OMMA Display 2011 Presentation by Linda Gridley Transformation of the Measurement Industry: How Much Can be Attriibuted to M&A? Learn more about Gridley & Company at http://www.gridleyco.com

1. Transformation of the Measurement
Industry: How Much Can be
Attributed to M&A?
November 7, 2011

2. Introduction
• Industry leaders today are facing a quickly changing landscape
- Rate of change in industry among the highest in all of digital
technology
- Emergence of real time data collection and dissemination driving
technology deeper into today’s solutions
• Increasingly tough to compete with new, innovative entrants
- Growing channels and use cases bringing new players to the market
Unprecedented opportunity for new leaders to emerge
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3. Snapshot of the Web 10 Years Ago
143 million Americans (54%) Users spent seven hours per
using the Internet week online (email, news, chat)
Source: NTIA Source: Harris Interactive
41% of Americans using Social networks limited to
mobile phones (voice only) forums, blogs, and chatrooms
Source: CTIA
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4. Despite its Size, Online Advertising was Quite
Underdeveloped
U.S. Online Advertising Revenue
($ in billions) • Highly manual processes
$8.0 • Little to no accurate measurement
$7.1
methodology
$7.0
$6.0
“…big advertisers still don't see the value of
$5.0 the Internet yet,"
$4.0 Morgan Stanley analyst Michael Russell - July ’01
$3.0
$2.0 “… experts in the field now say that advertisers
ought to forget about click-throughs… Online ads
$1.0 aren't meant only to spawn direct sales.. They're
also for establishing or burnishing a brand…”
$0.0
BusinessWeek – July ‘01
2001
Source: IAB Internet Advertising Report, BusinessWeek
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5. Tried and True Methodologies Were Manual,
Expensive and Hard to Scale
Mall Intercepts / Interviews Focus Groups Mailed Surveys
Random Digit Dialing Set Meters
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6. The Web Quickly Developed Scale and Use
Time Spent on
Doubling of U.S. Online Penetration Internet + Mobile Approaching TV
90%
79%
80% Mobile
70% 8%
Radio
15% Newspaper
60%
5%
50% Internet
43% Magazines
23% 3%
40%
30% Other
TV | Video 7%
20%
39%
10%
0%
2000 2010
Avg. hrs
spent per
week ~7hrs ~13hrs
Source: ITU, Harris Interactive, comScore Source: eMarketer
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7. Fundamental Shifts in Usage Are Driving Need for
New Measurement Methodologies
Introduction of Social Networking ~8x growth in
the Smartphone Creating Information at Scale U.S. eCommerce
($ in billions)
$180.0
$164.6
25% 70%
23% $160.0
61%
60% $140.0
20%
50% $120.0
15% $100.0
40%
$80.0
30%
10%
$60.0
20%
$40.0
5% $25.8
10% 8%
$20.0
0%
0% 0% $0.0
2001 2010 2005 2010 2000 2010
Source: comScore Source: Pew Research Source: U.S. Census Bureau
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8. The Rapid Growth in Online Advertising Has
Created Various Measurement Complexities
On Site On Social
Transaction Brand
Platforms
How are
users
behaving? How
effective are
my ads?
How do I measure
safety and
effectiveness in blind
environments?
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9. M&A Has Been Critical in Shaping Online
Measurement
• Key themes from 2000 – 2008:
• Offline players buying online capabilities
• Proprietary data sets became highest sought after
• Realization of mobile potential, key players acquired mobile capabilities
• Real time emerging as important factor in measurement
/ /
July
2006
/ May
2008
/ / / /
February October March
January 2007 2007 2008
2005
January April
2006 April – June
2007 2008
June / /
2002
/ /
(Online Audience
Measurement Assets)
/
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10. M&A Has Been Critical in Shaping Online
Measurement (cont’d)
• Key themes from 2009 – today:
• New entrants to the market with use cases beyond research – Adobe, IBM,
Salesforce
• Measurement in real time environments – Social, RTB
• Measurement -> Data Analytics
/ /
September
March
/
2010
/ 2011
/
/ /
September
February August
2009 January
2010 2011
2011
July
2008 2010 April
June
Nielsen releases its 2011
2010 Online advertising
first quarterly “Three
overtakes
Screen Report”,
covering TV, October / newspapers in U.S. / September
2009 (source: eMarketer) February 2011
Internet, and mobile 2011
/ / /
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11. Online Measurement Landscape Today Online Ad
Ad Attribution / Safety /
Effectiveness Analytics Social Verification
/
/
/
/
/ Mobile
/
Ratings /
/
/ / /
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12. Highly Attractive Valuations in Online Measurement
Mobile Social
Implied Ent. LTM Rev. Implied Ent. LTM Rev.
Date Acquirer / Target Value ($MM) Mult. Date Acquirer / Target Value ($MM) Mult.
02/23/10 NA NA 04/18/11 $300.0 NA
12/22/09 NA NA 03/30/11 $340.7 NA
05/28/08 $43.7 4.41x 02/07/11 $100.0 1.54x
06/27/07 NA NA 02/26/07 NA NA
Web / Data Analytics Survey / Other
Implied Ent. LTM Rev. Implied Ent. LTM Rev.
Date Acquirer / Target Value ($MM) Mult. Date Acquirer / Target Value ($MM) Mult.
01/10/11 $50.0 7.14x 02/14/11 $237.7 2.02x
06/15/10 NA NA
10/06/09 NA NA
09/15/09 $1,675.7 4.60x
03/03/08 $75.0 5.03x 06/26/09 NM NM
10/25/07 $381.8 5.10x
08/06/08 $421.5 3.06x
04/19/07 $240.0 6.00x
02/06/07 $328.3 7.50x
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13. M&A Case Studies: Obtaining Premium Valuation
Implied
Enterprise LTM Rev
Date Acquirer Target Value Multiple Comments
Strengthened display
01/10/11 $50.0 7.14x media buying
opportunities with retail
clients
05/28/08 $43.7 4.41x Developing mobile
capabilities for cross-
media planning
03/03/08 $75.0 5.03x Added competitive
internet ratings
04/19/07 $240.0 6.00x Able to provide
internet intelligence to
its client base
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14. Who are the Big Acquirers?
Acquirer Targets Themes
New Players
• Leveraging strong publisher assets to
solve publisher ROI challenges through
data
• Approaching from the biggest data
challenges – marketing/advertising
business intelligence
• Coming at online measurement through
strong consumer level data sets (CRM and
Jigsaw)
Existing Players
• Using M&A to as part of product and
channel extension strategy
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15. Measurement Technologies Will be Important to
the Development of Real-Time Bidding
Rapidly growing market > Majority of impressions still relatively anonymous
U.S. Exchange Traded
Media Spending in $MM
Non-RTB
$1,600
RTB • Measurement of
$1,400 quality and
$1,200 effectiveness will
$592
$1,000 grow in importance
$800 “Cookied” Blind • Stigma of low quality
$600 will further increase
$380
importance of real
$400 $823
time measurement
$200 $353 technologies
$0
2001 2010
Source: Forrester
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16. Ad Effectiveness Solutions will Follow the $$ Up
the Funnel
Brand
Performance
Demand generation
65% Share Increased interest
shift to and innovation as
digital new digital $$ focus
earlier in the
purchase cycle
Demand fulfillment
Most innovation and
35% 29% technology M&A at
71% this part of funnel
Traditional Media Digital Media
Source: Credit Agricole, Gridley
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17. Social will Challenge the Status Quo in Both
Advertising and User Measurement
Facebook controls a large part of the Brands are going directly to its
adtech supply consumers through Facebook
Coca-Cola
Rest of the Facebook
Web
(~30%)
Example of
Example of
Coke using
Coke using
Facebook to
Facebook to
elicit
elicit
Massive
Massive feedback on
feedback on
audience
audience bottle
bottle
Q1’11: 1.1 trillion impressions design
design
Source: Comscore Q1 estimates for U.S. Web, Facebook
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18. Tremendous Promise with Mobile Given Unique
Characteristics
Newspapers,
Magazines,
Watch Books Measurement will be critical to achieve
Camera
scale by marketers
Computer
ROI of Existing Mobile Marketing Campaigns
GPS, Snail Exceeded expectations
Maps, Mail
Compass
8%
Performed as expected
16%
Video
Performed worse than expected
Camera
5%
PDA Far below expectations
5%
Haven’t measured
Range 34%
Finder Don’t know
Telephone 29%
Game
Credit Cards, Console
Over 50% of campaigns
Identity Alarm
lack any sort of measurement
Music Clock
Player
Source: eMarketer
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19. Everything is Becoming Internet-Enabled
PC: 1990 - VoIP: 1999 - Mobile: 2008 - Tablet: 2010 - TV: 2012 ? Car: 2013?
• Growing interest from brand
marketers to define ROI across
channels
Offline Online • Data integration becoming
increasingly possible/seamless
as world become internet-
enabled
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20. Convergence of Capabilities
• Becoming hard to
Mobile Social determine who is
competitive as separate
disciplines converge
• Has major M&A
Users implications
Ad Ad Safety /
Effectiveness Verification
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21. Advice to the Audience – Private Companies
• Unprecedented opportunity for new leadership
• Clear, differentiated capabilities are key
• Buyers will pay premiums for market leaders and experienced teams
• Scale and successful client case studies are key
• Watch for new buyers to emerge
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22. Advice to the Audience – Public Companies
• Traditional leaders – You are more vulnerable than you think
• Think strategically about innovation and M&A
• Tremendous value being created, competitive dynamics are changing
• Watch out for disruptive business models
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23. Advice to the Audience – VC / PE Investors
• "Jump In – The Water's Fine"
• Be careful about amount of $ invested
• $250MM+ exits aren't easy!
• Look for new strategic buyers to emerge
• Different companies require different exit strategies
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24. Questions?
Linda Gridley
Gridley & Company LLC
10 East 53rd Street, 24th Floor
New York, NY 10022
212.400.9720 tel
212.400.9717 fax
Twitter: @gridleyco
www.gridleyco.com
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