luma digital brief 005 - market report q3 2015

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Q3 2015 Market Report

LUMA partners

Digital Brief 005

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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

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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

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25 21 18 16 14

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0

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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

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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

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Ad Tech M&A Activity

Ø Observations§ AdTechM&Aactivityslowed

duringthesummer§ 6ofthe14dealsinvolvedvideo

andtelevisionAdTech,signalingtheconvergenceofTVandvideo

Ø LookingAhead– MobileAdvertising§ FollowingtheAOL– Millennial

Mediaacquisition,weexpecttoseemoreattentionbeingpaidtothefewscaledmobileAdTechcompaniesstillonthemarket

§ Locationandmobilevideotechnologywilldrivethemostinterestfrompotentialbuyers

#ofTransactions


95 3 1 3

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0

5

10

15

20

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Q32014 Q42014 Q12015 Q22015 Q32015

+$100M <$100M

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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

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MarTech M&A Activity#ofTransactions

Ø Observations§ 3transactionsinvolvedfinancial

buyersacquiringmarketingtechnologycompanies

§ HGGCacquiredStrongview andEuropean-basedSelligent whilePermira acquiredeBayEnterprise

Ø LookingAhead– ConvergenceofMarTechandAdTech§ Salesforce andOraclerecently

announcedtighterintegrationswithAdTech/paidmedia

§ Weexpecttoseemoreoftheseintegrations/partnershipstoariseasthisnewtrendwillalsocontributetomoredealactivity


2 3 15 3

11 1010

16 19

0

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Q32014 Q42014 Q12015 Q22015 Q32015

+$100M <$100M

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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


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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


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Q32014 Q42014 Q12015 Q22015 Q32015

+$100M <$100M

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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


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Ad Tech – Q3 2015 Stocks Performance

Ø AdTechStocksCrash§ Afterararepositivequarterin

Q2,AdTechstocksplungedonaverage35%bytheendofQ3

§ MXPT,YUMEandMRINledtheAdTechcrash,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%

01-Jul-15 15-Jul-15 29-Jul-15 12-Aug-15 26-Aug-15 09-Sep-15 23-Sep-15

TUBE RUBI TRMR MXPT YUME FUEL CRTO MRIN NASDAQ

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MarTech – Q3 2015 Stocks Performance

Ø MarTechSuffersItsWorstQuarteroftheYear§ MarTechstocksfellover14%this

quarteraftergaining5%inthepriorquarter

§ BCOV,BV,andDWREeachdroppedover24%duringthisperiod

Ø Highlights§ Themarketingtechnologysector

wasnotimmunetotheoverallmarketdecline

§ AutomationSaaS leadersCRM,MKTOandHUBSareoftenthestrongestperformersbutcouldnotstaypositiveattheendofQ3

Market Data as of 9/30/15

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

01-Jul-15 15-Jul-15 29-Jul-15 12-Aug-15 26-Aug-15 09-Sep-15 23-Sep-15

CRM MKTO HUBS BCOV BV CTCT DWRE JIVE NASDAQ

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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

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LUMA’s Recent Content

DigitalBrief003Q22015MarketReport

Ø InoursecondMarket Updatewereported75acquisitionsindigitalmedia,highlightedbystrategicbuyersinCommerce,AdTechandConsumerInternet

TheStateofDigitalVideoPresentedatVidCon 2015

Ø AtVidCon 2015wepresentedourviewsontheriseofthedigitalvideomarketanditssurgeagainsttraditionalTV

DigitalBrief004BacktoMadMen

Ø InourfourthDigitalBriefweexplainedwhatthefutureholdsforadagenciesandfivestrategiestheymaketakeinacompetitivemarketplace

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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.



The$undersigned$acted$as$exclusive$financial$advisor$to$Millennial$Media,$Inc.

a$division$of



Principals$currently$at$the$undersigned$acted$as$exclusive$financial$advisor$to$Looksery,$Inc.

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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

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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

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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

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