Marketing & Tech Investment Landscape presented by Wilma Jordan, Founder & CEO The Jordan, Edmiston Group, Inc. January 21, 2014
About JEGI The Jordan, Edmiston Group, Inc. ( JEGI ) The Leading Independent Investment Bank Serving the Media, Information, Marketing and Technology Sectors Experience Founded in 1987, JEGI has completed more than 500 transactions, spanning media, information, marketing and technology companies. Industry Leadership JEGI has deep relationships among global, middle-market and emerging media, information, marketing and technology companies, enabling it to anticipate trends and provide valued advice. Primary Focus JEGI focuses primarily on executing sell-side assignments, conducting efficient, highly effective processes to meet the needs of the client and achieve maximum value. Independence JEGI is committed to the success of each client assignment, with no sales and trading, lending or private equity investing to conflict with the firm s advisory clients' priorities. Results JEGI s team-driven process achieves the highest transaction success rates and enthusiastic endorsements from the firm s satisfied clients. 2
JEGI Leading The Market JEGI The Consistent Market Leader in Transactions Completed Among the Sectors It Serves #1 8 th Consecutive Year *Source: 451 Group 3
Industry-Leading Domain Expertise 27 Transactions in 2012/13; Over $2 Billion in Enterprise Value In each transaction listed above, JEGI s client is mentioned first. 4
M&A Overview Media, Marketing and Technology M&A Driven by Lots of Small Deals 5
M&A Volume and Value by Sector Marketing Services & Technology Remains Most Active M&A Sector Industry Sector No. of Deals Value (millions) No. of Deals Value (millions) No. of Deals B2B Online Media & Technology 57 $601 84 $11,957 (32%) (95%) B2C Online Media & Technology 219 $6,197 252 $10,088 (13%) (39%) Business to Business Media 34 $452 34 $411 0% 10% Consumer Magazines 37 $1,703 43 $277 (14%) 515% Database & Information Services 69 $6,029 59 $11,450 17% (47%) Education Information, Technology & Training 81 $6,954 64 $5,255 27% 32% Exhibitions & Conferences 64 $3,751 50 $874 28% 329% Healthcare Information & Technology 209 $10,458 156 $10,461 34% (0%) Marketing & Interactive Services 479 $45,079 485 $20,501 (1%) 120% Mobile Media & Technology 145 $7,398 124 $3,468 17% 113% Total 1,394 $88,623 1,351 $74,742 3% 19% Source: JEGI Transaction Database Media, Information, Marketing & Technology M&A Activity 2013 2012 January December January December % Change Value 6
Five Hot Trends Driving Marketing/Tech M&A 1 Non-Tech Companies Buying Tech Start-ups 2 Acqui-Hires 3 Continued Rise of Mobile Advertising 4 Building Out the Stack 5 Consulting Firms Becoming Marketing Services Firms 7
1 Non-Tech Cos Buying Tech Start-ups Key Trends Retail traditional retailers actively acquiring technology, to compete with e-commerce sites, such as Amazon Walmart (Walmart Labs), Target, Staples and others are already actively acquiring Technology start-ups enable expanded customer reach, to a younger demographic Customer loyalty is key interaction and personalization important To help boost sales and customer interaction Companies collecting vast amounts of data (big data) need to acquire the tools to analyze and utilize the data Companies have developed Labs to house acquisitions key is the ability to retain talent 8
1 Non-Tech Cos Buying Tech Start-ups Securing Talent & Technology to Compete Recent examples of non-tech companies acquiring tech start-ups: Monsanto acquired Climate Corporation (big data weather tech) for $930 million Under Armour bought MapMyFitness (fitness tracking app) for $150 million Staples acquired e-commerce personalization company Runa First Data acquired mobile loyalty start-up Perka and mobile payments start-up Clover E.W. Scripps acquired Newsy (delivers news via devices) for $35 million Ford Motors bought Livio, an in-car music app, for $10 million Live Nation acquired Meexo, a mobile start-up for connecting people more meaningfully Walmart acquired Tasty Labs, a social software developer 9
2 Acqui-Hires Talent Acquisition Corporations, especially high-growth digital media/marketing/tech companies (e.g., Google, Facebook, Apple, Yahoo!, Twitter) acquiring for talent Typically, valuation based on price per head mostly cash deals, possibly some stock, but earn-outs usually avoided Talent deals are a horribly expensive way to get talent 10 to 100 times as much as we d pay a recruiter. But it s a necessity. David Sobota, Director, Corp Dev, Google Companies prefer acqui-hires of companies that have not raised much capital VCs/investors need to get a decent return Companies focused on making acquisitions work and have institutionalized the process of integrating acquisitions For every deal we do, the sponsor on the corp dev team has to do a check-in 30 days in to catch stuff early, and also six-month and one-year look-backs. Jessica Verrilli, Corp Dev Principal, Twitter 10
2 Acqui-Hires Securing Talent to Compete Recent examples of acqui-hires: Facebook acquired SportStream, social sports app enables users to connect over games Yahoo acquired Ptch, a social media application that enables users to create short videos Yahoo acquired Quik.io, a three-person app that sends videos, music, etc. to ipad Square acquired Viewfinder, a NY-based photo sharing app Square acquired Evenly, a four-person mobile payments app Twitter acquired Locomatix, real-time stream and analytic data processing Apple acquired SnappyLabs, a one-man photo technology app Google acquired Behavio, allows mobile devices to sense and react to human behavior 11
3 Continued Rise of Mobile Advertising Mobile A Very Hot Market Global mobile ad market growing 57% in 2014, to $26.3 billion Facebook s share of global mobile ad revenue continues to expand, but Google still the 800 pound gorilla more than 50% of global mobile ad revenue US mobile ad spending forecasted to grow 56% this year, to $15 billion Global Mobile Ad Spend Source: emarketer 12
3 Continued Rise of Mobile Advertising Case Study Twitter Acquires MoPub for $350 million Target Overview: Mobile ad exchange helps mobile publishers manage ad inventory Twitter Rationale Driving significant revenue from mobile; deal vaults Twitter to forefront of race to combine effective targeting and mobile ad-buying Pre-acquisition, Twitter expected to account for nearly 2% of 2013 global mobile Internet ad revenue 1 Insider View We look at this deal as a big bet on the mobile ecosystem, which is growing incredibly quickly mobile advertising is in the early stages, and Twitter and MoPub together give us the opportunity to help drive what mobile advertising becomes. Kevin Weil, VP, Revenue, Twitter 1 emarketer 13
4 Building Out the Stack It s All About Enterprise Marketing Management High rate of technology adoption by CMO s a tremendous market opportunity for enterprise technology vendors The Stack comprises systems that help marketers manage and measure ongoing interactions with their customers Rapid technology adoption within marketing function has significantly impacted marketing services providers EMM STACK Stack Business BI Intelligence Analytics Customer Experience CEM Mgmt Multi-Channel MCMMarketing Customer Relationship CRM Mgmt Web Content WCM Mgmt Asset DAM/MAM Management 14
4 Building Out the Stack $30 Billion in M&A Value, 2010 to 2013 Three of largest transactions in media/marketing/technology for 2013 were marketing automation deals to help enterprise software companies build the marketing stack Salesforce acquired ExactTarget for $2.5 billion Oracle bidding for Responsys for $1.6 billion Adobe acquired Neolane for $600 million 15
5 Consulting Firms Becoming Marketing Services Firms Investing in Marketing Services for Growth Acquisitions of marketing services firms bring needed talent to consulting firms (e.g., digital strategists, designers, analysts, technologists) Marketing services provide creative/new capabilities for consulting firms (e.g., customer experience, customer interaction, design, measurement, targeting, insights) Marketing services enable consulting firms to offer clients a more holistic group of services (a key differentiator) and higher levels of customer satisfaction and loyalty Consulting firms able to keep more revenue in-house providing more actionable services to clients, expanding market share and growth Insider View These sophisticated digital creative strategists, when coupled with PwC s broad range of global business and industry consultants, strengthen our ability to deliver holistic, end-to-end business transformation around the world. Miles Everson, PwC US Advisory Leader 16
5 Consulting Firms Becoming Marketing Services Firms Keeping More Revenue In-House Recent examples of consulting firms acquiring marketing services groups: PWC acquired BGT, a digital creative consultancy PWC acquired Ant s Eye View, community building and management Deloitte acquired Banyan Branch, a digital and social media agency Deloitte acquired Ubermind (mobile app developer) for $50 million Accenture acquired Fjordnet, digital design services Accenture acquired Acquity Group (e-commerce and digital mark services) for $285 million IBM acquired Urbancode, push out updates via mobile, social, cloud, etc. IBM acquired Tealeaf, mobile commerce analytics KPMG acquired Link Analytics, big data analytics solutions 17
Predicting the Future Predictions 1. Lines continue to blur, as publishers become agencies; agencies become content creators and sometimes publishers; and brands are content creators Can Everyone Play Well in the Sandbox? Publishers Agencies Agencies Content Creators Brands Publishers 18
Predicting the Future Predictions 2. Sponsorship spending estimated at $20.6 billion in 2014 1 and will continue to have a major impact on advertising 3. Native advertising (60% of Facebook s revenues in 2013) is the major driver of advertising spend for the foreseeable future 1 JP Morgan 19
Transitioning Advertising Model ADVERTISER PUBLISHER CONSUMER BRANDVOICE 20
Predicting the Future Predictions 4. By 2016, programmatic will drive an estimated 35% of all digital advertising spend and, finally 5. Over the next few years, large corporations ($250+ million of revenue) will drive M&A, further consolidating emerging marketing and tech companies 21
Predicting the Future Thank you. Wilma Jordan, Founder & CEO The Jordan, Edmiston Group, Inc. 22
Marketing & Tech Investment Landscape presented by Wilma Jordan, Founder & CEO The Jordan, Edmiston Group, Inc. January 21, 2014