LUMA Digital Brief 011 - Market Report Q3 2016

1

Q3 2016 Market Report

Digital Brief 011

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 InourlastQ22016MarketReport,wereported

64mergersandacquisitionsindigitalmediaandmarketing

Ø Thedealswetrackinthisreportfallintooneoffourcategories:§ Large(over$500mm)§ Medium($100– $500mm)§ Small($20– $100mm)§ Sub$20mmexitsareconsideredtechandteamdeals,

capitulations,orundisclosed

4

U.S. Digital Media M&A Activity by Sector

Source: LUMA

#ofTransactions

Ø AlthoughM&Aactivityremainedsteady,thereweremanylargescaledbilliondollardealsincludingtheAppLovin,NetSuite,Playtika,andYahooacquisitions

Ø Asventurecapitalfundingdriesupandfragmentationcausesmoreundifferentiatedcompaniestostruggle,weexpecttoseemoreofamixofstrategicand“capitulation”dealsinthefuture

14 1120

12 14

2218

1422 20

23

19

28 30 28

0

10

20

30

40

50

60

70

Q32015 Q42015 Q12016 Q22016 Q32016

AdTech MarTech DigitalContent

5

A Growing Pool of Strategic Buyers

MARKETINGTECH

CRMSOFTWARE

INTERNETORIGINALS

MARKETING

MEDIA

DATA

CONSUMERINTERNET

TECHSERVICES

Ø Internationalbuyershavesteppedupactivityinthesectorforavarietyofreasons

Ø WhilesomedealsarestrategicinnaturewhereforeignfirmsarebuyingU.S.capabilities,others(aswithChinesebuyers)areleveragingvaluationarbitrageswithhighervaluestockmarkets

INTERNATIONAL

TELCO

COMMERCE

Right Time Decisioning of

Consumer Data

(Ad Tech and MarTech)

6

13%

34%

4%17%

8%

8%

8%

8%ConsumerInternetCommerceTelcoMediaMarketingTechTechServicesInternetOriginalsCRMSoftwareMarketingData

Digital Media M&A Activity by Strategic BuyersQ32016

StrategicBuyersTransactions

Ø Inthethirdquarter,buyersfromCommercewereveryactiveincludingExpediaandRakutenMarketing

Ø Weexpecttoseecreditcardcompanies,whichpossessrichtransactiondatafrombillionsofusers,toenterthisspaceinameaningfulwayeitherthroughM&Aorinvestments

Source: LUMA

7

Ad Tech M&A Activity#ofTransactions

Ø Observations§ Chinawasthemajorstorythis

quarterasthreelargescaledacquisitionswereledbyChinesebuyers

§ TheAppLovinandMedia.netacquisitionsaretwoofthelargestAdTechdealsinthepastdecade

Ø LookingAhead– NewBuyers§ WeexpecttoseefurtherM&A

activityfromChineseandotherforeignbuyers aswellasdomesticnewentrantstothesector

Source: LUMA

3 1 1 2 4

1110

19

1010

0

5

10

15

20

25

Q32015 Q42015 Q12016 Q22016 Q32016

+$100M <$100M

8

Ad Tech – Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

Source: Capital IQ: Crunchbase

$4M $1.4B Chineseprivate equityfirmOrientHontai Capitalhas agreedtoacquireamajoritystakeinthefast-growingmobileadnetworkAppLovin.

N/A ~$100M WiththeacquisitionofConvertMedia,Taboola willbeabletodeliveroutstream videoinadditiontoitscorecontentrecommendationofferings.

$45M N/A MediaoceanhasacquiredInvision,anAdTechcompanyofferingworkflowsolutionstobroadcastersandMVPDs,toaddsell-sidetoolstoitscorebuy-sidebusiness.

N/A $900M Media.net,anAdTechcompanypoweringYahooBingContextualAds,willbeacquiredbyaChineseconsortiumledbyBeijingMitenoCommunicationTechnology.

NASDAQ $76M AdserverSizmekwillbetakenprivatebyVectorCapitalafteritsspin-offfromDGandtwoyearsasapubliccompany.

$43M $148M SpearheadMarketing,anofflinemarketingproviderbasedoutofChina,acquiredpublisher-focusedmobileAdTechcompanySmaato foritsfirstinternationalacquisition.

9

MarTech M&A Activity#ofTransactions

Ø Observations§ Oracle’spendingacquisitionof

NetSuitewasastrategicmoveforthesoftwaregianttobettertargettheSMBmarketasitmovesaggressivelyintothecloud

§ Nuance,knownforitsspeechrecognitiontechnology,acquiredTouchCommerce tostrengthenitscustomerengagementproducts

Ø LookingAhead– MarketingCloudsandPrivateEquity§ Lookforcontinuedacquisitions

fromboth“marketingclouds”aswellasprivateequity-backedMarTech roll-ups

Source: LUMA

3 3 25 3

1915

12

1717

0

5

10

15

20

25

Q32015 Q42015 Q12016 Q22016 Q32016

+$100M <$100M

10

MarTech – Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

N/A $50M ZetaInteractive followedupitsacquisitionofeBay’se-DialogbusinesswiththeacquisitionofAcxiom’smarketingautomationsolution,Impact.

NYSE $8.7B SoftwaregiantOraclehasagreedtoacquireNetSuite,theSaaSERPleader(with marketingtechnologyassets).

$21M $149M FontmakerMonotypehasacquiredOlapic,auser-generatedcontentmarketingplatform,tostrengthenitsmarketingcapabilitiesandexpandbeyonditsfontbusiness.

$28M $215M With theacquisitionofTouchCommerce,Nuance’sEnterprisebusinesswillgainitse-commercefocusedcustomerserviceandengagementtechnologyandexpertise.


11

Digital Content M&A Activity#ofTransactions

Ø Observations§ GamingM&Acontinuestobe

robustwithnotabledealsincludingthesalesofPlaytika,RocketGames,andTinyCo inthequarter

§ MicrosoftandTwitch’sacquisitionsingame-streamingrepresentthegrowinginterestthespacehasattractedoverthepastfewyears

Ø LookingAhead– Livevs.On-Demand§ Whileon-demandvideohasbeen

thepredominantformatontheWeb,liveisemergingwithgreatpromise

§ Partnerships,investments,andacquisitionswillallbekeytohowlivevs.on-demandplaysout

Source: LUMA

72

6 6 6

16

17

22 24 22

0

5

10

15

20

25

30

35

Q32015 Q42015 Q12016 Q22016 Q32016

+$100M <$100M

12

Digital Content – Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

Giant(ChineseConsortium)

N/A $135M Afterfilingforbankruptcy,GawkerMediahasbeensoldtothewinningbidderUnivision, themediagiantwhichrecentlyacquiredTheOnionandFusion.

N/A $4.4B AconsortiumofChinesebuyershasagreedtoacquirePlaytika,thesocialcasinogamingunitofCaesarsEntertainmentitoriginallyboughtin2011.

$38M N/A SGN,aleadingpuzzlegamemaker,hasacquiredgamingstudioTinyCo,knownforpopulartitlesincludingFamilyGuyandMarvelAvengers.

$10M $185M TheacquisitionofVurb,amobileappfocusedonactivitieswithfriends,pointstowardsSnapchat’sgrowingambitionstoexpandbeyonditscoremessagingexperience.

NASDAQ $4.8B FollowingitsacquisitionofAOL,VerizonhasagreedtoacquireYahoo’scorebusiness,whichincludesitsdigitalmediapropertiesandscaledAdTechcapabilities.


13

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

7/1/16 8/1/16 9/1/16

TUBE RUBI TRMR MXPT YUME

FUEL CRTO MRIN TTD NASDAQ

Ad Tech – Q3 2016 Stocks Performance

Ø AdTechFallsAgaininQ3§ AdTechsufferedasecond

consecutivequarterinnegativeterritory,down9%withissues,suchasheaderbiddinghurtingRUBI(40%)andCRTO(23%)thehardest

Ø Highlights§ TheTradeDesk(TTD)hada

successfulIPOafterraising$84millionandclosingitsfirstdayoftradingvaluedat$1.2billion

§ TTDisnowthesecondbiggestpublicAdTechcompanybehindCRTO,butalsoownsthelargestrevenuemultipleof8.2x

Market Data as of 9/30/16

14

-20%

-10%

0%

10%

20%

30%

40%

50%

7/1/16 8/1/16 9/1/16

CRM HUBS BCOV BV JIVE NASDAQ

MarTech – Q3 2016 Stocks Performance

Ø MarTech Rebounds§ WhiletheNASDAQrecorded

recordhighs,theMarTech sectorsoaredhigher,climbingover25%inQ3

Ø Highlights§ HUBS,BCOV,andBVeachgained

over30%,whileCRMwastheloneMarTech stockthatslidinthequarter

§ BCOVcontinuestoenjoyafantasticyearwithitsstockjumpingover118%thisyear

Market Data as of 9/30/16

15

Q3 Key Startup Financings to WatchLead Investor Capital Raised Valuation Comments

Source: Crunchbase

$70M N/A Multi-channel networkDefyMediaproducesvideocontentthat generatesover800millionviewsandreaches125millionuserseverymonth.

$80M $800M NextVR,aVRplatformfocusedonlivecontent,isbuildingitsdistributionaroundtheworldwiththebackingofsomeofAsia’slargestcompanies.

$118M $1.0B LocalmarketplaceOfferUp,whichletsusersbuyorsellanythingfromshoestocars,isontracktoprocess$14billionofsalesonitsplatformthisyear.

$45M $500M FashionmediacompanyRefinery29hasraisedmore capitalasitcontinuesworkingtowardsreachingaudiencesontelevisioninadditiontotheweb.

$55M N/A Scopely,agamingstudio thatalsoprovidesmonetizationtoolstootherdevelopers,has seenitsrevenuegrowbyover500%inthepast18months.

$105M $1.8B Sprinklr,a socialmarketingcompany,isoneofthefastestgrowingSaaScompaniesintheworldaftersurpassing$100Minannualrevenuelastyear.

$181M $1.5B Unity,oneoftheleadinggameengineplatforms,hasraisedcapitaltocontinuebuildingtechnologyforvirtualandaugmentedrealityexperiences.

16

LUMA’s Recent Content

LUMADigitalBrief010PowertothePeople

Ø “PowertothePeople”discusseshowandwhytheindustryismovingtowardspeople-basedmarketing

StateofDigitalMediaPresentedatDMS16

Ø Atour8th annualDigitalMediaSummit,wepresentedtheStateofDigitalMedia,whichprovidesourviewsonthemarketandsignificanttrendsindigitalmedia

LUMADigitalBrief008ScapeofCards

Ø “ScapeofCards”explainstheissuesfacingthedigitaladvertisingecosystemandtheimplicationsforallthekeyconstituents

17

LUMA’s Funny Business

MeekerforMillennials

Ø WeparodiedEminem’sLoseYourselftohelpexplainMaryMeeker’sInternetTrendsdeckattheCodeConference.Thoselyricswerehard– newfoundrespectforrap!

CannesYachtLUMAscape

Ø ThecontinuedproliferationofrentedyachtsbythetechecosystemseemedliketheperfectopportunityforaLUMAscape

CannesCarpoolKaraoke

Ø SinceCannesLionsisaboutcreativity,weadoptedJamesCorden’spopularCarpoolKaraokeformattofeaturetheenthusiasmofdigitalleaders,startingwiththeinimitableCarolynEverson

18

LUMA’s Recent Deals

19

LUMA’s Differentiated Value Proposition

1. PeerlessIndustryKnowledge2. StrategicApproach

3. ExecutionExcellence

20

LUMA’s Content-Driven, Expert-Based Approach

=

acquiredby

December2011

acquiredby

November2012

=mergedwith

March2012

toform

December2011

acquiredby

mergedwith

May2015

acquiredby

March2015

acquiredby

September2014

acquiredby

July2014

asubsidiaryof

acquiredby

September2015

adivisionof

acquiredby

September2015December2015

acquiredbyacquiredby

July2016

acquiredby

March2016 February2016

acquiredbyacquiredby

Pending

ConferenceKeynotes

Publications(over3millionviews)

CorporateTeach-ins

LUMAscapes(over6millionviewsfrom211countries)

CompletedDeals

DigitalBriefs

DISPLAY MOBILE VIDEO SOCIAL NATIVE SEARCH MARTECH COMMERCE GAMING STRATEGICBUYERS

21

Access. Insights. Execution.

New York | Palo Alto