Embedded Specialized Accomplished

OMMA DDM Conference

July 24, 2013

The Imminent Ad Tech Shakeout:

Is Consolidation in the Horizon?

2

VC Investment in Ad Tech Declining

Source: Headwaters MB

$645.3

$786.9

$1,242.0

$543.1

$431.0

$945.9

$573.3

$257.8 $253.3

$324.5

109

98 90

99 96

75

63 57

48 56

$7.3 $8.8

$17.7

$6.8 $5.3

$14.6 $11.5

$5.5 $6.2 $7.1

0.0

20.0

40.0

60.0

80.0

100.0

120.0

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

Nu

mb

er o

f D

eals

Val

ue

(in

$ m

m)

Aggregate Deal Value Number of Deals Avg. Deal Size

Ad tech businesses have largely proven to be unprofitable and challenging businesses to exit successfully

3

M&A Activity Increasing as Investors Lose Patience

Ad tech transactions for the first half of 2013 doubled YoY from the beginning of 2012

― Investors in the ad tech space are losing patience with slow returns, pushing their companies to

either find buyers or show a clear path to profitability

17

34

$163

$1,246

$0.0

$400.0

$800.0

$1,200.0

$1,600.0

H1 2012 H1 2013

0.0

10.0

20.0

30.0

40.0

Val

ue

(in

$ m

m)

Nu

mb

er o

f D

eals

Number of Deals Deal Size

4

Recent M&A Activity

Date Target Buyer / Investor Comments

Jul 2013 IgnitionOne

(spinout from Dentsu

led by management)

ABS Capital,

Persimmon Capital

• Buyside marketing tech platform

• Single stack solution for multi-

channel media buying in search,

display, mobile, and social

• Competes with Turn, MediaMath,

Adobe, Marin Software, Kenshoo,

Criteo and Rocketfuel.

• $100M revenue

Apr 2013 Dedicated Media LIN TV • Multichannel ad buying platform

Jan 2013 Akamai’s Advertising

Decision Solutions

Unit

MediaMath • Akamai’s data co-op and

management platform

• Pixel-free tracking technology

Jan 2013 MediaWhiz - $10M Matomy • Multichannel performance marketing

platform

Jan 2013 TapIt! Media - $23M Phunware • Mobile display ad mediation

5

What’s Driving This?

Investors have realized that Ad Tech Businesses are generally profit-challenged

Too many “point solutions” funded – Too much overlap and competition

Not enough revenue / profit in the market – unnecessary duplicative costs

― Every dollar of agency spend nets a publisher $0.45 on average

― Remainder gets cut up among trading desks, DSPs, exchanges, networks, data suppliers,

data aggregators, ad verification, tag management, retargeters, optimization, SSPs, etc.

Agencies used to be able to manage multiple vendors – now they all want to

consolidate their vendor relationships

Only a handful of players are achieving size, scale, profitability (AppNexus)

― Often play the role of consolidator(s) in the space and stepping in where large media

strategics have bowed out; can attract growth capital

Most players are running out of funding and not in a position to receive more

Many driven by impatient investors to exit – oftentimes at unattractive valuations

Too large ? … go IPO Too small or undifferentiated? … wind down (AdBrite)

6

Ad Tech IPOs

Tremor Video’s recent IPO suggests previous unsuccessful attempts at securing buyers as

those with interest in the space – strategic or financial – become scarce

― Tremor raised only $75.0mm of the $90.0mm it was seeking; unprofitable - $16.0mm loss in 2012

YuMe has recently filed S-1 and others are expecting to follow suit

Recent IPOs Indicative of “Last Resort” Options for Ad Tech Companies

Tremor Video Stock Price Performance since IPO

$6.50

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

28-J

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l-13

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Clo

sin

g P

rice

Performance

- 16% from

IPO open of

$10.00

7

Ad Tech Public Companies

Few ad tech companies are publicly traded; few that are public are performing well

― Millennial Media currently at $9.00 vs IPO open $13.00, close $23.50 (down 60%) – unprofitable

― Velti currently at $1.00 vs Mar 2012 price of $13.55 (down 92%)

― ValueClick is the rare exception – its stock has risen over 30% since Mar 2012 price of $19.74

Publicly traded pure play ad tech companies are few and rare; not many are performing well

Stock Price Performance

Performance

ValueClick

+30%

Millennial

Media

- 60%

Velti

- 95% $0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

Clo

sin

g P

rice

Millennial Media Velti ValueClick

8

Market Still Controlled by Small Number of Top Vendors

Advertising agencies agree there is too much overlap amongst companies that only provide simple

point solutions over sustainable services

― For every one successful company, there are 35-40 unprofitable companies offering redundant products,

splitting a revenue pie that is too small to sustain the entire ecosystem

Few end up achieving the size and scale needed to become attractive acquisition targets or to be

consolidators in the space

90.0%

82.0%

73.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2008A 2009A 2010A 2011A 2012A

Ind

ust

ry R

even

ue

%

Top 50

Top 25

Top 10

Top 10 Ad Companies Command 73.0% of Industry Revenues

9

Display Ad Landscape – Unsustainable Number of Players

Source: LUMAscape

10

Search Ad Landscape – Same Here

Source: LUMAscape

11

Video Ad Landscape – … and Here

Source: LUMAscape

12

Mobile Ad Landscape – and it’s becoming an issue Here

Source: LUMAscape

13

Social Advertising Landscape – as well as Here

Source: LUMAscape

14

Agencies / Advertisers Want to Deal with Fewer Vendors and More Single Stack, Multichannel Solutions

Source: LUMAscape

DYNAMIC AD

INTELLIGENCE

PLATFORM

CENTRALIZED

AD-SERVING

OPTIMIZATION

RE-TARGETING

DATA MGMT

REPORTING

ACCESS INVENTORY TO REACH AUDIENCE ACROSS PREMIUM PUBLISHERS AND AD NETWORKS:

VERTICALS BEHAVORIAL CONTEXTUAL

VIDEOS MOBILE SOCIAL

15

So What’s Happening? Consolidation of Point Solutions toward Broader Platform Offering

Source: LUMAscape

16

Potential Consolidators?

Company Capital Raised Investors Comments

AppNexus $75.0M (Jan 2013) TCV, Venrock, Tribeca • DSP

Videology $68.3M (May 2013) NEA, Comcast, Valhalla, Pinnacle,

Catalyst

• Video advertising

• DSP

RocketFuel $50.0M (Jun 2012) Mohr Davidow, Summit, Northgate,

Nokia

• Multichannel DSP

PubMatic $45.0M (Jun 2012) August, DFJ, Nexus, Helion • SSP

OpenX $27.5M (Dec 2012) Accel, SAP, Index, Samsung, Mitsui • Ad Exchange and

DSP

JumpTap $27.5M (Jun 2012) Summerhill, Redpoint, Valhalla,

General Catalyst

• Mobile RTB

Flurry $25.3M (Nov 2012) DFJ, InterWest, Menlo, CrossLink,

Union Square

• Mobile analytics and

advertising

DataLogix $25.0M (April 2013) IVP, Sequel, General Catalyst • DSP

Collective Media $20.0M (May 2013) Accel, Samsung, Cox • Ad exchange

Nexage $15.0M (May 2012) Hearst, GrandBanks Capital, Relay,

SingTel

• Ad exchange,

mediation and DSP

17 Spring 2013

Online Advertising Report

Strategic Buyer Interests

Low Interest / Valuation High

Mobile /

Video

Social

Online

S

tra

teg

ic In

tere

st

/ P

rio

rity

RTB

Auction

Exchanges

DSPs

Self-Serve

Platforms Local /

SMB

Search

Agency

SMS /

MMS

Marketing

In-App

Display

FB

Game

Ads

Ad Networks

Affiliate Networks

Display

User

Acquisition

Marketing

In-

App

Video

Ad tech companies with strong technology and high potential for scalability in the areas of mobile, video and / or

social attract highest interest

18

DMP Trends

DMPs have become fragmented as well – need for a DMP for DMPs / DSPs to emerge

― Validate and “cleanse” data from multiple DMPs / DSPs

― Provide mediation across various DMPs / DSPs in order to maximize targeting accuracy, reach

― Provide integrated DCO, tag management, ad verification capabilities as part of solution

Key trend is the separation of the data layer from the execution layer in the marketing

stack

― Brands want to leverage learnings of their audience profiles and customer data and apply that to

all marketing and consumer touch-points – online and offline

Biggest opportunity for growth lies in ability to use accurate data profiles across all

consumer marketing channels

― Huge opportunity in using data to inform offline media buying

― Important areas of focus also include social, video and mobile

Current implementation efforts are focused on the core purpose of targeted media

buying

Long-term potential for DMPs to be integrated into core business software systems to

facilitate data-driven decision making on sales, product dev, fin mgmt

19

DMP Trends

59.0%

69.0%

73.0%

76.0%

83.0%

84.0%

84.0%

86.0%

90.0%

93.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Advertising Yield Optimization

Site Content Optimization

Creative Content Optimization

CRM Program Optimization

Channel Optimization

Emerging Channel Deployment

Multichannel Integration & Optimization

Campaign Channel Attribution

Targeted Media Buying

Customer Insight Development

Priority Applications for Future DMPs Generally Supported Applications by Existing DMPs

23.0%

32.0%

32.0%

36.0%

37.0%

40.0%

44.0%

45.0%

78.0%

82.0%

0% 20% 40% 60% 80%

Emerging Channel Deployment

Creative Content Optimization

Site Content Optimization

CRM Program Optimization

Advertising Yield Optimization

Multichannel Integration & Optimization

Campaign Channel Attribution

Channel Optimization

Customer Insight Development

Targeted Media Buying

Survey conducted by IAP & Winterberry Group