1

Introduction

1 1

What’s hot in marcoms today?

Q3 2014

2

What’s hot in marcoms?

2

As specialist advisers to the marketing communications and technologies industry, we are uniquely positioned to ensure that we are continually on top of key trends in

this rapidly evolving landscape. One of our key tools is our global deal tracker, which gathers the details of all completed deals in this sector, subcategorised and cross referenced by our team of analysts. This, along with the hundreds of conversations we have each month with both buyers and sellers, enables us to continuously identify emerging M&A trends. With the ever blurring boundaries between “marcoms” and “martech”, it is maybe unsurprising to see that the most talked about subsectors sit at their convergence points, namely : 1. Content marketing 2. Data & analytics,

3. eCommerce 4. Digital marketing; and 5. Mobile marketing This paper examines each subsector, the key trends and deal activity in 2014 YTD using both proprietary and third party data.

Introduction

Mobile Marketing

Sector Overview

Market Overview

4

Mobile Marketing Market Overview

22

36

58

88

127

177

0

20

40

60

80

100

120

140

160

180

200

2013 2014 2015 2016 2017 2018

Co

nn

ec

ted

We

ara

ble

Un

its

(m)

250

315

360

405

455

0

100

200

300

400

500

600

2013 2014 2015 2016 2017

Tab

let

PC

Un

it S

hip

me

nts

(m

)

Global growth of tablets (20) Growth of global connected wearable devices (21)

Growth slowing quarter on quarter, Apple noticeably suffering

Strong price elasticity, cheaper alternatives to high end models are

gaining market share

Dominated by consumers (89% in 2013), enterprise targeted as a

growth sector

Potential high growth sector, currently in the early stages of

adoption

Particular focus in 2014 as Apple announce Watch, Google

Glasses go on sale for the first time and Samsung continue to

develop their range

Mobile redefined

5

Mobile Marketing Market Overview

UK mobile adspend to increase 96% in 2014, an

increase of nearly a £1bn from 2013

This will represent nearly 30% of all digital advertising in

the UK. Mobile adspend is forecast to increase as a

percentage of digital (and total media adspend)

and eventually dominate digital adspend in 2018 with

a 70% share

526

1,031

2,021

3,233

4,462

5,756

6,907

9.7%

16.4%

27.9%

40.6%

51.6%

62.2%

70.4%

3.9%

7.3%

13.4%

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33.7%

39.1%

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20%

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80%

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1,000

2,000

3,000

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5,000

6,000

7,000

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2012 2013 2014 2015 2016 2017 2018

% o

f to

tal d

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UK

mo

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ad

spe

nd

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m)

UK mobile adspend % of total digital adspend % total media adspend

Globally, mobile adspend will increase from an expected $13.1bn in

2013 to $41.9bn in 2017, representing a CAGR of 33.7%. North America

is projected to take the lion’s share of growth. However, the UK is

expected to grow at a CAGR of 53.7% over the same period

Video is expected show the highest growth, with display formats

expected to make up the most revenue. Display is predicted to shift to

mobile web display away from in-app display

UK mobile adspend predictions (22)

6

Mobile Marketing Market Overview

Native Mobile Advertising

Native advertising site examples

• Native advertising is establishing itself as new trend in the mobile

marketing industry

• Difficult to define – “native in the eye of the beholder”

• Small screen means disruptive advertising does not work

• Whether it is in story or video format, the aim is to make an ad

blend inconspicuously into the experience of the consumer.

• Facebook, Twitter and most recently Instagram are pioneers of

the technology

• Future trends for native advertising:

• Standardisation

• Regulation

• Data-driven

IAB’s ‘Core Six Native Ads’

In-Feed Units Paid Search Units Recommendation Widgets

Promoted Listings In-Ad (IAB Standard) with

Naïve Element Units

Custom / “Can’t Be

Contained”

USA native social ad revenues

Mobile - Native Display (21)

1.6

2.9

4.6

0

1

2

3

4

5

2012 2013 2014 2015 2016 2017

USA

na

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7

Mobile Marketing Market Overview

Mobile marketing – Video

• Two main uses:

- Within a mobile app install unit to drive app downloads

- Embed into a sponsored post for a page

• Mobile video views increased 300% between 2012-2013

• Tablets are fuelling the growth

• Key driver in the ‘Big Data’ trend

• Content creation that detects the device, delivering the right size

and style of video delivers best growth

• Emerging markets – cheaper average cost per click:

- India, Pakistan and Tanzania: 1 cent

- UK: 5.4 cents

The completion rate of videos by spot position

Completion rate is the single most-important metric when

talking about mobile video

Growth in global mobile video internet traffic

Mobile video consumption has increased 532% since 2012

Facebook – the video pioneer

• October 2013 – Facebook introduces mobile video marketing

• Users will ‘click play’ to watch the video about their app before

being led to the app installation page.

- Increases installation rates and decreases the overall cost per

installation

• December 2013 – In-feed video ads trialled and introduced on

mobile

• Focus on brand promotion and mCommerce

Mobile – Video (23)

0

2000

4000

6000

8000

10000

12000

2013 2014 2015 2016 2017 2018

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tab

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nth

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59% Post-roll

59% Pre-roll

88% Mid-roll

8

Mobile Marketing Market Overview

• There are over a million apps available, which generate over $26 billion of

revenue p.a., and this is constantly growing

• There were 102 billion downloads in 2013

• Money is increasingly made through advertising and in-app purchases, fewer

developers are charging for the initial download to achieve a greater

audience

• Tablet app adspend is catching up with smartphone devices; by 2017, the tablet/smartphone app adspend split will be almost 50/50

• Consumers spend the majority of their time on apps when using their

smartphone devices; the split is 80:20, app:browser

• Strategy around how to climb the app store rankings is becoming a key part of

mobile marketing – high costs associated with climbing the ‘top charts’ have

meant it has become increasingly difficult to promote an app without

significant cost

App advertising Paid for apps

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2011 2012 2013 2014 2015 2016 2017

% o

f a

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Paid-for apps % of app store revenues

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2011 2012 2013 2014 2015 2016 2017

% o

f a

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In-app purchases % of app store revenues

In-app purchases

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

-

2,000

4,000

6,000

8,000

10,000

12,000

2011 2012 2013 2014 2015 2016 2017

% o

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Advertising Revenue % of App Store Revenues

Mobile apps (24)

9

Mobile Marketing Market Overview

65.6%

17.7%

16.7%

79.5%

11.8%

8.7%

USA digital ad spend 2011-2017 – Search

Global paid search spend by device

Computer

Phone

Tablet

14.4 15.1 15.3 14.9 13.9 12.6 10.3

0.7 2.2 4.3

6.7 9.3 12.2 15.3

0

5

10

15

20

25

30

2011 2012 2013 2014 2015 2016 2017

US S

ea

rch

Ad

Sp

en

d (

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ns)

PC & Laptop Mobile & Tablet

2012 2013

Computer

Tablet

82.8%

68.5% 65.7% 64.1% 64.2%

50%

60%

70%

80%

90%

2012 2013 2014 2015 2016

Phone

Search (25)

Why is search on mobile a good tool?

• Increased mobile usage: Searches on mobile devices are expected to surpass desktop

searches by the end of 2014

• Facilitation of local search: 97% of consumers go online to research products or services in

their local area

• mCommerce on the rise: 74% of mobile users utilise a search engine during their

purchasing process

• Strong conversion statistics: 73% of mobile searches trigger additional action and

conversion (purchase, visit of website, visited store)

• Click through rates second only to video

Mobile Search Marketing – Key Considerations

• 81% of mobile searches are driven by speed & convenience

- Mobile user experience improved through mobile friendly website

- Mobile page load speeds

• Understanding and interpreting mobile user’s intent

• Expanding search mechanisms - augmented reality, conversational and voice

• Google Adwords – shift to integrated (desktop & mobile) search approach

Google losing market share

• Search isn’t restricted to browsers – innovative apps allow consumers new ways to

monetise search

Google as a % of total USA mobile search ad spending

10

Mobile Marketing Market Overview

Key trends

• Definition of “Mobile Marketing” – 2014 is becoming the year of the wearable, with mobile marketing evolving

beyond smartphones and tablets

• Programmatic buying in mobile media is shaping the way marketers are thinking and implementing mobile

campaigns and this will only evolve as technology becomes more sophisticated

• Inevitable innovation of ad formats – Native has been a revelation in 2014 and with the rise of mobile video and

improvements in location targeting tech new ad formats taking advantage of this will undoubtedly follow

• Big data – The increased integration and usage of data in mobile marketing is rapidly quashing the myth that

mobile customers are typically difficult to target

• Increased intelligent in-app marketing – Apps are where the user spends the majority of their time on mobile, and

with Snapchat and Instagram introducing advertising into their apps the bar is being raised as to how to maximise

return on investment, whilst minimising intrusion

• New sensory functionality in apps – Apple’s new health update for example will mean new innovation on a new

mobile platform resulting in a new way for marketers to raise brand awareness

• Mobile first marketing – Budgets will begin to shift to target mobile as a primary marketing route with improved

yields and engagements metrics vs. more traditional channels

Trends

Mobile Marketing

Sector Overview

M&A Market

12

Mobile Marketing M&A Market

Q1-Q3 2014 Mobile Marketing deals (26)

Q3

Deal Volume Target Region

Major Buyers Deal Types

Quarterly Split

Cross Border

PE Backed

18

2 25

11

12

Q2

Q1

21

2 North America

UK

1

South America

Middle East 1

4

2

WPP DMI

48

Total Deals

1

APAC 11

Africa

8

Western Europe

Eastern Europe 3

13

Mobile Marketing M&A Market

Date Buyer Target Target Location Target Description

Aug-14 UK Mobile app development

Aug-14 USA Mobile app development

Jul-14 USA Mobile app development

Jun-14 Australia Mobile sites and app development

Jun-14 Sweden Full service mobile marketing

Jun-14 Hong Kong Mobile advertising

May-14 Turkey Full service mobile marketing

Apr-14 USA Full service mobile marketing

Mar-14 UK Full service mobile marketing

Jan-14 South Africa Full service mobile marketing

Q1-Q3 2014 selected transactions

14

Mobile Marketing M&A Market

References

1) Results Intelligence

2) Advantage Business Media’s digital road map, AdAge

3) Content Marketing in the UK: 2014 Benchmarks, Budgets and Trends: Content Marketing Institute/DMA UK

4) Nativeadvertising.com

5) Content Marketing in the UK: 2014 Benchmarks, Budgets and Trends: Content Marketing Institute/DMA UK

6) Content Marketing in the UK, Content Marketing in North America: 2014 Benchmarks, Budgets and Trends: Content Marketing Institute/DMA

7) CapIQ, 451, OneSource, Results Intelligence

8) ExactTarget Marketing Cloud 2014 State of Marketing Survey, Deloitte Analytics Trends 2014, IBM, TechRepublic

9) CapIQ, 451, MergerMarket, Results Intelligence

10) eConsultancy (January 2014), eMarketer (January & April 2014), International Business Times (October 2013), eCommerce Week (January 2014),

bpost International (January 2014)

11) eConsultancy (January 2014), IMRG (January 2014), eCommerce Week (January 2014), bpost International (January 2014), Statista (2014)

12) The Drum (February 2014), Talk Business Magazine (December 2013)

13) CapIQ, 451, MergerMarket, Results Intelligence

14) eMarketer (March 2014)

15) IAB Digital Adspend 2013

16) eMarketer (June 2014)

17) IAB/PWC Adspend 2013

18) IAB Digital Adspend 2013

19) CapIQ, 451, MergerMarket, Results Intelligence

20) Cisco VNI Mobile (2014), NPD DisplaySearch (February 2014), IDC Worldwide Quarterly Tablet Tracker (2014)

21) IAB Native Advertising Playbook (2013), BIA/Kelsey

22) eMarketer (July 2014), Gartner (2013)

23) Google & Nielsen (March 2013), Cisco VNI Mobile (2014), relevant press, company websites

24) Gartner (September 2014), relevant press, company websites, Results Intelligence

25) eMarketer (August 2013), Kenshoo (December 2013)

26) CapIQ, Companies House documents, Press, company websites, Results intelligence

15

About Results

Corporate Finance Advisors to the Marketing Services & Marketing Technology sectors

Selected clients and transaction counterparties

An established team of sector experts…

• Results International is a market-leading M&A advisory

firm founded in 1991

• Entrepreneurial and owner-managed

• 40 person global team with over 250 completed

transactions

• Senior level attention on all transactions

• Winner of Cross-Border Deal of the Year 2014 (sale of We

Are Social to Blue Focus)

Software

Marketing Services

Marketing Technology

Digital Media

Sector specialism

…with global reach

16

About Results

has been acquired

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has been acquired

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launched a new

global creative

network

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has been acquired by

Unrivalled expertise in the Marcoms sector

17

About Results

Mark Williams Director

• Joined Results in 2010, with over 15 years of M&A experience

• Prior to joining Results Jim led

European M&A activity for the

marketing services division of

Omnicom (DAS)

• Clients include We are Social,

Blue Rubicon, Virgo Health,

Crayon and Iris

• Joined Results in 2005 - Previously Head of M&A at Ernst & Young

• 20+ years experience in corporate

finance, including M&A,

fundraising, IPOs, JVs, MBOs and

MBIs

• Clients include The Group, Figtree,

Monitor Media, Spannerworks, Flip

Media, Transactis, Punktilio,

Flamingo, Brand X, and AIA

• Joined Results in 2012. He started

his career at KPMG working in

Financial Services M&A and

moved to Ingenious Corporate

Finance in 2010

• Clients include Staffcare, Moonpig, St Ives, and Inflexion

Julia Crawley-Boevey Director

• Joined Results in 2010 having spent

over four years at BDO where she

worked in both Audit and

Corporate Finance

• Clients include The Group, Blue

Rubicon, Virgo Health, Incite, and Crayon

• Joined Results in 2012 to lead the

tech and digital media practice

• 15 years M&A experience at

Broadview then Jefferies, advising

tech and digital media companies

on M&A and fundraising

• Advised on transactions with

Oracle, Microsoft, Experian,

Moody’s, IAC, Axel Springer, DMGT,

and BT

• Joined Results in 2014, with over

15 years M&A experience

• Prior to joining Results, Chris led

the Technology M&A practice at

KPMG. He previously spent 11

years advising tech companies

at Arma Partners and JPMorgan

• Recent clients include Zinc

Ahead, Pushbutton and Irdeto

James Kesner Manager

• Joined Results in 2013 from Kingston

Smith

• ACA qualified, previously worked

as a Finance Director for a London

based brand consultancy

• Clients include ID magazine, Not to

Scale, Writtle, Adam and Eve

Richard Latner Manager

• Joined Results in 2014 after having

spent 9 years at KPMG across

audit, TS & M&A functions

• Clients include: WRG, Irdeto and

neoworks

Selected Team Members

Jim Houghton Partner

Keith Hunt Managing Partner

Julie Langley Partner

Chris Lewis Managing Director

18

About Results

Selected Team Members – International

• Long career in marketing sector

(Ogilvy & Mather, The Ball

Partnership)

• Managed the acquisition of SMART

by McCann Worldgroup, CCG by Publicis Group to establish Digitas

China, CIC by Kantar Media and

The Upper Storey by Isobar

Andrew Kefford Managing Partner –

Asia Pacific & MENA

Chris Beaumont Managing Partner –

North Asia

• 16 years of experience

consulting in Asia

• For 10 years Chris was with

McCann-Erickson in Asia; he was

both Vice-Chairman of its operations in Tokyo and Chief

Strategy Officer for WorldGroup

across Asia

• Has closed over 35

transactions totaling $0.75

billion

• Experience includes advising

Hunt Mobile Advertising on its

transaction with Opera Mediaworks

• Maurice has previously

worked at the Zanett Group,

Morgan Stanley and IBM

Maurice Watkins Partner

• 27 years experience in the

advertising sector, including

as COO of JWT's Middle East

Network

• Joined Results International in

2008 and has since been

engaged in a number of buy

and sell mandates

Imad Kublawi Regional Partner –

MENA

• Spent 24 years at Hindustan Thompson (part of JWT), the

largest ad agency in India

• Other roles include COO at

RK Swamy/BBDO and as

advisor to companies in India,

Pakistan & Dubai

Sunil Gupta Area Liaison –

South Asia

USA

Asia

Pierre-Georges Roy Partner

• Closed $4.0 billion in cross-

border transactions

• Experience includes advising Hunt Mobile Advertising on its

transaction with Opera

Mediaworks and Telesystem

International Wireless (NASDAQ:

TIWI) on its sale to Vodafone

For more information contact:

Jim Houghton Partner

+44 (0) 20 7514 8234

jhoughton@resultsig.com

Julia Crawley-Boevey Director

+44 (0) 20 7514 8239

jcrawley-boevey@resultsig.com

Disclaimer:

This document has been produced by Results International Group LLP (“Results”) and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of Results’ officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.