FIRST HALF DEAL NOTES 2011 M&A and Investments Review for the Marketing, DEAL NOTES Media, Technology, and Service Industries 1H11 Marketing, Media, Technology and Service Industries Transaction Activity Up 241 Percent; Deal Value Up 193 Percent on a Year-Over-Year Basis 1H11 Review: 1,353 Transactions Totaling $63.3 Billion Digital Media/Commerce Most Active and Highest Value Segment in 1H11 With 577 Transactions and $29.9 Billion in Deal Value Mergers and acquisitions and investment activity in the Marketing, Media, Technology and Service industries MARKETING, MEDIA, TECHNOLOGY & SERVICE INDUSTRIES 1H11 M&A AND INVESTMENT ACTIVITY grew 241 percent in the first half of 2011, while ($ in Millions) aggregate transaction value increased 193 percent, compared to 1H10. During the first half of 2011, Petsky Digital Media/ Commerce Prunier tracked 1,353 transactions for a total of $63.3 $29,937 billion across six broad segments: Digital Advertising, Agency/Consulting, Marketing Technology, Digital Digital Agency/ Advertising Consulting Media/Commerce, Software & Information and $2,937 $2,639 Marketing Services. Digital Media/Commerce was the most active and highest value segment with 577 transactions worth $29.9 billion in deal value. While strategic buyers accounted for approximately half of the combined M&A and investment activity, their Marketing Software & transactions represented 64 percent of the total value. Technology Information $9,338 Marketing $15,060 Venture and growth capital investors announced 705 Services transactions worth $13.8 billion. While there were $3,369 only 37 private equity buyout transactions, the deals accounted for $9.0 billion in value. (Continued on page 2) IN THIS ISSUE MARKETING, MEDIA, TECHNOLOGY & SERVICE INDUSTRIES M&A and Investments Overview 1 M&A AND INVESTMENT ACTIVITY: 2Q10 - 2Q11 Monetizing Facebook: Advertisers, Developers Look to Capitalize ($ in Billions) on Explosive Growth in Facebook Applications Platform 3 The DMP Debate: The Benefits of Pure Play vs. Mixed Model Data DOLLAR Management Platforms 4 VALUE Rising Above the Din: Professional Services Help Technology $38.2 Solutions Providers Differentiate From the Pack 5 Segment Analysis: $25.1 $19.8 Digital Advertising 6 Agency/Consulting 7 $13.3 $12.8 Marketing Technology 8 DEAL Digital Media/Commerce 9 VOLUME 219 205 414 651 702 Software & Information 10 2Q10 3Q10 4Q10 1Q11 2Q11 Marketing Services 11 Recent Transactions 17 What’s New at Petsky Prunier 18 About Petsky Prunier 18 Securities offered through Petsky Prunier Securities, LLC FIRST HALF DEAL NOTES 2011 1H11 M&A Overview (continued from pg. 1) M&A ACTIVITY M&A activity in the Software & Information segment Looking at control transactions only, Digital Media/ also increased substantially in 1H11. There were 84 Commerce was the most active and highest value transactions worth approximately $14.0 billion, M&A segment in the first half of 2011 with 242 compared to 30 transactions worth approximately transactions and $20.4 billion in M&A deal value. The $7.3 billion in the same year-ago period. The largest Social Media/Apps subsegment accounted for almost deal in the segment was Infor Global Solutions’ half of the segment’s aggregate transaction value, while $2.1 billion acquisition of Lawson Software. Market eCommerce represented 27 percent. Compared to Research accounted for 26 percent of M&A activity the first half of 2010, M&A transaction volume in in this segment. the Digital Media/Commerce segment increased by nearly 284 percent, while aggregate transaction value In Agency/Consulting, M&A activity in the first half increased by 801 percent. Of the largest transactions of the year increased by 147 percent, with 89 deals in 1H11, Digital Media/Commerce deals accounted announced for approximately $2.5 billion. The Digital for five of the top 12 deals, including Microsoft’s Agency subsegment generated the highest value with $8.5 billion acquisition of Skype at 9.9x revenue and 35 deals announced for $1.2 billion, a 41 percent 32.2x EBITDA, Allstate’s $1.0 billion acquisition of increase in deal value compared to 1H10. Within Esurance and Answer Financial, Apax Partners’ $745 Agency/Consulting, the General Agency subsegment million buyout of Trader Corporation, Kuoni Reisen saw a significant year-over-year increase in activity with Holding’s $720 million acquisition of Gullivers Travel 15 deals announced for $187 million compared to two Associates and AXA Private Equity’s $682 million deals for $55 million in the first half of 2010. Notable buyout of Opodo. transactions within the segment included acquisitions of two of the largest independent agencies: Publicis The second most active M&A segment in 1H11 was Groupe’s $575 million acquisition of Rosetta at 1.62x Marketing Technology, with 131 transactions valued revenue and 12.5x EBITDA and Epsilon’s $345 million at $7.7 billion. Marketing Technology deals accounted acquisition of Aspen Marketing Services at 1.4x revenue for three of the top 12 highest-value transactions across and 8.6x EBITDA. Additional transactions included all segments, including eBay’s $2.4 billion buyout of Barclays Private Equity’s $193 million buyout of The GSI Commerce, DG’s $414 million acquisition of Mill at 1.6x revenue and dunnhumby’s $60 million MediaMind Technologies and Google’s $400 million acquisition of social agency BzzAgent at 3.0x revenue. acquisition of AdMeld. (Continued on page 12) 1H11 Most Active Strategic Buyers by # of Transactions # of Buyer Transactions Representative Targets Publicis Groupe 11 Rosetta, Tailor Made, GP7, Talent Group, Airlock, Kitcatt Nohr, Interactive Communications Google 8 SageTV, AdMeld, Rank, Sparkbuy, TalkBin, Pushlife, BeatThatQuote.com, fflick Groupon 7 Crowdmass, Pelago, Disdus, Groupmore, SoSasta.com, Twangoo, Grouper eBay 6 GSI Commerce, Magento, MissionFish, FigCard, Where, MissionFish, Gittigidiyor.com CrowdGather 5 PbNation.com, Forumer.com, Rapmusic.com, PbNation.com, DigiShopTalk.com LivingSocial.com 5 DealKaren, GoNabIt, Ensogo, Dealissime.com, SocialMedia.com Evolve Media 3 Crowd Ignite, WholesomeBabyFood.com, PlayStationLifeStyle Experian 3 Medical Present Value, Computec, Techlightenment, eLong Thomson Reuters 3 CorpSmart, Manatron, World-Check VMware 3 Digital Fuel Technologies, Socialcast, SlideRocket Yellow Pages Group 3 Ad Splash Media, Mediative, UPTREND Media Avos Systems 2 Tap11.com, Delicious HomeAway 2 Second Porch, Realholidays.com.au Microsoft 2 Prodiance, Skype 2 FIRST HALF DEAL NOTES 2011 Monetizing Facebook: Advertisers, Developers Look to Capitalize on Explosive Growth in Facebook Applications Platform While Facebook continues to capture the time and SponsorPay, which was founded in 2009 and attention of consumers worldwide, marketers have is seeking to grow its business with U.S.-based struggled to find targeted ways to reach and connect application developers, plugs into developers’ currency with the massive Facebook audience. But that struggle modules and helps them sell the virtual currency to may be coming to an end, as Facebook’s application end users, who can pay for Facebook goods in cash platform – the springboard for software developers – is or by completing an advertising offer. Facebook’s now experiencing explosive growth, leading to a wave introduction of Facebook Credits, making it easier for of new advertising and marketing opportunities. consumers to buy virtual goods, will further encourage developers to monetize their online games. “An army of software application developers is building out the Facebook ecosystem,” explains Mitchell “Facebook has become a very lucrative environment Weisman, CEO of LifeStreet Media, the largest social for application developers. The platform has media ad network. “As a result of the increasing size matured, dominant players like Zynga and Electronic and maturity of that ecosystem, there is more and Arts have cemented their positions and the quality more demand for advertising inventory from both “of the games has become more important.” direct response advertisers and brand advertisers. It’s a Andreas Bodczek, CEO, SponsorPay wonderful portfolio of business opportunities.” LifeStreet serves nearly half of Facebook’s in-application PERFORMANCE DOMINATES PRICING advertising inventory, the display ads owned by In a shift from traditional CPM pricing, many of application developers. According to Weisman, that these new social media advertising opportunities percentage has doubled over the last year, providing are being offered as pay-for-performance. “The vast advertisers with an audience of more than 300 million majority of what we do for advertisers – 95 percent users globally, including more than 70 million in – is performance-based,” says LifeStreet’s Weisman. the U.S. Facebook also offers its own marketplace “We’re not paid on a CPM or CPC [cost-per-click] inventory, the ads on the right side of the screen that basis, we’re paid on a per-conversion basis.” are owned and sold by Facebook itself. Social gaming companies, some of LifeStreet’s largest An army of software application developers is advertisers, have several objectives for their online building out the Facebook ecosystem. As a result of advertising, including growing their new user bases the increasing size and maturity of that ecosystem, and encouraging return players. “A valuable conversion there is more and more demand for advertising could be a new installation of a game’s software – so “inventory from both direct response advertisers we have a cost-per-install