M&A and Investments Review for the Marketing, DEAL NOTES Media, Technology and Service Industries 1H12 Marketing, Media, Technology and Service Industries Announced 1,481 Transactions Totaling $78.3 Billion; Social and Mobile Subsegments Accounted for 22 Percent of Activity and 10 Percent of Value Digital Media/Commerce was the Most Active Segment in 1H12 with 515 Transactions; Software & Information was the Highest Value Segment with $31.8 Billion in Deal Value During the first half of 2012, Petsky Prunier tracked 1,481 transactions for a total of $78.3 billion across seven MARKETING, MEDIA, TECHNOLOGYChart Title AND SERVICE INDUSTRIES 1H12 M&A AND INVESTMENT ACTIVITY broad segments: Digital Advertising, Agency/Consulting, ($ in Millions) Marketing Technology, Digital Media/Commerce, Software & Information, Out-of-Home & Specialty Media and Marketing Services. The Social and Mobile subsegments Agency/ Consulting within the broader Agency/Consulting, Digital Advertising, $6,861 Digital Media/Commerce and Marketing Technology Out-of-Home & Specialty Media Software & segments together accounted for 22 percent of total activity $7,770 Information and 10 percent of value. Digital Media/Commerce was the $31,873 most active segment overall, with continued technology and market shifts driving ongoing demand for eCommerce Digital Media/ and Social Media/Apps. In addition, growing adoption of Commerce $13,556 cloud-based software resulted in Software & Information being the highest transaction value segment in the first half Digital Marketing Advertising Marketing Services of the year. $3,341 Technology $1,477 (Continued on page 2) $13,405 IN THIS ISSUE MARKETING, MEDIA, TECHNOLOGY AND SERVICE INDUSTRIES! Overview of M&A and Investment Activity 1 MARKETING, MEDIA, TECHNOLOGY AND SERVICESERVICE INDUSTRIESINDUSTRIES! 1Q11-2Q12M&A1H12 AND M&A INVESTMENT M&A AND AND INVESTMENT INVESTMENT ACTIVITY: ACTIVITY1Q11 ACTIVITY - 2Q12! ! ($ in Millions)! Big Data’s Big Opportunities and Challenges 3 ($($ inin Billions)Billions)! Hyper-Local Marketing Evolves Beyond Daily Deals 4 Mobile Growth Drives Increasing Need for Data Security 5 DOLLAR Segment Analysis: VALUE Digital Advertising 6 Agency/Consulting 7 $47.9 $42.0 $42.1 Marketing Technology 8 $36.2 Digital Media/Commerce 9 $30.6 $25.9 Software & Information 10 Marketing Services 11 Out-of-Home & Specialty Media 12 DEAL VOLUME Recent Transactions 18 686 787 825 796 709 772 About Petsky Prunier 18 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Securities offered through Petsky Prunier Securities, LLC Overview of 1H12 M&A and Investment Activity (continued from page 1) M&A ActivitY Content management and social engagement were driving Acquisitions accounted for 44 percent of total transactions in forces behind M&A activity in the Marketing Technology 1H12. Digital Media/Commerce remained the most active segment. The subsegments Content Management and M&A segment in 1H12 with 184 acquisitions and $9.1 Social Technology each accounted for 15 percent of the billion in deal value. M&A activity in the Digital Media/ 136 total transactions and five percent and 23 percent of Commerce subsegment was dominated by eCommerce, the total value, respectively. Acquisitions in the segment Social Media/Apps and Niche Content, which accounted included: for 53 percent of the aggregate volume in the segment. Digital Media/Commerce transactions included: • Microsoft’s $1.2 billion acquisition of Yammer, an enterprise social network offering employee collaboration • Facebook’s reported $1 billion acquisition of mobile social solutions network and photo-sharing app Instagram • Salesforce.com’s acquisition of Buddy Media for a reported • WellPoint’s $800 million acquisition of 1-800 Contacts, total consideration of $745 million one of the largest direct marketers of contact lenses • Oracle’s $300 million acquisition of Vitrue, which • International Game Technology’s $250 million acquisition operates a social relationship management platform, of Double Down Interactive, which offers online social followed by its acquisition of social media monitoring casino gaming platform Collective Intellect • iEnergizer’s $150 million acquisition of Aptara, which The second most active M&A segment in 1H12 was provides digital publishing and content management Agency/Consulting with 144 transactions valued at $6.2 technology solutions that allow publishers to manage a billion. Consolidation among digital marketing services diverse portfolio of content and digital channels firms continued, as providers sought to bolster their multichannel/multidevice digital capabilities. M&A Software & Information was the highest-value M&A activity among the Digital Agency subsegment increased segment in the first half of 2012 with 83 deals worth 41 percent from 2H11, accounting for 38 percent of approximately $29.5 billion, including 10 valued at deal activity and 27 percent of deal value in the segment. more than $1 billion. ERP Software was the most active Notable deals included: subsegment in 1H12, accounting for 23 percent of M&A activity in the segment. Significant deals included: • WPP’s reported $550 million acquisition of AKQA, the largest independent digital agency, at 2.0x revenue and • Toshiba’s $850 million acquisition of IBM’s Retail Store 12.9x EBITDA Solutions Business, at 0.7x revenue • Aegis Group’s $125 million acquisition of Roundarch, a • Amazon.com’s $775 million acquisition of Kiva Systems, digital agency founded in 2000 by WPP Group, Deloitte which provides automation software for distribution Consulting and BroadVision, at 1.8x revenue and 10.9x centers that helps companies simplify operations and EBIT reduce costs while increasing strategic flexibility, at 7.8x revenue (Continued on page 13) 1H12 Most Active Strategic Buyers by Number of Transactions Number of Buyer Transactions Representative Targets WPP Group 15 AKQA, Converge Technologies, DTDigital, EffectiveUI, Frey G2, Grape, OOO Jvision Publicis Groupe 8 BBR Group, i&e, Indigo Consulting, King Harvest, Longtuo, Mediagong, Pixelpark Facebook 6 Face.com, GazeHawk, Glancee, Instagram, Karma, Lightbox Groupon 6 Adku, DITTO.ME, FeeFighters, HyperPublic, Kima Labs, Mertado, UpTake Networks Interpublic Group of Companies 5 FRUKT Communications, FUSE, Lakestar Media, Nicole Weber Communications Omnicom Group 5 Adam & Eve Group, Fleishman-Hillard Vanguard, Medical Collective Intelligence Chime Communications 4 iLUKA, McKenzie Clark, Rough Hill, StratAgile, Succinct Communications Havas 4 Creative Lynx, Ignition, Victors & Spoils, Snapworx Mobile IHS 4 Displaybank, GlobalSpec, IMS Research, XeDAR Twitter 4 Hotspots.io, Posterous, RestEngine, Summify Google 3 Meebo.com, Quickoffice, Retailigence, TxVia IBM 3 TeaLeaf Technology, Varicent Software, Worklight MDC Partners 3 dotbox, R.J. Palmer, TargetCast Salesforce.com 3 Brighter Option, Buddy Media, Stypi 2 Big Data’s Big Opportunities and Challenges: Turning an ever-increasing amount of information into actionable insight Companies today are hungrier than ever for customer In addition, machines that are becoming more computerized insight that can help them streamline operations, increase are generating enormous amounts of data that wasn’t available customer lifetime value and grow revenue. “Our customers before. Smart devices are also adding to the mix. “Cell phones are chomping at the bit to receive as much data as possible with GPS now have information on where you are, when you as quickly as possible to get their questions answered,” says call and whether you’re making a phone call, text message or Dean Stoecker, chairman and CEO of Alteryx, an analytics accessing the Internet,” says Sandy Steier, CEO of 1010data, solutions provider for enterprises. “Whether it’s call center a cloud-based data warehouse/business intelligence platform management, store operations, replenishment programs or provider. “Even devices like gas and electric smart meters are supply chain, senior executives are trying to figure out how now recording data every 15 seconds and sending it back to to get a higher return, and, for that, they need a wider variety a utility.” of content.” The fastest growing contributor to big data today, however, is unstructured data, such as social media and search engines. “Companies are producing 15 petabytes of new “Unstructured data creates enormous amounts of data in real- information daily. That’s more than the content of time on an ongoing basis.” says Vina. “The ability to combine an average library every single day. But you don’t these types of online data with structured information opens need to store it. You just need to read it, process it a new universe of possibilities.” and store what’s relevant.” The challenge, Stoecker adds, is for companies to make sure Dean Stoecker, chairman and CEO, Alteryx they are always able to consume data from new sources and make sense of it, which requires having the right set of tools. The good news is, there is no shortage of information Dashboards, Stoecker says, with their rear-view approach, available. The challenge is for organizations to manage the are not much help with understanding big data. “I want massive amounts of data they are increasingly collecting, to know what’s happening next. I need tools that give my which solutions providers say is doubling every two to contemporary questions contemporary answers, because in three years. “Companies are producing 15 petabytes of new six months, I’m going to have a whole new set of questions.” information daily,” says Stoecker. “That’s