INDEPENDENT INVESTMENT BANKING FOR MEDIA, INFORMATION, MARKETING, TECHNOLOGY & HEALTHCARE Client Briefing March 2014 since 1987 The Jordan, Edmiston Group, Inc. (JEGI) hosted its 10 th annual Media & Technol- ogy Conference on January 16 th at the Time Warner Center in New York City. JEGI’s 2014 conference featured dynamic, world-class speakers, with more than 300 senior indus- try executives and investors in attendance from across the media, information, mar- keting and technology sectors. As always, JEGI is extremely grateful to the event’s sponsors for their support: The Bos- ton Consulting Group; GE Capital; Morgan Lewis; The Howard-Sloan-Koller Group; In- tralinks; and Econsultancy, as well as the as- sociation sponsor, Software & Information Industry Association (SIIA). Many thanks also to our A-list of speakers, whose bios can be found here: http://bit.ly/1fdHmyh. JEGI partnered with Econsultancy on the 4 th Annual Media Growth Survey, announc- ing the results at the Annual Conference. The results are based on a survey of nearly 350 industry thought leaders and influenc- ers across the sectors JEGI serves. The full report is available at: http://bit.ly/1ejSc2V . Fireside Chat moderator: John Rose, Senior Partner & Managing Director, Boston Consulting Group keynote speaker: David Moore, Chairman & CEO, 24/7 Media rose: People have been using data in a lot of different ways for a long time, but people are talking about “big data” as if there is a real paradigm shift happening. Where do you come out on this? moore: I have not seen a dramatic short- term change happen overnight in any medium; it’s always an evolving process. There’s no question that data is going to run our lives in the media business, but there’s a cost to aggregating the data, and the key question is whether the cost of some of this data is worth its value. For example, providers of third-party cookie data claim to give you all the information you need about people interested in your product. In many cases, though, we have found that it’s cheaper to buy very low- priced inventory and spray the message ev- erywhere, than to purchase the data that provides more of a rifle shot. rose: The sum of the enterprise values of traditional media companies, digital media companies, and digital marketing services providers is about three times the amount of revenue that anyone could remotely forecast four or five years from now. So, who’s wrong? moore: I think probably everybody’s a little bit wrong. If you look at, for instance, peo- ple in the market to buy a new car – let’s say it’s two million people. Who can help me identify those folks? And who can give me the right strategy for reaching these people? A number of quant experts will use the data to tell you when the best time is to (continued on page 6) JEGI Media & Technology Conference 1 > for more information visit www.jegi.com In This Issue • JEGI Media & Technology Conference Introduction • Fireside Chat 01 02 03 04 05 06 07 08 To subscribe to JEGI’s Client Briefing Newsletter: http://bit.ly/YzEqQK Follow JEGI on Twitter: http://twitter.com/JordanEdmiston (from left) Scott Peters, Co-President, JEGI; John Rose, Senior Partner & Managing Director, Boston Consulting Group; David Moore, Chairman & CEO, 24/7 Media; Steven Swartz, President & CEO, Hearst Corporation; and Wilma Jordan, Founder & CEO, JEGI JEGI Media & Technology Conference • JEGI Sector Insights • CEO Update: Hearst Corporation • Legal Update 2014 • Content Marketing Value Chain • New Data and Technology Transforming Marketing • Thoughts about Healthcare IT • Path to Purchase in a Digital Age • Retail Marketing Revolution • Financial Markets Update
Transcript
I N DEPEN DENT I NVESTMENT BAN KI NG FOR MEDIA, INFORMATION, MARKETING, TECHNOLOGY & HEALTHCARE
Client Briefing March 2014
since 1987
The Jordan, Edmiston Group, Inc. (JEGI) hosted its 10th annual Media & Technol-ogy Conference on January 16th at the Time Warner Center in New York City. JEGI’s 2014 conference featured dynamic, world-class speakers, with more than 300 senior indus-try executives and investors in attendance from across the media, information, mar-keting and technology sectors.
As always, JEGI is extremely grateful to the event’s sponsors for their support: The Bos-ton Consulting Group; GE Capital; Morgan Lewis; The Howard-Sloan-Koller Group; In-tralinks; and Econsultancy, as well as the as-sociation sponsor, Software & Information Industry Association (SIIA). Many thanks also to our A-list of speakers, whose bios can be found here: http://bit.ly/1fdHmyh.
JEGI partnered with Econsultancy on the 4th Annual Media Growth Survey, announc-ing the results at the Annual Conference. The results are based on a survey of nearly 350 industry thought leaders and influenc-ers across the sectors JEGI serves. The full report is available at: http://bit.ly/1ejSc2V.
Fireside Chatmoderator: John Rose, Senior Partner & Managing Director, Boston Consulting Group
keynote speaker: David Moore, Chairman & CEO, 24/7 Media
rose: People have been using data in a lot of different ways for a long time, but people are talking about “big data” as if there is a real paradigm shift happening. Where do you come out on this?
moore: I have not seen a dramatic short-term change happen overnight in any medium; it’s always an evolving process. There’s no question that data is going to run our lives in the media business, but
there’s a cost to aggregating the data, and the key question is whether the cost of some of this data is worth its value. For example, providers of third-party cookie data claim to give you all the information you need about people interested in your product. In many cases, though, we have found that it’s cheaper to buy very low-priced inventory and spray the message ev-erywhere, than to purchase the data that provides more of a rifle shot.
rose: The sum of the enterprise values of traditional media companies, digital media companies, and digital marketing services providers is about three times the amount of revenue that anyone could remotely forecast four or five years from now. So, who’s wrong?
moore: I think probably everybody’s a little bit wrong. If you look at, for instance, peo-ple in the market to buy a new car – let’s say it’s two million people. Who can help me identify those folks? And who can give me the right strategy for reaching these people? A number of quant experts will use the data to tell you when the best time is to (continued on page 6)
JEGI Media & Technology Conference
1 > for more information visit www.jegi.com
In This Issue• JEGI Media & Technology Conference Introduction • Fireside Chat
0102030405060708
To subscribe to JEGI’s Client Briefing Newsletter: http://bit.ly/YzEqQK
Follow JEGI on Twitter: http://twitter.com/JordanEdmiston
(from left) Scott Peters, Co-President, JEGI; John Rose, Senior Partner & Managing Director, Boston Consulting Group; David Moore, Chairman & CEO, 24/7 Media; Steven Swartz, President & CEO, Hearst Corporation; and Wilma Jordan, Founder & CEO, JEGI
JEGI Media & Technology Conference
• JEGI Sector Insights
• CEO Update: Hearst Corporation • Legal Update 2014
• Content Marketing Value Chain
• New Data and Technology Transforming Marketing
• Thoughts about Healthcare IT • Path to Purchase in a Digital Age
daniel avrutsky, managing director: A recent copy of JEGI’s Cli-ent Briefing listed our top ten most important transformations in tech over the past ten years – including SaaS, cloud, social media, big data and such trends as virtualization and consolidation of the data center stack. Combined, they give all of us the ability to in-novate like never before.We look back to better inform ourselves and our clients as to what comes next, to assess the technology transformation and where it will have the highest impact. For example, personalization 2.0 – imagine what innovative companies will be able to do with their ability to “reverse search” for us and deliver content and products based entirely on our context. Or, how about marketplaces that maximize efficiencies in utilizing expensive yet underleveraged resources and infrastructure across the C2C spectrum, or the Pay-ments Revolution, and the list goes on.david clark, managing director: Today’s big technology de-pends on an enormous ecosystem of technical and creative ser-vices firms that surround these core technologies, forming the “marketing services stack”. This large and complex ecosystem (i.e., systems integrators, managed service providers, strategy and cre-ative firms) plays a critical role in putting this big technology into smaller packages.Last June, for example, Apple introduced iBeacons, low-cost trans-mitters that can identify your device as it moves through any space where iBeacon receivers are placed, launch apps that will know who and where you are, guide you through that space, pres-ent you with offers and information, launch media or branded content, or push into ecommerce. Apple has built battery friendly radio technology into every phone and tablet over the last three years – that’s 300+ million iBeacon devices already out there, wait-ing to tell us what to do.scott peters, co-president: Technology is creating exciting new revenue streams, such as branded content (aka native advertis-ing) for publishers. Today, when an advertiser like Oracle wants to speak directly to the consumer, there’s a big risk for publish-ers that they will be left out of the loop. To avoid this, Forbes has launched BrandVoice, a backend platform enabling them to pro-vide services and technology to help Oracle more effectively reach the consumer – and get paid for doing so.Forbes built a technology platform to help Oracle bring expert contributors to publish content on Forbes.com, then provided so-phisticated real-time tools to track how their articles were per-forming in the digital ecosystem, becoming the facilitation part-ner in the middle. In this new ecosystem, brands like Oracle are becoming an au-thentic and credible source of information, while Forbes has cost-effectively created compelling content with a SaaS model and is being paid monthly by the brands. Key advertisers are becoming technology partners, creating a very sticky role for Forbes.So the lines continue to blur. Publishers are becoming agencies; agencies content creators and, in some cases, publishers; and brands are now content creators and starting to look like publishers.
richard mead, managing director: B2B markets are global, com-plex, highly competitive and changing constantly. Suppliers need efficient marketing channels to find buyers and vice-versa; they can’t do it on their own. Technology enables the brightest and best capitalized to scale their businesses globally and take market share, while creating new digital products to leverage their valu-able market intelligence and relationships.
Identifying buyers when they start to glow and go hot (i.e., ready to buy) is worth a lot to a B2B marketer. Summit Professional Net-works, for example, has a multi-stage strategy for lead generation (see below), enabling marketplace interaction through multiple touch points, providing valuable information to buyers and sellers how and when they want it.
Leading trade show operators have invested significant brain power and capital in applying technology to year-round content, social networking, and ecommerce products to create new rev-enue streams for the operator.
chris calton, managing director: Innovation in healthcare is more evolutionary than revolutionary. Hospitals and physicians are typically not early adopters of technology. As a result, infor-mation technology in healthcare has generally lagged behind in terms of innovation. Now, the Affordable Care Act and the High Tech Act have created massive financial incentives to digitize healthcare and widespread adoption of electronic medical re-cords, to achieve value-based healthcare (i.e., the best outcomes at the lowest possible price).
Two challenges the healthcare industry faces in getting to value-based healthcare are (i) dealing with unstructured data – 90% of healthcare data is unstructured (e.g., faxes, MRIs, videos); and (ii) process, analyze, and derive benefit from that data to make better decisions. In healthcare, this is called decision support, or in the clinical setting, it’s evidence-based medicine. For example, Zenith Technology Solutions helps hospitals and other care providers ad-dress the high-risk/high-cost portion of their patient populations. Zenith’s software pulls claims, medical records, and prescription data, and puts them through a proprietary algorithm to develop a customized and real-time care management plan. n
Steven Swartz, President & CEO, Hearst Corporation
As Hearst addresses technological change, we take three different approaches. First, we look to continue moving capital into businesses that we believe are high-growth businesses (e.g., entertainment and busi-ness information). Second, we’re trying to develop digital business models for our leg-acy print businesses to ensure their growth. Third, we continue to experiment through our very successful venture activities.
Hearst’s biggest source of profits is cable television. We launched what became the A&E and Lifetime channels with ABC more than 30 years ago, and later History. We also acquired 20% of ESPN, a truly great investment. Last year, we had 15 hit shows across A&E, History, and Lifetime.
The second-biggest source of profits for us is business information, led by Rich Mal-loch. This business started with a couple of auto database businesses, then we moved into medical information, which is an area that we are very excited about. We now own four significant medical information companies, including First DataBank, the leading provider of drug interaction data.
Our other B2B investment is a 50% stake in Fitch Ratings, a global leader in financial information services jointly owned with a French public company, Fimalac S.A. We’re very bullish on Fitch and on Fitch manage-ment’s thoughts about how they might continue to grow, both organically and through acquisitions.
We own 29 television stations, and in a year like 2014, with both political advertis-ing and the Olympics, we expect strong growth to return. We continue to move that business forward and feel very good about its future.
We continue to innovate in our magazine business, and we believe that our approach can be very successful in the right sectors. We are putting much more emphasis on
our free to the consumer web sites. We are already seeing some dramatic results with Cosmopolitan.com and Elle.com.
We are still working on what is the best format for paid magazines on the tablet. We’ve seen decent growth, but we are still figuring out what people want. We believe that the more immersive tablet offerings are, the more they can be a paid product, but we will see. In the meantime, we’re making progress with our paid digital products and in moving forward with our free to the con-sumer mobile and web for our magazines.
Our newspaper profits have grown, as we find ways to make our operations more ef-ficient. We are also offering a full range of digital marketing services, which we man-age from a central location and sell through our newspaper salespeople and additional salespeople we hired to specialize in this suite of services (called LocalEdge), and other newspaper companies have adopted the LocalEdge product set.
Unlike many others in the newspaper in-dustry, we have not put pay walls on our free to the consumer sites. We want house-hold penetration, so we are keeping our sites free. We do withhold premium sto-ries (e.g., deep investigative reports), which we sell as premium digital editions – both standalone and in combination with print.
Finally, we’re experimenting through our very successful venture operation, not only a very strong source of profits (we had a big win on Pandora and with HootSuite, a digi-tal marketing company in Canada), but also a great way to learn about what’s happen-ing in digital. We invested in Roku and in BuzzFeed (nobody does native advertising better). We’re learning from them and try-ing to take that learning back and inform what we’re doing at our newspaper sites, our magazine sites, our broadcast sites, and our digital marketing operations. n
CEO Update: Hearst CorporationRob Dickey, Partner, Morgan Lewis A number of cases in 2013 illustrated the importance of legal concepts not contained in a contract, but that can dramatically af-fect the rights and obligations of the par-ties involved. Here are two examples:Transdigm Inc. v. Alcoa Global Fasteners, Inc.: Transdigm knew that its key customer planned to reduce its purchases by 50%, and only at a discount. Each time Alcoa inquired about potential price reductions relating to the customer, Transdigm denied any prob-lem existed. After closing, Alcoa discovered the problem and sued. The purchase agree-ment disclaimed Alcoa’s reliance on any reps outside the agreement, and the court agreed that this clause prevented reliance on the statements about the customer re-lationship. However, the court let Alcoa’s claim proceed because the agreement did not disclaim the buyer’s reliance upon the seller’s omissions (i.e., the failure to disclose the problems to the buyer).This case illustrates the importance of in-cluding state-of-the-art disclaimers as a seller, and informs consideration of wheth-er to disclose items not called for by the agreement.SIGA Technologies, Inc. v. PharmAthene, Inc.: SIGA and PharmAthene planned a collaboration agreement and finalized a non-binding term sheet, but then opted to merge. The merger agreement provided that if the merger wasn’t consummated, the parties would negotiate a licensing agreement in good faith, on the terms set forth in the term sheet. The merger agree-ment was eventually terminated by SIGA, and PharmAthene sent SIGA a draft license agreement based on the term sheet. SIGA insisted on more favorable terms that were inconsistent with the term sheet, and Phar-mAthene sued. The court ruled that SIGA breached its obligation to negotiate in good faith and allowed PharmAthene to seek not only out-of-pocket damages (lawyers’ fees, etc.), but also expectancy damages – the expected profits under the licensing deal, which could be far more significant.This case illustrated the risk of a purport-edly non-binding document becoming binding, and the potentially significant damages in such a case. n
Legal Update 2014
“Unlike many others in the newspaper industry, we have not put pay walls on our free to the consumer sites.”
“Hearst’s biggest source of profits is cable television.”
4
moderator: Amir Akhavan, Managing Director, JEGI
panelists: Reggie Bradford, SVP, Product Dev, Oracle Shafqat Islam, CEO & Co-Founder, NewsCred Alex Jutkowitz, Managing Partner, Group SJR David Segura, CEO, Giant Media
akhavan: This panel focuses on technol-ogy and service providers around the content marketing stack, and the connection between the user, the content and the brands.
segura: Giant is a native video company that distributes mostly long-form video content for brands like J&J, Honda, Nissan, etc.
islam: NewsCred is a content marketing platform combining soft-ware (workflow, collaboration, publishing, distribution, and ana-lytics) with fully licensed and original content, powering market-ing programs across any distribution or marketing channel.
bradford: I joined Oracle via the acquisition of Vitrue, a company I founded. Vitrue is the leading SaaS-based social marketing plat-form working with brands to develop and build their connections on social networks.
jutkowitz: Group SJR, a subsidiary of WPP, is a content creation provider for corporations, such as GE and Dell. It helps them be-come daily publishers and media properties to gain organic distri-bution and circulate their ideas and knowledge.
akhavan: As you’re thinking about the tech-enabled CMO and their content needs, what are some challenges you’re trying to solve?
bradford: With the explosion of social and mobile and the need to have a truly ubiquitous connection between online and offline, we felt we needed to be part of a broader ecosystem. At Oracle, we are part of an integrated, unified, single platform connected to a whole suite of applications in the cloud for marketing, sales, com-merce, HR, etc. that delivers a unified customer experience.
islam: The biggest challenge is to create enough high-quality con-tent at a high enough cadence at a low enough price to meet the needs of all the marketing channels. The use of manual processes causes workflow to be extremely fragmented – there needs to be a unified solution. We have morphed into a fully SaaS-based tech-nology provider to solve these workflow inefficiencies.
akhavan: Reggie, from the collaboration and workflow stack, what tools are required to make the CMO’s job more efficient?bradford: Every marketer needs to become a content creator and deliver that content to audiences across paid, owned, and earned – which requires a lot of technology and data to be integrated to move to more real-time. These conversations happen rapidly; brands need to connect these systems to enhance their value.akhavan: David, on the evolution of what content is in advertising, you guys are blazing the path with native video. Tell us how your clients’ needs are evolving.
segura: We are figuring out the best way technology and media work together to bridge the gap between brands and pub-lishers. The brands want the editors of these publishers to tell a story that is authentic, but also helps promote the brand’s agenda. That leads to conflict, so a lot of Giant’s time and evolution has been building tools and technology to moderate and bridge that gap.
akhavan: What are your clients’ pain points?
jutkowitz: Ultimately, it’s reaching the right people with the right knowledge. We’re quick to rush to the new, new thing, when sometimes the new, new thing isn’t right for the particular audi-ence we’re trying to reach. If you use audience as the organizing principle and voice of what you’re trying to do, your North Star, this becomes a much easier conversation.
islam: LinkedIn ROI in terms of lead generation and conversion rates has been phenomenal, by targeting people with content us-ing sponsored posts. We’ve seen 64% conversion rates off land-ing pages with articles on LinkedIn when normally it’s 10% – an incredible difference in quality of audience.
akhavan: How are you talking to your customers about identifying the right audience at the right time with the right message?
segura: We’re very much a media company. We work with lots of publishers – mobile and desktop – to enable the brand’s agenda with their own content. We help properties that don’t view them-selves as social, to be more social. They want their audience to con-sume this content and importantly, endorse and share this con-tent, which in turn will drive earned media and real engagement.
jutkowitz: If there is a content continuum, lightweight content is the daily fire hose flow of social, which tends to be like empty calories. Heavyweight content might be thought of as broadcast advertising or filmmaking. Middleweight content is where clients are really making a difference, with daily content substantive enough to create some sort of action – ecommerce, lead gen, etc. In this middleweight space, there aren’t a lot of folks thinking stra-tegically about how to meaningfully engage and develop.
islam: The action part is really important. We encourage custom-ers to think about the conversions they want to measure, and then find content that results in conversions. That’s ultimately what’s going to prove ROI in this space.
bradford: “Seek first to understand and then to be understood” is the opportunity. Through one interface, create the ability to lis-ten and analyze real-time conversations on your own Facebook page, Twitter handle, etc.; find conversations and themes that are important for your brand or audience; and then develop and au-tomate the content you deliver. It’s an area that’s very exciting – delivering the right message to the right consumer at the right time in an earned to owned fashion, and then, if that’s resonating and driving engagement, quickly putting that into a paid story. n
Content Marketing Value Chain
(from left) David Segura, Shafqat Islam, Reggie Bradford, and Alex Jutkowitz
5
moderator: Dr. Charles Stryker, Founder & CEO, Venture Development Center
panelists: Jonathan Flatow, CEO, OneSource Information Services Auren Hoffman, CEO, LiveRamp Neil Isford, VP, Smarter Solutions, IBM North America
stryker: Neil, what are your views on where things are going in regards to data and analytics?
isford: We are on a new wave of technology, and we’re just at the beginning with this whole concept of cognitive computing. We see technologies and computers being able to learn, reason and interact with humans in new ways. It’s becoming about how humans and computers work together to essentially make better decisions. IBM has been advancing this technology, reducing the price and cost of it and has started moving it into some industries.
hoffman: At LiveRamp, we process, store, and distribute a company’s data to all their marketing applications. LiveRamp takes the data that happens at a particular appli-cation, “online” or “offline”, which could be at a point of sale or could be on Twitter, and ties these together to help our customers make better marketing decisions.
f latow: OneSource operates what we believe is the world’s largest database regarding businesses. It’s used primarily by marketers, salespeople, and knowledge work-ers to understand businesses. The development work we’re do-ing now is to take massive amounts of unstructured data on the Internet and understand corporations’ behavior. What are they doing? What have they been purchasing? We then score the be-havior relative to our database of about 23 million companies. We want to provide companies a targeting ability to help find their next best prospect.
stryker: So in a sense cognitive computing and the advancements of the brain…big data are the eyes and the ears that fuel the brain and you need both. Part of the argument here is that we’re at a mo-ment in time where we have both. Neil, do you have some examples of what you’re doing today that illustrates that point?
isford: Cognitive computing is being used with Sloan-Kettering, our partner, to help doctors diagnose cancer and prescribe the right treatments. New research comes out every year. We’ve been able to digest all this data into a gigantic corpus, and doctors are able to use this essentially as an advisor. Sloan-Kettering would say this is fundamentally going to change the healthcare industry.
stryker: Auren, do you have a simple example that would illustrate the power of tying online data to offline data?
hoffman: Let’s say you’re a big retailer, and you run online adver-tising, which then convinces some people to visit your store and
make a purchase. You should be able to attribute that purchase to the online advertising campaign so that you can calculate ROI.
stryker: Jonathan, of the thousands of company scores that are under development at OneSource, what are examples of a few, to give the audience a good taste of what might be coming?
f latow: By reading tens of thousands of news sources, we are able to learn if a company has decided to open a new office or expand into another country. By tying this information together with their job postings or hiring plans, we can then provide a strong target for an HR consultant, an office furniture company, etc. If you can get this information to the decision-makers first, you are that much ahead.
isford: Data analytics is going to permeate everything – HR sys-tems, financial services, etc. It’s already a key differentiator and
a source of competitive advantage across every industry. So this is not a question of “whom”, but rather one of “how quick”. We’ve been using the term CAMS: cloud, analytics, mobile, and social. Those are ar-eas where we are heavily investing and building skills.
hoffman: The CMO role today is extremely different than just 10 years ago – it’s ex-traordinarily data oriented, and the amount of technology they’re using is growing. The
number of applications that the CMO uses has doubled in the last two years, and we expect it to double again in the next two.
stryker: Jonathan, who is going to shine in this new world of data, insights, and analytics in the B2B sector?
f latow: That company doesn’t exist right now. If somebody can go from intent to lead to managing the sales process to close and understand all of the data along the chain, it will continue to build on itself…that’s the company that will win in the B2B space.
stryker: How about privacy? It couldn’t be more in the news with the NSA topics, Target’s data breach, and consumers’ reactions to it.
hoffman: One of the problems in regards to privacy is that no one tries to say anything interesting anymore. To be interesting, you risk saying something that could be taken out of context or be politically incorrect. So, when I’m speaking on panels, my goal is to fool everyone into thinking that I’m reasonably intelligent without saying anything interesting.
f latow: In the B2B space, as opposed to consumer, the compa-nies we market to and for generally display all of their informa-tion all the time on their web site and through their activities. So, in general, people understand that there’s limited privacy from the point of view of a commercial enterprise, and so we don’t face these problems. It’s going to be a matter of innovation, but it’s also a matter of legislation. And, people will have to decide whether they want to get marketed to or not. n
New Data and Technology Transforming Marketing
(from left) Neil Isford, Auren Hoffman, and Jonathan Flatow
6
reach a person, using which medium. Competing companies will tell you they’re best positioned to reach this audience. The compa-nies that know how to identify the audience and also put the right message in front of the audience over a prescribed period of time will become the winners...and not every company will be a winner.
rose: How do we ensure we actually have the rights and permission to use the data? How big of a problem do you think that is?
moore: It’s a big issue. One of the biggest challenges is education, but it’s expensive to educate consumers about the value of a cook-ie. Still, if consumers feel they are getting true value, they’ll give you information. When you sign up for Amazon Prime, it provides Amazon with a dossier on you (including your credit card informa-tion), but you’re fine with it because you feel it’s a “fair trade” for the value Amazon gives to you.
rose: What do companies need to do to establish sufficient trust so that customers know they won’t be surprised in an unpleasant way?
moore: It’s a difficult challenge, requiring well thought-out so-lutions. Few people read the privacy pitches received in the mail from banks, credit card companies, etc. It’s bigger than marketing communications, though. New changes are being made to the NSA’s ability to gather information. For me, giving them my con-tact information is a fair exchange for security. But, many people disagree; they have a problem with cookies…even though they will give their credit card information to almost anybody. n
Fireside Chat (cont. from page 1)
Cem Tanyel, VP/GM Healthcare/Life Sciences Software & Solutions, CSC •In healthcare IT, the laws of supply and demand don’t apply – it’s
neither a free market economy nor a public sector business.•As income rates increase in emerging countries, and as we live
longer and demand better care, the rate of growth in healthcare demand is faster than the affordability of the economy.
•Healthcare is an unsustainable economy, meaning there is an opportunity for disruptive change, much of which will come from the technologists.
•A few years down the road, the next challenge is going to be the optimization of the electronic patient record. It works, but it’s not optimized. Providers are certainly not getting the full value.
•By nature, healthcare is a very local business, one of the reasons why it hasn’t capitalized on many global trends – there are many different regulations, laws, and ways that medicine is practiced around the world.
•There’s a lot to be learned from globalization. Part of my mission is to figure out how to take this global trove of local knowledge and best practices, accumulate it, and then share it around the world.
•There are some really good best practices elsewhere, such as the Netherlands and New Zealand. They are so isolated that they have set up unique infrastructures for themselves and are actu-ally very innovative. n
Thoughts about Healthcare IT
Geoff Ramsey, Chairman, eMarketerIn 2013, eMarketer estimated US mobile commerce, on smart-phones and tablets, was $42 billion, or 16% of all US ecommerce, and will reach 26% by 2017. The impact goes way beyond the $15
billion of sales last year transacted on mobile phones alone. You also have to look at the huge influence factor which, according to a couple of sources, is in the range of $140-160 billion (and that may be understating it), when looking at the entire mobile spectrum,
including mobile advertising, apps, and the other experiences that consumers have with marketers on their mobile phones.Mobile phones are being used in the store increasingly, and consumers’ store-related mobile activities are actually contrib-uting to, not taking away from, in-store sales. However, 35-45% of in-store shoppers are checking out prices to possibly buy the product online, so showrooming is still very important, as well as providing a consistent cross-channel experience. Retailers must match in-store and online prices, and provide consumers with the option to buy online and pick up in store, an advantage that Ama-zon doesn’t yet have. In order to provide a consistent cross-channel experience for con-sumers, retailers must integrate their mobile platforms with oth-er channels – easier said than done. The CMO Council surveyed retail marketers about the level of integration in their online and offline analytics; only 3% said they were “completely integrated”, 43% were “at best, poorly integrated”, and almost half claimed they were “improving” – not such a good thing. In this day and age, circuitous is the new linear; marketers need to throw out the old funnel model. Now, in a social media world, in the span of one day, a consumer can go from never having heard of a product to seeing it trending on Twitter and watching friends posting about it on Facebook, and the next thing you know, that consumer is ready to buy. The marketer never had this consumer insight through its traditional rifle targeting marketing model, so these examples are upending this model entirely.The bottom line is that smart use of data across all platforms and devices – especially mobile – is the only way to keep up with rising consumer expectations. This is especially critical among younger folks, as they expect all platforms to be integrated.Mobile advertising spending in the US, according to eMarketer, rose 120% to almost $10 billion in 2013, and we see 8x growth from 2012 to 2017. Mobile’s slice of the whole digital ad spending pie was approximately 23% in 2013, and eMarketer expects it to reach 57%, a majority of the ad dollars, by 2017. By the end of Q3 2013, Facebook’s mobile ad spending already totaled 49% of all their digital ad dollars, and Twitter’s mobile ad spending reached 70% of ad dollars. Mobile is here to stay. n
Path to Purchase in a Digital Age
Retail m-commerce sales (as % of total ecommerce sales)
panelists: Paul Chachko, CEO, V12 Group Greg Coleman, President, Criteo Rod Ford, CEO, nGage Labs Jeff White, Founder & CEO, Gravy
geffs: Given the way things are changing in ecommerce, are we going to see big lines at midnight on Black Friday in a few years?
coleman: Two years from now, I believe the lines on Black Friday will dissipate. Five years from now, they’ll be a thing of the past. The amount of activity and overall growth in ecommerce, with fabulous deals on the spot, is going to preclude people from waiting in those lines. What was a dream for ecommerce five years ago is more than a reality right now.
chachko: Black Friday is an event, so I don’t think it’s going to disappear. We do a lot of acquisition marketing off our platform, Launchpad, prior to Black Fri-day – e-mail, display, social, mobile, direct mail – and the amount of work is enor-mous: announcing store hours, sales, in-store events, etc.
ford: Retailers are looking for ways to cap-ture their audience, as they move to mobile devices. The only way to do that is through true personalization, offering an engaging experience, a destination. Personalization is real-time analytics, a true offer cadence that’s adaptable to you, and a true price point adapted to you. Ten people walk into Talbot’s and get ten different offers – that’s how we deal with the margin erosion of couponing.
geffs: Your four companies allow a retailer to reach a consumer in a customized, per-sonalized way – through display, e-mail, mo-bile app, and mobile messaging. What’s in it for the retailer, aside from driving their IT investment through the roof in an already thin-margin business?
coleman: Companies are getting better at understanding who the consumer is and what they’re looking to buy, and doing it more efficiently. The amount of ecom-merce is going up incredibly, as are R&D budgets at the retail level and coordination
between CMO, CTO, and CFO. They never used to get together unless they bumped into each other in the hallway. Now their lives are intertwined.
chachko: The key is how you take the enormous amount of data being created and stored and make it actionable. We do a lot of work with the top ten retailers in the country. They’ve got huge amounts of data they’re not using, and typically 30-40% of their overall CRM file is dead. Most of the file is not responding to any of the offers they receive from those retailers.
If you don’t have a really good data strategy and you’re not able to manage that data or gain insights from that data – create mod-els, clones, etc. – it’s not going to get you to your target the way it’s supposed to.
ford: We have all the data we need on the customer side. But we went at it back-wards and started harvesting all this data without even understanding what the business outcome was. Once you figure that out, you’ll find out you don’t need 99% of the data you harvest and manage, then you can start picking up speed.
I get frustrated when people say, “Yeah, I’m in the cloud.” No, you’re not – you’re pass-ing files through the web. Until we reach the point where we can deliver personal-ized messaging using disruptive technol-ogy capabilities at their fullest, we won’t personalize mobile. But we’ll get there.
geffs: Jeff, your company is mobile native, what does it take to be really successful in mobile in terms of creating an experience that works for retailers?
white: Everything is relevance. Without relevance, there’s no intimacy formed with the consumer. There’s no conversion, noth-ing to track, no follow-up. If a consumer gets an undifferentiated message, it’s al-
most insulting. If you take the little data that you need in order to create a relevant experience for the consumer, they’ll tell their friends. They’ll share. You’ll get viral amplification. And the mobile phone does two things – it intersects time and space like no other device and builds everything upon those intersections.
geffs: Let’s turn to the hot topic of privacy. Where is the borderline between helpful personalization and creepy stalking?
white: Consumers have always traded pri-vacy for convenience, and as long as there’s no malevolence associated with person-alization, I believe consumers will always continue to make that trade.
We’re based in DC, and I will tell you legis-lation is coming. Whether it’s perceived or it’s reality, Congress feels they have to do something.
audience question: Are you seeing any differences in how tablet users and phone users are responding to advertising?
coleman: In terms of performance, tab-lets are acting very similar to desktops in terms of click-through rates and conver-
sion rates. On mobile phones today, we’re seeing higher click-through rates and low-er conversion rates in general.
ford: Even though we tend to group them as very similar devices, they behave differ-ently in location. One is a location-centric device; one is not so location-centric. One has direct text; the other one requires an over-the-top text program, which not ev-eryone uses. Also, they behave very differ-ently on a response curve. There is a latency to tablet responses, and there is an instan-cy to the mobile device. You’ll get an or-der from an iPhone user in approximately eight minutes, whereas your order will stay open on that iPad for about three days, if it’s a push to an app.
coleman: We’re seeing things move so fast in mobile that I believe, in two years, you won’t have delineation of mobile, tablet, phone. You’ll have something called reach, and people are not going to care about the difference, and proficiency should be up. It’s moving that quickly today. n
(from left) Jeff White, Greg Coleman, Paul Chachko, and Rod Ford
8
Financial Markets Updatemoderator: Scott Peters, Co-President, JEGI
panelists: Elizabeth Granville-Smith, MD, BV Investment Partners Daniel Kortick, Managing Partner, Wicks Group of Companies Ray Shu, MD & Media Team Leader, GE Capital Rick Smolen, VP, Strategic Transactions, Intralinks
peters: Please summarize your firm’s investment activity last year, and tell us what you think is going to happen in 2014.
granville-smith: Over the past 15 months, it has been a seller’s market, and we have been taking advantage of that. Now, every single Managing Director in my firm is focused on new deals. We’re looking particularly in areas of security, Internet infrastruc-ture, and healthcare information services.
kortick: I agree. Throughout 2013, Wicks fo-cused mostly on add-on acquisitions to our existing portfolio. With multiples ticking up, we focused on investing in areas where we had a true strategic reason to be investing. Our most active sectors were business ser-vices and marketing services, and also B2B. Most of the B2B businesses that are seeing activity are those that look a lot more like marketing services business.
shu: From a lender’s viewpoint, 2013 was a banner year for the debt market. Our firm closed 59 transactions totaling in excess of $5 billion in the TMT space, and probably 70% were in the media and technology space. Liquidity is abundant. It has been very com-petitive out there. The software sector has been one of our fastest-growing areas in the portfolio. Valuations are extremely rich right now, but there’s still a lot of appetite.
For 2014, we expect a very robust debt market. We anticipate an improving economy, and a lot of companies have improved their margins, after all the cost-cutting during the downturn. We really do expect M&A activity to come back.
granville-smith: One trend we’ve noticed is the lower and mid-dle-market private equity investors seem to have turned away from the standard LBO model. A lot of great businesses aren’t able to get financing or PE money, because they aren’t sexy high-growers.
peters: Now that marketing services models are looking more like subscription models, what is your view on that sector in general?
shu: It’s definitely more bankable, given the visibility and the re-current nature of the revenue stream. Having said that, it’s still a very complex ecosystem. There are still business models – ad tech-type businesses, for example – where the model changes every two to three years, so we’re still fairly selective.
peters: Given all the M&A data you have on these sectors, what is Intralinks’ perspective on what 2014 will be like?
smolen: In the context of M&A, Intralinks is the global leader in
providing virtual data rooms. We typically get involved six months before a deal is announced. In 2013, we had a significant peak in the initiation of due diligence activities in Q2 ’13, over 20% higher than in ’12. Q3 and Q4 also showed elevated levels, so we expect meaningful increases in deal activity in H1 ’14 vs. H1 ’13.
peters: As you look at value creation in the portfolio, what will the dominant theme be in 2014 – organic growth, accretive acquisitions, or deleveraging of your portfolio companies?
granville-smith: For us, it’s all about organic growth. We’re ex-pecting new product development to help all of our portfolio com-panies grow EBITDA this year.
kortick: I agree. A natural by-product of organic growth will be deleveraging, and we will look for good add-on acquisitions, too, so all of the above.
peters: Heading into 2014, I’ve heard people say the debt market looks a lot like 2007, in terms of seven and eight times leveraged mul-tiples, and covenant-lite deals. Do you see it that way?
shu: I wouldn’t say we’re back to the 2007 levels yet, but directionally, we’re heading there. From a pure, total leverage perspec-tive, we’re still probably half a turn to a turn below 2007.
peters: What was your experience with debt in your 2013 deals?
kortick: We’re in the lower end of the middle market, and we don’t see the wide swings in leverage that the larger market sees. We’re not seeing leverage multiples anywhere near six times; in a good debt market like this, we do get the benefit of moderately higher leverage, lower pricing, the ability to do some recaps of our business to get some of the capital out.
peters: At a high level, what makes an investment that you’re look-ing at really attractive?
granville-smith: At BV we are very focused on vertical areas where there is tailwind. We look at all the services around the aging of America and around Internet infrastructure. We’re look-ing at home security, personal security, cyber security. We’ve been looking at a lot of tech-enabled services, information services around the energy space.
kortick: We like a high degree of fragmentation – either a highly fragmented industry (with add-on acquisition targets) or custom-er base (looking for an aggregator and distributor of information). Companies solving a unique problem in an industry are attractive.
shu: We still like traditional media. Traditional media’s not dead by any means. We’re the biggest lender in the B2B space – you need to make sure the right people are in place to carry the busi-ness into the digital world. Events still really drive a lot of the value in B2B. And software is probably going to still be our most active sector during 2014. n
(from left) Elizabeth Granville-Smith, Daniel Kortick, Ray Shu, and Rick Smolen
150 East 52nd Street, 18th Floor New York, NY 10022 212-754-0710 www.jegi.com
For the 8th Consecutive Year, JEGI Ranked #1 by Bloomberg for U.S. Media, Internet
and Marketing M&A TransactionsBloomberg M&A League Tables, 2009-2013
top advisors serving the us media, marketing and internet sectors*
2009-2013 (5-Year)2013
Rank Advisor # Deals
1 Jordan, Edmiston Group 152 Goldman Sachs & Co 133 JP Morgan 123 Petsky Prunier 125 Morgan Stanley 116 Bank of America Merrill Lynch 106 Citi 108 RBC Capital Markets 99 Credit Suisse 710 4 Firms Tied 6
* rankings by number of deals completed.
Rank Advisor # Deals
1 Jordan, Edmiston Group 702 Petsky Prunier 503 Goldman Sachs & Co 454 Morgan Stanley 425 Bank of America Merrill Lynch 335 RBC Capital Markets 337 GCA Savvian 328 JP Morgan 319 Evercore Partners 2410 Barclays / Citi 22
jegi’s client is mentioned first in each of the above transactions.
august 2012
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a global leader in digitalengagement specializing in
promotions and loyalty campaignsacross mobile, social and web
september 2012
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a division of DMGT plc
a leading peer-to-peer leadership platform for Fortune 1000 C-suite executives
for $94,000,000
october 2012
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a portfolio company of
the leading provider of sales enablementand business intelligence SaaS solutions
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two leading full servicecontent marketing firms
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the leading provider of news,information, events, and datato the global travel, meetings
and hospitality industries
a leading operator of large, business-to-business tradeshows
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june 2013
expositions
for $950,000,000
a full service competitiveadvertising tracking firm
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october 2013
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november 2013
a digital creative consultancy
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december 2013
its fiduciary tax outsourcing business and licensed
related software
a leading provider of shoppingand shopper marketingsoftware and services
