January 2016 INSIGHTS

Linda Gridley, Partner

Disruption in the Advertising Industry: Consumers, Technology, and New Participants Leading the Way

Confidential 1

Agenda

I. Overview

II. Market Size and Key Trends in the Advertising & Digital Marketing Industry

III.Overview of Important CMO Issues and Key Digital Marketing Offerings

IV.Recent M&A and Private Placement Transactions

Confidential 2

I. Overview

Confidential 3

Period of Major Disruption and Opportunity in the Advertising Industry The advent of digital, mobile and big data technologies is causing dramatic changes in the advertising industry

Advertising / Marketing / Customer Relationship Management has now become a “CEO” level strategic issue. It no longer represents simple “tactical” spending on which TV program to advertise on and/or how to figure out which 50% of the marketing spend is accountable

CMOs must work harder to understand technology & its uses for marketing. The days of delegating this to the CTO are over

‒ Advertisers in Control

‒ Mass oriented ads pushed to Consumers

‒ Minimal targeting or knowledge about ad effectiveness

‒ Creative “ruled”

‒ “Superbowl ticket” relationship between ad exec and CMO client

‒ Agency served as middleman between client and all other marketing related vendors

‒ Consumers in Control

‒ Ads are increasingly personalized and targeted based on specific consumer behavior

‒ Effective consumer engagement “rules”

‒ The “CMOs table” is increasingly crowded and competitive…not just about Superbowl tickets anymore

‒ Other marketing vendors bypassing agencies and building direct-to-client relationships

MAD MEN DAYS TODAY

Source: AGC Partners

Confidential 4

Period of Major Disruption and Opportunity in the Advertising Industry The increasing role of digital and big data technologies in advertising has changed the dynamics of

the traditional ad agencies’ relationships with their CMO clients The “ad agency disruptors” understand that there is a huge strategic/execution/technology opportunity that exists today in a

much bigger way than 5-10 years ago − They are using M&A to bolster their capabilities to go after this marketing and technology spend more aggressively

Traditional Ad Hold Co.’s

- Stuck in “Mad Men” Days - Don’t want to own tech - Highly unattractive acquisition

structures →hard to invest in growth

Consulting Firms

- Marketing is now key strategic issue for CEOs

- These firms have the logical “ear” to the CEO & CMO

- As campaigns become more data centric (less creative), they are a huge threat to the agencies’ traditional CMO relationships

CMO

- More tech focused - Ability to be more effective and

efficient with marketing spend - Customer experience and

lifecycle analysis approach

Software / Mk. Automation

- Similar theme to ad tech with

email & creative automation & big data analytics as the core competency to what they bring to the CMO

AdTech

- Key drivers in use of data to change marketing process

- Consolidation leading to scale & a few big industry leaders

- Complex to understand with important ramifications if wrong → CMO’s team needs to understand

Traditional Media/Vertical Market Expertise

- Less developed theme but some specific examples

- Publishers see marketing as a way to improve declining traditional media revenues & creative synergies

- Some firms building integrated vertically oriented solutions to compete against more general traditional relationships

Source: AGC Partners

Confidential 5

Ad Agency “Disruptors” - Select M&A Transactions

Software/Marketing Automation

: Auditude ($120m) Demdex (NA) Omniture ($1.8B) Neolane ($600m)

:Coremetrics (ND) Silverpop ($270m) Unica ($480m)

:BlueKai ($400m) Datalogix (1.1B) Eloqua ($870m) Responsys ($1.6B)

:Buddy Media ($690m) Exact Target ($2.5B) RelateIQ ($390m)

Traditional Media/Vertical Market Solutions

: Freewheel ($360m) : iCrossing ($400m) : Selectable Media (ND)

Traditional Ad Agency / CMO Relationship

Consulting / IT Services

: ChaoticMoon (NA) Pacific Link Group – Hong Kong (ND) Brightstep – Sweden (ND) Fjord (ND) Avventa (ND) Acquity ($316m)

: Cadient Group (ND)

: Banyan Branch (ND) Flow Interactive (ND) Mobiento – Sweden (ND) Ubermind (ND)

: Olson Group ($300m) Ironworks ($100m) CityTech (ND)

: Beacon Partners (ND)

Ad Tech

: AdapTV ($405m) Convertro ($100m)

: LiveRail ($380m)

: Adometry (NA) Ad Mob ($750m) Channel Intelligence ($125m) DoubleClick ($3.1B)

: [x+1] ($230m)

: BlueFin Labs ($80m) MoPub ($350m) TellApart ($533m)

: Brightroll ($640m) Flurry ($240m)

: AOL ($4.4B)

Sources: Capital IQ and 451Research

Confidential 6

II. Market Size and Key Trends in the Advertising & Digital Marketing Industry

Confidential 7

Size and Growth Characteristics of the U.S. Ad Industry Ad spending across major media channels in the U.S. is expected to total $183 billion in 2015. When marketing services spending is added in, the total spend is expected to be approximately

$407 billion. U.S. Ad Spending Forecast (a)

Source: (a) ZenithOptimedia (Advertising Expenditure Forecasts, June 2015

Confidential 8

Overall U.S. Advertising Industry Growth

Traditional ad spending excluding digital was relatively flat in 2013 and 2014 and is down 2-3% per quarter in 2015

Digital ad spend was up 18-20% in 2013 and 2014 and is up 17-22% per quarter in 2015

Some of the stats around traditional ad spend are pretty bleak Print ad spend has declined $54 billion since its peak Consumer magazine ad spend has declined in 15 of the last 17 quarters National TV ad spend growth has slowed for six consecutive quarters Newspaper ad spend has declined for the past 35 consecutive quarters including double digit declines in Q2 and

Q3 2015.

Source: Goldman Sachs Research – 2015 Quarterly Ad Monitor

US Advertising Growth by Media

Confidential 9

Size and Growth of the U.S. Digital Ad Market

Digital Marketing in the U.S. is expected to increase 12% annually from $57Billion in 2014 to $103Billion in 2019. It represents 27% of all ad spend in 2015. Search will continue to dominate the spend (54% of 2014 total & 44% of 2019 total) Spending on mobile and social are the big growth drivers

Source: (a) Forrester Research: US Digital Marketing Forecast, Nov 2014 (b) Salesforce 2015 State of Marketing Cloud

US Digital Market Forecast (a) Areas of Increase and Decrease in 2015 Budget (b)

Confidential 10

U.S Digital Ad Market By Sector

Source: (a) IAB/PwC Internet Ad Revenue Report, HY 2015

Spending on search has dominated the overall digital ad spend

Mobile has seen tremendous growth and that is expected to continue

Advertising Format Share, 2006 – 2015* (% of total revenue) (a)

Confidential 11

Social and Mobile are Driving the Growth in Digital Ad Spend

Source: (a) Salesforce 2015 State of Marketing

Social Media Marketing Impact on Business (a)

Mobile Marketing Impact on Business (a)

Between 2014 and 2015, marketers have seen a significant increase in the importance of social and mobile marketing.

According to a study done by Salesforce, 64% of marketers see social media marketing as a critical enabler of their products and services and 70% see mobile marketing as a critical enabler.

Confidential 12

Retail is the Largest, Highest Growth Vertical in Digital Ad Spend

Source: (a) Advertising Age Datacenter (b) IAB/PwC Internet Ad Revenue Report, HY 2015

US Ad Spending by Category (a) Internet Ad Spend by Industry Category YTD 2015 vs. 2014 (b)

Confidential 13

III. Overview of Important CMO Issues and Key Digital Marketing Offerings

Confidential 14

Overview – Increased Role of the CMO

The CMO’s job has become much more complex in this new “customer centric” marketing environment. A good CMO needs to understand change management, data management, and consumer experience design, not simply provide creative and media channel expertise. Key challenges/issues include the ability to:

Provide a single, integrated view of the customer across channels across all of the customer’s

lifecycle Manage multiple campaigns across multiple channels efficiently and effectively

Offer highly targeted personalized ad campaigns Determine what capabilities to do in-house and what to use partners for and who the best type of

partner is

Confidential 15

Key CMO Issues and Challenges

The CMO’s increased role brings with it a broad array of business challenges especially around customer lifecycle issues.

Source: (a) Salesforce 2015 State of Marketing

Most Pressing CMO Business Challenges (a)

Confidential 16

Key CMO Issues and Challenges

According to a Salesforce study, 86% of all marketers that they surveyed said it was critical or very important to create a cohesive customer journey.

Source: (a) Salesforce 2015 State of Marketing

The Effectiveness of Various Technologies at Creating a Cohesive Customer Journey (a)

Confidential 17

Key CMO Issues and Challenges

According to a study done by Teradata in September 2014, the key driver for new technology spending is improving the customer experience and the key issues around that spend are the need to integrate data across various technologies and privacy concerns. Only 37% of the 400 enterprises surveyed reported that they had a “single view” of their customers.

Drivers of New Technology Spend (a) Key Criteria for New Technology (a)

Source: (a) Teradata: Enterprise Priorities in Digital Marketing, Sept 2014

Confidential 18

Key CMO Issues and Challenges

Historically, media campaigns and channels were independent – getting their own budget allocations. Today, with a more “customer centric” marketing environment, priorities and marketing teams must work on a more integrated, multichannel approach.

However, with this more integrated approach, there is also a big priority by companies to more

accurately figure out what part(s) of the marketing spending are actually working. Hence, attribution is a key issue for the CMO.

Actions Taken By Companies Surveyed to Drive % of Companies Surveyed with “Customer Centric” Work (a) Plans for New Technology Investment (a)

Source: (a) Teradata: Enterprise Priorities in Digital Marketing, Sept 2014

Confidential 19

Key CMO Issues and Challenges

# Simultaneous Digital Campaigns at Busiest Challenges in Technologies and Data (a) Seasons (a)

Source: (a) Teradata: Enterprise Priorities in Digital Marketing, Sept 2014

The CMOs surveyed in the Teradata study reported that they are managing an average of 37 different ad campaigns simultaneously during their busiest season. The most active CMOs are managing 112 different campaigns simultaneously.

It is not surprising that those same CMOs said workflow management at scale is a big challenge for them in today’s environment.

Confidential 20

Key CMO Issues and Challenges

The ability to offer personalized campaigns is seen as an important capability in today’s “customer centric” marketing environment.

However, shown in the chart below, the level of personalization capabilities offered today by most

companies is relatively basic. Existing Personalization Capabilities by Companies Surveyed (a)

Source: (a) Teradata: Enterprise Priorities in Digital Marketing, Sept 2014

Confidential 21

Key CMO Issues and Challenges

Many people believe that there is a general trend for CMOs to build up more digital marketing capabilities in-house rather than using agencies and/or technology partners. Data Analytics seems to be the biggest focus of current in-house capabilities.

% of Companies Surveyed with These Capabilities In-House (a)

Source: (a) Teradata: Enterprise Priorities in Digital Marketing, Sept 2014

Confidential 22

Key CMO Marketing Execution Considerations

Create Optimal Consumer Experience – Not Mass Advertising. Look for what consumers want/need, not simply what the marketing message should be.

Focus on building brands that consumers trust and that provide useful value. It’s not just

about creating pretty brand images anymore.

Increasing importance of consumer and peer influence in the development of the brand.

Increasing number of marketing channels and devices creates campaign execution complexity.

Increased use of data to drive advertising/marketing decisions. Companies that manage a lot of digital data (e.g. ecommerce platforms) may become “next gen”

CRM data managers as they are collecting real time data based on actual behavior. Implications for traditional database marketing companies?

New technologies will lead to many new creative ad formats (cinemographs, animation on top of video, etc.).

Will large marketing suite vendors build customized marketing suites for agencies? Source: Forrester Research: Innovation Agencies, Dec 2014

Confidential 23

Key CMO Marketing Execution Considerations

Increasingly marketers are shifting attention away from traditional metrics like ROI and conversion to metrics that better reflect customer satisfaction. This trend further complicates the “effectiveness equation” for any particular ad campaign.

Source: (a) Salesforce 2015 State of the Marketing Cloud

Popularity and Effectiveness of Digital Marketing Channels and Strategies (a)

Confidential 24

Key Ad Agency Capabilities

A December 2014 report by Forrester talks about the following as key capabilities for a successful agency today: Innovation around products and services Integration of channels and customer data Implementation of enabling tech systems

The same report talks about the importance of agencies’ ability to provide their clients with high level business strategy services and educational services around change and innovation. These types of capabilities have not necessarily been core competencies of agencies in the past

Source: (a) Forrester Research: Innovation Agencies, Dec 2014

Agencies Reposition To Meet Marketers’ Demand (a)

Confidential 25

Key Ad Agency Capabilities The same report also published their Forrester Wave of the Most Innovative Ad Agencies.

All of the entities shown in the “Wave” are part of a larger organization (mostly ad holding companies) except for T3 and Mutual Mobile. T3 is a family owned agency in Austin, Texas that Forrester likes for its “Think Tank” approach to customer

experience strategy. The agency is also known for its innovation around mobile experiences. Mutual Mobile is a small agency focused on emerging technologies & helping clients build discrete digital

products based on collaboration, user-centered design, and iteration.

Source: (a) Forrester Research: Innovation Agencies, Dec 2014

Ownership of Companies Featured Sapient Nitro / Publicis R/GA / IPG Huge / IPG Frog / Aricent Razorfish / Publicis Isobar / Dentsu AKQA / WPP Critical Mass / Omnicom Mutual Mobile – Independent T3 – Independent

Innovative Agencies (a)

Confidential 26

Competitive Landscape Only 1 of the top 5 digital agency networks is owned by an ad holding company There are only 8 independent agencies in the top 50 digital agency networks Total 2014 revenues for the top 50 digital agency networks was $13.8 Billion, up 14% vs. 2013

Source: Ad Age Annual Agency Report

2014 Rev ($mm)

%Growth

1. IBM Interactive Experience (IBM) $1590 NA

2. Deloitte Digital (Deloitte) $1470 NA

3. Accenture Interactive (Accenture)

$1408 NA

4. Epsilon (Alliance Data) $1201 +6%

5. Wunderman (WPP) $1175 +4%

6. Digital @ Ogilvy (WPP) $1103 +5%

7. Sapient Nitro (Publicis) $937 +9%

8. Digitas LBi (Publicis) $871 +8%

9. PwC Digital Services (PwC) $747 NA

10. Havas Digital Group (Havas) $697 +12%

Top 10 Digital Agencies 2014 Rev ($mm)

%Growth

14. Merkle $271 +28%

34. Gyro $114 +4%

36. Platform Advertising $107 +2%

44. TMP Worldwide $87 -1%

45. Richards Group $80 +34%

46. In Touch Solutions $77 +13%

47. Resource Ammirati $75 +14%

49. Hello World $70 -17%

Independent Digital Agencies in Top 50 Ranking

Confidential 27

Overview of the Largest 10 Digital Ad Networks

Source: Advertising Age and Company Websites

Confidential 28

Competitive Landscape – Overview of the Largest Independent Digital Agencies

Source: Ad Age Annual Agency Report

Confidential 29

IV. Public Companies and Select Recent M&A and Private Placement Transactions

Confidential 30

Selected Recent Advertising Private Placements

Source: CapIQ Selection criteria based on size and publicly available information.

Confidential 31

Selected Advertising Agency Public Companies

AdTech Public Companies

US$ M Market Data Operational Metrics

Enterprise EV / Revenue EV / EBITDA Revenue EBITDA Revenue Growth LTM Gross LTM Adj.

Company Value (a) (b) 2015E (c) 2015E (c) 2016E (c) 2015E (c) 2016E (c) 2015E (c) 2016E (c) '15E/'14A '15E/'16E Margin Op. Margin

WPP $32,539 1.8x 11.0x 10.6x $17,953 $18,592 $2,955 $3,073 56% 4% 87% 16%

Omnicom 20,957 1.4x 9.5x 9.1x 15,167 15,815 2,217 2,309 (1%) 4% 25% 13%

Publicis 15,559 1.5x 8.6x 8.1x 10,314 10,803 1,801 1,924 42% 5% 39% 16%

IPG 10,085 1.3x 9.7x 9.1x 7,607 7,890 1,037 1,108 1% 4% 36% 11%

Havas 3,492 1.5x 9.0x 8.3x 2,338 2,489 389 420 25% 6% 39% 14%

MDC 1,931 1.5x 9.8x 8.5x 1,328 1,431 198 228 9% 8% 33% 7%

25th Percentile $10,085 1.4x 9.0x 8.3x $7,607 $7,890 $1,037 $1,108 1% 4% 36% 13%

MEDIAN $15,559 1.5x 9.5x 9.1x $10,314 $10,803 $1,801 $1,924 25% 4% 39% 14%

75th Percentile $20,957 1.5x 9.7x 9.1x $15,167 $15,815 $2,217 $2,309 42% 5% 39% 16%

Notes:(a) Based on closing stock prices on January 12, 2016.(b) Calculated as Equity Value plus total debt, minority interest (at book value unless otherwise noted) and preferred stock, less cash & equivalents).(c) Projections represent Wall Street estimates.

Source: CapitalIQ Selection criteria based on size and publicly available information.

Confidential 32

Selected Recent Advertising M&A Transactions US$ M

Date Announced Acquirer Target Target DescriptionImplied Ent.

Value LTM Rev EV / LTM Rev

Apr-15 KPMG Beacon Partners Provides management consulting and investment banking advisory services ND ND ND

Feb-15 ICON Medimedia Pharma Solutions Offers scientific and medical communication services $120 ND ND

Jan-15 MAPI Developpement Select Optum Life Sciences Services Offers information technology-enabled health services in the US and internationally ND ND ND

Nov-14 Publicis Sapient Provides a range of online marketing campaign creation and management services 3,419 1,356 2.5x

Oct-14 ICF International Olson Provides a range of digital marketing, public relations, and web design for businesses 295 126 2.3x

Aug-14 MedAssets Sg2 Provides healthcare BI SaaS as well as related consulting services 142 100 4

Oct-14 Cognizant Cadient Provides digital marketing services for the healthcare, medical device and pharmaceutical industries ND ND ND

Jul-14 Boston Consulting Group Strategic and Creative Provides web design, product design and mobile marketing design services ND ND ND

Oct-13 McKinsey Brick and Click Solutions Provides digital and social media marketing campaign creation and management services ND ND ND

May-13 Accenture Acquity Provides online marketing campaign creation and management, social media marketing, search engine optimization and Web design services 280 141 2.0x

Oct-12 Accenture Avventa Provides Web design, banner advertising, email marketing and mobile application development services for businesses globally 5 ND ND

Sep-12 Publicis LBi International Provides Web design, mobile app development, search engine optimization, pay-per-click campaign management and social media marketing 547 279 2.0x

Sep-12 Athenahealth Healthcare Data Services Provides healthcare data analytics, quality control and management SaaS 6 ND ND

Jun-12 WPP AKQA Provides Web design, online marketing campaign creation and management, and social media and mobile marketing services 540 189 2.9x

May-11 Publicis Rosetta Provides online marketing campaign creation and management, social media marketing, search engine optimization (SEO) and Web design services 575 250 2.3x

Jun-10 The Lowe Group / IPG Face Digital Offers advertising and communication services 42 29 1.5x

25th Percentile $81 $120 2.0x

MEDIAN $280 $165 2.3x

75th Percentile $544 $257 2.6xSource: CapitalIQ, 451 Research M&A Knowledgebase Selection criteria based on size and publicly available information.

Confidential 33

UNDISCLOSED COMPANY

AGC COMPLETES 28 DEALS IN 2015

Confidential 34

Contact Information & Disclaimer

This document is intended to serve as information only, and to suggest that further analysis and consideration may be warranted. Unless otherwise indicated, AGC does not believe that the information contained herein is sufficient to serve as the basis of an investment decision. There can be no assurance that these statements, estimates or forecasts will be attained and actual results may be materially different. Only those representations or warranties which are made in a definitive purchase agreement will have any legal effect. To learn more about the company/companies that is/are the subject of this commentary, contact one of persons named herein who can give you additional information.

Linda Gridley Partner, Co-Head of

Digital Media Group – New York lgridley@agcpartners.com

212-400-9710

Gee Leung

Partner, Digital Media Group – San Francisco

gleung@agcpartners.com 650-241-1490

Jon Guido Partner, COO, Co-Head of

Digital Media Group - Boston jon@agcpartners.com

617-261-4126

Markus Salolainen Partner, Head of Europe,

Digital Media Group - London msalolainen@agcpartners.com

+44 7776 193 861