The Jordan, Edmiston Group, Inc. (JEGI)hosted its ninth annual Media & TechnologyConference on January 17th at the TimeWarner Center in New York City. JEGI’s 2013conference featured dynamic, world-classspeakers, with more than 250 senior industryexecutives and investors from across the media,information, marketing and technology sectors.

As always, JEGI is extremely grateful to theevent’s sponsors for their support: The BostonConsulting Group; GE Capital; MorganLewis; The Howard-Sloan-Koller Group;IntraLinks; and Econsultancy, as well as theassociation sponsor, Software & InformationIndustry Association (SIIA). JEGI would alsolike to thank the A-list of speakers who con-tributed their time and effort to the conferenceprogram. Bios for all speakers and the full con-ference program can be found here:http://bit.ly/Xwoj8c.

Fireside ChatModerator: John Rose, Senior Partner &Managing Director, The Boston ConsultingGroup

Keynote Speaker: Gracia Martore, President& CEO, Gannett

Rose: Gannett has made a number of changesin its legacy businesses. What does Gannettlook like now vs. two years ago?

Martore: Since 2011, our senior leadershipteam has been focused on leveraging Gannett’sstrengths to reposition the company. Weweren’t just newspapers or broadcast; we hadstrong, long-term relationships in 120 localmarkets across the country, with highly-trustedbrands built over 50 or 100 years. We engagewith those communities in a very deep way,not only on the content side, but also throughadvertising and providing services to advertis-ers. As well, we had relationships with 150,000small and medium-sized businesses throughoutthe country, and we also have 5,000 journalistsnationwide – the largest in the country.

We also had a financially strong company, andhad spent a couple of years recasting our bal-ance sheet and reducing debt significantly.

So we began to focus on digital marketing serv-ices and ways that we could leverage our rela-tionships with SMBs in a much more mean-ingful way. We have made some small acquisi-tions in digital marketing services, in socialmarketing and in loyalty programs, adding toour couponing business. USA Today hasalways been strong in sports, with an amazingamount of local sports content, but we rankedabout 17th in digital audience in 2011. Wemade a couple of very strategic acquisitions,brought in some terrific folks in our sportsgroup, renamed it USA Today Sports Media,and we cracked the top five by March 2012.

Rose: Gannett appears to be the only owner oflocal community newspapers that has reversedwhat many thought was an inevitable set ofdeclining trends.

Martore: One of the first things the seniorleadership team agreed was to focus on theconsumer and the content. If we could providerelevant, engaging, important content to con-sumers on every platform, then our brandwould be with those consumers throughoutthe day.

We have to make sure that our extensive con-tent is structured correctly and is appropriatefor the platform on which we’re providing it.We now let our customers choose which pay-ment option best fits their lifestyle and readingand viewing habits.

We rolled this new model out over a severalmonth period to close to 80 of our newspapers,and we saw our first ever increase in company-wide circulation revenues in Q3-12. Theimportant thing was we focused on the con-sumer and the content that we were providingrather than the distribution mechanism.

Rose: Are the people who are accessing yourdigital content paying for it? And, are theyyour traditional readership, or are you startingto access different pools of people?

Martore: As we rolled this out, we found thatconsumers were willing to pay for content thatthey needed, wanted, and were engaged withon a digital platform.

(continued on page 5)

JEGI Media & Technology Conference

March 2013 Independent Investment Banking for Media, Information, Marketing & Technology

In This Issue...JEGI Media & Technology Conference

Introduction . . . . . . . . . . . . . . . . . . . . .1

Fireside Chat . . . . . . . . . . . . . . . . . . . .1

Smarter Marketing . . . . . . . . . . . . . .2

At the Crossroads of Media . . . . . . .3

Credit Markets . . . . . . . . . . . . . . . . . .3

JEGI 2013 Sector Trends . . . . . . . . . .4

2012 M&A Overview . . . . . . . . . . . . .5

Transforming a Content-BasedOrganization . . . . . . . . . . . . . . . . . . . .6

Legal Update . . . . . . . . . . . . . . . . . . . .6

Four Predications & A Diatribe . . . .7

Media Growth Survey Results . . . .7

Getting to Revenue withSocial Media . . . . . . . . . . . . . . . . . . . .8

To subscribe to JEGI’s Client Briefing Newsletter: http://bit.ly/YzEqQK

Photo One: (from left) Dan Galpern, Partner, TZPGroup; Wilma Jordan, Founder & CEO, JEGI; andGracia Martore, President & CEO, Gannett

Photo Two: (from left) Tolman Geffs, Co-President,JEGI; Lisa Hook, President & CEO, Neustar; RyanMcNally, Partner, Catalyst Investors; and WilmaJordan, Founder & CEO, JEGI

Follow JEGI on Twitter:http://twitter.com/JordanEdmiston

For more information visit:www.jegi.com

JEGI’s Media & Technology ConferenceJanuary 17 at The Time Warner Center, NYC

2 JEGI Client Briefing – March 2013

moderator: Tolman Geffs, Co-President, JEGIpanelists: Russell Glass, CEO, Bizo Jamie Egasti, CEO, Catalina MarketingRichard Harris, CEO, Intent MediaRich Tarrant, President & CEO, MyWebGrocerHarris: Intent Media helps commerce companies transform from beingpurely about transactions to an intelligent combination of media andtransactions. Google has been the largest repository of consumer intenton the Internet – people type in whatever they’re thinking about, which isoften what they want to buy. Thepremise we are proving out atIntent Media is that there is alarger, more granular, more valu-able repository of consumerintent – the aggregated intent ofconsumers on commerce sites.We help these sites monetize thevalue of this intent via high mar-gin media revenue streams. Glass: Bizo helps marketers andpublishers reach business audi-ences across the web. We aggre-gate about 90% of the U.S. busi-ness audience and provide datafor that entire audience set, interms of location, job function,seniority, company size, industry to marketers and publishers that are look-ing to reach those business audiences via social media or display advertis-ing. We provide analytics to help measure what is working for these busi-ness marketers and then provide personalization capabilities to make surethe content served is right for the audience. Tarrant: MyWebGrocer is a combination of a software platform enablingbrick and mortar supermarket retail companies, with an additional layer ofmarketing services for consumer packaged goods companies. We are ver-tically focused and leverage our technology platform into media and tar-geting, with very valuable data. Egasti: Catalina Marketing has a 30-year history and uses the largest shop-per data set from food, drug, and mass retailer stores to enable our retailand CPG brand partners to target and personalize their communications.We are moving from an exclusively in-store network to a multi-channeloffering to engage with the shopper wherever, whenever, and how shechooses on the path to purchase, whether at home, online, in store, or withher mobile phone. Our precision database marketing capabilities close theloop to actually see what is sold and provide incredible analytics around ROI. Geffs: Jamie, of course every time I shop I get your coupons so you know atremendous amount about what I buy for my household. How are youusing that outside of the store to help marketers get closer to their cus-tomers before the purchase?Egasti: We are thinking about our in-store network and 50,000 stores real-ly as a personalized media network. We see 175 million consumers amonth, and that data drives powerful insight to target display advertisingvia purchase behavior. We are able to target on your mobile device and asyou plan your grocery shopping at home, and then we can close the loopwith our in-store coupon products. Geffs: Going from groceries to the business world, how does Bizo learnmore about me as a business person rather than a shopper and put that towork for a marketer? Glass: Bizo is similar to what Catalina did in the grocery world, collectingdata about you as a shopper, organizing that data, and then being smarterabout what messages to serve. Bizo has done this in the business world forthe business audience. We have about 3,000 data providers contributingdata to this ecosystem, like registration data and IP address information.We organize that into a rich set of profiles covering about 90% of the U.S.business audience to help marketers and publishers be much smarterabout what content or ad to serve.

Geffs: Well Richard, why would an online travel agency (OTA) sell ads to itscompetitors? Harris: An OTA could be spending tens of millions of dollars a year on per-formance marketing. A good chunk of that is likely going to Google forkeyword terms like New York Hotels. Once the user gets inside the hotelpath on the OTA’s website, the company learns it’s on these dates, in thisneighborhood, this rating, this brand preference, and that is very rich intentdata. Before Intent Media, the OTA would try to present relevant offerings,but that failed 97% of the time; the average conversion rate in travel. So,97% of people will leave the OTA’s site without buying anything and yet the

merchant has accumulated this much more detailed under-standing of intent than Google has access to. So before thatperson leaves, monetize them and earn search-like economicson that intent asset. Geffs: Rich, you are also helping companies do things thatthey didn’t know they could do before. Tarrant: Many companies are trying to piece together thelayers of the digital purchase funnel. MyWebGrocer startedwith a commerce platform and then moved into marketingservices, not unlike what Amazon is starting to do now. Wehave broad distribution of tools that are used in the path topurchase in the grocery vertical – if you are planning yourshopping at your local grocer, you are probably going throughone of our tools. We help marketers segment and target pur-chasers of products and identify what is a good spend or nota good spend. What is more personal than knowing exactly

what you buy to the UPC level and then, when you are in the process, let-ting you know that your favorite items are on special or offering you acoupon. At the end of the day, being able to measure the efficacy of themedia is where all of this is going. If you can provide ROI to the mediaspend, you will get the repeat media spend, and so that’s how we operate.Geffs: Well let’s follow that thought. How is media buying and measure-ment changing? Glass: You might even see the term media buying go away pretty soon.How media was bought in the past, campaign by campaign, is giving wayto always on, always reaching your audience based on an understanding ofwhere customers are in the funnel. Reach and targeting on social media,display or any digital channel becomes a by-product of programmatic buy-ing against those different data sets.

Egasti: I have experienced the other side, with big CPG marketers spendinghundreds of millions of dollars and wasting more than half because theyhad no tools. We’ve come a long way with the always-on tools to commu-nicate the right content at the right time to the right individual. We lookedat the 400 largest brands and found that about 65% of television massmarketing was spent against shoppers that represent only 2% of the vol-ume. So the premise is simple: use the data, use the modeling and the ana-lytics on a closed loop model to much more effectively drive your market-ing spend. Tarrant: I would even take that a half a step deeper, because you can notonly target based on that information but then you can also start dialingup the incentive to see what it’s going to take to switch them over. So, youknow the segment of the population that might convert from one brand toanother, based on a price point, and you can offer them a coupon and actu-ally start measuring what is going to work to flip them into your camp.Tying back to a purchase history and purchase data, not only can you tell ifthat marketing tactic is effective, you can then see the lifetime value of theconsumer, and you can see when they leave you, so that you can retargetthem to get back into their shopping basket. It’s enormously powerful. ■

JEGI Media & Technology Conference – Smarter Marketing

(from left) Jamie Egasti, CEO, Catalina Marketing; RichTarrant, President & CEO, MyWebGrocer; Tolman Geffs, Co-President, JEGI; Russell Glass, CEO, Bizo; and Richard Harris,CEO, Intent Media

“How media was bought in the past, campaignby campaign, is giving way to always on, alwaysreaching your audience based on an understand-ing of where customers are in the funnel.”

3JEGI Client Briefing – March 2013

I can’t imagine a more challenging or fascinat-ing time to stand at the crossroads of media,information, marketing, and the technologysectors, where JEGI stands. I also can’t imag-ine a more exciting time to be at Neustar. Wemanage over six billion physical and virtualaddresses. We direct seven billion daily textmessages – that’s every single message in NorthAmerica – and manage 5.8 million domainnames. We direct every telephone call inNorth America (about four billion daily).

We are focused on becoming the trusted neu-tral provider of commercial insight and analyt-ics, offering services that enable CMOs to pro-mote their businesses, and COOs and CIOs toprotect their businesses. We use unique datasets to enable our customers to identify, tolocate, and to evaluate their customers. Nowthat lives are lived online and entire sectors areupended by upstarts, businesses today faceincreased volatility, uncertainty, and disrup-tion. In this new world, planning takes on avery different character, as businesses have torespond to a rapidly changing environment.This is manifest in the shift to just-in-timestrategy, agile development, and iterative plan-ning. Near real time analytics across large datasets allow one to extract small, but importantsignals from a very noisy background, and leadto the insights needed to make better dynamicdecisions. The winning companies will be theones that figure out how best to analyze infor-mation to provide insight.

The second trend I want to talk about can bereferred to as predictive applications in theshrinking of the nanosecond. In a recentWorld Cup downhill ski race, the top four fin-ishers ended up within two one-hundredths ofone second from each other. A split secondisn’t what it used to be. In the informationservices business, data informing critical deci-sions and customer interactions can be servedup in nanoseconds. In the network world, therace to provide sub second responses is a com-petitive imperative. Performance is also meas-

ured by the quality of the insight. At Neustar,we operate robust and predictive applicationswith sub second response times over a networkwhere we are queried with an identifier such asa phone number, an email address, or an IPaddress. We then return a score that measuresthe relevance of one or more of literally thou-sands of products or services or other attributesfrom data housed in independent vertical datasets. For example, a customer sends us anemail address, and we’re able to return howmany bathrooms the email owner has in theirhome and the likelihood that the owner willremodel a bathroom. Companies that are ableto do more than simply access data, but alsoformulate insights utilizing predictive informa-

tion will thrive in the coming years. And, sowill the companies that enable them to do this.

The third insight I want to offer is this: bigdata is not Big Brother. Businesses increasing-ly have access to information that enables themto know something about virtually everyone,but not everything about anyone. The trick isknowing how to use distributed bits of infor-mation about a lot of people to predict rele-vance for a particular customer – a segment ofone. That’s the difference between companiesbeing able to efficiently harness data to makethe right offer to the right customer, and theprivacy nightmare that is often projected, buttruly is not real. There is no genome map forindividuals that is stored in the cloud. There isinstead an ephemeral piece of data that can helpmarketers identify, locate, and evaluate a poten-tial customer. And, coming from a companythat has privacy design embedded in its DNA,this is a good and very exciting development.And, it’s something that I think about often.

Historically, players were protected becausethey had unique sole source data. Today, how-ever, much of the massive capital expenditurenecessary to access data and to create action-able insights from it, no longer exists. Whatmatters now is the quality of the data, thesmarts needed to understand how to deriveinsights from that data, and the ability to deliv-er those insights most efficiently, using aninterface that is simple, elegant, and efficient –one that delights the CMO. ■

JEGI Media & Technology Conference – At the Crossroads of MediaBy Lisa Hook, President & CEO, Neustar

2012 Review2012 was a banner year for the leveraged finance market. Driven by a strongtechnical environment from collateralized loan obligations (CLOs) andinflows to mutual and exchange traded funds, the total volume for the yearended at $812 billion, which surpassed the previous high of $679 billion thatwas seen in 2007. Looking at the media segment, volumeincreased to $26 billion for 2012, from $25 billionin 2011. Investors continue to show strong inter-est in the space. Opportunistic transactions fordividend recaps represent about 20% of theoverall market, up from 6% in the previous year.Refinancings continue to represent the largestpercentage of volume at 40%, and LBOs andacquisitions also experienced increases as apercentage of overall volume vs. 2011 levels.Considering the deals that closed in 2012, thecommon theme in terms of lending characteris-tics is companies that exhibit:• high barriers to entry;• competitive differentiation;• low customer and market concentration;• high renewal rates;• contractive revenue; and• low maintenance cap ex.

Key TakeawaysThe key takeaway is that the markets continue to be receptive to the media,information, marketing and technology sectors. There remains significantliquidity to market through the CLO creation of mutual fund inflows.Current volatility remains low, and the financing window remains open,although it’s always subject to geopolitical shock. Multichannel media plat-

forms with diversified revenue streams continue tobe more attractive than single solution models.And, increased activity in growth sectors, as well asimproved performances in traditional media sec-tors, provide for a favorable financing environment.Looking Ahead to 2013In 2013, we anticipate a slow start in overallissuance. We expect a positive technical environ-ment to persist in the near term, and a continuedlow default rate environment to remain below his-torical averages. This should make for an issuerfavorable market in early 2013. It should be notedthat we do expect investors to focus on the progressof the debt ceiling discussions over the next month.And, depending on those outcomes, that could havean impact in the financing markets. Middle marketactivities are expected to continue at a modest rate.And, finally, as seen last year, financing opportuni-ties will continue to be available for growing sus-tainable businesses in this space. ■

Credit Markets: 2012 Review and 2013 OutlookBy Garrett Ellsworth, Senior Vice President, GE Capital

2012 Volume: $25.7B

media sector debt volume by purpose

Refinancing, 40%

Recap/ Dividend,

20%

Acquisition, 18%

LBO, 6%

Exit Financing,

5%

Recap/ Stock Purchase, 3%

Recap/ General Recap,

1%Other, 7%

“The winning companies will bethe ones that figure out howbest to analyze information toprovide insight.”

4 JEGI Client Briefing – March 2013

Richard Mead, Managing Director B2B Marketing SolutionsScott Peters, Co-President Content MarketingDavid Clark, Managing Director Marketing ServicesTolman Geffs, Co-President Smarter Marketing

B2B Marketing Solutions – Richard MeadThe B2B Marketing Solutions sector is thriving, with leading B2B companieshaving grown organically at double-digit rates in 2012. This year, B2B rev-enues should exceed 2008 levels, with in-person events providing a solidplatform for the ongoing evolution of B2B, with complementary year-rounde-media online solutions.

B2B is creating new products to leverage long-standing industry relation-ships and respective content. Development activity has focused on increas-ing customer retention and enhancing customer acceptance of new prod-ucts, while also improving the quality, quantity, and therefore value ofleads for marketers. B2B companies are also exploring e-commerce oppor-tunities and marketing workforce solutions that combine owned andaggregated content delivered through software platforms.

Customer Experience Freeman, which produces more than 4,000 eventsannually on behalf of its customers, has introduced its Technology Suite,combining six interactive tools that facilitate year-round interactionbetween event operators, exhibitors, and eventually attendees.

Customer Engagement UBM Tech, a long-established B2B marketing infor-mation provider to the technology world, has created over 30 online com-munities for diverse technology topics that build participant engagementand provide strong informational marketing and social platforms for ven-dors and buyers.

Lead Generation Hanley Wood, which serves the residential and commer-cial construction markets with leading events and media brands, uses BigData (housed in a new centralized database) to fuel the recurring lead gensubscription business that now forms the core of its corporate strategy.

Advanstar, whose MAGIC events are leading in the fashion industry, offersanother lead gen model. Its Shop the Floor online service brings togetherbuyers and sellers online, enhancing their in-person trade experience, pro-viding enhanced lead gen and, importantly, facilitating transactions.

E-commerce Penton Media, with leading B2B positions in numerous heavyequipment markets, combined forces with AssetNation (an online market-place for salvage assets and equipment that was acquired by RitchieBrothers in 2012) to accelerate its penetration in the heavy equipment auc-tion markets to facilitate e-commerce.

Enterprise Workflow Business information companies like Bloomberg, IHS,and Thomson Reuters, have created successful workforce solutions forlarge, complex groups. These are embedded in the customer’s workflowand form a key part of the daily decision-making routine by providing realtime business information.

In conclusion, the Internet and technology are driving innovation andgrowth for B2B leading to new revenue streams and deeper customer rela-tionships. It is clear that scale really does matter: B2B companies need abroader base of products and skill sets as their customer marketing needsincrease. As a result, we see further M&A consolidation in B2B in the nextfew years, with valuations increasing due to stronger revenue growth andmargins, as well as more recurring and subscription revenue products andservices.

Content Marketing – Scott PetersContent marketing presents a very interesting opportunity for many of thecompanies in the sectors served by JEGI. By content marketing, I mean thecreation and sharing of content to attract, acquire and engage customers,to drive profitable interaction. It includes all forms of content in the digitaland traditional print ecosystems. This is a $40 billion industry, which onecould argue is still flying under the radar.

For example, the average annual brand investment in multi-channel con-tent marketing totals $1.7 million. 39% of marketing spend goes towardcontent marketing, up from 29% year over year. 42% of content marketingis print-based, but is rapidly evolving to multi-channel. Lastly, 56% ofbrands outsource content creation and marketing, and thus content mar-keting, so it presents a huge opportunity for companies playing in theecosystem.

High quality content that is linked and shared is key and, I would argue,critical to organic rankings on Google. If you want to be relevant in search,you need content, and that is driving a significant shift in thinking in theCMO suite. Social media and engagement are also driven by content. Ascontent distribution channels continue expanding, it has become verycomplex in terms of managing the content across all available channelsand understanding ROI. And lastly, content marketing ROI metrics are, infact, emerging.

Today’s brand marketing has evolved dramatically from the traditionalmedia model, which pushed one-way communication out to the audience,and focused on reach, frequency, and awareness. Now, the focus hasmoved to engagement, loyalty, and advocacy. It requires an entirely differ-ent skill set, and with the number of distribution channels out there, it isgetting more complicated.

The content marketing ecosystem spans everything from email to maga-zines to websites to iPad apps to mobile to direct mail to blogs. Brandsincreasingly are stepping back and figuring out what their brands stand forand what the content message should be.

Given the importance of this challenge, everyone from ad agencies to PRfirms to social media agencies to publishing companies in-house and free-lance editorial is jumping in to help CMOs figure it out. JEGI’s view is thatthis challenge will spawn the rise of the content agency of record, whichwill have a holistic set of capabilities to develop the content strategy, cre-ate the content and the distribution plan, and importantly, measure it onthe back end. The dashboard to measure ROC, return on content, isdesigned to help marketers measure whatever they are trying to solve for– be it brand loyalty, lead gen, customer engagement, or lower returns.

Marketing Services – David ClarkIn 2012, we saw the continuing push of technology vendors into the mar-keting field, while the marketing technology sector underwent further con-solidation. Simply put, these vendors see the rate of technology adoptionby CMOs as the next mega opportunity in enterprise technology spending.

Technology adoption within the marketing function has had a profoundimpact on providers of marketing services. If you were to analyze recentmarketing technology M&A deals, you would see the emergence of whatwe call the Enterprise Marketing Management (EMM) Stack, which is com-prised of systems that help marketers manage and measure ongoing inter-actions with their customers.

Although the description of the Stack may seem simplistic, the process ofbuilding and integrating the EMM Stack is a complicated and expensiveundertaking, as new needs are uncovered and new capabilities surface.And, it is made even more challenging by the fact that the definition of a“customer interaction” continues to transform.

Customer interactions that really matter would, of course, include: Point-of-Sale (POS), e-commerce, loyalty programs and customer care channels,

JEGI Media & Technology Conference – JEGI 2013 Sector Trends

“The B2B Marketing Solutions sector is thriv-ing, with leading B2B companies having grownorganically at double-digit rates in 2012.”

Content Marketing Ecosystem

JEGI Client Briefing – March 2013 5

and all variety of “traditional” digital media (search, social, etc.). However,in today’s world, where media has fragmented down to the level ofJavaScript tags and pixels, “interactions that matter” also include: mobileads…running in applications…across multiple ad networks…in ad units builtfor a specific device. These types of interactions are exploding in volume,and they rely upon very complex “plumbing” and an entirely separategroup of applications, platforms, and application programming interfaces(APIs), which enable disparate software components to communicate witheach other.

So, the Stack just keeps getting bigger and the data exchanges more com-plicated. As a result, we anticipate CMOs will continue to spend heavily inthe coming months on technology that accomplishes two things: first, tomake these interactions work – from both a creative and technical perspec-tive; and second, to collect and analyze the marketing data that gets gen-erated along the way.

The task of building and managing all of this marketing managementinfrastructure involves a lot complexity…and a lot of investment risk…andtherefore will continue to create demand for an expanded array of highly-specialized marketing-related services… On the one hand, more technicallyadvanced Agency and Creative Services; and on the other, IT and ConsultingServices that are useful to both the CMO and the IT department.

This explains why Agencies and IT Consultants are increasingly going tomarket with a shared vocabulary. This is about shifting budgets; a new,sizeable area of spending on technology driven marketing services, and thecapabilities required to grab a share of that wallet.

Smarter Marketing – Tolman GeffsA very interesting array of emerging companies are helping marketers,merchants, and publishers move closer to their customers, leveraging the

data that they already own but could put to much better use. Whereveryou look at the classic audience marketing funnel (starting with aware-ness, then moving down to consideration, preference, purchase and finallyretention), there’s a set of customer data that lines up against it. Whetherit’s interest data at the top of the funnel (demographic, psychographic,social, contextual) or intent data at the bottom (shopping, search retarget-ing, remarketing), the Web is absolutely awash in consumer data.

It is remarkable how much data is being collected. In addition to classicclick-stream data, there are other very interesting data sources online:search data, social interactions, online shopping, and e-commerce transac-tions that say a lot about my interests and intentions.

There is also a wealth of offline data owned by the merchants, publishersand marketers who often don’t know they have it or know what to do withit. Email registrations, catalog and direct marketing transactions, print sub-scriptions, retail and financial transactions, membership and loyalty dataand even down to geo-data, pinpointing where I am at any given moment.This is a much wider data universe that could be put to work enriching themarketing message and making it a lot more relevant.

One excellent example of a company that did this is I-Behavior, which wesold to WPP in 2010. They work with direct marketers and catalog compa-nies that actually share their consumer transaction data with each other. Itwas an astonishing idea. These are direct competitors who are sharingtransaction data, sharing their customer lists in order to better understandtheir customers as a whole and then make better offers to them; it worksextremely well. We believe this more effective approach, whereby publish-ers and merchants share their first party data or leverage their first partydata and then supplement it with third party data, is the way to go.

There have been quite a few recent M&A transactions against this idea ofsmarter marketing, of leveraging the data that merchants and publishersalready own, and even more financings. Looking ahead, we expect quite afew more transactions in the area of smarter marketing, with some of thebig data aggregators (e.g., Acxiom, Epsilon, Merkle and Experian) playing arole, as you might expect. We also expect big systems integrators (e.g.,Accenture, IBM, Oracle and Salesforce) to enter this space as well, helpingmerchants and publishers leverage the data that they already have.Likewise, some of the big insights players, like Adobe, Neustar and Nielsen,are coming into this area, and finally consumer platforms, like Amazon,Ebay and Google, who own an astonishing amount of data themselves, butare also powerful marketing platforms, are entering the market. So, staytuned, a lot more M&A is going to be happening in the world of smartermarketing. ■

Fireside Chat (cont. from page 1)Martore (cont.): We spent 2012 rolling this out to all of our markets,and we gained about 40,000 new digital only subscribers. We havea goal in 2013 to increase the number of digital subscribers by 5-7x.And interestingly, digital only subscribers are much younger, moreaffluent and better educated, which certainly defines a sweet spot forsome of the advertisers and marketers that we are looking to attract.So, it has been both a circulation subscription opportunity, as wellas a developing advertising opportunity.

Rose: Can you talk a bit about how advertising and marketing serv-ices are changing in the local and small to medium enterprise world?

Martore: Five years ago, the average small business heard from thelocal newspaper, television station and radio station, plus direct mailand the yellow pages. Today, those same SMBs are hearing from 25-30 different vendors wanting to sell them search and web site servic-es, loyalty card programs, etc. We built a product suite to provide alldigital marketing services. For example, we bought a loyalty cardcompany and a social marketing company called Blink. Given thedepth of reach and scale we have in local markets, we saw an incred-ible opportunity to help these businesses by being a one-stop shop,allowing us to go after the total marketing pie. ■

Annual M&A due diligence volume was up 18% in 2012 vs. 2011.However, overall deal volume was flat, meaning there was deal makingtrying to happen, but not as many deals coming to fruition. There arebigger spreads and a more difficult environment overall, making it hard-er to get deals done.

There was a spike in activity in Q2 2012 (especially in North America).Since IntraLinks is typically involved about six months before a dealclosing, this implies that a lot of companies were trying to close deals in2012 likely to avoid the fiscal cliff and tax implications in the U.S.There was a significant pull back in the initiation of due diligence in theNorth American market in Q3 and Q4, and that may have an impacton the number of deal closings for Q1 and Q2 of 2013. However, ini-tiation of due diligence increased in Q3 and Q4 in EMEA and LatinAmerica, so deal announcements should be more prevalent in thosemarkets in the first half of 2013.

As a macro trend, there was a larger volume of middle market deals in2012. Since it’s more difficult for companies to IPO than it used to be,M&A is a strategy for smaller companies, and strategic buyers are tak-ing selective looks within the middle market for acquisitions. ■

2012 M&A OverviewBy Rick Smolen, SVP, North America Advisory Business, IntraLinks

6

Wolters Kluwer is a $4.7 billion revenue com-pany with four divisions – legal, health, tax,and financial and compliance services. WhenI joined in 2005, we were a provider of compli-ance documentation and research for thefinancial services market, with 1,500 employ-ees. Our revenue was 100% in the U.S., 40+%print. We had about 10,000 customers – allfinancial services firms. Today, Wolters KluwerFinancial Services is a global leader in finance,risk compliance and audit solutions, with com-prehensive and cohesive solutions at the inter-section of content, expertise, technology, andservices. We have offices in 20 countries andcustomers in over 100, and we’re 6% print.

In 2005, our customers found it difficult tomanage the static content we delivered in printor to a database. And, while our mortgage andbanking clients knew the data was accurate,they needed us to advance our technology,because it was difficult to process, given thevolume of regulatory change in the U.S. Wewere losing market share, because we hadn’tevolved the delivery system. Furthermore,even though we offered the most trusted andcomprehensive compliance content on themarket, what we found was that the majorityof that content wasn’t being used. So, we start-ed to transform the business.

Our content, while accurate, was not alwaysbeing used because it wasn’t integrated into ourclients’ workflow at the point of decision. Weneeded to build technology systems to expandour relevance. But first, we had to earn theright to command the investment needed tore-invent the business. We embarked on a plan

to systematically make us the most opera-tionally efficient provider of B-to-B servicesand software in the world. We adopted a leanSix Sigma approach and rolled out a programthat ensured that every employee on all levelsbe trained. What we found was that the frontline employees loved it, and the reticence camefrom the executive and middle level staff. Thisspoke to the leadership changes needed totransform the business. Over the past eight

years, we transformed our management teamsat all levels of the organization by bringing inand cultivating leaders who understood theneed to transform and were change-agents inthat process.

We embarked on the transformational contentstrategy, looking at what actionable contentand best practices should be, and we went tothe point of use. Our hypothesis had been thatall of these businesses stopped at the point ofuse inside of our customer, the financial insti-tution. So, we adopted a strategy that was nolonger focused on what we originally sold,which was cost, efficiency, and effectiveness,but rather asked “At the point of use, how dowe impact the customer’s customer? For exam-ple, how do we make it easier for the persongetting a mortgage, and in turn be more mis-sion critical by satisfying the customer’s cus-tomer?” We moved down this path through a

series of acquisitions and investments and bybuilding technology teams, and we addedactionable content and best practices. We alsorealized that being focused on compliance wastoo confining, so we added to it, with broaderrisk and finance capabilities, specialist tech-nologies, dynamic documents, intelligentworkflow, rules, data, regulations, and auto-mated dashboards. We also set up customerexcellence centers around the United Statesand collapsed this all into one key operationalcenter.

We still needed to solve the higher level riskand performance management needs withinfinancial institutions. This has to do withunderstanding and managing the risk and con-trols across a business. We knew that we need-ed to build and acquire to expand our adjacen-cies and give us a stronger position across thisarea, which we did by asking ourselves, “Whatelse needs to go across this continuum forenterprise risk management, and where do weneed to fill in the adjacencies around these?”We acquired an internal audit company andconnected and developed from our existingcomponent solutions to create this enterpriseview. As a result, through a series of acquisi-tions, innovation and building out of our tech-nology, we built a leadership position aroundknowledge-based technology solutions. Andour approach has been validated by the market.In 2012 alone, we won 16 awards or place-ments for our solutions and our company. Forthe past two years, we have also been named atop 10 risk management firm by Chartis. ■

JEGI Media & Technology Conference – Transforming a Content-Based OrganizationBy Brian Longe, CEO, Wolters Kluwer Financial & Compliance Services

Crowd FundingThe JOBS Act, passed in April 2012, does severalthings to facilitate capital raising by smaller com-panies, including legitimizing crowd funding.Once the SEC issues its rules, crowd funding willpermit U.S. companies to raise up to $1 million in12 months. Investors with less than $100,000 inannual income or net worth can contribute up to$2,000, or 5% of income or net worth, whichever isbigger. Investors with more than $100,000 ofincome or net worth can contribute up to$100,000, or 10% of income or net worth. Emerging Growth CompaniesThe JOBS Act also creates “emerging growth com-panies,” which can have annual gross revenues upto $1 billion. A company can qualify as an emerg-ing growth company if it is not publicly traded orup until five years after its IPO. If the companyqualifies as an emerging growth company, it willbe subject to certain less burdensome obligationsas a result of becoming public, including:• Less extensive disclosure requirements;• Two years of audited financial statements;

• Exemption from new accounting standards;• “Testing the waters” permitted;• Confidential SEC review of IPO registration

statement; and• No filing fee for draft registration statement. Other JOBS Act ChangesCompanies can now generally solicit for privateplacements. As long as companies sell to accred-ited investors, they are no longer subject to havinga pre-existing relationship with the investors.Another funding avenue was developed, calledSuper Regulation A. This allows companies thatare bigger than emerging growth companies toraise up to $50 million in 12 months. Ongoing public reporting is now only required forcompanies with 2,000 equity class holders or 500non-accredited investors, with crowd fundingsecurities exempted.Implications for M&AOne important change is that it will be a lot easi-er for companies that want to achieve a liquidityevent to do a dual track between an IPO and a

sale. There will be less due diligence and less rep-resentations and warranties. Companies will feelthat as long as the market is amenable, they cango down the IPO path and achieve liquidity thatway, without the risk of indemnification to apotential buyer. On the other hand, there is someassurance that the companies have gone throughan underwriting process and have been vetted abit, which is an advantage.There will also be some additional complexities inacquisitions, including:• More complex basic deal structures to address

larger shareholder populations;• Public company precedents will be even more

relevant; and• Increased litigation risk. ■

By Charles Engros, Managing Partner, Morgan Lewis

Legal Update 2013

JEGI Client Briefing – March 2013

(from left) Ray Shu, Managing Director, GECapital and Scott Peters, Co-President, JEGI

JEGI’s 9th Annual Media &Technology Conference

“We knew that we neededto build and acquire toexpand our adjacencies andgive us a stronger position.”

7JEGI Client Briefing – March 2013

Media industry executives seem to be figuring out solutions to the disrup-tion caused by the digital revolution, according to the third annual MediaGrowth Survey from JEGI and Econsultancy, a global independent publish-er focused on best practice digital marketingand e-commerce. The survey results indicatean optimistic outlook for 2013. The findingsare based on research results from a survey ofmore than 225 industry thought leaders andinfluencers (83% of whom are c-level execu-tives), followed by one-on-one interviews.Growth and ChallengesCreating new products is the number onegrowth factor, as shown in the accompanyingchart. As for the number one systemic barrierto growth, the entry of new competitorstakes the lead. Because of the focus on newproduct development, it also means there ismore competition. The dominant internal issues for executivesare around people, not technology, which is secondary to finding andretaining the people who will keep their companies growing. The challengeof finding great senior managers was especially acute for this year’srespondents. Some of them have found success by looking for talent in

non-traditional places, hiring through acquiring (or “acqui-hiring”) and notforgetting to sometimes train vs. hire. One executive noted, “We’re reallylooking at acqui-hiring as essential in the product areas that are key to us.”

Outlook for M&AWe expect to see a strong year in M&A. Virtually everyrespondent organization with over $250 million in rev-enues describes itself as likely to make an acquisitionin 2013. However, the sharpest increase on a percent-age basis can be seen in those organizations with $10-$50 million of revenue, where nearly 50% more com-panies are planning an acquisition in 2013, as com-pared to 2012. Many of these companies are lookingfor new process technologies, content engines andtools for manipulating and packaging data.Trends in Data and Social MediaData is critical for all executives, but they struggle toanalyze data and create meaningful value andinsights from the data. When it comes to social media,

the consensus among CEOs is that social media is valuable for awareness,but many leaders are still having difficulty pointing to revenue from theirsocial media spend. One respondent said, “Great for research/keeping upwith our customers. No straight line to revenue, maybe no line at all.” Clickhere for the complete Media Growth Survey Report: http://bit.ly/W4CcK7. ■

3rd Annual Media Growth Survey Results

Prediction #1: Advertising standards willgrow the marketplace; native ad units will not.Advertising requires scale to be economicallyefficient for clients, and scale requires standard-ization. Native ad units, by definition, are cus-tomized, and while customized ads are a veryimportant part of the overall media mix, theycannot be economically efficient, because theydo not scale, making them an impossiblyexpensive part of any advertising program. TheIAB Rising Stars program has created scalablead units that use the full canvas and palette ofdigital environments and enable creative oppor-tunities that are superior to banners. Ourresearch shows that IAB Rising Stars outper-form classic banners significantly in both inter-action rate and time, because of the creativeopportunities they offer.

Prediction #2: Digital audience measure-ment will finally make sense in 2013. 3MS(Making Measurement Make Sense), a $6 mil-lion joint cross-industry initiative among IAB,ANA (Association of National Advertisers) andthe 4As (American Association of AdvertisingAgencies), is aimed at unifying buyers, sellersand primary intermediaries around identifyingand measuring audiences in digital environ-ments. The biggest obstacle to the growth ofdigital display advertising, which includesvideo, is that it is the only medium that doesnot work according to “viewability” standards.Our standard is served impressions, but,because there are no guarantees that impres-sions actually end up on someone’s screen, theindustry is an outlier in the world of marketingand media, especially to brand marketers. In

essence, we are currently not able to create thefunctional equivalent of a gross rating pointonline. So, we’re working on developing a grossrating point metric enabling the reporting ofreach and frequency of viewable impressions,and also to implement a classification system sothat we can understand the value of differentkinds of inventory. Online display growth isdependent upon the adoption of standards thatcan improve data transparency and analytics.

Prediction #3: The wild west of mobile willbe tamed, but it’s going to take three years.Mobile is an enormously valuable medium, butit has some short-term structural challengesthat differ from those in online, and the indus-try must coalesce to address them. The problemwith digital display from a pricing standpoint isa massive oversupply relative to fairly stabledemand (about 2% of GDP since 1917,according to the Commerce Department). Indigital, however, there’s no incremental cost forcreating new inventory, bringing enormousoversupply into the marketplace; hence, ratesdecrease. That’s not true in mobile; there is nooversupply of inventory. In fact, it’s the oppo-site – there are so many obstacles, so muchcomplexity in the marketplace, it’s very difficultto advertise in mobile. Structural problemswith distribution are what’s holding backmobile advertising. Mobile is largely a cookie-less environment; there are no standards foridentifiers because the ability to use unique userIDs is constrained by regulation. Mobile is avery complex ecosystem, with several massive,highly bureaucratic entities (device manufac-turers and telecommunications networks) inter-

posing themselves in it. And, that is why wehave a problem of digital dimes going to mobilepennies; it’s just too difficult to work here.

About 30 IAB members have funded IAB’s newMobile Marketing Center of Excellence; itsmission is to work on mobile standards – thingslike mobile video ad metrics definitions andtaxonomy; etc. We’re creating HTML5 bestpractices and a standard for mobile rich mediainterface so that very rich multidimensional adscan be used with different mobile devices ondifferent mobile operating systems. In thisenvironment, consumer trust is even moreimportant than in display, because location datais enormously sensitive.

Prediction #4: Digital video will be an explo-sive ad market, and this will happen soonerthan in mobile, because it’s a simpler market-place, and one that is much more readily under-stood by major brand marketers. Another fac-tor is that most televisions will be connected.According to Irwin Gotlieb, Group M GlobalCEO, within 18 to 24 months, 66 millionhomes in the U.S. will have IP televisions. So,growth of digital video seems less like a technol-ogy issue and more of a rights issue.

Diatribe: Complexity is the enemy of the dig-ital advertising industry, and standardization isgenerally the solution. While we continue to seean enormous amount of innovation, all thisinnovation is not actually leading to increasingmargins for brand marketers and their partnersin the value chain. In fact, advertising rates aregoing down because there is way too muchsupply. ■

JEGI Media & Technology Conference – Four Predictions & A DiatribeBy Randall Rothenberg, President & CEO, Interactive Advertising Bureau (IAB)

By Stefan Tornquist, Vice President, Research (US), Econsultancy

Key Growth Drivers

JEGI Media & Technology Conference – Getting to Revenue with Social Media

8 JEGI Client Briefing – March 2013

moderator: Amir Akhavan, Director, JEGIpanelists: Michael Lazerow, CMO, Salesforce Marketing Cloud Sheldon Owen, CEO & Co-Founder, Unified SocialMichael Wiley, Chief Social Media Officer, VivaKiBen Elowitz, CEO & Co-Founder, WetpaintLazerow: The Marketing Cloud is a new division of Salesforce, which acts asan innovation partner for the CMO. There are a lot of exciting things hap-pening in marketing, and we’re looking to dowhat Salesforce has been doing for the past 14years across primarily sales and the ChiefRevenue Officer. Owen: Unified Social is 18 months old, withoffices in Chicago, San Francisco, Australia, andLondon (later this year). We solve the interestingproblem of bringing business intelligence toadvertisers. We can take engagement metrics andsocial investments and quantify it back through acloud-based system for brands and agencies. Wiley: VivaKi is a unit of the Publicis Groupe, pri-marily focused on accelerating the digital trans-formation and expertise of Publicis and its agen-cies. In my role, I look for companies that canbring value to our agencies and clients. Today, we are the global leader indigital advertising solutions. Elowitz: Wetpaint is both a media company and a technology company.We started working on a platform to systematically build audiences in thesocial networks and then drive them to destination media properties,including our own. Wetpaint Entertainment is one of the fastest growingmedia destinations of all time. We have also been building loyal audiencesfor selected strategic partners, using the social web.Akhavan: Sheldon, what does the concept of a social media operating sys-tem mean to Unified?Owen: We have a patent pending technology around quantification ofsocial engagement and social sharing, which we can integrate into anymarketing program. Our operating platform offers full transparency to pro-fessional marketers, from audience acquisition to engagement, all the waydown to transactions, which allows us to deliver business intelligence.We’ve layered that on top of social engagement strategies, so companiesuse us as their cloud-based system of record.Akhavan: Mike, a promise of Buddy Media’s acquisition by Salesforce wasbeing able to market to your CRM database. How is that actually being exe-cuted and where is Salesforce going with its marketing solution?Lazerow: There is no promise about marketing your CRM database. If you,as a business, are not marketing to, listening to, and engaging with yourcustomers, you’re probably going to go out of business. Customers are nowconnected to your vendors, to your employees, and to your partners, andyou have to connect with them in a fundamentally new way, with the cus-tomer in the center, via social nets, local, collaboration, communities, andecosystems.Wiley: As the social media industry has grown up, we’veseen a proliferation of “point solutions”. You have a lis-tening solution, a CRM solution, a social commerce solu-tion, and none of these technologies have interoperableAPIs. Corporations have email lists they’re using andtheir CRM database, and they’ve got millions of people talking about them,but there’s no harmonization of who those social identities are with theCRM database. That’s what we’re working on, to create harmony and powereffective marketing. Lazerow: Being able to take your email database, identify who they are onFacebook, and market to them as a custom audience – that’s a great exam-ple of what we’re doing every day for clients, which is fundamentally differ-ent. This is all about communicating to people that you know, in terms ofwho they are to your business, to their friends and to the world. Elowitz: It’s not all that rosy right now. The interest in social is 90% for its

potential and 10% for results. When people get results, it can be inspiring,but most of the ads I see online are for things I’m not interested in. We’restill at the very beginning, in terms of turning insights into results. Owen: Unified’s system can set quantification values for any sort ofengagement. Our philosophy is that we’re not going to set that metric foradvertisers or marketers. The CMOs of Coke and Pepsi have created lifetimevalue analyses on their email lists and their audiences, and they have theirown metrics by which they measure success. So, we let them access the sys-

tem and let them set those parameters, and thendeploy those shares or viral affects or amplifica-tion initiatives out in the social web or the openweb. And, then we track it from impression toengagement. Elowitz: It’s still just analysis and measurement.There’s very little out there to help you tune andimprove marketing spend. When it comes toowned and earned, marketers don’t have a lot ofcontrol, nor do publishers, because their tool setsdon’t help optimize and improve media. And, thatis such a different proposition than just measur-ing it. Measuring tells you where you are. To actu-ally optimize and tune, you move all the way upto doing really, really impressive marketing.

For example, we’ve seen tenfold improvements when we talk to ourFacebook fans. In the last year, we’ve run over 200 A/B tests (timing, pack-aging, volume of posts, frequency), each one repeated hundreds of times.We’re very practical folks focused on finding out what consumers respondto and doing more of those things. It takes a sophisticated tool set to do it. Akhavan: What do you think about Facebook’s move to work on a searchproduct?Elowitz: I love it, not because Facebook search is ready to take over Googlesearch. It’s not. But, when you look at how they can take those very narrowsearches, where you can get 10x more meaningful results than via Google –it’s a great way for them to leverage all the data they have and provide usersa great service. It will also serve publishers and advertisers well, because itgives them the ability to match identity, personality, and interests. Wiley: I’m a little less bullish. It’s a great idea, but with some serious short-comings. For example, many of us link primarily to third party content. So,if I check in via Foursquare, post a YouTube video, post content from my ownwebsite, these are not going to appear in the search results. So, it creates adilemma for brands, because now you have another content managementchallenge. You need to decide if you are going to put all your content onFacebook. Still, I’m pretty excited about it.Owen: If I were in the generation that relies on Facebook and Facebook con-nections, I probably wouldn’t switch windows to go search on Google. I’dprobably stay in the same window and live my life on Facebook. So, I thinkthere’s a bright future for it and a huge monetization value that we’re justbarely seeing now. It’s early. Akhavan: Will there be a new category of companies emerging that are

social search engines or social search agencies? Owen: I think you’re going to see any agency that doessearch now try to evolve and call themselves a socialsearch agency. If a company is not touching social, Idon’t think they’re going to survive.

Akhavan: What are the trends you’re seeing that will be really exciting andgenerate the next wave of investing?Lazerow: Companies that are solving real business issues and have realmanagement teams have a bright future. When I look for trends, it startswith social. I’ve always thought that social is so much bigger than justadvertising, and that it was also about internal and external collaboration.For example, GE airplane engines are now hooked up to a collaboration plat-form, Chatter, and if there are any issues, service teams from the airline andGE can instantly collaborate and work together to solve the problem.Everything from your TV to your health records is moving into the cloud, andevery company has to have an app platform. ■

(from left) Amir Akhavan, Director, JEGI; Ben Elowitz,CEO & Co-Founder, Wetpaint; Michael Wiley, Chief SocialMedia Officer, VivaKi; Sheldon Owen, CEO & Co-Founder,Unified Social; and Michael Lazerow, CMO, SalesforceMarketing Cloud

“If a company is not touch-ing social, I don’t thinkthey’re going to survive.”

For the 7th Consecutive Year, JEGI Ranked #1by Bloomberg for U.S. Media, Internet and Marketing M&A Transactions

JEGI’s client is mentioned first in each of the above transactions.

December 2012

a leading digital strategyand experience design firm

focused on delivering e-commerceand broadband video solutions

has been soldto

anda portfolio company of

October 2012

has sold

the leading providerof sales enablement and business

intelligence SaaS solutions

to

&

a portfolio company of

May 2012

a SaaS marketing platform (CRM) for real-time, multi-stage, and

multi-channel marketing including social media, email, and mobile

has been sold

to

July 2012

the leading Canadian producer of trade shows, conferences

and consumer showsto

has sold

for $53,000,000

December 2012

a leading full servicecontent marketing firm

has been sold

to

150 East 52nd Street, 18th Floor New York, NY 10022 (212) 754-0710 www.jegi.com

Bill HitzigCOO

billh@jegi.com

Scott PetersCo-President

scottp@jegi.com

Richard MeadManaging Directorrichardm@jegi.com

Wilma JordanFounder & CEOwilmaj@jegi.com

Tom PechtManaging Director

tomp@jegi.com

Tom CreaserEVP

tomc@jegi.com

Adam GrossCMO

adamg@jegi.com

Tolman GeffsCo-President

tolmang@jegi.com

David ClarkManaging Director

davidc@jegi.com

Chris CaltonManaging Director

chrisc@jegi.com

Amir AkhavanDirector

amira@jegi.com

December 2012

a marketing research firmto

has sold

a portfolio company of

August 2012

a global leader in digitalengagement specializing in

promotions and loyalty campaignsacross mobile, social and web

has been sold

to

July 2012

the leading provider of news, information, events, and data to the global travel, meetings

and hospitality industries

has been sold

to

September 2012

has sold

to

a division of DMGT plc

a leading peer-to-peerleadership platform

for Fortune 1000 C-suite executives

for $94,000,000

April 2012

a leading provider ofintegrated event solutions

anda portfolio company of

The Riverside Companyand

VS&A Comm Partners Fund IIhas been sold

to

Daniel AvrutskyManaging Director

daniel@jegi.com