsletter is based upon information that we consider reliable, but we do not represent that it is accurateor complete, and it should not be relied upon as such. Prediction of future events is inherently subject to bothknown and unknown risks, and other factors that may cause actual results to vary materially. We are under noobligation to update the information contained in this newsletter. Opinions expressed are our present opinionsonly and are subject to change without notice. Additional information is available upon request. The companiesmentioned in this newsletter may be clients of Headwaters MB, LLC. The decisions to include any company in thisnewsletter is unrelated in all respects to any service that Headwaters MB, LLC may provide to such company.This newsletter may not be copied or reproduced in any form, or redistributed without the prior written consentof Headwaters MB, LLC. The information contained herein should not be construed as legal advice.

Disclaimer

22Confidential

Appendix3Q 2014 Internet AdvertisingPrecedent M&A Transactions

23Confidential

Date Target Target Description Acquirer(s)EnterpriseValue ($M)

EV /LTM Rev.

09/29/14 Video NativesProvides online video advertising services, including campaign management, ad placement, SEO and analytics, for businesses, video content creators and Web publishers worldwide. Also provides real-time ad bidding services for advertisers.

Adyoulike SA -- --

09/26/14Connectiva Analytics and Insights Ltd.

Provides customer analytics, business analytics, revenue management and fraud detection SaaS, as well as related managed and BPO services, for businesses in the telecom, media and utilities sectors globally.

Altruist Technologies Pvt Ltd. -- --

09/23/14 LocalVoxProvides marketing management software-as-a-service (SaaS) that syndicates news and content to social platforms and targets mobile marketing, improves brand searchability and manages social media networks for publishers, brands and SMBs in US.

TBC Holdings I Inc. -- --

09/22/14Xaxis [WPP Group plc] (Open AdStream assets)

The Open AdStream ad serving technology assets of Xaxis, which provides online advertising campaign management and analytics SaaS for businesses, Web advertisers and publishers globally.

AppNexus -- --

09/18/14Viral Ad Network [aka VAN]

Provides online viral video and social media advertising placement services for businesses.

Sharethrough Inc. -- --

09/17/14 ClicktoolsProvides enterprise customer survey SaaS, enabling businesses to collect, organize and utilize customer feedback collected through Web surveys and forms and then integrate the information into existing CRM systems.

Callidus Software Inc. [dba CallidusCloud]

14.8 --

09/17/14Opinionmeter International Ltd.

Provides cross-platform customer feedback mobile applications, Web-based SaaS and point-of-experience touch-screen survey kiosks and PDAs for retailers and businesses worldwide.

PeriscopeIQ Inc. -- --

09/16/14Adquant [fka Adotomi]

Provides predictive analytics-enabled in-game and in-app social media advertising SaaS for businesses and software developers globally as a Facebook Preferred Marketing Developer (PMD).

Kenshoo Ltd. -- --

09/15/14 Content Savvy Inc. Provides Web, customer and social media analytics software and SaaS for businesses. SmartFocus -- --


EV ($M)EV/LTM Revenue

High $2,216.4 4.4x

Mean 358.1 3.0x

Median 144.0 3.1x

Low 5.0 1.4x

3Q 2014 Precedent M&A Transactions

24Confidential


EV /LTM Rev.

09/11/14Conversant Inc. [fka ValueClick Inc.]

Provides online advertising and marketing services, including ad serving, affiliate marketing, display advertising, lead generation and digital coupons, for businesses. Also operates an online advertising network for marketers and ad publishers.

Alliance Data Systems Inc. 2,216.4 3.7x

09/11/14 MarquiProvides marketing Web content management SaaS and Web design, SEO, Web and email marketing services, for marketing teams and marketing businesses.

Givex Corporation -- --

09/11/14 Mongoose MetricsProvides CRM phone call analytics and management SaaS to enable businesses to track, analyze and aggregate customer phone call data, for marketers, enterprises and SMBs.

Ifbyphone Inc. -- --

09/11/14 Neoworks LimitedProvides multichannel commerce and hybrid e-commerce software, and multichannel services and Web performance consulting for businesses globally.

Salmon Ltd. [WPP Group plc] -- --

09/10/14 ADFOXProvides digital marketing and advertising SaaS, including SEO and search engine advertising, marketing analytics, social media marketing, web branding, display advertising and mobile marketing, for marketers and businesses in Russia.

Yandex [NASDAQ: YNDX] -- --

09/04/14Brightkit [fka Memelabs]

Provides social media marketing SaaS for businesses. Software enables branded marketing content and communication across multiple online and mobile social media websites, as well as social media contest creation.

HootSuite Media Inc. -- --

09/03/14Luminate Inc. [fka Pixazza]

Provides in-image text and display advertising SaaS to enable Web publishers, marketing and advertising agencies to publish ads that are displayed over targeted image searches on Web and mobile devices.

Yahoo! Inc. -- --

08/26/14 InsightExpress LLCProvides digital marketing campaign analysis and analytics tracking SaaS for businesses. Software enables Web publishers and ad agencies to measure the effectiveness of cross-media advertising campaigns for the purposes of optimization of advertising budgets.

Millward Brown -- --

08/21/14 OffergraphProvides predictive marketing analytics and social media marketing SaaS to enable targeted mobile and social media advertising for marketers and businesses.

Notice Technologies Inc. [dbaPolygraph Media]

-- --


3Q 2014 Precedent M&A Transactions (Cont.) EV ($M)

EV/LTM Revenue

High $2,216.4 4.4x

Mean 358.1 3.0x

Median 144.0 3.1x

Low 5.0 1.4x

25Confidential


EV /LTM Rev.

08/20/14 Mad Mimi LLCProvides email marketing SaaS for small businesses. Software enables users to create, send and track HTML-based email marketing campaigns and company newsletters without the need for using stock templates.

GoDaddy -- --

08/18/14 Sherpa LLCProvides predictive modeling AI-enabled data analytics tracking and reporting SaaS, mobile application development and consulting services for government agencies, political organizations and market research firms.

evolve24 -- --

08/17/14Mark-It Systems Inc. [dba Advantage Xi] (customer base)

The customer base of Advantage Xi, which provides Windows-based contact database management and email automation software for enterprises.

Realvolve -- --

08/15/14 SharpSpring LLCProvides email marketing, social media marketing and mobile message marketing SaaS, including customizable marketing templates and related analytics, for marketers and businesses worldwide.

SMTP Inc. 5.0 --

08/15/14InterInBox S.A. [dba GraphicMail]

Provides marketing automation SaaS, including email and social media marketing and related analytics, for SMBs.

SMTP Inc. 5.2 --

08/06/14 5RocksProvides email marketing, social media marketing and mobile message marketing SaaS, including customizable marketing templates and related analytics, for marketers and businesses worldwide.

Tapjoy Inc. -- --

08/05/14[x+1] [fka Poindexter Systems]

Provides mobile application marketing automation SaaS, including user analytics, CRM, targeted marketing and advertising A/B testing, for game app developers and businesses.

Rocket Fuel Inc. 230.0 2.6x

08/05/14 FluidwareProvides a centralized data management hub for online advertising; the marketing platform combines first- and third-party data to enable businesses and advertisers globally to track and optimize advertising through a variety of marketing channels.

SurveyMonkey -- --

08/04/14 Perfect MarketProvides digital marketing SaaS to Web publishers and advertising firms, enabling users to manage, optimize and monetize large libraries of digital content.

Taboola -- --



EV/LTM Revenue

High $2,216.4 4.4x

Mean 358.1 3.0x

Median 144.0 3.1x

Low 5.0 1.4x

26Confidential


EV /LTM Rev.

07/31/14 SpotXchange Inc.Provides online customer survey SaaS focusing on retail. Software enables the creation, distribution and analysis of surveys that can be completed online or downloaded for completion offline by customers.

RTL Group 144.0 --

07/31/14 SodaHead Inc.Provides an online survey application that enables brands and businesses to create real-time polls and receive responses from consumers. Also operates as an online community that enables consumers to participate in related surveys and discussions.

Prodege LLC -- --

07/30/14Contactology Inc. (business and assets)

The business and assets of Contactology, which provides white-label email marketing SaaS for enterprises. Software enables the creation of email advertising campaigns, with the ability to send bulk emails, manage subscriptions and track click-thru performance.

j2 Global Inc. -- --

07/29/14 PoptipProvides social media polling, research and analytics SaaS to enable real-time text analysis of social media conversations for marketers and businesses.

Palantir Technologies -- --

07/23/14 Admeta ABProvides online advertising-focused yield management, optimization, data management and web analytics SaaS for businesses globally. Also provides an online advertising network.

WideOrbit, Inc. -- --

07/23/14Prosperio (programmatic direct platform)

Properios' programmatic direct platform, which provides online advertising purchasing SaaS for advertisers. Software enables marketers to purchase online advertising space directly from Web publishers on sites that target a brands consumer base.

PK4 Media -- --

07/22/14 BizoProvides website visitor behavior analytics SaaS to enable business-to-business (B2B) targeted display ads and social media marketing campaigns for businesses.

LinkedIn Corporation [NASDAQ: LNKD]

175.0 4.4x

07/21/14 DirectSmile GmbHProvides multiple media marketing automation software to enable and integrate web, e-mail, social media, mobile marketing, variable data printing (VDP) and direct mail marketing, for marketers and businesses.

Electronics for Imaging, Inc. [dba EFI]

-- --

07/21/14 Flurry Inc.Provides a mobile ad network and software and application usage tracking and analytics SaaS for mobile software developers.

Yahoo! Inc. -- --



EV/LTM Revenue

High $2,216.4 4.4x

Mean 358.1 3.0x

Median 144.0 3.1x

Low 5.0 1.4x

27Confidential


EV /LTM Rev.

07/17/14 Venda Inc.Provides omni-channel business-to-business (B2B) and business-to-consumer (B2C) e-commerce SaaS for retailers, manufacturers and enterprises. Software enables businesses to merchandise, market and sell to consumers

NetSuite Inc. 50.5 1.4x

07/16/14 Freshplum Inc.Provides real-time customer analytics and couponing SaaS and related services to enable data-driven customized and targeted discounts and promotions based on individual customer profiles for e-commerce companies.

TellApart -- --

07/07/14 CrowdPressProvides a WordPress themed social crowdfunding application and website development for enterprises, businesses and entrepreneurs to create their own software-related fundraising campaigns.

IgnitionDeck Inc. -- --

07/07/14 FundifyProvides a WordPress themed social crowdfunding application and website development for enterprises, businesses and entrepreneurs to create their own software-related fundraising campaigns.

IgnitionDeck Inc. -- --

07/02/14 LiveRailProvides a video advertising network for Web publishers that uses real-time bidding for Internet advertising space.

Facebook 382.0 5.5x

07/01/14 TriVu Media Inc.Operates an online video advertising network and provides advertising data analytics for businesses, publishers and advertising agencies. Service classifies videos and video audiences to enable contextually targeted advertising.

Adknowledge, Inc. -- --


3Q 2014 Precedent M&A Transactions (Cont.)EV ($M)

EV/LTM Revenue

High $2,216.4 4.4x

Mean 358.1 3.0x

Median 144.0 3.1x

Low 5.0 1.4x

28Confidential

Appendix3Q 2014 Internet AdvertisingPrecedent Investments

29Confidential

Date Target Target Description Investor(s) Deal TypeDeal Size

($M)

Company Valuation

($M)

09/30/14 SharethroughProvider of a social video advertising and distribution platform. The company offers a software platform that enables publishers, application developers and media companies to create in feed advertising on their sites,

BSB, Elevation Partners , FLOODGATE , North Bridge , Silver Creek Ventures

Later Stage VC 10.0 --

09/29/14 DatoramaProvider of a cross-channel marketing analytics platform. The company provides a software-as-a-service data management platform for advertisers and advertisement agencies.

Cedar Fund, Innovation Endeavors, Marker

Series B 15.0 --

09/29/14 TriggerMailProvider of a personalized retention e-mail services for e-commerce. The company creates e-commerce mails by allowing users to choose a prompt or trigger, which will send off an automated e-mail.

FirstMark Capital Series A 6.0 --

09/25/14 HootsuiteProvider of a social media management system. The company provides a social media management system for businesses and organizations to collaboratively execute campaigns across multiple social networks.

Accel Partners, Fidelity Investments, Insight Venture Partners, OMERS Ventures

Later Stage VC 60.0 1,000.0

09/23/14 BrandMakerProvider of Marketing Resource Management (MRM) systems in Europe. The company centralizes all marketing activities within one single platform. Its modular MRM service optimizes the entire marketing process chain.

L-Bank, PINOVA CapitalPE Growth/ Expansion

30.0 --

09/23/14Performance Horizon Group

Provider of performance marketing services. The company operates a platform that enables large brands and other consumer-facing enterprises to manage all of their online performance marketing partnerships.

DN Capital , Greycroft Partners, Mithril Capital Management

Series B 10.0 --

09/22/14 AppNexusDeveloper of a virtualized cloud computing platform for online advertising applications. The company provides an on-demand production infrastructure for direct marketers, advertisement networks and demand-side platforms.

WPP Group Later Stage VC 85.0 1,200.0

09/17/14 Windsor CircleProvider of a retention marketing platform. The company's technology helps online retailers connect their platforms, email marketing software and other data sources to analyze their customer purchase history and behavior.

Comcast Ventures, IDEA Fund Partners, Origin Ventures , Triangle Angel Partners

Series B 6.3 24.2

09/16/14 BEBB IndiaProvider of an online platform that offers information and tools for small and medium enterprises. The company supplies a wide variety of materials like steel, aluminum, polymers, paints, inks and chemicals.

Accel Partners, Inventus Capital Partners, Kalaari Capital

Series C 6.9 --

3Q 2014 Precedent Investments, $5M+Deal Size

($M)CompanyVal. ($M)

High $85.0 $1,200.0

Mean 17.8 315.6

Median 10.0 186.6

Low 5.0 24.2

_______Source: PitchBook

30Confidential


($M)

Company Valuation

($M)

09/04/14 xAdDesigner of mobile local search and advertising solutions. The company’s solutions include access to a base of national and regional advertising networks; and carrier-grade listings and data from a portfolio of database providers.

Emergence Capital Partners, Institutional Venture Partners , Silicon Valley Bank, SoftBank

Later Stage VC 50.0 250.0

08/27/14 EtouchesProvider of web-based event software management platform for corporation, small business, association, agency, educational institution, meetings and events companies.

Connecticut Innovations Series B 12.5 35.6

08/26/14 BizibleProvider of an online tool to help local businesses with online marketing. The company provides a platform that enables businesses that deliver products and services offline to measure their marketing efforts.

Investment Group of Santa Barbara, Madrona Venture Group, MHS, Scale Venture Partners

Series B 8.0 --

08/22/14 Delivery AgentProvider of shopping enabled entertainment and online advertising for television shows, movies, magazines, sports and music videos.

-- Series F 8.0 191.5

08/19/14 WebLincProvider of an e-commerce platform for online retailers. The company provides various services such as branding, managed hosting, search engine, business reviews and mobile site development.

Safeguard Scientifics Series A 6.0 28.0

08/15/14 NaventProvider of online classified advertising. The company provides a regional classified advertising network for jobs and real estate. The network extends through several Latin American countries.

Riverwood Capital Series C 20.0 --

08/13/14 AdStageProvider of analytical tools for businesses to advertise across multiple networks. The company's platform is a self-serve cross-network online advertising platform with full management and analytics for campaigns in search, social and mobile.

Digital Garage, Freestyle Capital, Individual Investor, Newbury Ventures, Verizon Investments

Series A 6.3 --

07/30/14 DstilleryProvider of internet advertising services. The company provides brand marketers with targeted audiences using the social graph data.

Menlo Ventures, NewSpringCapital, US Venture Partners, Venrock

Series C 24.3 186.0

07/28/14MadwireMedia

Operator of a digital marketing & design agency. The company's product Marketing360 is an automated marketing software platform that allows companies to measure the digital footprint of their businesses.

Copley Equity Partners, Cypress Growth Capital

Series A 5.5 --

3Q 2014 Precedent Investments, $5M+ (Cont.)


Deal Size ($M)

CompanyVal. ($M)

High $85.0 $1,200.0

Mean 17.8 315.6

Median 10.0 186.6

Low 5.0 24.2

31Confidential


($M)

Company Valuation

($M)

07/23/14SmartZipAnalytics

Provider of investment ratings, research and predictive marketing analysis for residential real estate properties.

Claremont Creek Ventures, Crest Capital Ventures, Intel Capital

Series B 12.0 54.0

07/21/14 Intent MediaProvider of an advertising platform. The company provides the full revenue potential of online travel companies by delivering innovative, high-margin advertising products through advanced analytics.

Insight Venture Partners, Matrix Partners, Redpoint Ventures

Series C 22.7 187.2

07/15/14NostoSolutions

Provider of electronic-commerce software and services. The company engages in providing its products primarily for an online marketing automation to the global electronic-commerce industry.

Open Ocean Capital, SanomaVentures, Tekes, Wellington Partners

Series A 5.5 --

07/08/14 WordStreamProvider of a keyword management and pay per click software services for search engine optimization and marketing efforts.

Baird Capital, Sigma Partners Series C 12.0 --

07/03/14 Return PathProvider of an email marketing service that works on both the sending and receiving sides of email in order to help commercial email senders get more email delivered to the inbox.

SAP Ventures Later Stage VC 5.0 --

07/01/14 Simply HiredProvider of a search engine platform for jobs and recruitment advertising network for employers and recruiters. The company builds an online database of jobs and searches job sites and companies.

Foundation Capital, IDG Ventures USA

Series E 12.0 --

07/01/14 TamocoDeveloper of mobile proximity technologies. The company uses near field communication, wifi and bluetooth to provide location based marketing services.

First Eastern Investment Group Early Stage VC 5.0 --

3Q 2014 Precedent Investments, $5M+ (Cont.)


Deal Size ($M)

CompanyVal. ($M)

High $85.0 $1,200.0

Mean 17.8 315.6

Median 10.0 186.6

Low 5.0 24.2

Documents

Internet Advertising Market Update 3Q 2014...Confidential 3 • Innovation in the Internet Advertising ecosystem is being driven by emergence and confluence of mobile, video, social