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LUMA Digital Brief 012 - Market Report Q4 2016


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LUMA Presents Digital Brief 012 - Market Report Q4 2016

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LUMA Digital Brief 012 - Market Report Q4 2016

  1. 1. 1 Q4 2016 Market Report Digital Brief 012
  2. 2. 2 Mobile LUMA’s Singular Focus on Digital Media Technology Media Marketing MarTech Digital Content Ad Tech Ø LUMA’s expertise is at the intersection of Media, Marketing and Technology Ø At this intersection exists: § Digital Content: content sites, MCNs, game publishers, aggregators § Ad Tech: display, search, video, mobile, social, content marketing/native, connected TV § MarTech: data, analytics, sales and marketing automation, email, predictive tools, commerce technology, shopper marketing, payments Ø Mobile proliferation has a major impact on these markets and LUMA is deeply knowledgeable on mobile
  3. 3. 3 Overall Commentary on Consolidation Ø In our last Q3 2016 Market Report, we reported 62 mergers and acquisitions in digital media and marketing Ø The deals we track in this report fall into one of four categories: § Large (over $500 mm) § Medium ($100 – $500 mm) § Small ($20 – $100 mm) § Sub $20 mm exits are considered tech and team deals, capitulations, or undisclosed
  4. 4. 4 U.S. Digital Media M&A Activity by Sector Source: LUMA # of Transactions Ø Robust M&A activity across digital media is reflective of the growing pool of strategic buyers, most notably new entrants from the telecom industry as well as international and private equity buyers Ø This phenomena has resulted in many large scaled exits for differentiated companies at very strategic multiples 59 56 72 77 78 112 0 50 100 150 200 250 300 2015 2016 Ad Tech MarTech Digital Content
  5. 5. 5 U.S. Digital Media M&A Activity by Sector Source: LUMA # of Transactions Ø In the fourth quarter, scaled exits in Ad Tech was a major story with industry leading companies focused on video / TV and data being acquired Ø We expect momentum from 2016 to continue into the new year as new market dynamics and increased competition will drive further consolidation across these sectors 20 12 14 10 14 22 20 21 28 30 28 26 0 10 20 30 40 50 60 70 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Ad Tech MarTech Digital Content
  6. 6. 6 A Growing Pool of Strategic Buyers DATA INTERNET ORIGINALS TECH SERVICES TELCO INTERNATIONAL PRIVATE EQUITY MEDIA MARKETING CONSUMER INTERNET COMMERCE MARKETING TECH CRM SOFTWARE Right Time Decisioning of Consumer Data (Ad Tech and MarTech) Ø The pool of strategic buyers continues to grow with private equity becoming active acquirers in this space Ø Private equity buyers have not only become very acquisitive in digital marketing, but are also paying strategic multiples for these assets
  7. 7. 7 9% 26% 6% 27% 8% 5% 5% 6% 6% 2% Consumer Internet Commerce Telco Media Marketing Tech Tech Services Internet Originals CRM Software Marketing Data Digital Media M&A Activity by Strategic Buyers 2016 Strategic Buyers Transactions Ø In 2016, buyers in Commerce were very acquisitive with the aim of acquiring strategic assets for their core business and to enhance their digital marketing capabilities Ø Buyers in Media including Time Warner, Univision and Ziff Davis were also particularly active this year with publishers building their portfolio of brands as engagement online continues to grow Source: LUMA
  8. 8. 8 Ad Tech M&A Activity # of Transactions Ø Full Year Observations § The second half of 2016 saw many scaled exits in Ad Tech including the acquisitions of AppLovin and in Q3 as well as HookLogic, INVIDI, Operative, Triad Retail Media, and TubeMogul in Q4 § Telcos and Marketing Clouds were particularly acquisitive in Ad Tech this year from AT&T to Adobe Ø Looking Ahead – TV § We expect to see an increase in M&A activity in TV advertising following the acquisitions of INVIDI and Operative in Q4 Source: LUMA 1 2 4 4 19 10 10 6 0 5 10 15 20 25 Q1 2016 Q2 2016 Q3 2016 Q4 2016 +$100M <$100M
  9. 9. 9 Ad Tech – 2016 Notable Deals Acquirer Capital Raised Enterprise Value Comments Source: Capital IQ; Crunchbase $4M $1.4B Chinese private equity firm Orient Hontai Capital has agreed to acquire a majority stake in the fast-growing mobile ad network AppLovin $39M $250M Criteo will boost its performance marketing platform by leveraging HookLogic’s unique relationships with brand manufacturers and retailers $132M N/A A consortium led by AT&T has announced plansto acquireINVIDI, a leading provider of addressable TV advertising solutions $45M N/A Mediaoceanhas acquired Invision, anAd Tech company offering workflow solutions to broadcasters and MVPDs, to add sell-side tools to its core buy-side business N/A $900M, an Ad Tech company powering Yahoo Bing Contextual Ads, will be acquired by a Chinese consortium led by Beijing MitenoCommunication Technology $34M $360M Norwegian telecom operator Telenor acquired cross-device advertising company Tapad to bolster its digital marketing capabilities NASDAQ $540M Adobe has agreedto acquire TubeMogul, a leading video DSP, and combine it with the Adobe Marketing Cloud as the companydives deeperinto media execution
  10. 10. 10 MarTech M&A Activity # of Transactions Ø Full Year Observations § The acquisitions of Demandware, Marketo, NetSuite and Neustar headlined a busy year in Marketing Technology § Private Equity buyers were very active this year in MarTech, paying multiples typically associated with strategic buyers Ø Looking Ahead – Identity § Identity is a key industry focus since it is critical to enable true 1:1 marketing § Marketing Clouds and startups alike are building robust identity solutions Source: LUMA 2 5 3 4 12 17 17 17 0 5 10 15 20 25 Q1 2016 Q2 2016 Q3 2016 Q4 2016 +$100M <$100M
  11. 11. 11 MarTech – 2016 Notable Deals Acquirer Capital Raised Enterprise Value Comments NYSE $2.7B Leading CRM platform Salesforce.comacquiredDemandware, the leading enterprise cloud-basede-commerce platform provider, to create its new Commerce Cloud $50M $700M By acquiring DMP Krux, Salesforce’s clients will be able to perform more granular segmenting and stronger audience management from within its Marketing Cloud NASDAQ $1.7B Marketo, a marketing automation company with over 4,600 customers, was taken private by Vista Equity Partners NYSE $8.7B Software giant Oracle acquired NetSuite, the SaaS ERP leader (with marketing technology assets) NYSE $2.9B Golden Gate Capital has agreed to acquire Neustar, an industry leading provider of information services and digital marketing capabilities NASDAQ $2.6B Business intelligenceand data visualization platform, Qlik, has been taken private by ThomaBravo N/A $1.1B Sitecore, a web content management system, was acquired by EQT Partners as it plans to expand Sitecore’sdigital marketing capabilities Source: Capital IQ; Crunchbase
  12. 12. 12 Digital Content M&A Activity # of Transactions Ø Full Year Observations § Acquisitions in traditional media (Dreamworks, Time Warner) and digital media (Complex Media, EverydayHealth, Gawker Media) highlighted digital content in 2016 § Gaming companies Supercell and Playtika had two of the largest exits in the sector all year Ø Looking Ahead – Publisher Consolidation § Amid the golden age of content, we expect to see further consolidation among publishers in order to offer a broader variety of compelling content across verticals and attract large advertisers Source: LUMA 6 6 6 3 22 24 22 23 0 5 10 15 20 25 30 35 Q1 2016 Q2 2016 Q3 2016 Q4 2016 +$100M <$100M
  13. 13. 13 Digital Content – 2016 Notable Deals Acquirer Capital Raised Enterprise Value Comments NASDAQ $4.1B NBCUniversal(Comcast) acquired DreamworksAnimations to bolster its portfolio of entertainment franchisesacross TV, film, and digital properties $245M ~$800M NetmarbleGames has acquired Kabam’sVancouver-based studio, the developer of popularmobile game stitlesincluding “Marvel Contest of Champions” NYSE $26.2B By acquiring LinkedIn, Microsoft adds the ubiquitous professional network and its diverse revenue models to Microsoft’s “professional cloud” N/A $4.4B A consortium of Chinese buyers has agreed to acquire Playtika, the social casino gaming unit of Caesars Entertainment it originally bought in 2011 N/A $10.2B Chinese media giant TencentHoldings acquired a majority stakein the massively profitable maker of the popular mobile gaming franchise Clash of Clans NYSE $105.6B AT&T has agreedto acquire Time Warner to own content and distribution as the telecom giant aims to push media and advertising to its growing user networks NASDAQ $4.8B Following its acquisition of AOL, Verizon has agreed to acquire Yahoo’s core business, which includes its digital media properties and scaled Ad Tech capabilities Giant (Chinese Consortium) Source: Capital IQ; Crunchbase
  14. 14. 14 Ad Tech – 2016 Stocks Performance Market Data as of 12/31/16 Ø Ad Tech Weighed Down by Industry Issues § Header bidding is having a strong impact on Ad Tech as investors question the future of these firms under this new market dynamic § A recent analysis concluded that Facebook and Google captured all of the growth in digital advertising in 2016, raising many concerns about the rest of the industry Ø Ad Tech IPO’s § TTD’s successful initial public offering in September was a major boost for Ad Tech and could serve as a catalyst for more IPO’s § AppNexus is expected to go public in Q2 of 2017 after filing confidentially for an IPO -100% -50% 0% 50% 100% 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 TUBE RUBI TRMR MXPT YUME FUEL CRTO TTD NASDAQ
  15. 15. 15 MarTech – 2016 Stocks Performance Market Data as of 12/31/16 Ø Major Acquisitions § Two industry leaders, MKTO and DWRE, were acquired for $1.8 billion and $2.8 billion respectively § MKTO and DWRE acquisition multiples were 7.5x LTM, 6.2x CY revenue and 10.5x LTM, 8.8x CY revenue respectively Ø MarTech Continues Steady Growth § MarTech stocks on average grew 17% of value during 2016, but the declines of CRM and HUBS weighed down the sector § After growing substantially in 2015, CRM and HUBS shed nearly 10% of their market value in 2016, while SHOP added nearly 100% of value during the year -80% -40% 0% 40% 80% 120% 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 BV DWRE JIVE MRIN LPSN SHOP NASDAQ
  16. 16. 16 2016 Key Startup Financings to Watch Lead Investor Capital Raised Valuation Comments Source: Crunchbase $555M $30B Airbnb recently unveiled its ambitious new line of business “Trips” as it looks for growth outside its core rental home offering $200M $1.7B Following its $200 million raise last year, BuzzFeed has received another $200 million from NBCUniversal to grow its content / advertising partnership $794M $4.5B Augmented reality (AR) startup Magic Leap’s Series C round of funding will enable the secretive company to bring its first product to market soon $1.8B $20B Snap Inc., the parent company of Snapchat, has now raised over $2.6 billion in funding as it prepares for its eventual IPO next year $150M $9B Digital payments company Stripe nearly doubled its valuation as it builds upon a leading position in the fast growing e-commerce space $181M $1.5B Unity, one of the leading game engine platforms, has raised capital to continue building technology for virtual and augmented reality experiences $430M $16B WeWork, the popular co-working space startup that has 50,000 members in 21 cities, raised funding to enter the Asian market as it continues to grow
  17. 17. 17 LUMA’s 2016 LUMAscape Ø 2016 was such a busy year for LUMA, we made a LUMAscape out of all our activity grouped by our three value propositions: Access - We hosted several exclusive events from our CEO DMS series to fun dinners and launched LUMA Corporate Partners Insights – We published lots of great content that attracted audiences in the millions Execution – We announced transactions valued at $3 billion for our clients
  18. 18. 18 LUMA’s Differentiated Value Proposition 1. Peerless Industry Knowledge 2. Strategic Approach 3. Execution Excellence
  19. 19. 19 acquired by March 2015 acquired by September 2014 acquired by July 2014 a subsidiary of acquired by September 2015 = acquired by December 2011 acquired by November 2012 = merged with March 2012 to form December 2011 acquired by acquired by July 2016 acquired by March 2016 acquired by October 2015 a division of December 2015 acquired byacquired by November 2016 February 2016 acquired byacquired by Pending acquired by Pending acquired by December LUMA’s Content-Driven, Expert-Based Approach Conference Keynotes Publications (over 3 million views) Corporate Teach-ins LUMAscapes (over 6 million views from 211 countries) Completed Deals Digital Briefs DISPLAY MOBILE VIDEO SOCIAL NATIVE SEARCH MARTECH COMMERCE GAMING STRATEGIC BUYERS
  20. 20. 20 Access. Insights. Execution. New York | Palo Alto