11

Q2 2016 Market Report

Digital Brief 009

22

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

33

Overall Commentary on ConsolidationØ InourlastQ12016MarketReport,wereported

62mergersandacquisitionsindigitalmediaandmarketing

Ø Thedealswetrackinthisreportfallintooneoffourcategories:§ Large(over$500mm)§ Medium($100– $500mm)§ Small($20– $100mm)§ Sub$20mmexitsareconsideredtechandteamdeals,

capitulations,orundisclosed

44

16 14 1120

12

21 2218

1422

18 23

19

28 30

0

10

20

30

40

50

60

70

Q22015 Q32015 Q42015 Q12016 Q22016

AdTech MarTech DigitalContent

U.S. Digital Media M&A Activity by Sector

Source: LUMA

#ofTransactions

Ø WithventurecapitalfundingactivitycoolingoffandatepidIPOmarket,M&Aremainsabrightspotinthishighlyfragmentedenvironmentasdealactivitycontinuestogrowonarobustpace

Ø AdTechM&AactivitynotablyslowedthisquarterwhileMarTechM&AsawanuptickinactivitywithmajordealsincludingtheacquisitionsofDemandware,Marketo andSitecore

55

9%

9%

13%

43%

9%

4%13%

ConsumerInternetCommerceTelcoMediaMarketingTechTechServicesInternetOriginalsCRMSoftwareMarketingData

Digital Media M&A Activity by Strategic BuyersQ22016

StrategicBuyersTransactions

Ø Inthesecondquarter,buyersfromMedia,TelcoandCRMSoftwareledM&Aactivity

Ø TheDreamworks andSupercellacquisitionsheadlinedthesignificantconsolidationinMediathisquarter

Ø ThemarketingcloudwarsareheatingupwithSalesforce,OracleandAdobemakingnotableacquisitionsacrosse-commerce,data,andcontentengagementtechnology

Source: LUMA

66

Ad Tech M&A Activity#ofTransactions

Ø Observations§ AdTechM&Avolumeanddeal

valuefellthisquarterreflectingadeclinebothq-o-qandy-o-y

§ Despitethedecline,weexpectmoreconsolidationduetoincreasingfragmentationinthespaceandagrowingpoolofbuyers

Ø LookingAhead– People-basedMarketing§ People-basedmarketinghas

emergedtodeliveradstorealusersbasedoffoffirst-partydata

§ Leveragingthistechnologyenablestrueone-to-onemarketingacrossdevices

Source: LUMA

1 3 1 1 2

15 1110

19

10

0

5

10

15

20

25

Q22015 Q32015 Q42015 Q12016 Q22016

+$100M <$100M

77

Ad Tech – Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

Source: Capital IQ: Crunchbase

N/A N/A Samsung acquiredCanadianDSP/adserverAdGear tohelpitspushintoadvertisingwhereitcanmonetizeeffectivelyacrossTVandmobile

NASDAQ $170M Gannetthasagreedtoacquirelocal digitalmarketingcompany,ReachLocal,tobolsterthepublisher’sgrowingdigitalbusiness

$6M >$100M Comcastacquired StickyAds,avideoSSPbasedoutofFrance,asitbuildsoutitsprogrammaticTV/digitalvideoadvertisingbusiness

88

MarTech M&A Activity#ofTransactions

Ø Observations§ Itwasthequarterofprivate

equitydealswithEQT,MarlinEquityandVistaallactivebuyers

§ VistawasthesurprisebuyerforMarketo,rumoredtobeatargetforSAPandMicrosoft,payingastrategic6xrevenuemultiple

§ Teradataexitedthemarketingsoftwarebusinessfor$90MM,afterpaying$525MMfortheassetsfromAprimo in2010

Ø LookingAhead– PrivateEquityBuyers§ Privateequitybuyersare

becomingmoreactiveandpayingstrategicmultipleforthequalitytargets;lookforthistocontinue

Source: LUMA

5 3 3 25

16 1915

12

17

0

5

10

15

20

25

Q22015 Q32015 Q42015 Q12016 Q22016

+$100M <$100M

99

MarTech – Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

$5M $50M ByacquiringCrosswise,Oracleaddscross-devicetechnologytoitsDataCloud,furtherstrengtheningthetechgiant’sdataassetsandcapabilities

NYSE $2.7B LeadingCRMplatformSalesforce.comacquiredDemandware,theleadingenterprisecloud-basede-commerceplatformprovider,tocreateitsnewCommerceCloud

NYSE $170M|$315M OpenTextacquiredHP’sCustomerManagementandCustomerExperiencesoftwareassets(formerlyInterwoven)tocomplementitsowncustomermanagementofferings

$67M N/A AdobeacquiredLivefyre,acontentmarketingandengagementplatform,andwillintegrateits technology intotheAdobeExperienceManager

NASDAQ $1.7B Marketo,amarketingautomationcompanywithover4,600customers,willbetakenprivatebyVistaEquityPartners

N/A $1.1B TCV’spositioninSitecore,awebcontentmanagementsystem,wasacquiredbyEQTPartnersforastrategicmultipleasitplanstoexpanditsdigitalmarketingcapabilities

NYSE $90M TeradatadivesteditsmarketingsoftwareassetstoMarlinEquityforasignificantlylowerpricethanthe$525MMTeradatapaidtoacquiretheassetsinthe2010fromAprimo

CustomerExperience CMS

Marketing Software

CustomerManagement

Source: Capital IQ: Crunchbase

1010

Digital Content M&A Activity#ofTransactions

Ø Observations§ TheSupercell,Dreamworks and

LinkedInacquisitionswerethehighlightsofthequarterwhileacquisitionsofComplexMediaandFusionandmanyothernichepublisherswerethetrend

Ø LookingAhead– VirtualReality§ ContinuedinvestmentandM&A

activityinvirtualrealityisevidenceofamaturingindustry

§ Fromincumbentstonewstartups,theentiremediaecosystemisfocusedonexploringnewpossibilitieswiththisrichandengagingmedium

Source: LUMA

37

26 6

15

16

17

22 24

0

5

10

15

20

25

30

35

Q22015 Q32015 Q42015 Q12016 Q22016

+$100M <$100M

1111

Digital Content – Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

$61M $250M VerizonandHearstjointlyacquiredComplexMedia,amale-focusedmediacompany,togainitscovetedaudienceasComplexbecomesmorevideo-centric

NASDAQ $4.1B NBCUniversal (Comcast)acquiredDreamworksAnimationstobolsteritsportfolioofentertainmentfranchisesacrossTV,film,anddigitalproperties

$25M $250M GermanmediagiantAxelSpringeracquiredmarketresearchfirm eMarketerasthecompanyexpandsitsdigitalpresenceintoEnglish-speakingmarkets

N/A N/A UnivisionacquiredDisney’sstakeinFusion,aTVanddigitalmediapublisher,and iscreatingFusionMediaGrouptohouseitsgroupofmediaproperties

NYSE $26.2B ByacquiringLinkedIn,MicrosoftaddstheubiquitousprofessionalnetworkanditsdiverserevenuemodelstoMicrosoft’s“professionalcloud”

N/A $10.2B ChinesemediagiantTencentHoldingsacquiredamajoritystake inthemassivelyprofitablemakerofthepopularmobilegamingfranchiseClashofClans

Source: Capital IQ: Crunchbase

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Ad Tech – Q2 2016 Stocks Performance

Market Data as of 6/30/16

Ø AdTechStumblesinQ2§ Althoughthesectorgained1%in

value,itwassignificantlydrivenbyCRTO’sgrowth

§ RUBI,TUBEandFUELsufferedsharpdeclinesinQ2

Ø Highlights§ Followingitssuccessfulreverse

stocksplit,MXPTfinishednearly60%attheendofthequarter

§ ExcludingMXPT,onlyCRTOshinedafterreportingstrongrevenuegrowthof36%andmobileadvertisingmakingupover50%ofrevenueforitsQ1performance

-40%

-20%

0%

20%

40%

60%

80%

4/4/16 4/18/16 5/2/16 5/16/16 5/30/16 6/13/16 6/27/16

TUBE RUBI TRMR MXPT YUME FUEL CRTO NASDAQ

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MarTech – Q2 2016 Stocks Performance

Ø MarTech Rebounds§ MarTech recoveredfromapoor

Q1:eachstockgrewonaverage4%excludingMKTOandDWRE

§ SHOPcontinuestohavegreat2016,gaining11%afterrisingover18%inthepriorquarter

Ø Highlights§ TwomajorMarTech players,

MKTOandDWRE,wereacquiredfor$1.8billionand$2.8billionrespectively

§ MKTOandDWREacquisitionmultipleswere7.5xLTM,6.2xCYrevenueand10.5xLTM,8.8xCYrevenuerespectively

Market Data as of 6/30/16

-40%

-20%

0%

20%

40%

60%

80%

100%

4/1/16 4/15/16 4/29/16 5/13/16 5/27/16 6/10/16 6/24/16

CRM MKTO HUBS BV CTCT DWRE

JIVE MRIN LPSN SHOP NASDAQ

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Q2 Key Startup Financings to WatchLead Investor Capital Raised Valuation Comments

Source: Crunchbase

$50M ~$300M Meta,anaugmentedrealitystartup,raisedfundingtocontinuedevelopmentofitsnewestMeta3headsetandsoftwaretools

$50M $600M PublishingplatformMediumisbuildingtowardsitsvisionasapublishingnetworkaftersigningmajorpublisherstoitsplatform

$100M $500M Themusicvideocreatorapppopular withyoungteensisgrowingrapidlywithover60millionusersasitbecomesafull-fledgedsocialnetwork

N/A $45M N/A Contentrecommendation engineOutbrain isusingnewfundingtobuildtoolsforpublisherstomaximizerevenueandimprovecontentdiscovery

$50M N/A Showpad,asalesenablementplatform,hasdoubled revenueoverthelastfouryearsandservesover850customers

$50M N/A Withits latestroundoffunding,socialmarketingplatformSpredfast willmake apushintoplanningandcontentcreation,andexpandintegrations

$100M N/A RidesharingcompanyViaisexpandingintonewcities asitbringsitsdifferentiatedmodel– flatfeepricingandsharedrides– tomoremarkets

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LUMA’s Recent Content

StateofDigitalMediaPresentedatDMS16

Ø Atour8th annualDigitalMediaSummit,wepresentedtheStateofDigitalMedia,whichprovidesourviewsonthemarketandsignificanttrendsindigitalmedia

LUMADigitalBrief008ScapeofCards

Ø “ScapeofCards”explainstheissuesfacingthedigitaladvertisingecosystemandtheimplicationsforallthekeyconstituents

StateofDigitalMarketingPresentedatDMSWest15

Ø AttheUpfrontSummit,wepresentedtheFutureofTV,whereweexplainedtheconvergenceofTVanddigitalvideoandwheretheindustryisheadednext

1616

LUMA’s Funny Business

MeekerforMillennials

Ø WeparodiedEminem’sLoseYourselftohelpexplainMaryMeeker’sInternetTrendsdeckattheCodeConference.Thoselyricswerehard– newfoundrespectforrap!

CannesYachtLUMAscape

Ø ThecontinuedproliferationofrentedyachtsbythetechecosystemseemedliketheperfectopportunityforaLUMAscape

CannesCarpoolKaraoke

Ø SinceCannesLionsisaboutcreativity,weadoptedJamesCorden’spopularCarpoolKaraokeformattofeaturetheenthusiasmofdigitalleaders,startingwiththeinimitableCarolynEverson

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LUMA’s Differentiated Value Proposition

1. PeerlessIndustryKnowledge2. StrategicApproach

3. ExecutionExcellence

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May 2015

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LUMA’s Content-Driven, Expert-Based Approach

ConferenceKeynotes

Publications(over3millionviews)

CorporateTeach-ins

LUMAscapes(over6millionviewsfrom211countries)

CompletedDeals

DigitalBriefs

DISPLAY MOBILE VIDEO SOCIAL NATIVE SEARCH MARTECH COMMERCE GAMING STRATEGICBUYERS

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