offers partners & diligence process

© 2013 Karthik Ethirajan, all rights reserved

Offers Partners & Diligence Process Karthik Ethirajan September 2013


Agenda

2

1. Due Diligence Process

2. Partners Snapshot

3. Key Learning

4. Partner Rap Sheet

Venue / Events Offers Archer

CLO Offers Citi Edo Cardlytics

eGifting Offers

Blackhawk

National Offers Spotzot Blue Kangaroo RetailMeNot DealNews

Local Offers Entertainment Books ValPak

National Deals Gilt City

Local Deals SignPost

Donations Raz Mobile


1

Partner Due Diligence: Process & Assessment

Framework

3

• Market research

• Partner phone interviews

• 2 weeks

Preliminary Assessment

• Host a Partner Week at

company

• F2F meetings with New

Ventures team

• 2 weeks

Business Diligence

• F2F meetings with PD

team at HQ

• Technology deep dive

• Platform integration

assessment

• 3 weeks

Technical Diligence

Invitee List for Partner Week

3

2

Qualified Partner Offers

Business Model

Partner Integration

Plan

Company Offers Sourcing

• Revenue • How are offers sourced ?

• # Employees • How big is sales force ?

• Subs / Visitors • How many brands ?

• Founded • Number of offers ?

• Scale & stability • Coupon types (regular,

exclusive, others)

• Competitors • Offer categories

• Closed loop tracking

Business Model Technology / Platform

• Revenue share or licensing

model • Platform capabilities

• Revenue from merchants:

CPM, CPC or CPS • Software

• Distribution model / partners • Web services (APIs, Widgets,

others)

• Coupon ASP

~ 10 partners

~ 5 partners

~ 3 partners

Partner Rap Sheet

Execute NDA

Execute WIDA

© 2013 Karthik Ethirajan, all rights reserved 4

Partner Status Offer

Type

Interest

Level

Launch

Target

Business

Term Tag Line

On Hold Venues /

Events High

A campaign designer could be offered up as a VAS to

merchants and can help win venue/events based offers

On Hold CLO Low

Brand name credit card company seeking exclusive MNO

partnership in U.S. Hopes to replicate model from market

launches in Europe and Asia

Slow

Response CLO Medium 2H14

Experienced sourcing CLO offers and standing up offers

businesses with credit card companies. Looking for new

partners to bring additional subs

On Hold CLO Medium Another CLO specialist looking for a wider distribution and

complimentary capabilities such as contextual targeting

Contract eGift High 1H14 A eGift Card specialist with relationship to all major

brands

Contract Reg/Prem

National High 2H13

Provider of curated public coupons as well as sponsored

ones. Differentiates by its targeting of high intent

shoppers & platform capabilities.

Done Premium

National High 2H13

A mCoupon provider to help national brands with in-store

sales with a small proportion of premium offers

No Deal Reg/Prem

National Medium

A mCoupon provider with an aspiration to be more of a

platform player

Done Premium

Local High 2H13

ValPak is a local offers powerhouse with a lopsided

business model for its affiliates. Savings.com is an offer

source for national brands

On Hold Premium

Local High 1H14

EB is looking to replicate its successful “pay for coupons”

model on the mobile side aided by its legacy brand name

On Hold Local

Deals High 1H14

A small local deals provider looking for distribution with

favorable terms

Slow

Response

National

Deals High 1H13

A high value, exclusive brands, experiences niche deals

provider offering sub-par terms to distribution partners

© 2013 Karthik Ethirajan, all rights reserved 5

Partner Status Offer

Type

Interest

Level

Launch

Target

Business

Term Tag Line

No Interest Donations Low

Serves an interesting niche, donations, via a mobile

platform and relationship with non-profit and political

organizations

Contract Premium

National High 1H13

Provider of high quality offers for brand name products

sourced mostly from public domain


Key Learning

6

Regular offers are non-monetizable

Premium offers are monetizable

There are few pure play content providers. Most partners want to sell both content and platform as a package. As such, agreeing to a technology collaboration will be key to consummating many of these deals.

Ideally, not more than one partner needed for each offer type


A campaign designer could be offered up as a VAS

to merchants and can help win venue/events

based offers

7

Company Impact

• Willing and able to introduce merchants. Can serve as good lead to venue/events marketing.

• With Archer partnership, company can offer campaign design as a VAS to merchants

Contact

• Michael Levinsohn ,

Executive Chairman

Value Proposition

• Design & delivery of SMS/MMS campaigns across the globe

• Experience working directly with brands & MNOs worldwide

Company & Products

• Works with many international MNOs

• Competitors: Hip Cricket, Velti (good international reach), Vibes

• Reporting & analytics

Business Model

• Revenue from designing MMS/SMS campaigns and technology platform licensing

• Text messages via SaaS model

• MMS messages via managed services

Technology

• User agent profile database enriched with GSMA device profile database

• Platform supports couponing, and POS integration

• Improved throughput for A2P MMS messaging: xx MPS

• MM7 and SS7 protocols

• Eliminate transcoding problems

• Video file format: 3GP. MP4 .MOV

• Delivery rates of 70% + depending on handset database

Interest

Level

Key Stats

Founded 2005

156 employees

Seattle HQ

$25-35M revenue

Revenue split: xx% carrier

campaigns, xx% merchant

campaigns, xx% platform

1,700 campaigns/mo. in U.S.

HIGH

Offer

Type

Venue/

Events


Brand name credit card company seeking exclusive

MNO partnership in U.S. Hopes to replicate model

from market launches in Europe and Asia

8

Company Impact

• Wants company to provide access to subs, preload, care & co-marketing

• Open to co-branded or company branded solution. Citi branding needs to be subtle in order not

to unintentionally drive away other card holders

• Looking for some sort of exclusivity (we can’t work with other banks or wallet solutions excluding

Google Wallet) and in return Citi won’t partner with other MNOs

• Agreed that non-CLO offers can drive both impressions & provide incremental revenue

• We don’t need their wallet. We only needs their subs without driving away non-Citi subs.

Contact

• Richard Char, MD, Global

Enterprise Payments

• Rich Naddy

Value Proposition

• Closed loop CLO (Card Linked Offers) that requires no POS integration

• Money2 wallet

• Launch ready technology platform

• Consumer shopping data is better than carrier phone data

• International experience

Company & Products

• Just launched CLO offers in Hong Kong with the operator 3

• Little US presence using Edo platform

• Mobile and online teams are organizationally apart

• Not a big ISIS fan (may be because it is too inclusive) even though Citi is a ISIS member

• Citi wallet can accept other cards to be added to it

• Source offers from Cartera, mPhoria, Rearden (Citi invested $75M), Living Social

• Product roadmap include gift cards and loyalty programs

Business Model

• Commission from merchants based on redemption (CPS)

Technology

• Enablers include NFC, location

• Targeting based on location, context, demographics, shopping history

Interest

Level

Key Stats

LOW

Offer

Type CLO


Experienced sourcing CLO offers and standing up

offers businesses with credit card companies.

Looking for new partners to bring additional subs.

9

Company Impact

• Open to doing a xx/yy rev share deal

• Edo is looking for access to company’s subs & their credit card transaction data

• Company won’t be able to monetize Edo’s existing subs base (from Edo’s partner cards)

Contact

• Steve Kietz, GM Strategic

Partnerships

Value Proposition

• Closed loop CLO (Card Linked Offers) that requires no POS integration

• Offers program does not require consumers to preselect offers. “Accidental redemptions” are ok.

• Huge sales force to source offers directly from merchants

Company & Products

• Customers include Capital One, Citibank (U.S.), Discover, PageOnce app

• Competitors: Cardlytics (hosts BankAmeriDeals), Cartera (powers Wells Fargo)

• Targeting based on user credit card transaction data

• Check (was PageOnce) 8M credit card transactions

Business Model

• Merchant commission (based on redemption CPS) to Edo is xx% for national brands, xx% for

local or low priced items

Technology

• Passbook integration

Interest

Level

Key Stats

Founded 2007

106 employees (36 sales)

Nashville HQ

Revenue $10-20M

$15M Series C Sep’12

35M partner card subs by 2013

2.3B offers forecasted in 2013

50/50 mobile/PC offers

60% offers national brands, 25%

local and 15% online only

15% average discount

2-4 offers/week/user

2-4% redemption rate for

national brands, 1-1.5% local

100+ national, 400+ local

merchants

MEDIUM

Offer

Type CLO


Another CLO specialist looking for a wider

distribution and complimentary capabilities such as

contextual targeting

10

Company Impact

• Company does not have to collect credit card number, but need mobile number or a Connexus

key

• Willing to bring additional parties (such as a bank) in order to do contextual + behavioral

targeting

• Contextual targeting capability expected from company

Contact

• Jared Luskin,

Partnerships

• Julio Farach, Corporate

Development

Value Proposition

• Offers program requires consumers to preselect offers

• Focused more on local merchants

Company & Products

• Prefer company to handle contextual targeting and they will handle targeting based on shopping

behavior

• Offers are only sent to targeted customers; not broadcasted to all

• They would like to be able to provide their own reporting back to merchants

• Runs CLO programs for Bank of America, Regions, PNC, etc.

• Gets a lot of Starbucks campaigns

Business Model

• Merchant commission (based on redemption CPS) will be split across Cardlytics, company and

a bank

Technology

• Shopping data will most likely come from a 3rd party such as a credit card issuer

• Targeting: Need some level of PII data or Equifax’s Connexus key to be transmitted from

company to Cardlytics real-time so that the user’s credit card and hence their shopping

transactions can retrieved

Interest

Level

Key Stats

Founded 2007

250 employees (Sales: 16

national, 65 local)

Atlanta HQ

Revenue $10-20M

$100M total raised thru Series D

15M monthly mobile users

70M credit card accounts

380 financial institutions

1500 merchants (a few hundred

national, rest all local)

18 active offers

xx% of users activate offers

xx% of users redeem offers

MEDIUM

Offer

Type CLO


A eGift Card specialist with relationship to all

major brands

11

Company Impact

• Offers a rev share of xx/yy between BH/company and in case where payment transaction costs

are involved, it would be taken out of BH share

Contact

• Patrick Ramsey

• Jaime Rodriguez, product

director

Value Proposition

• Carry eGift cards from many brand names on GiftCardMall.com

• Has many flavors of eGift card related offers

Company & Products

• Subsidiary of Safeway Inc.

• Carries both prepaid and coupon-type offers

• Offer types: Bonus value gift cards, CLO, promotional value gift cards, unlimited use coupon

and redemption value gift cards

• Support transaction types such as gift card activation, reload & redemption

Business Model

• Commission from merchants (~ xx% typically) on sale of their gift cards and offers

Technology

• eGifting platform

• REST based services

• Resource based services that use JSON over https

Interest

Level

Key Stats

Oakland, CA HQ

100k stores selling BH cards

18 markets overseas

HIGH

Offer

Type eGifting


Provider of curated public coupons as well as

sponsored ones. Differentiates by its targeting

of high intent shoppers & platform capabilities .

12

Company Impact

• CPC based monetization of sponsored offers (varies based on offer, determined by Spotzot)

• Willing to send (rank ordered) coupon feeds. Focused on distribution.

• Require sharing of user ID & location so they can do the targeting instead of our platform

Contact

• Jim Schreitmueller, Co-

founder, VP Sales

Value Proposition

• Sources sponsored offers directly from merchants and curates offers from 1500 public sources

• Ability to target high intent shoppers. Platform/APIs to enable location, voice search, etc. and

generate an offer list

Company & Products

• Competitors: ShopSavvy, Shopkick, CardStar, Geodelic

• Has an affiliate program and works with ad networks (Amobee, Jumptap) for distribution

• Analytics for merchants. Defined a shopping index = Shopping Intent / Shopping Interest

• Shopping Scorecard portal for merchants shows foot traffic, shopping index, etc.

• Spotzot does not self-publish their own offers

Business Model

• Sponsored Offers (coupons & sale promos): Commission based coupons (~ xx%) sourced

directly from merchants

• They keep xx% of revenue from merchants and distribute the rest to publishers (affiliates) based

on performance at $xx CPC

Technology

• Publishers provide user location & unique ID and receive an offer list from Spotzot

• Offer list is dynamically generated using targeting data

• Spotzot could insert an i-frame within a publisher app to render merchant offer. Publishers

control user experience.

• RESTful APIs for integrating content and enabling location, barcode, voice search, social, digital

wallet, check-in, other mall-centric shopping features

Interest

Level

Key Stats

Founded 2009

40 employees

Bay Area HQ

$2.2M Series A Nov’11

$1-$10M Revenue (estimated)

300K-2M impressions/campaign

20-40% CTR on 2-5 minute

session time

15k brands, 500k stores

15 product categories

1500 offer sources

$xx CPC for Publishes

~1000 coupons/day, 10

sponsored (merchant paid)

~100 shopping apps (Pubs.)

3x ROI guarantee for merchants

HIGH

Offer

Type

Reg/Prem

National


A mCoupon provider, with a small proportion of

premium offers, that helps national brands with in-

store sales

13

Company Impact

• Sending us only premium offers (Goal: 5 active offers at any time)

• 4 rev share models: 1) xx/yy or better CPS (% sales based on redemption), 2) % flat fee based

on redemption, 3) % sales based on traffic, 4) % flat fee based on traffic

• Enthusiastically engaged. Giving us early access to API and wants feedback

• Sees synergy with our Telefonica relationship as they have presence in Europe

• RMN will not provide direct customer care for coupon issues

Contact

• Ian Mooney, Business

Development Manager

• Jody Goehring

Value Proposition

• Provide mobile coupons usable in-store with a promo code

Company & Products

• A Whaleshark Media property

• Operate 7 websites in NA and Europe

Business Model

• Commission from merchants

Technology

• Merchant metadata includes merchant name, logos, locations, POS capabilities

• Other merchant data include closed loop status, monetization status and payment structure &

rate

• Offer data include title, description, start date, expiration date, restrictions, T&C, valid locations,

offer image, category, offer type, redemption methods, distribution limits and offer URL

• Publisher Analytics: page views, visits, engagement actions, POS feedback, benchmarking

Interest

Level

Key Stats

Austin, TX HQ

Revenue $120M in 2012

$1.7B in merchant sales in 2011

100k merchants

5M downloads

xx% mobile traffic in 2012, xx%

forecasted by 2015

Inventory of xxM coupons, xx%

crowd sourced

HIGH

Offer

Type

Premium

National


A mCoupon provider with an aspiration to be more

of a platform player

14

Company Impact

• Currently feeding offers to Eureka app and showcased on lumen bar

• $xxM for content + platform (Rewards/Loyalty, Product Lists) or $xxM for content only. It is a 2-

year contract.

Contact

Value Proposition

• A strong content player for local and national offers

• Technology investment for an offers platform that touts many features

Company & Products

• A ChoozOn property

• Primitive mobile app

• Redirects consumers to merchant site for redemption

• Mostly scraped coupons like others. Good assortment of brands though.

Business Model

• Commission from merchants for premium offers

• Platform license fee

Technology

• Personalization Platform

• Deal Search & Deal Recommendation Engine

• Marketing Inbox

• Geo-Fence Based Notification of Offers

• Browser-Based Notification of Offers

• Social Sharing of Deals

Interest

Level

Key Stats

Founded 2010

Seattle HQ

Top 2000 brands

MEDIUM

Offer

Type

Reg/Prem

National


ValPak is a local offers powerhouse with a

lopsided business model for its affiliates.

Savings.com is an offer source for national brands

15

Company Impact

• Willing to engage on a pilot to test CPC rev share model (not interested in CPM)

• ValPak offers feeds are from local merchants (feeds from other players are mostly national

brands)

Contact

• Fred Steube, Dir. of

Digital Innovation

• Gigi Swanson, Technical

Lead

Value Proposition

• ValPak provides local merchant offers and Savings.com provides national brand offers

• ValPak is a 40+ year old household brand

Company & Products

• Both brands are owned by Cox

• ValPak distributes local coupons via envelopes, online and mobile app

• ValPak offers are integrated into Microsoft Wallet

• Business Profile Page (BPP) for local merchants. It helps Valpak do better SEO.

• Launched a new merchant app to handle PoS side

• Plan to launch CLO

• Savings.com sources offers directly and via UGC

• Savings.com use ad network (LinkShare) for distribution

• DealPro: Savings.com network of deal experts and bloggers

• ValPak partners include Roximity (connected car), YaSabe (spanish search for local business,

YellowBot (business data source), GeoQpons (LBS), Coupon Cabin

Business Model

• Franchises get local offers and decide pricing to merchants. ValPak collects a fixed-rate fee

from its franchises.

• Revenue-neutral model: Affiliates don’t get compensated distributing ValPak offers

Technology

• Passbook integration, augmented reality, geo, connected car

Interest

Level

Key Stats

40M/mo. print distribution in NA

5M unique visitors/mo.

170 franchises

100k offers from national brands

70k offers from 30k local

merchants

2.5 offers/local merchant

3.6M coupons printed

640M offers viewed in 2011

HIGH

Offer

Type

Premium

Local


EB is looking to replicate its successful “pay for

coupons” model on the mobile side aided by its

legacy brand name

16

Company Impact

• Proposed that the first $xx revenue goes to EB (guaranteed in 18 months), the second $xx

revenue goes to company, and xx/xx revenue split thereafter. It is a 2-year contract.

• Monthly subscription will be set at $xx or $xx based on the results of a A/B market test. Subs

can redeem up to 10 premium offers per month.

• Required creating a special folder with subscription based access inside the app

• EB provide customer care for any of its offer related questions. Company takes care of the rest

including subscription purchase and management.

Contact

• Dainon Haggard, VP

Marketing

Value Proposition

• Brand legacy of 30+ year old

• Offered both local and national coupons including some premium offers

Company & Products

• Emerging from Chapter 11 bankruptcy with founding family taking control of the company again

• Offer types: Frequent Values (20% discount) & Premium offers (buy one, get one 50% off)

• Offer categories: Dining, Events & Attractions, Shopping, Travel

Business Model

• A monthly subscription based model to access EB coupon book, typically $35/year/market

• Publishers on their own and sells wholesale (typical contract is $xx worth of coupons for 12

months) to companies which in turn offer coupon books & online access as a benefit to their

employees, clients, etc.

• Makes money from participating in many fundraising events similar to Girl Scouts Cookies

Technology

• EB to send company daily XML feed of offers

Interest

Level

Key Stats

Troy, MI HQ

~500 employees

160 markets (~1 sales person

per market)

40k merchants

75k offers

93k store locations

Offer

Type

Premium

Local

HIGH


A small local deals provider looking for distribution

with favorable terms

17

Company Impact

• Small company

• Favorable (xx% rev share) business terms for distribution partners

• Will provide a landing page until company has checkout capability

Contact

• Jacco de Bruijn, VP

Business Development

Value Proposition

• Provide highly discounted local deals

• Distribute via their own website as well as multiple partners

• Help small merchants setup campaigns & provide reporting

Company & Products

• Tag line: Marketing automation for local business

• Distribution partners: Google, Amazon, Microsoft, MasterCard, CBS, eBay, AoL, Gilt, Digital

First media

• Each campaign is matched to only one or two partners

Business Model

• Signpost charges merchants a flat monthly fee of $xx for their services

• Distribution partner gets to keep all transaction commission (typically xx% of sales)

Technology

• Distribution Engine selects a partner for running a campaign based on merchant targeting

requirements, caps on deals, and other distribution partner requirements

• Campaign meta data supported is limited to merchant targeting preferences & merchant location

Interest

Level

Key Stats

70 employees (50 sales)

Revenue <$10M

NYC HQ

40 US markets

15k SMB merchants

>50% discounted deals

HIGH

Offer

Type

Local

Deals


A high value, exclusive brands, experiences niche

deals provider offering sub-par terms to distribution

partners

18

Company Impact

• Company gets xx% of sale (~ xx/yy split between Gilt/company) for new users to Gilt, and xx%

(~ xx/yy) for existing Gilt users

• Purchase experience not contained within company

Contact

• Laura Buhler, Business

Strategy Manager

Value Proposition

• Highly brand conscious player

• High value deals, small exclusive inventory

Company & Products

• Gilt, parent company, has many product themes: Gilt female, man, kids, home, taste

(restaurants), city (experiences)

• Use Commission Junction to track conversion with affiliate network participants

• Seen greater success with iPhone shoppers

• Gilt’s partner diligence process entails: 1) past sales, 2) brand alignment, 3) potential to scale

• Big on social media integration

Business Model

• Typical sales commission from merchants is xx% of sales

Technology

• Providers XML feeds to affiliates

• Redirects to Gilt property for checkout (higher risk of cart abandonment for mobile users)

• Not too big an emphasis on targeting, much like other deals providers

Interest

Level

Key Stats

100 employees (Gilt 1000 emp.)

~ 100 deals at any time

2.5M registered users

4M app downloads

xxM online impressions

xx% of sales from mobile

HIGH

Offer

Type

National

Deals


Serves an interesting niche, donations, via a

mobile platform and relationship with non-profit and

political organizations

19

Company Impact

• Offers Raz/Company xx/yy revenue split Contact

• Dale Knoop, Founder

Value Proposition

• Provides information about donors to Non-Profit Organization (NPO) and political campaigns

Company & Products

• Social sharing is enabled

• Considers text-to-give as the main competitor pointing to its high cost. Also, carrier billed SMS

solution limits donations to $5 and $10

• Maintains user credentials on file to facilitate repeat donations

Business Model

• RĀZ Mobile charges xx/month per client + x% of donations processed (~ averages to $xx

processing fee for every $1 in donation)

Technology

• Follow LAMP process

• Provides a mobile optimized browser for NPOs to use

Interest

Level

Key Stats

3 employees

Kansas City, KS HQ

Launched Aug 2011

~24 NPOs

Raised $900k angel round

LOW

Offer

Type Donations


Provider of high quality offers for brand name

products sourced mostly from public domain

20

Company Impact

• Offers xx/yy revenue split on both CPS and CPC

• Does not require any subscribed data to be passed over

Contact

• Jeremy Globerson, VP

Business Development

Value Proposition

• High quality offers with commentary from public domain

• Guranantees lowest price and high quality (usability) to consumers

• 90% of offers are monetizable, mostly national brands

Company & Products

• Company founders prefer to keep the company private

• 30 member editorial team curates offers

• Focuses on product-specific offers rather than store-specific offers

• The newly found offers are typically showcased in the homepage for 24 hours

Business Model

• Typical sees CPC (about xx% of offers) and CPS for the rest

Technology

• Mature API, experience syndicating offers with other publishers

• Robust process for tracking revenue & accounting

Interest

Level

Key Stats

90 employees

Huntsville, AL HQ

Founded 1997, still private

~300 new offers/day

Raised $900k angel round

HIGH

Offer

Type

Premium

National

offers partners & diligence process

Documents