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Market Spotlight: Ad Tech

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Market Spotlight: Ad Tech

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It’s an exciting moment in adtech, as improved analytics enable stronger targeting personalization and effectiveness, and the trend of omni-channel marketing begins to blur the lines between “traditional” and “digital” advertising. The digital portion of the advertising market is a $140B global industry, growing at over 16% a year. Companies finding innovative ways to create real value for brands is in high demand, with ad agencies among the most active buyers of technology companies. This Market Spotlight webcast will examine the trends within driving interest, with perspectives from analysts, bankers, buyers, investors, and CEOs.

It’s an exciting moment in adtech, as improved analytics enable stronger targeting personalization and effectiveness, and the trend of omni-channel marketing begins to blur the lines between “traditional” and “digital” advertising. The digital portion of the advertising market is a $140B global industry, growing at over 16% a year. Companies finding innovative ways to create real value for brands is in high demand, with ad agencies among the most active buyers of technology companies. This Market Spotlight webcast will examine the trends within driving interest, with perspectives from analysts, bankers, buyers, investors, and CEOs.

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Market Spotlight: Ad Tech

  1. 1. World Financial Symposiums WFS is an international organization dedicated to educating technology leaders through monthly, Market Spotlight webcasts and day-long Growth and Exit Strategies for Software and IT Companies conferences. www.wfs.com
  2. 2. Daniel Bernstein Daniel Bernstein, Vice President at Corum, has worked in a number of roles over a twenty year career in high technology, most recently as the founder and CEO of Sandlot Games Corporation, a leading casual games publisher and developer. Having sold Sandlot Games to Digital Chocolate in 2011, Daniel started a games studio and a consulting practice where he advises larger companies such as RealNetworks and smaller high growth businesses on product development, strategic initiatives, and M&A opportunities. Prior to Sandlot Games, Daniel Bernstein held director level positions in companies such as Wild Tangent and Monolith. Daniel holds a BS in Computer Science and an MA in Music Composition from the University of Virginia. Moderator
  3. 3. Yasmin Khodamoradi Yasmin joined Corum Group in 2015 as a research analyst. Previously she worked as a finance and operations coordinator at a financial technology startup and provided consultation services to an institutional investing advisory firm. Yasmin graduated from the Foster School of Business at the University of Washington, specializing in Finance and International Business. Research Analyst
  4. 4. Total Media Ad Spending Worldwide ($B) Source: eMarketer
  5. 5. US Mobile Search Ad Spending ($B) Source: eMarketer
  6. 6. US Mobile vs. Desktop Search Volume (billions) Source: eMarketer
  7. 7. Mobile Internet Ad Spending Worldwide Source: eMarketer
  8. 8. Ad Revenue Mobile +46% +72% 73% 89%
  9. 9. 0 10 20 30 40 50 60 70 80 90 100 0 1000 2000 3000 4000 5000 6000 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 AdTech M&A Activity (2012-2015) Total Disclosed Deal Value ($mm) Total Deal Count Source: 451 Research
  10. 10. 0 10 20 30 40 50 60 70 80 90 100 0 1000 2000 3000 4000 5000 6000 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 AdTech M&A Activity (2012-2015) Total Disclosed Deal Value ($mm) Total Deal Count
  11. 11. 37 22 19 18 14 14 13 12 10 10 9 9 9 Top Strategic Acquirers: 2014
  12. 12. 37 22 19 18 14 14 13 12 10 10 9 9 9 Top Strategic Acquirers: 2014
  13. 13. 37 22 19 18 14 14 13 12 10 10 9 9 9 Top Strategic Acquirers: 2014
  14. 14. Sold to Target: BrightRoll Acquirer: Yahoo! Date Announced: November 2014 Transaction Value: $640 million - Programmatic video solutions, including a demand side platform and marketplace - Accelerates Yahoo’s advances into digital video, making its video advertising platform one of the largest in the US
  15. 15. Sold to Target: Flurry Acquirer: Yahoo! Date Announced: July 2014 Transaction Value: $270 million - Mobile application analytics and ad network - Additional insight on consumer behavior on mobile apps.
  16. 16. Sold to Target: [x+1] Acquirer: Rocket Fuel Date Announced: August 2014 Transaction Value: $230 million - DSP/DMP, programmatic marketing and data management solutions - Strengthens media buying algorithms and direct-to-advertiser capabilities
  17. 17. Sold to Target: LiveRail Acquirer: Facebook Date Announced: July 2014 Transaction Value: $500 million - Platform connecting publishers to advertisement networks, demand side platforms, trading desks, and real-time biddable exchanges - Yield optimization technology and publisher relationships give Facebook an edge in competing for video ad dollars.
  18. 18. Sold to Target: Freewheel Acquirer: Comcast Date Announced: March 2014 Transaction Value: $360 million - Technology platform for ad management and monetization for the television industry - Highlights industry’s move toward addressable TV buys at a programmatic scale
  19. 19. Sold to Target: AdColony Acquirer: Opera Date Announced: June 2014 Transaction Value: $350 million - Mobile video ad network and monetization platform - Strengthened Opera’s mobile video ad capabilities and highlighted its focus on engaging ad formats
  20. 20. Sold to Transaction Value: $532 million - Digital ad platform and retargeting Sold to Sold to Transaction Value: ~$30 million - Analytics tools for social media campaigns Transaction Value: ~$30 million - Digital ad platform and retargeting
  21. 21. Sold to Target: AOL Acquirer: Verizon Date Announced: May 2015 Transaction Value: $4.4 billion - Advertising.com - digital advertising platform - Verizon’s data on customers should enhance Aol’s advertising business
  22. 22. Demand Side Platforms Rocket Fuel [x+1] ($230M), Blinkx LYFE Mobile, Single Touch DoubleVision Networks ($3.6M) Supply Side Platforms Millennial Media Nexage ($107.5M), Blinkx AdKarma ($15M), RNTS Media Fyber ($190M) Core Technology (e.g. Analytics, Retargeting, DMPs) Gravity4Triggit, AppNexus Xaxis ($225M), GoDaddy Mad Mimi ($42M), Linkedin Bizo ($175M), Twitter TapCommerce ($100M), AOL Gravity ($90.7M), Comcast Freewheel ($360M), Rocket Fuel [x+1] ($230M) Ad Exchanges Matomy Media Group MobFox ($17.6M), Yahoo BrightRoll ($640M), RTL Group SpotXchange ($144M) Ad Networks Zenovia AdJuggler ($10M), Opera AdVine, Yahoo Flurry ($270M), Opera Apprupt Notable AdTech Deals by Category (2014)
  23. 23. Danan Margason Danan is General Counsel and a member of the executive team at TUNE, Inc. 500’s 88th fastest- growing company in 2014. TUNE (www.tune.com) creates Software-as-a-Service (SaaS) products to help marketers manage performance advertising relationships across mobile and desktop. Danan is heavily involved with TUNE’s business operations, and his team manages key aspects of TUNE’s M&A activity. TUNE is based in Seattle and has offices in San Francisco, NYC, Dallas, Tel Aviv, Seoul, Berlin, and London. Danan is on the executive team and manages the legal team and much of the company's operations. General Counsel
  24. 24. Ragnar Kruse As a serial entrepreneur with 30+ years experience in IT, Ragnar Kruse understands the unique challenges in bringing new technologies to market. He has built up several companies from inception to market launch in both the US and Europe. At Intershop Communications, a leader in E-Commerce software solutions, Ragnar was VP of Sales and Marketing in San Francisco. During his tenure, Ragnar was instrumental in the company’s growth and ushering it through a successful IPO on NASDAQ and the “Neuer Markt” in 1998. More recently, Ragnar held key management positions at high-tech companies in the U.S. and Europe including eCharge and Xtramind. Through his many years in IT, Ragnar maintains strong relationships with companies in the telecommunications and mobile sectors, including Deutsche Telekom, Telekom New Zealand, Telstra, Telia, Cable & Wireless, Siemens, T-Online, T-Mobile, France Telecom, HP and SUN. Ragnar started his career as an entrepreneur. In 1980, he founded IPT GmbH, a computer retail business that imported products into Germany from the USA and Taiwan. In 1987 he expanded his business by starting DTP Partner GmbH, a distribution company in Hamburg. DTP Partner was the exclusive distributor of several desktop publishing solutions such as Corel and was instrumental in establishing international distribution agreements with American and Taiwanese companies. Ragnar studied law at the universities of Hamburg and Munich, Germany. CEO
  25. 25. Hagai Tal Hagai has extensive international management and business development experience, specializing in growing start-ups into profitable ventures/IPO, predominantly in the areas of on- line marketing, digital media/advertising and global financial processing. He has invested, led and developed companies for successful growth, continued investment and IPO/disposal including: Kontera, Amadesa, Payoneer, BlueSnap (formerly Plimus), Spark Networks (NYSE: LOV). Hagai is a Fellow of the third class of the Middle East Leadership Initiative of The Aspen Institute and a member of the Aspen Global Leadership Network. CEO
  26. 26. Scott Braley Scott Braley is senior vice president, Demand, at OpenX. He brings 16 years of ad tech sales leadership to the OpenX Demand team, where he works closely with agencies, agency trading desks and advertisers to help them understand the benefits of programmatic tools and why they should be an integral element of any comprehensive marketing strategy. Before joining OpenX, Scott ran the U.S. Sales and Global Agency team for Facebook’s Atlas division, where he oversaw all U.S. new business and account management functions. Previously, Scott held various global and regional sales leadership roles for the Atlas division at Microsoft and aQuantive. Prior to his 10 years collectively on the Atlas business, Scott held various sales and account management roles at Bluestreak, AdKnowledge, and TBS Media Management. Scott holds a B.A. in Psychology from SUNY Albany. SVP of Demand
  27. 27. Contact Us For further information or copies of today’s presentation: • Visit www.wfs.com • -or- • Email danielb@corumgroup.com 30

Hinweis der Redaktion

  • Thanks Dan

    So looking at advertising spending in aggregate, it’s projected to grow steadily in the coming years. Now this includes all formats- including digital (online and mobile), magazines, newspapers, outdoor, radio and tv.
  • And out of those categories, mobile is projected to grow tremendously in the coming years. And The number that’s interesting to look at is in 2015, where the proportion of mobile to desktop search ad spending exceeds 50%.
  • As you can see more clearly in this graph, the singularity where mobile search volume overtakes desktop is expected to occur in 2015.
  • And the newest figures suggest total mobile ad spending worldwide is projected to grow at double digit rates well into 2019, and may take up to a quarter of total media ad spend by then.
  • Of course, Mobile is especially important to companies like Facebook and Twitter, where a greater proportion of ad revenue is coming from mobile. While Facebook’s total Q1 ad revenue grew 46% year over year and Twitter saw an increase of 72%... Ad sales for mobile accounted for 73% and 89% of Facebook’s and Twitter’s total ad sales respectively.
  • So we’ve established advertising spending (particularly in mobile) is growing, so how does that look on the deal side? Well as you can see here, 2014 was a bonanza year for AdTech M&A, both in terms of deal value and count, which reached record highs. Q1 2015 is a slightly different story… so there is a drop off in deal value, which may be due to the weak adtech IPO market in 2014, which dragged down valuations somewhat. However, deal count in Q1 was still considerably high, meaning a larger number of smaller deals is taking place, which is great news for smaller adtech companies.
  • Deal values in Q2 should shoot up considerably, as the $4.4B acquisition of AOL alone should bring deal values back up to trend.
  • Looking at the top strategic technology buyers of 2014, many of the names you see here were involved in adtech deals. We saw traditional media agencies like WPP and Publicis expand their reach internationally by buying digital marketing agencies in China, Russia and Latin America. We also saw tech companies like Facebook, Twitter, and Google who make most of the money from advertising, making major investments in adtech. Similarly, Yahoo has been making big plays to accelerate their efforts in mobile and video advertising.
  • Looking at the top strategic technology buyers of 2014, many of the names you see here were involved in adtech deals. We saw traditional media agencies like WPP and Publicis expand their reach internationally by buying digital marketing agencies in China, Russia and Latin America. We also saw tech companies like Facebook, Twitter, and Google who make most of the money from advertising, making major investments in adtech. Similarly, Yahoo has been making big plays to accelerate their efforts in mobile and video advertising.
  • Looking at the top strategic technology buyers of 2014, many of the names you see here were involved in adtech deals. We saw traditional media agencies like WPP and Publicis expand their reach internationally by buying digital marketing agencies in China, Russia and Latin America. We also saw tech companies like Facebook, Twitter, and Google who make most of the money from advertising, making major investments in adtech. Similarly, Yahoo has been making big plays to accelerate their efforts in mobile and video advertising.
  • … An example of which is their acquisition of BrightRoll, the largest independent video ad network, late last year for $640M. This deal would make Yahoo one of the largest video advertising platforms in the US.
  • And their acquisition of Flurry earlier in 2014 was another major deal. Yahoo was especially interested in the wealth of audience data that flows through Flurry’s app analytics service, which should give them insight into consumer behavior on mobile apps and enhance their targeting capabilities.
  • Similarly, Rocket Fuel finally ended their hunt for a data management platform by purchasing DSP/DMP [x+1] for $230M- The data from x+1’s platform should enhance Rocket Fuel’s media buying algorithms and boost their offline targeting capabilities.
  • Facebook also bolstered their advertising business by acquiring LiveRail, which should make them more competitive against Google and AOL in the video marketplace, as LiveRail’s technology allows Facebook to extend the purchase of ad inventory outside the walls of the Facebook environment.
  • Another interesting acquisition was Comcast’s purchase of FreeWheel, which is known as the go-to ad serving platform for TV networks streaming online. Naturally, Comcast is interested in owning the technology for its own video platform and network partners.
  • In addition to nabbing ad networks Apprupt and AdVine, Opera’s acquisition of AdColony for $350M last June was their largest in a series of purchases to further their advertising business. AdColony’s technology, which enables fast-loading of video ads on mobile, should allow Opera to embrace more advanced advertising formats that command higher payments from brands.
  • Looking at deals this year, Twitter picked up three adtech companies. A couple weeks ago they paid $532M in stock to acquire digital ad platform and retargetter TeleApart. This is the largest deal Twitter has done to date and places TellApart’s market cap above most public companies in the space, including Rocket Fuel, Tremor Video and Tube Mogul. They also added a new stream of revenue by acquiring Niche, a startup that offers analytics tools to social media creators and brands that want to leverage them in their advertising. They also acquired Indian adtech startup ZipDial for an estimated $30M, which will allow Twitter to deliver ads over the phone to users in developing markets with little or patchy internet connectivity.
  • And of course, there is the AOL/Verizon megadeal. This was an important deal for a couple reasons. First, the combination of Verizon’s customer data and AOL’s capacity to serve ads should improve advertisers’ ability to get the right ads to the right people. After all, the most successful companies in mobile advertising, i.e. Facebook and Google, tend to be those that know a lot about their customers. Second, combining a leader in mobile with a leader in video and programmatic advertising has the potential to create one of the more powerful media technology companies out there.

    …Of course it remains to be seen how well they will integrate, but will serve as an interesting case study nonetheless.
  • Looking back on 2014, these were some of the more interesting deals by category, in addition to the ones we covered just now. There was increased M&A activity in almost all categories as larger companies consolidate, particularly in ad networks and exchanges as well as smaller analytics and retargeting outfits. Looking forward to 2015, deals of all sizes are in play as buyers still seek access to new markets abroad, technologies that boost mobile advertising capabilities, and innovative, new ways to reach their desired audiences.

    Now I’m going to hand it back to Dan and our panel of luminaries, which includes executives from some of the fastest growing adtech companies so they can cover this market in more detail.

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