Digital Marketing Industry Review

Digital Marketing Industry Review
January 2013
Ken Allen
Managing Director allen@blackstone.com
Rumena Manolova
Associate rumena.manolova@blackstone.com
Table of Contents
I.
II.
Executive Summary
Industry Themes
2
7 39 51
III. M&A Perspectives Appendix
Blackstone
I.
Executive Summary
I.
Executive Summary
Summary Observations The Digital Marketing sector continues to evolve, and is becoming increasingly strategic to a large number of ecosystem players.
The Digital Marketing Ecosystem Continues to Undergo a Significant Transformation
Multi-decade transition from analog to digital Audience-centric, cross-channel, data-driven, real-time
Growth in the Digital Marketing Industry is Being Driven by a Number of Important Trends
Mobile, Social, Video, Audience Targeting / RTB, and Data / Analytics are critical capabilities
that have gained strategic importance in recent years
The Above Trends Have Catalyzed a Significant Wave of Consolidation in the Industry
Leading strategic acquirers seeking growth have gained access to these capabilities through
inorganic expansion
Stack convergence is resulting in unified, multi-channel offerings fueled by data and analytics
Consolidation / M&A Will Continue to Define the New Digital Marketing Ecosystem
Larger players will continue to leverage M&A as a means to unify the product suite, purchase
R&D, acquire talent, and, as a defensive measure, prevent strategic assets from falling into the wrong hands
Strategic M&A has become a core capability and a source of competitive advantage for
many firms
Blackstone 3
I.
Executive Summary
A Significant Shift Is Occurring in Online Marketing and Commerce Platforms Marketing and eCommerce platforms are becoming increasingly integrated, supported by data and analytics, and processed in real time.
How We Decide
How We Buy
Mobile Display Search
Social Email Local
Comparison Mobile Shopping
Social Digital Goods
Auctions
Flash Sales / Daily Deals
Ecommerce TV Community Barcode TV Point of Sale
Radio Print
Branding
Call Center
Direct Mail
Multi-Channel Engagement
Multi-Channel Commerce
Purchase History
Intent
Behavioral
Social Graph
Demo / Geo
Preferences / Likes
10110011011001010110001 ...
Data
... 10110011011001010110001
Blackstone 4
I.
Executive Summary
The Online Channel Represents the Sole Growth Vector in the Global Advertising Market While currently smallest in size, the Online advertising market is vastly outpacing other channels in terms of long-term growth.
2011 Global Market Size ($bn)
$497bn Online, 18%
($87)
Online media becoming central pillar of advertisers marketing efforts Growth driven by increased Internet penetration, advanced technologies
2006 2011 CAGR
Key Drivers and Themes
+14% (6%)
Advertisers demanding engagement across multiple screens
(e.g., data analytics), and new forms of engagement (e.g., video)
Rapid decline caused by secular disadvantages
Print, 23%
($116)
Shift towards brochures, flyers, booklets, press kits; away from news Increased integration with digital (QR, augmented reality, ambient) Strength in local / national cable offset by decline in broadcast TV, radio,
Broadcast, 25%
($125)
2%
and outdoor broadcast

Rapid growth of online video and radio creating competitive pressure Persistent decline caused by secular disadvantages
Direct, 34%
($169)
(5%)
Integration with digital channels (mobile, QR) and enhanced data
analytics capabilities becoming critical

Renewed interest in Direct Mail led by financial services, retail, and
automotive sectors
($5)
Global Market Size
________________________________________________
Source: Wall Street research, Bloomberg, eMarketer.
Blackstone
I.
Executive Summary
Key Industry Growth Drivers A number of important themes are driving growth in the Digital Marketing ecosystem.
Mobile
$40 $30
Social
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
Audience Targeting / RTB
Data / Analytics
________________________________________________
Note: Digital Advertising Revenue refers to U.S. spending; $ in billions. Source: Business Insider, IAB, eMarketer, Blackstone.
Blackstone
II.
Industry Themes
II. Industry Themes
Digital Marketing Industry Themes: Mobile
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 8
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Mobile Endpoints Are Expected to Drive Significant Data Consumption and Advertising Growth
Consolidation / M&A
Data / Analytics
The proliferation of mobile devices, combined with the potential inherent in mobile targeting, Callout presents a significant market opportunity.
Evolution of Hardware Device Penetration
(Millions in log scale)
1,000,000 Mobile Internet
Ad Conversion by Device Type

(Based on a scale of 100% for Desktop)
120% 100% 80% 60%
45% 25% 17% 50% 27% 22% 110% 100% 100% 100%
107% 100% 90%93%

68%
100,000 Desktop Internet PC
10,000
40%
20%
1,000
10B+Units?
1B+Units / Users
0% Rev. Per Click iPad Desktop Conv. Rate Android Tablet Avg. Order Value iPhone Android Phone
100
Mini Computer
10
U.S. Net Mobile Ad Revenues

Mainframe 10MM+Units 100MM+Units
($ in millions)
$4,000 $3,000 $2,000 '11 - '14E CAGR 68%
1MM+Units
0 1950 1970 1990 2010 2030
$1,000 $0 2011
Google 2012E Facebook Twitter 2013E Apple (iAd)
40% 194% 85% 57% 2014E Other

Blackstone 9
There are currently 953mm smartphone subscriptions vs. 6.1bn mobile subscriptions, representing a massive growth opportunity.
________________________________________________
Source: Wall Street research.
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Mobile Is Taking Share From all Other Media Channels
Consolidation / M&A
Data / Analytics
Consumers are incorporating mobile in all aspects of their daily lives from social activities to commerce and TV viewing.
Share of Consumer Time Spent with Major Media(1)
50% 45%
45% 44% 43% 42%
Metric(2)
~1,100% YoY growth in users in Q4 2012
40%
35% 30%
26% 26% 26%
~56% of users from mobile in 2012
25%
20% 15% 10%
25%
~1,000% YoY growth in users in Q3 2012
17% 16% 15% 14% 12% 9% 6% 9% 8% 7% 7% 8% 7% 5%
70% of users from mobile in 2011 ~20% of shoppers scan a product barcode
and/or send product pictures to friends and family
6%
5% 0% TV Online Radio 2009

________________________________________________
4%
Mobile 2010 2011
Print 2012
Other
85% of smartphone users access phones

while watching TV
55% of users from mobile in 2011

Blackstone 10
(1) Source: eMarketer, BII Research. (2) Source: BII Research, Facebook, Enders Analysis.
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
On a Global Basis, the Mobile Growth Opportunity Is Massive
Consolidation / M&A
Data / Analytics
Despite its rapid growth to-date, mobile continues to represent a major untapped opportunity.
G-20 Internet Access(1)
3,000
(Consumer broadband connections in millions)
Untapped Smartphone Opportunity(2)

(Global users in billions)
8.0
7.0
2,707
6.0 5.0
6B Users
2,500
4.0
3.0 2.0 1.0
2,000 2,134 1,500
1B Users
0.0
Smartphone Mobile Phone
Untapped Online Opportunity(3)

825 475
1,000
(In billions) 7.0

6.0 5.0 4.0
573
500 167
0
350
3.0 2.0 1.0 0.0
Global Population
2005
2010
Fixed Mobile
2015
Internet Population
________________________________________________
(1) Source: Strategy Analytics, International Telecommunications Union, BII Research. (2) Source: Boston Consulting Group, Mary Meeker, Kleiner Perkins, Morgan Stanley Research, Berg Insight, BII Research. (3) Source: International Communication Union, Google, BII Research.
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Blackstone 11
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Smartphone Penetration in the U.S. Is Showing Signs of Saturation
Consolidation / M&A
Data / Analytics
As more than half of U.S. mobile subscribers now own smartphones, the pace of net new adds has slowed down.
U.S. Smartphone Market: Year-Over-Year Net New Adds
(Users in millions)
40 35 30 25 20 15 21 12 13 10 13 27 29 29 35 34 32 32
100%
80% 60% 40%

20% 0%
10
5 0
14
15 11
18
10
(20%) (40%)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2013 Users Added % YoY Growth
% Smartphone Penetration(1)
30%
________________________________________________
38%
41%
44%
48%
50%
55%
Source: comScore, Nielsen, BII Research. (1) Note: U.S. mobile subscribers 18+.
Blackstone
12
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Mobile Ad Revenues Have Exhibited Slower Growth Thus Far Relative to Other Media
Consolidation / M&A
Data / Analytics
Mobile advertising has grown more slowly than other media, as advertisers struggle to adopt the right advertising model.
Comparative U.S. Advertising Media Annual $ Revenue Growth (First 5 years)
($ in millions)
$5,000 $4,500 $4,000 $3,500 $3,698
$4,621
$3,000
$2,500 $2,000 $1,500 $1,000 $1,012 $358 $80 $160 $267 $392 $907 $806 $2,162 $2,162
$1,920
$1,171
$500
$0
$55
Year 1
________________________________________________
Year 2
Broadcast TV
Year 3
Mobile Internet
Year 4
Year 5
Note: Adjusted for inflation. Source: IAB, McCann-Erickson, BIA-Kelsey, Bll Research.
Blackstone
13
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Mobile Ads Are Primarily Web Search and Display
Consolidation / M&A
Data / Analytics
Search dominates mobile ad revenues; however, eCPMs are lower than Desktop. The two leading smartphone platforms, Android and iPhone, garner the highest eCPMs.
2011 Global Mobile Ad Spend(1)
Messaging
10%
$4.00 $3.50 $3.50
Effective CPM, Desktop vs. Mobile(3)
Display 28%
62% Search
$3.00 $2.50 $2.00
CPM Rates by Mobile

$3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $0.20
Devices(2)
$1.50 $1.00
$2.85 $2.10
$0.75
$0.50 $0.00
$0.59
$0.64
RIM
$1.01
J2ME / others Android iPhone
Windows Symbian Phone

________________________________________________
Desktop Internet
Mobile Internet
(1) Source: IAB, BII Research. (2) Source: Opera Software, Q2 2012. (3) Source: comScore, Vivaki, Mobclix Exchange, BII Research.
Blackstone
14
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Native, Location-based, and Video Ads Represent the Next Big Opportunity in Mobile Native, social, location-based, and video ads integrate more seamlessly in consumer mobile experiences and have higher CPMs.
Ads in Timelines (Twitter / Facebook)(1) Location-Based Ads(2)
(Monthly Ad Requests Per Mobile User by Location)
75 60 45 30 15 0
Consolidation / M&A
Data / Analytics
70
67
67
47 37
39
35
27
24
23
16
CPM Rate for Selected Mobile Ad Platforms(3)

xAd Local LSN Mobile Local Ads $3.50 $5.00 $5.00 $10.00 $0.0 $2.5 $5.0 $7.5 $10.0
Blackstone 15
Adsmobi Video Ads Flurry Video Ads

________________________________________________
(1) Source: Twitter, Facebook. (2) Source: JiWire, 3Q 2012. (3) Source: Ad platforms, BII Research, Greg Sterling, Opus Research.
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Smartphone Users Spend More Time on Apps than on the Web Apple dominates the mobile app revenue market.
Total Time Spent Using Mobile Web vs. Apps(1)
(Minutes Spent per Month in billions)
Consolidation / M&A
Data / Analytics
2011 Mobile App Revenue Share(2)
140 120 100 80 60 40 20 0 Mar-11
Other
Android 7% 10%
83% Apple iOS

Jun-11 Sep-11 Dec-11 Apps Mar-12 Mobile Web
________________________________________________
(1) Source: Nielsen Smartphone Analytics, BII Research, Blackstone. (2) Source: iSuppli, Forrester Research, company press releases, BII Research.
Blackstone
16
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Google Is the Overall Leader in Mobile Ad Revenues
Consolidation / M&A
Data / Analytics
Google practically owns the mobile search market, and has steadily increased its revenue share over time.
Mobile Ad Revenue(1)
(% of total)
100% 90% 80%
Other
70%
60% 50% 40%
30%
20% 10% 0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Google Global Mobile Search Market Share(2)

Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 96% 96% 96% 97% 98% 98% 98% 98% 97% 97% 97% 97% 97% 97% 97% 97%
________________________________________________
(1) Source: BII Research, Blackstone. (2) Source: Global StatCounter, BII Research.
Blackstone
17
Digital Marketing Industry Themes: Social
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 18
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Social Networks Are Profoundly Changing How Consumers Discover and Interact with Brands
Consolidation / M&A
Data / Analytics
Social networks are becoming a primary source for consumers to discover new products, view peer recommendations, and seek reviews. Innovations such as mobile check-ins and Facebook integration with retailer sites have allowed consumers to take word-of-mouth marketing to a mass scale. Traditional Marketing Funnel Social Media Marketing Loop
Awareness Awareness
Interest
Interest
Recommendation
Decision
Action
Decision
Action
________________________________________________
Source: eMarketer, Blackstone.
Blackstone
19
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
The Shifting Display Ecosystem Has Resulted in Dramatic Share Shifts in Advertising
Consolidation / M&A
Data / Analytics
Underlying industry dynamics have resulted in significant display advertising share shifts from static, non-targeted premium channels to RTB and Social formats.
Net U.S. Online Display Ad Revenues
(% of Total Display Ad Revenues, 2011 2014)
Net U.S. Social Network Ad Spending

(% of Total Social Ad Revenues, 2011 2014)
2011 14.0%
2012E 16.8%
2013E 17.7%
2014E 17.1%
2011 70.9%
2012E 68.8%
2013E 65.6%
2014E 63.5%
13.8%
16.5%
19.8%
21.7%
5.5%
8.3%
11.1%
12.7%
10.8%
9.1%
8.1%
Social 7.5% Games
Social Games
5.5%
6.7%
7.0%
7.4%
4.5%
4.4%
4.3%
4.4%
4.3%
5.3%
5.8%
6.1%
4.3%
4.0%
3.8%
3.7%
1.8%
Total Top Five - % of Total Display
47.4%
50.8%
53.7%
54.4%
Total Top Five - % of Total Social
88.0%
89.1%
89.5%
89.7%
________________________________________________
Source: eMarketer.
Blackstone
20
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Facebook Represents an Exciting, Although As Yet Unproven, Advertising Platform
Consolidation / M&A
Data / Analytics
Facebooks data and potential targeting mechanisms hold significant promise for advertisers. Marketer response, however, has been mixed thus far.
Facebook Targeting Framework Facebook Advertising ROI vs. Competitors
(% Surveyed)
Superior
17.1%
Inferior 38.3%
44.5%
YOU
Targeting Mechanisms
About the Same
Facebook Advertising Feedback from C-Level Executives

Demographic data Personal Primary customer data Retargeting (Based on Citigroup Facebook Advertiser Survey)
Facebook Advertising Partner CEO of Major eCommerce Platform CEO of Leading Online Luxury Goods Retailer CEO of Digital Ad Agency Exec at Large Online Auction / Commerce Site Exec at Large Online Community Site View Mixed Negative Mixed Mixed Negative Mixed Negative Positive Negative Positive Facebook Advertising Partner CEO of Online Ad Agency CEO of Large Online Ad Agency Group CMO of Online Ad Agency CMO of Large Global Beverage Company CMO of Global Bank CMO of Leading CPG Company CEO of Online Travel Company CMO of Online Automotive Retailer Exec at Leading Hot Beverage Company View Mixed Negative Positive Positive Mixed Mixed Negative Mixed Positive
information Interest graph
Targeting Channels
Exec at Consumer / Business Printing Site Veteran Online Advertising Executive Exec at Online Ad Platform
Facebook Online
Facebook Newsfeed
Facebook Mobile Apps
Facebook Exchange
Zynga.com
Third-Party Smartphone Sites Apps
CEO of Large Ad Agency Firm Exec at Large Ad Agency Firm
________________________________________________
Source: Blackstone, Wall Street Journal, Citigroup.
Blackstone
21
Digital Marketing Industry Themes: Video
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 22
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
A Huge Opportunity, One that Online Video Is Ideally-Suited to Target, Exists in Display & Brand Advertising
Consolidation / M&A
Data / Analytics
A significant gap exists between the relative share of online and offline branding, implying a $13.0bn untapped market opportunity in the U.S. alone.
U.S. Market Opportunity (2011)
($ in billions)
Online Becoming The New Primetime

$31.0bn Direct (1) Response ($19.0bn, 61%)
% People 15+ Using Medium
70 60 50 40 30 20 10 0 Midnight 2 AM 4 AM 6 AM 8 AM 10 AM 12 PM 2 PM 4 PM 6 PM 8 PM 10 PM
Prime Time
100%
$152.0bn Direct Response ($27.0bn, 18%)

(1)
TV
75% Implied Gap ($13.0bn, 43%)
Internet
50%
(2)
Harder to Reach Audiences in the New Media Model

ADS TARGET AUDIENCE
Reached more people
MEDIA
With undivided attention.
Traditional Media
25%
Branding ($125.0bn, 82%)
Fewer ads
Branding (2) Branding ($12.0bn, 39%) [__]
(2)
0%
U.S. Offline Media Spend
U.S. Online Media Spend
________________________________________________
Source: IAB, Wall Street research, comScore, Blackstone. (1) Offline DR includes direct mail and directories. Online DR includes classifieds, e-mail, lead generation, and search. (2) Offline Branding includes outdoor, print, radio, and TV. Online Branding includes banner ads, rich media, sponsorships, and video.
New Media
More ads
Reaching fewer people
Paying less attention.
Blackstone
23
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Over-the-Top Video Is Reaching Mass Adoption
Consolidation / M&A
Data / Analytics
As consumers begin to view more content online, over-the-top video revenues are on the rise.
U.S. Primetime TV Viewing(1)
120%
(% of 18-49 TV set users during 8-9 PM hour, multiple responses permitted)
Global Digital Video Revenue(2)

($ in billions)
$5.0
100%
6%
6% 16%
7%
8% $4.0
17%
80%
26%
$3.0
60% $2.0 40% 82% 83% 64%
20%
$1.0
0% 2004 Live TV Video game

________________________________________________
2008
2012 Recorded TV Streaming video
$0.0 2006 2007 2008 Netflix 2009 Youtube Hulu 2010 2011
(1) Source: GfK, BII Research. (2) Source: Company filings, Wall Street research, BII Research, Blackstone.
Blackstone
24
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Online Advertising Has Shown Robust Growth Over the Past Decade
Consolidation / M&A
Data / Analytics
Online advertising growth, which has averaged 18% per year over the past decade, has come mainly at the expense of Print. In the future, Video is expected to be a major growth driver online.
Historical U.S. Market Share by Channel
50% 47% 40%
Projected U.S. Online Advertising Market Share

50% 48%
47%
40%
38% 30%
40%
30%
24%
20%
21%
15%
20%
17% 10% 5% 0%
21% 18% 14%
10%
0%
8% 6% 5% 5% 3% 0% 2011
5% 5% 4% 3% 0%
2012E 2013E 2014E 2015E 2016E
Broadcast (1)
________________________________________________
Print(2)
Direct (3)
Online(4)
Search Video Lead Generation Sponsorships
Display(5) Classifieds and Directories Rich Media Email
Source: Wall Street research, eMarketer. (1) Broadcast includes outdoor, radio, and television. (2) Print includes magazines and newspapers. (3) Direct includes direct mail and directories. (4) Online includes search, display, video, classifieds, lead generation, rich media, sponsorships, and e-mail. (5) Includes mobile advertising.
Blackstone
25
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Similar to Print a Decade Ago, TV is Ripe for Disruption
Consolidation / M&A
Data / Analytics
Google already generates almost as much U.S. ad revenue as all magazines and newspapers. The Company is well positioned to take share from TV networks as more video content is consumed online and becomes better monetized.
U.S. Ad Revenue(1)
($ in billions)
Ad Loads, TV vs. Digital(2)

(% share of programming)
$50.0
$45.0 $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0
Online Video 98.5% 1.5% TV 75.2% 24.8%
Streaming TV Online
$5.0 $0.0 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
0% 20%
92.1%
7.9%
40%
60%
80%
100%
Google
________________________________________________
Magazines
Newspapers
Content
Ads
(1) Source: Google, NAA, PIB, BII Research. (2) Source: comScore, June 2012, BII Research.
Blackstone
26
Digital Marketing Industry Themes: Audience Targeting / Real-time Bidding (RTB)
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 27
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
The Display Markets Have Seen a Flood of Non-Premium Inventory That Is Less Attractive to Brands
Consolidation / M&A
Data / Analytics
The Display market has been driven by a rise in non-premium inventory, which has typically been less attractive to brands and has resulted in pricing pressure for premium publishers.
Global Display Advertising has Seen a Flood of Inventory
($ in billions)
$80.0
U.S. Average CPM by Media Type

Broadcast TV
% Increase
'07-'10E '10E-'13E Supply Demand 122% (22%) 87% 13%
Cable TV Huge opportunity to increase ad effectiveness through social marketing / audience targeting / RTB Syndication TV Radio Magazine
$60.0 100%
90% 80%
$40.0 70%
41%
41%
47%
51%
60% 50% 40% $20.0

$17.1 $7.4 ($1.3)
$23.1
57% $1.2 $32.2
Newspaper Out-of-Home Internet (Display) Online Video
$7.8
30%
20% 10% $0.0 0%
42%
46%
48%
45%
39%
Hulu
2007 Inventory Pricing 2010 2004 (Supply) 2005 (Demand) 2006 Inventory Pricing 2013E 2007 (Demand) 2008 (Supply)
CPM
<$2
$6
$10
$14
$18
$22
$26
$30
$34 >$40
Supply-Driven
Demand-Driven
Denotes Average CPM

________________________________________________ Source: Media Dynamics, comScore, Wall Street research. Note: All media measured per adult, based on 2009 / 2010 rates; low estimates for traditional media include ads aimed at mass market (no demo targeting); average estimates for TV include 1) early am, 2) daytime, 3) early news, 4) primetime, and 5) late evening and are based on upfront pricing.
________________________________________________ Source: Wall Street research, Blackstone. Note: Display inventory comprised of page views and ad coverage; pricing reflective of RPMs. Pricing reflective of the combination of CTRs and CPC.
Blackstone
28
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
A New Display Advertising Ecosystem Is Emerging The Display ecosystem is increasingly integrated, data-driven, and real-time in nature.
Advertisers Format
Display Search
Consolidation / M&A
Data / Analytics
Advertiser Tools Optimization / Analytics DSPs / Targeting Ad Campaign Management Media Buying Platforms Marketing Automation
Exchange Ecosystem Long-tail Networks
Publisher Tools
Inventory Format
Display
Publishers
Premium O&O Niche / Vertical Social Networks Video
Brand
AdSense Rich Media
Optimization / Analytics
Search AdSense
Online Video
Mobile Social
DemandSide Platforms
Ad Exchanges
SupplySide Platforms
Mobile
Self-Service Ad Platforms
Rich Media Online Video
Direct
TV Radio (?)
Print (?)
Other (?)
Data Management Platforms
SSPs
Mobile Social
Proprietary Networks
Direct Data Integration / Aggregation / DMPs Infrastructure Infrastructure Data Warehouse Client / Primary Data Third Party Data Cloud / Edge Network / CDN
________________________________________________
Source: Blackstone.
Blackstone
29
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
RTB Spending Is Growing Across All Major Ad Formats
Consolidation / M&A
Data / Analytics
While it has been used historically to auction remnant inventory, RTB has extended to premium publishers, premium advertisers, and premium ad formats.
U.S. Real-Time Bidding Digital Display Ad Spending
($ in billions)
Key Drivers of RTB Spending

Maturation of Facebook Ad Exchange Influx of Mobile and Video Inventory
$10.0
$8.0
$7.1 $6.0
Greater Availability of Premium Inventory Demand for Increased Transparency
Types of Advertisers that Use RTB in North America

$4.0
Q2 2012
$2.0 $1.0
QoQ in # of Advertisers 30% 23% 25% 49%
Major National Internet Brand
57% 29% 11% 3%
$0.0 2011
% of Total Display Ad Spending 8%
2016
22%
Major Regional Local Business
________________________________________________
Note: Includes all display formats served to all devices. Source: eMarketer.
Blackstone
30
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Ecommerce Players Are Also Disrupting the Display Ecosystem by Leveraging Data
Consolidation / M&A
Data / Analytics
Major eCommerce players have developed significant advertising businesses by harnessing their unique data assets to target advertising to specific audiences.
U.S. Retailers: Total Ad Display Impressions(1)
(In billions)
25.0 20.0 15.0 10.0
Other
5.0
0.0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Product Ads From External Websites(2)
________________________________________________
(1) comScore, BII Research. (2) Amazon.com, BII Research.
Blackstone
31
Digital Marketing Industry Themes: Data / Analytics
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 32
II. Industry Themes
The Internet Has Generated an Explosion of Unstructured Digital Content

1 NEW DEFINITION is added on 13,000+ hours MUSIC 1,600+ STREAMING READS ON on 12,000+ NEW ADS POSTED on 370,000+ minutes VOICE CALLS on 320+ NEW 20,000+ NEW POSTS on accounts 100+ NEW accounts 13,000+ APPLICATIONS DOWNLOADED 1 NEW article is published
associatedcontent
98,000+ TWEETS
The worlds LARGEST community created content
100+
Answers.com
40+
6,600+ NEW pictures are uploaded on
QUESTIONS asked on the internet
600+ NEW VIDEOS
50+ DOWNLOADS 695,000+
25+ hours TOTAL DURATION
70+ DOMAINS REGISTERED
STATUS UPDATES 60+ NEW BLOGS 168 million EMAILS ARE SENT 694,445 SEARCH QUERIES 1,700+ DOWNLOADS 79,364 WALL POSTS 510,040 COMMENTS
125+ PLUGIN downloads
1,500+ BLOG POSTS

________________________________________________
Source: Go-Globe.com
Blackstone
33
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Data Usage Is Projected to Continue to Grow Exponentially In addition to massively increasing data volumes, the variety and complexity of data are experiencing similar exponential growth. The explosion of data represents a tremendous opportunity, and challenge, for marketers.
Multiple Sources Contributing to Growth in Data
Sensors / RFID / Devices Petabytes Mobile Web User Click Stream
Consolidation / M&A
Data / Analytics
Historical and Projected Data Growth

(Exabytes)
90
Big Data
Sentiment
CAGR (2010 2014E)

79.2
User Generated Content Social Interaction & Fees Spatial & GPS Coordinates External Demographics HD Video, Audio, Images Speech to Text Product / Service Logs SMS / MMS
48.0% 22.0%
75
Web
Terabytes Web logs Offer History A/B Testing Dynamic Pricing Affiliate Networks Segmentation Offer Details Search Marketing Behavioral Targeting Dynamic Funnels
60
53.2
CRM
Gigabytes
45 35.7 30 16.4 15 2.5 0 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 3.8 6.3 8.7 10.5 24.2
58.0%
Customer Touches
Support Contacts ERP
Megabytes
Purchase Detail Purchase Record Payment Record
Increasing Data Variety and Complexity

________________________________________________
Unstructured
Structured
Source: Cisco, Wall Street research, YouTube.
Blackstone
34
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Data Analytics, Mobile, and Social Are the Top Priorities of Todays CMO
Consolidation / M&A
Data / Analytics
Analytics, social, and performance-based advertising are at the forefront of the CMO agenda.
Technology that CMOs Worldwide Plan to Increase Use of in the Next 3 5 Years
(% Respondents)
Transition to Performance-Based Advertising

(% Channel Market Share)
100% 90% 80% 70% 48% 45% 17% 13%
Social Media
Customer Analytics CRM
82% 81% 81%
5%
4%
4%
4%
5%
4%
Mobile Applications
Content Management Tablet Applications
80%
73% 72%
39%
37%
33%
31%
60%
50% 40% 30% 20% 10% 0%
42%
46%
Single View of Customer

Collaboration Tools Predictive Analytics
70%
68% 66%
Reputation Management
Search Engine Optimization Campaign Management Score Cards / Dashboards Email Marketing 46%
63%
62% 61%
41%
41%
47%
51%
57%
59%
62%
65%
56%
2004
2005
2006
2007
2008
2009
2010
2011
0%
15%
30%
45%
60%
75%
90%
Performance-Based CPM Hybrid
Data-Driven Marketing
________________________________________________
Source: IBM, eMarketer.
Blackstone
35
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Data Is Gaining Increased Importance in the Current Digital Marketing Landscape

Brands / Primary Data
Consolidation / M&A
Data / Analytics
Agencies
Database Marketing
Enterprise CRM Marketing Software
Analytics, Optimization and Media Plan Execution Analytics

(IBM)
`
Networks / Exchanges (Google) (WPP)
(Omnicom)
3rd Party Data / Data Exchanges
(WPP)
________________________________________________
Source: Blackstone, Gartner.
Blackstone
36
Digital Marketing Industry Themes: Consolidation / M&A
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Consolidation / M&A
________________________________________________
Data / Analytics
Blackstone 37
Social
Mobile
$40 $30
Video
II. Industry Themes
$20
$10 $0 1995
1999
2003
2007
2012
Strategic M&A Activity Is Occurring on All Levels of the Digital Marketing Stack
/
Display
Consolidation / M&A
Data / Analytics
/
Email Email / MA Local Local
Services
Mobile Mobile
/
Search Search
/
Social Social
/
Video Video
/ / / / /
/
/ /
(Daily deal sites consolidation)
/ / /
/ / /
(Search partnership)
/ /
/ / /
Platforms
/ / /
Optimization
Analytics
/ /
/
/ /
/
________________________________________________
Data
Source: Capital IQ, Blackstone.
Blackstone
38
III. M&A Perspectives
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Summary Observations in Digital Marketing M&A Strategic M&A is impacting every layer of the Digital Marketing stack.
The Digital Marketing Ecosystem Continues to Consolidate through Strategic M&A
Marketers realize inherent value from the consolidation of multiple point products into an integrated offering
Market solutions evolving toward integrated CMO dashboards for executing cross-channel campaigns Data, analytics, and automation are increasingly important components
Consolidation / M&A
Data / Analytics
Digital Marketing Strategic Activity is Concentrated Among a Relatively Small Number of Serial Acquirers
21 major market participants across 4 key sectors: Agencies, Software, Platforms, and Publishers
Others acquirers exist, but tend to make tuck-in buys in a sporadic fashion
Interest in Inorganic Expansion in the Digital Marketing Sector Has Broadened Beyond the Traditional Internet Platform Players
Google, Yahoo!, Microsoft, AOL, WPP, and Publicis formerly viewed as the end-game Strategic buyer ecosystem has broadened materially in recent years, most notably into the traditional horizontal software players
Strategic Activity Has Concentrated in a Handful of Hot Sectors of Late

Buyers continue to orient their M&A strategies around key growth sectors Data / Analytics, Social, Mobile, Content, eCommerce, and Digital Agencies have attracted significant investment
No Market Participant Has Assembled a Complete Stack Solution, as Yet

Google has made the most aggressive moves to-date
Adobe, IBM, Oracle, and Salesforce.com beginning to make interesting moves as they target the Marketing Cloud
________________________________________________
Source: Blackstone.
Blackstone
40
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Digital Marketing Strategic Activity: Historical Perspective
Consolidation / M&A
Data / Analytics
Digital Marketing M&A activity has grown steadily post-2008 levels, from both a volume and size perspective.
Transaction Volume
# of Deals YoY % Change
960 845 800 674 614 600 519
$36 $32
Transaction Value
Deal Value, $bn
Average Deal Size, $mm
1,000
90.0%
$75
$64
$125
758
60.0%
$60
$100
570
30.0%
$45
$75
400 295 200 179 214 321
0.0%
$30
$28
$27 $20
$50
(30.0%)
$15
$13
$16
$15
$25
$7
0 (60.0%)
$0
$5 $0
2003
2012
2002
2004
2005
2006
2007
2008
2009
2010
2011
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Number of Deals
________________________________________________
YoY % Change in # of Deals
Deal Value ($ in Billions)
Avg. Deal Size ($ in Millions)
Note: Includes disclosed deal values only. Source: The 451 Group, Thomson Financial.
Blackstone
2012
41
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
The Digital Marketing Stack Continues to Consolidate
Consolidation / M&A
Data / Analytics
A number of key players continue to consolidate the Digital Marketing stack through strategic M&A. Digital Marketing Stack
Digital Agencies Channels
Advertiser-Side
Search Display Video Mobile Social Email
Marketing Automation
Key Industry Consolidations

Agencies
Software
Data / Analytics Networks Ad Servers and Exchanges

Publisher-Side
Platforms
Publishers
eCommerce Optimization SSPs Content
________________________________________________
Source: Blackstone.
Blackstone
42
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Digital Marketing Strategic M&A Chessboard: 2007

Agencies Software
2012(1)
Platforms
Consolidation / M&A
Data / Analytics
Publishers
Services
Digital Agencies
Search Display
Advertiser-Side
Video Mobile Social Email
Software
Marketing Automation Data / Analytics Networks Ad Servers / Exchanges eCommerce
Publisher-Side
Optimization SSPs Content
________________________________________________
Source: The 451 Group, Capital IQ, company websites and news releases. (1) Data represents strategic transactions in the Digital Marketing sector only.
= 1 Transaction Blackstone 43
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Strategic Buyer Observations
Consolidation / M&A
Data / Analytics
The Digital Marketing ecosystem has changed dramatically as various players have increasingly leveraged M&A as a strategic capability.
Buyers from Multiple Sectors are Converging on the Digital Marketing Opportunity
Agencies, Software, Platforms, and Publishers represent core segments of activity
Buyers, Historically, Have Tended to Stay Close to Home

Agencies have rarely bought technology eCommerce and Publisher players have historically bought within their core sectors
A Small Number of True Stack Players Exist

Google, Adobe are the furthest along; each has accomplished stack convergence, in part, through M&A of strategic capabilities
it did not own Examples include Google buying into Display and Mobile, Adobe buying into Site Optimization and Video
Sector Cross-over is Beginning to Emerge

IT Services increasing Digital Marketing presence and vice-versa Traditional horizontal software players moving aggressively into marketing vertical Commerce players, such as Amazon, moving into Display Advertising (organically, thus far)
M&A is Becoming a Strategic Capability

Innovation is difficult for many large companies; M&A in the Digital Marketing sector has served as a method for strategics to acquire
R&D, key personnel, and expertise Those companies who have been consistent and successful acquirers have tended to perform well financially and in the equity markets
________________________________________________
Source: Blackstone.
Blackstone
44
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
A Wide Range of Activity in the Digital Marketing Landscape Exists Across Market Participants
Consolidation / M&A
Data / Analytics
Strategic activity in Digital Marketing varies widely by participant. WPP, Microsoft, Google, and Gannett lead their respective sectors in terms of the number of transactions completed.
Number of Digital Marketing Transactions by Strategic Buyer
(# of Deals, 2007-2012)
70 100 97 71 60
50
47
40 31 30 29
37
23 20 20 16 9 20 18 18 18
10
6 2 1
Agencies
________________________________________________
Software
Platforms
Publishers
Blackstone 45
Source: The 451 Group, Capital IQ, company websites and news releases.
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Digital Marketing Strategic Activity Momentum by Buyer Two-Year Perspective (2011 2012)
Consolidation / M&A
Data / Analytics
Deal momentum in the Digital Marketing sector varies considerably by participant.

Low High
________________________________________________
Source: The 451 Group, Capital IQ, company websites and news releases. Note: Position on timeline based on total number of transactions from 1/1/2011 to 12/31/2012 relative to peers within given sector. Size of circle represents the aggregate total enterprise value of transactions by each company from 1/1/2011 to 12/31/2012, relative to peers within given sector. Transactions with undisclosed enterprise value are assumed to contribute a size of $25mm to the aggregate total enterprise value.
Publishers
Platforms
Software
Agencies
Blackstone
46
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Valuation Trends
Consolidation / M&A
Data / Analytics
Valuations in Digital Marketing are driven by growth, scalability, scarcity, synergy potential / fit, and a competitive dynamic among the relevant buyer universe.
Divergence Exists in the Multiples Paid by Various M&A Participants
Platform and Software players have paid nearly 2x the multiple of Publishers and Agencies, on average
Valuations in Digital Marketing are a Function of Growth and Scalability

Interactive agencies and other services businesses tend to have low margins, lower growth and low scalability, and as such achieve
lower multiples
Software and platform companies tend to trade at high multiples due to above average growth prospects and higher profitability
Strategic Assets Command Strategic Valuations

Assets in sectors viewed as being highly strategic, such as mobile and social, command premium valuations
Scarce assets that either have achieved scale in a sector, or have a differentiated and strategic technology also command a valuation
premium
YouTube, Admob, Buddy Media represent notable examples
Other key valuation drivers include: fostering a competitive dynamic among relevant buyers, synergies, and defensive reasons
Google has been the Most Prolific and Aggressive Acquirer

37 deals across nearly every segment of the stack Highest aggregate value and multiple paid (for disclosed deals)
________________________________________________
Source: Blackstone.
Blackstone
47
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Valuation Trends: 2007

20x
2012(1)
Consolidation / M&A
Data / Analytics
Digital Marketing Transactions by Valuation Multiple and Size

$ in millions # of Deals 275 50 123 41 489
= $500 million
18x 16x
Median Transaction TEV/LTM Revenue
Agencies Software Platforms Publishers Total
Summary Statistics Agg. Enterprise Value Avg. EV per Deal Median Multiple $18,923 $69 2.4x 19,921 398 5.2x 19,271 157 6.7x 4,059 99 3.5x $62,174 $127 4.4x
14x
12x 10x
8x 6x 4x 2x 0x 0 10 20 30 40 50 60 Total # of Transactions Software 70 80 90 100 110
Agencies
________________________________________________
Media Platforms
Publishers
Source: The 451 Group, Capital IQ, company websites and news releases. Note: Size of circle represents the aggregate total enterprise value of transactions by each company. Transactions with undisclosed enterprise value are assumed to contribute a size of $25mm to the aggregate total enterprise value. Facebook, IPG, and Omnicom excluded from graph due to unavailable transaction enterprise value data; total number of deals for Facebook, IPG, and Omnicom: 6, 29, and 31, respectively. (1) Data represents strategic transactions in the Digital Marketing sector only.
Blackstone
48
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Sector Observations Digital Marketing strategic M&A is concentrated along a number of key sectors and themes.
The Global Roll-up of Digital Agencies Continues
Acquisitions in the sector tend to be of relatively small agencies (<$100 million), by the major holding companies
WPP and Publicis represent serial acquirers in the space
Consolidation / M&A
Data / Analytics
Hot Sectors Have Garnered Significant Attention from Strategic Buyers

Mobile, Social, and Data / Analytics have become strategic priorities, given growth characteristics Despite relative nascency, these sectors have quickly become highly-sought after capabilities
M&A Activity among Networks and Exchanges has Waned

Plain-vanilla Ad Networks, in particular, are no longer viewed as strategic Interest among buyers has migrated to optimization around audiences, behavioral, predictive analytics
Ability to leverage data in real-time for precision targeting is viewed as critical
On the Publisher Side, Consolidation Continues Among Content and Commerce Assets
Amazon, eBay, and Google have made strong and consistent moves in the eCommerce arena
AOL, Google, Gannet, and Hearst have been the predominant acquirers of Content assets
Future M&A Will Concentrate on a Number of Key Themes

Social will migrate from Fan Page management to Cross-channel Social Marketing Mobile networks less interesting to buyers; post-click optimization, mobile advertising gamification gaining traction
Optimization of Digital Marketing messages to custom audience segments

Real-time Predictive Analytics, applied to marketing, will migrate from a nice-to-have to a must-have Marketing Automation is increasingly viewed as a strategic capability
Oracle / Eloqua, IBM / Unica, Teradata / Aprimo recent examples; expect more to follow
________________________________________________
Source: Blackstone.
Blackstone
49
Social
Mobile
$40 $30
Video
$20
$10 $0 1995
1999
2003
2007
2012
Strategic Activity in Digital Marketing Varies Widely by Sector
Consolidation / M&A
Data / Analytics
The highest volume of Digital Marketing transactions exists in the Digital Agency, Mobile, Social, Data / Analytics, Content, and eCommerce sectors.
Number of Transactions by Target Sector
(# of Deals, 2007-2012)
280 70
60 50 40 30 23 20 20 12 10 0 7 14 8 49 272 66
3
Video
3
Display
2
Data / Analytics Networks Email
4 1
Ad Servers / Exchanges Optimization Content eCommerce SSPs
Social
Mobile
Search
Advertiser-Side
Marketing Automation
Digital Agencies
Publisher-Side
Services
________________________________________________
Software
Blackstone 50
Source: The 451 Group, Capital IQ, company websites and news releases.
Appendix
Appendix
Biography: Ken Allen

Ken Allen is a Managing Director in Blackstone Advisory Partners L.P., is a founding member of Blackstones Technology M&A practice, and leads the firms Digital Marketing and Cloud Computing Advisory efforts. Mr. Allen has advised hundreds of companies in his 15 years in the industry, and has successfully executed M&A transactions having an aggregate value of over $10 billion. Notable transactions Mr. Allen has advised on include Publicis $530 million acquisition of Razorfish from Microsoft, OrangeSodas sale to Deluxe Corporation, ClickSquareds Series C Private Placement, Sapient's acquisitions of The Nitro Group and Derivatives Consulting Group, Compellents $960 million sale to Dell, Xerox's $8.3 billion acquisition of ACS, and the 190 million sale of Xafinity to Advent International. Prior to joining Blackstone in 2007, Mr. Allen worked in Deutsche Bank's Technology Group, where he focused on mergers and acquisitions, leveraged recapitalizations, leveraged buyouts, and equity financings for a range of companies including Infosys, Ciena, Intralinks, WNS, Stratus Technologies, Allot Communications, and Interwise. Mr. Allen received an MBA from the Tuck School of Business at Dartmouth, where he graduated as a Tuck Scholar. He also received his BE from Dartmouth in Electrical Engineering, where he graduated with summa cum laude and Phi Beta Kappa honors.
Ken Allen Managing Director
Blackstone
52

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III. M&A Perspectives Appendix

that have gained strategic importance in recent years

Mobile Display Search

Social Email Local

Comparison Mobile Shopping

Social Digital Goods

Flash Sales / Daily Deals

Ecommerce TV Community Barcode TV Point of Sale

2006 2011 CAGR

Key Drivers and Themes

Advertisers demanding engagement across multiple screens

(e.g., data analytics), and new forms of engagement (e.g., video)

Rapid decline caused by secular disadvantages

and outdoor broadcast

Integration with digital channels (mobile, QR) and enhanced data

analytics capabilities becoming critical

Source: Wall Street research, Bloomberg, eMarketer.

Audience Targeting / RTB

II. Industry Themes

Digital Marketing Industry Themes: Mobile

Audience Targeting / RTB

II. Industry Themes

Audience Targeting / RTB

Ad Conversion by Device Type

107% 100% 90%93%

100,000 Desktop Internet PC

U.S. Net Mobile Ad Revenues

40% 194% 85% 57% 2014E Other

Source: Wall Street research.

II. Industry Themes

Mobile Is Taking Share From all Other Media Channels

Audience Targeting / RTB

~56% of users from mobile in 2012

~1,000% YoY growth in users in Q3 2012

17% 16% 15% 14% 12% 9% 6% 9% 8% 7% 7% 8% 7% 5%

5% 0% TV Online Radio 2009

Mobile 2010 2011

85% of smartphone users access phones

55% of users from mobile in 2011

II. Industry Themes

On a Global Basis, the Mobile Growth Opportunity Is Massive

Audience Targeting / RTB

(Consumer broadband connections in millions)

Untapped Smartphone Opportunity(2)

2,000 2,134 1,500

Untapped Online Opportunity(3)

(In billions) 7.0

3.0 2.0 1.0 0.0

II. Industry Themes

Smartphone Penetration in the U.S. Is Showing Signs of Saturation

Audience Targeting / RTB

80% 60% 40%

II. Industry Themes

Audience Targeting / RTB

$5,000 $4,500 $4,000 $3,500 $3,698

II. Industry Themes

Mobile Ads Are Primarily Web Search and Display

Audience Targeting / RTB

Effective CPM, Desktop vs. Mobile(3)

$3.00 $2.50 $2.00

CPM Rates by Mobile

Windows Symbian Phone