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Q4 2016 Market Report

Digital Brief 012

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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

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Overall Commentary on ConsolidationØ InourlastQ32016MarketReport,wereported

62mergersandacquisitionsindigitalmediaandmarketing

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

capitulations,orundisclosed

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

Source: LUMA

#ofTransactions

Ø RobustM&Aactivityacrossdigitalmediaisreflectiveofthegrowingpoolofstrategicbuyers,mostnotablynewentrantsfromthetelecomindustryaswellasinternationalandprivateequitybuyers

Ø Thisphenomenahasresultedinmanylargescaledexitsfordifferentiatedcompaniesatverystrategicmultiples

59 56

72 77

78112

0

50

100

150

200

250

300

2015 2016

AdTech MarTech DigitalContent

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

Source: LUMA

#ofTransactions

Ø Inthefourthquarter,scaledexitsinAdTechwasamajorstorywithindustryleadingcompaniesfocusedonvideo/TVanddatabeingacquired

Ø Weexpectmomentumfrom2016tocontinueintothenewyearasnewmarketdynamicsandincreasedcompetitionwilldrivefurtherconsolidationacrossthesesectors

2012 14 10

1422 20

21

28 30 2826

0

10

20

30

40

50

60

70

Q12016 Q22016 Q32016 Q42016

AdTech MarTech DigitalContent

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A Growing Pool of Strategic Buyers

DATA

INTERNET ORIGINALS

TECH SERVICES

TELCO

INTERNATIONAL

PRIVATE EQUITY

MEDIA

MARKETING

CONSUMER INTERNETCOMMERCE

MARKETING TECH

CRM SOFTWARE

Right Time Decisioning of

Consumer Data

(Ad Tech and MarTech)

Ø Thepoolofstrategicbuyerscontinuestogrowwithprivateequitybecomingactiveacquirersinthisspace

Ø Privateequitybuyershavenotonlybecomeveryacquisitiveindigitalmarketing,butarealsopayingstrategicmultiplesfortheseassets

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9%

26%

6%27%

8%

5%

5%6%

6%

2%ConsumerInternetCommerceTelcoMediaMarketingTechTechServicesInternetOriginalsCRMSoftwareMarketingData

Digital Media M&A Activity by Strategic Buyers2016

StrategicBuyersTransactions

Ø In2016,buyersinCommercewereveryacquisitivewiththeaimofacquiringstrategicassetsfortheircorebusinessandtoenhancetheirdigitalmarketingcapabilities

Ø BuyersinMediaincludingTimeWarner,UnivisionandZiffDaviswerealsoparticularlyactivethisyearwithpublishersbuildingtheirportfolioofbrandsasengagementonlinecontinuestogrow

Source: LUMA

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Ad Tech M&A Activity#ofTransactions

Ø FullYearObservations§ Thesecondhalfof2016sawmany

scaledexitsinAdTechincludingtheacquisitionsofAppLovin andMedia.net inQ3aswellasHookLogic,INVIDI,Operative,TriadRetailMedia,andTubeMogul inQ4

§ Telcos andMarketingCloudswereparticularlyacquisitiveinAdTechthisyearfromAT&TtoAdobe

Ø LookingAhead– TV§ Weexpecttoseeanincreasein

M&AactivityinTVadvertisingfollowingtheacquisitionsofINVIDIandOperativeinQ4

Source: LUMA

1 2 4 4

19

1010

6

0

5

10

15

20

25

Q12016 Q22016 Q32016 Q42016

+$100M <$100M

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Ad Tech – 2016 Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

Source: Capital IQ; Crunchbase

$4M $1.4B Chineseprivate equityfirmOrientHontai Capitalhas agreedtoacquireamajoritystakeinthefast-growingmobileadnetworkAppLovin

$39M $250M Criteo willboostitsperformancemarketingplatformbyleveragingHookLogic’s uniquerelationshipswithbrandmanufacturersandretailers

$132M N/A AconsortiumledbyAT&Thasannouncedplans toacquire INVIDI,aleadingproviderofaddressableTVadvertisingsolutions

$45M N/A MediaoceanhasacquiredInvision,anAdTechcompanyofferingworkflowsolutionstobroadcastersandMVPDs,toaddsell-sidetoolstoitscorebuy-sidebusiness

N/A $900M Media.net,anAdTechcompanypoweringYahooBingContextualAds,willbeacquiredbyaChineseconsortiumledbyBeijingMitenoCommunicationTechnology

$34M $360M NorwegiantelecomoperatorTelenoracquiredcross-deviceadvertisingcompany Tapad tobolsteritsdigitalmarketingcapabilities

NASDAQ $540M Adobehasagreed toacquireTubeMogul,aleadingvideoDSP,andcombineitwiththeAdobeMarketingCloudasthecompanydivesdeeper intomediaexecution

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MarTech M&A Activity#ofTransactions

Ø FullYearObservations§ TheacquisitionsofDemandware,

Marketo,NetSuiteandNeustarheadlinedabusyyearinMarketingTechnology

§ PrivateEquitybuyerswereveryactivethisyearinMarTech,payingmultiplestypicallyassociatedwithstrategicbuyers

Ø LookingAhead– Identity§ Identityisakeyindustryfocus

sinceitiscriticaltoenabletrue1:1marketing

§ MarketingCloudsandstartupsalikearebuildingrobustidentitysolutions

Source: LUMA

25 3 4

12

1717 17

0

5

10

15

20

25

Q12016 Q22016 Q32016 Q42016

+$100M <$100M

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MarTech – 2016 Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

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

$50M $700M ByacquiringDMPKrux,Salesforce’sclientswillbeabletoperformmoregranularsegmentingandstrongeraudiencemanagementfromwithinitsMarketingCloud

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

NYSE $8.7B SoftwaregiantOracleacquiredNetSuite,theSaaSERPleader(withmarketingtechnologyassets)

NYSE $2.9B GoldenGateCapitalhasagreedtoacquireNeustar,anindustryleadingproviderofinformationservicesanddigitalmarketingcapabilities

NASDAQ $2.6B Businessintelligenceanddatavisualizationplatform,Qlik,hasbeentakenprivatebyThomaBravo

N/A $1.1B Sitecore,awebcontentmanagementsystem,wasacquiredbyEQTPartnersasitplanstoexpandSitecore’sdigitalmarketingcapabilities

Source: Capital IQ; Crunchbase

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Digital Content M&A Activity#ofTransactions

Ø FullYearObservations§ Acquisitionsintraditionalmedia

(Dreamworks,TimeWarner)anddigitalmedia(ComplexMedia,EverydayHealth,GawkerMedia)highlighteddigitalcontentin2016

§ GamingcompaniesSupercell andPlaytika hadtwoofthelargestexitsinthesectorallyear

Ø LookingAhead– PublisherConsolidation§ Amidthegoldenageofcontent,we

expecttoseefurtherconsolidationamongpublishersinordertoofferabroadervarietyofcompellingcontentacrossverticalsandattractlargeadvertisers

Source: LUMA

6 6 6 3

22 24 2223

0

5

10

15

20

25

30

35

Q12016 Q22016 Q32016 Q42016

+$100M <$100M

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Digital Content – 2016 Notable DealsAcquirer Capital

RaisedEnterprise

Value Comments

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

$245M ~$800M NetmarbleGameshasacquiredKabam’sVancouver-basedstudio,thedeveloperofpopularmobilegamestitles including“MarvelContestofChampions”

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

N/A $4.4B AconsortiumofChinesebuyershasagreedtoacquirePlaytika,thesocialcasinogamingunitofCaesarsEntertainmentitoriginallyboughtin2011

N/A $10.2B ChinesemediagiantTencentHoldingsacquiredamajoritystake inthemassivelyprofitablemakerofthepopularmobilegamingfranchiseClashofClans

NYSE $105.6B AT&ThasagreedtoacquireTimeWarnertoowncontentanddistributionasthetelecomgiantaimstopushmediaandadvertisingtoitsgrowingusernetworks

NASDAQ $4.8B FollowingitsacquisitionofAOL,VerizonhasagreedtoacquireYahoo’scorebusiness,whichincludesitsdigitalmediapropertiesandscaledAdTechcapabilities

Giant(ChineseConsortium)

Source: Capital IQ; Crunchbase

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-100%

-50%

0%

50%

100%

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TUBE RUBI TRMR MXPT YUME FUEL CRTO MRIN TTD NASDAQ

Ad Tech – 2016 Stocks Performance

Market Data as of 12/31/16

Ø AdTechWeighedDownbyIndustryIssues§ Headerbiddingishavingastrongimpacton

AdTechasinvestorsquestionthefutureofthesefirmsunderthisnewmarketdynamic

§ ArecentanalysisconcludedthatFacebookandGooglecapturedallofthegrowthindigitaladvertisingin2016,raisingmanyconcernsabouttherestoftheindustry

Ø AdTechIPO’s§ TTD’ssuccessfulinitialpublicofferingin

SeptemberwasamajorboostforAdTechandcouldserveasacatalystformoreIPO’s

§ AppNexus isexpectedtogopublicinQ2of2017afterfilingconfidentiallyforanIPO

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-50%

0%

50%

100%

150%

1/4/16 2/4/16 3/4/16 4/4/16 5/4/16 6/4/16 7/4/16 8/4/16 9/4/16 10/4/16 11/4/16 12/4/16

CRM MKTO HUBS BCOV BV DWRE JIVE NASDAQ

MarTech – 2016 Stocks Performance

Market Data as of 12/31/16

Ø MajorAcquisitions§ Twoindustryleaders,MKTOandDWRE,were

acquiredfor$1.8billionand$2.8billionrespectively

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

Ø MarTech ContinuesitsSteadyGrowth§ MarTech stockscollectivelygainedover7%

in2016withBCOVenjoyingalongpositivestretchtotheendofyearafterQ1

§ Aftergrowing34%and68%respectivelyin2015,CRMandHUBShaveseensomeheadwindsthisyear,falling11%and14%respectively

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2016 Key Startup Financings to WatchLead Investor Capital Raised Valuation Comments

Source: Crunchbase

$555M $30B Airbnb recentlyunveileditsambitiousnewlineofbusiness“Trips”asitlooksforgrowthoutsideitscorerentalhomeoffering

$200M $1.7B Followingits$200millionraiselastyear,BuzzFeed hasreceivedanother$200millionfromNBCUniversal togrowitscontent/advertisingpartnership

$794M $4.5B Augmentedreality (AR)startupMagicLeap’sSeries Croundoffundingwillenablethesecretivecompanytobringitsfirstproducttomarketsoon

$1.8B $20B SnapInc.,theparentcompanyofSnapchat,hasnowraisedover$2.6billioninfundingasitpreparesforitseventualIPOnextyear

$150M $9B DigitalpaymentscompanyStripenearlydoubleditsvaluationasitbuildsuponaleadingpositioninthefastgrowinge-commercespace

$181M $1.5B Unity,oneoftheleadinggameengineplatforms,hasraisedcapitaltocontinuebuildingtechnologyforvirtualandaugmentedrealityexperiences

$430M $16B WeWork,thepopularco-workingspacestartupthathas50,000membersin21cities,raisedfundingtoentertheAsianmarketasitcontinuestogrow

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LUMA’s 2016 LUMAscapeØ 2016wassuchabusyyear

forLUMA,wemadeaLUMAscapeoutofallouractivitygroupedbyourthreevaluepropositions:

Access -WehostedseveralexclusiveeventsfromourCEODMSseriestofundinnersandlaunchedLUMACorporatePartners

Insights – Wepublishedlotsofgreatcontentthatattractedaudiencesinthemillions

Execution – Weannouncedtransactionsvaluedat$3billionforourclients

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LUMA’s Differentiated Value Proposition

1. PeerlessIndustryKnowledge2. StrategicApproach

3. ExecutionExcellence

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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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Access. Insights. Execution.

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