2013 adpartners annual m&a outlook / media / marketing services / related technology firms

7/30/2019 2013 AdPartners Annual M&A Outlook / Media / Marketing Services / Related Technology Firms

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MERGERS AND ACQUISITIONS PROSPECTSFOR MEDIA, MARKETING SERVICES ANDRELATED TECHNOLOGY FIRMS

19th ANNUALMARKET

SURVEY2013


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Table of Contents

Executive Summary 3

Detailed Findings 4

Methodology 30

About AdMedia Partners 33


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Executive Summary

2013: A Level-Setting Year for An Evolving DigitalMedia Environment

As we head into 2013, there appears to be a general

sense of optimism about the advertising, marketing

services and media industries with expectations for acorresponding healthy M&A environment.

In late 2012, AdMedia Partners, Inc. conducted its

nineteenth annual survey of senior executives at leading

content, marketing services and marketing technology

companies, for their take on prospects for industrymergers and acquisitions in the coming year. The overall

outlook is optimistic but sober, signaling strong levels of

M&A activity during 2012 will continue into 2013, but

with a moderation of interest in hot areas such as

mobile, analytics, social and digital media. Nonetheless,mobile in particular remains a driving force in marketing

and media. Key findings of the AdMedia Partners survey

include:

High Level of M&A Activity in 2012 Expected toContinue into 2013

- Almost two-thirds (63%) of respondents wereapproached by a buyer in 2012, 54% by strategic

buyers and 26% by financial buyers (e.g. private

equity).- An overwhelming majority (81%) of respondents

believe that M&A by strategic buyers will be up in

2013; 46% of respondents believe M&A driven by

financial buyers will be up (vs. 36% who believe it willbe flat).

- Most respondents (88%) at companies with at least$50 million in revenues plan to seek an acquisition

target in 2013.- To fund these acquisitions, 60% say they would use

existing cash reserves and 48% would use debt. This

use of debt is sharply up from last year (27%),

possibly reflecting the expectation that current low

interest rates seem unlikely to change for quite a

while.

Optimism on 2013 with Sober Expectations

- The primary rationale that respondents gave for M&Aplans is to develop new services/product offerings

(59%) - this was the top reason for both services andcontent firms.

- For services firms, the top areas of interest forexpansion or acquisition remained consistent withlast year: mobile (67% of respondents), analytics

(66%) and social (64%). However, the percent ofrespondents interested in these sectors declined

slightly since last year, perhaps reflecting that these

areas were actively developed during 2012, and/or

lessons learned. The sector that lost the most interest

was search marketing - last year 50% of respondentsexpressed interest, this year just 32% - likely a result

of the maturing sector and the increasing importanceof social media.

- For content firms, the highest levels of interest werein digital media (69%), custom content (60%), app

development (56%) and user-generated content(56%). As in the services sectors, there was an overall

decline in interest in the various content sectors.

- While private equity remains an important driver ofM&A in the marketing services and content

industries, the overall number of respondents who

were approached by financial buyers droppedsignificantly from 2011 (43%) to 2012 (26%); likewise,

46% of respondents believe that M&A by financial

buyers will be up in 2013, versus 50% last year. These

trends perhaps reflect more discernment by private

equity firms as they gain experience in these sectors.- Overall, the sentiment is that multiples are flat to

slightly down as compared with the 2012 survey.

Sectors that are felt to have the strongest multiples

are mobile, ad tech, social and analytics on the

marketing side and big data and digital media on thecontent side: for these categories, at least half of

respondents thought that multiples of 7x EBITDA or

greater are reasonable. In contrast, almost half (44%)

of respondents believe that 4x or less is reasonable

for traditional media firms.

Mobile Still Hot, But Evolving

- Mobile remains the area of greatest expectedopportunity. It is the most popular area ofexpansion/acquisition for services firms, is deemed

to be the greatest industry disruptor, and is expected

to command among the highest multiples.

- A number of respondents commented on theimportance of mobile; for example, The Internetcoupled with mobile is the big gorilla, eyeballs

continue to migrate, and marketers and service firms

must follow.

- However, the monetization model for mobile is stillevolving: the number of respondents who said theirmobile phone content was free jumped from 24% last

year to 40% this year which is a level approximately

double that of more mature print and web (similar to

mobile phones, the number of respondents who said

their tablet content was free jumped from 22% to36%).

- More ad dollars are expected to migrate towardsmobile. Four out of ten respondents expect mobileadvertising to grow at least 20% in 2013, compared

to a median expected growth rate for interactiveadvertising of 13% and for advertising as a whole at

3%.

2013 Market Survey | www.admediapartners.com


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Detailed Findings


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M&A Activities in 2012

- Almost two-thirds (63%)of respondents have beenapproached by a buyer.

More than one-half (54%) were

approached by a strategicbuyer (compared to 58% in

2012) and 26% were approached

by a private equity buyer

(compared to 43% in 2011).

- Almost one-quarter (22%) ofrespondents received an offer.

- Over one-quarter (26%) made anacquisition;14% made only oneacquisition, while 12% mademultiple acquisitions.

- Respondents in content were morelikely than those in other industries

to report engaging in a processthat didnt go through, making one

or more acquisitions or being

acquired.

Q. For those who have been involved in M&A activities in the past year, which of the followingM&A-related activities has your company been involved in?


Fig. 1 - 2012 vs. 2011 M&A Activities

54%

26%

22%

14%

12%

11%

11%

4%

58%

43%

14%

11%

4%

8%

0%

Approached by astrategic buyer

Approached by aprivate equity buyer

Received an offer*

Made onlyone acquisition

Made multipleacquisitions

Acquired

Received aminority investment

Involved ina merger

2012 2011

Note: numbers exclude mentions of None

*Not asked in 2011


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M&A Expectations for 2013

- Respondents are optimistic, with57% expecting to seek an acquisition.This is consistent with the 59%

reported in 2012 and much higher

than the 40% observed in 2011.

- Acquisition intent is much morecommon among companies with at

least $50 Million in annual revenue.

- Overall, 47% will contemplate thesale of their company and/or a

subsidiary in 2013, compared to

48% in 2012. However, only 27% of

respondents in the content industryexpect to contemplate a sale.

- More than one-third (35%) plan toseek investment funding in 2013

a similar level to 2012.

Q. For those who have M&A expectations for 2013, which of the following M&A-relatedactivities do you expect your company to pursue in 2013?



Fig. 2 - 2013 vs. 2012 M&A Expectations

57%

47%

35%

59%

48%

38%

Seek an acquisition target

Contemplate sale ofcompany/subsidiary

Seek investment/growthfunding

2013 2012


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Acquisition Funding Strategies

- Six in ten (60%) respondents whohave funding strategies plan to use

existing cash reserves to fundacquisitionsa five percentage

point increase over 2012.

- Nearly one-half (48%) intend to usedebt financing. This represents a

sharp increase over 2012 when only

27% of respondents planned to fund

acquisitions in this way.

- Despite a decrease from the levelobserved in 2012, raising outside

equity remains an interesting option

(37%) for respondents.

Q. How do you plan to fund acquisitions?



60%

48%

37%

21%

4%

55%

27%

43%

14%

9%

Existing cash reserves

Debt financing

Outside equityinvestments

Share issuance

Disposal of business/assets

Fig. 3 - 2013 vs. 2012 M&A Funding Strategies

20122013


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M&A Drivers

- Overall, the key reasons forimplementing an M&A strategy areto develop new services/products

(59%) and acquire new clients/

verticals (43%). However, both ofthese drivers are less important

than in 2012.

- Nearly four in ten (38%)respondents are motivated by the

possibility of expanding theirgeographic reach while one-third

(33%) plan to capitalize on the

favorable buying opportunities in

the marketplace.

- For respondents in the servicessector, geographic expansion was

a relatively more important M&A

driver (44%); this was of less

interest to respondents in thecontent sector (17%).

Q. Which factors will drive your 2013 M&A plans?


59%

43%

38%

33%

28%

10%

2%

63%

56%

31%

26%

31%

10%

6%

Develop new services/productofferings

Develop new clients/verticals

Expand geographic presence

Capitalize on attractive buyingopportunities

Grow staff

We have no M&A plans for 2013

Other

2013 2012

Fig. 4 - 2013 vs. 2012 M&A Drivers


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Areas of Expansion Interest - Services

- The top three areas of interestfor expansion or acquisitionremained consistent with last

year: mobile (67%), analytics

(66%) and social (64%).

- Overall, the percentage ofrespondents interested in the

various sectors has declined

since last year.

- The sectors with the largestdeclines in interest were search

marketing (by 18 percentage

points), social marketing and

marketing/strategic consulting(both by 16 percentage points).

Q. For services firms, is your company considering expanding or acquiring any of the followingservices businesses?


67%

66%

64%

59%

51%

49%

47%

42%

40%

32%

32%

32%

27%

22%

75%

74%

80%

70%

65%

49%

45%

41%

50%

37%

31%

33%

MobileMarketing

Analytics

Social Marketing

Interactive Agencies/Web Development

User Experiences/Design*

Marketing/StrategicConsulting

MarketingTechnology

CRM/DatabaseMarketing

Integrated Ad

Agencies*

Market Research

Search Marketing

ExperientialMarketing

CorporateCommunications

Shopper Marketing

2013 2012

Fig. 5 2013 vs. 2012 Areas of Expansion Interest - Services

Note: numbers exclude mentions of Dont know

*Not asked in 2012


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Areas of Expansion Interest - Content

-The highest levels of interest forexpansion or acquisition were

digital media (69%), custom

content (60%), app development

(56%) and user-generatedcontent (56%).

- As with services sectors, overallinterest in these various content

sectors has declined since

last year.

- Though big data received a greatdeal of media coverage in 2012,

only 21% of respondents are

considering expanding oracquiring in that sector.

Q. For content firms, is your company considering expanding or acquiring any of the followingcontent businesses?



*Not asked in 2012

69%

60%

56%

56%

49%

49%

40%

36%

24%

21%

20%

2%

79%

80%

64%

79%

66%

59%

66%

46%

39%

Digital Media*

Custom Content

App Development

User-Generated

Content

Online Video

Marketing Services

Lead Generation

Information/Database

Publishing

Traditional Media*

Big Data*

Ad Networks

Place-based Media

2013 2012

Fig. 6 2013 vs. 2012 Areas of Expansion Interest - Content


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M&A Expectations for 2013 Strategic vs. Financial Buyers

- The vast majority (81%) expectthat M&A by strategic buyers will

be up in 2013. This figure is slightly

higher than was reported in 2012

(75% among services respondentsand 69% among content

respondents).

- Nearly half (46%) of respondentsanticipate an upward shift in M&A

by financial buyers.

Q. Compared to 2012, do you think M&A in your industrydriven by either strategic orfinancial buyerswill be up, flat or down in 2013?


Fig. 7 - M&A Expectations for Strategic or Financial Buyers

81%

15%

4%

46%

36%

18%

Up

Flat

Down


Financial BuyersStrategic Buyers

It seems like thereis more money, and

a willingness todo deals.

M&A will continueto increase in digital, social,

mobile and data.

2013 will be a soft year fortraditional media, but with

better prospects for innovativedigital businesses andmarketing services.

M&A will be very busy in 2013. The election is over. People have been onhold for over 18-24 months. Now that theyknow the basic ground rules for the nextfour years, M&A will pick up. Also, recent

economic indicators are positive.


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Valuation Expectations for Key ServicesSectors

Q. In your view, which multiples of EBITDA are reasonable today in valuing the following servicebusinesses?


For additional services valuation results, please see p. 23

11%

14%

17%

19%

17%

22%

Less than 5

5

6

7

8

9 or Greater

Fig. 8 - Multiple ofEBITDA Reasonable

in Valuing Firms in

MARKETINGTECHNOLOGY

7 EBITDA or Greater58% of Respondents

18%

8%

14%

17%

21%

22%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

MOBILEMARKETING


17%

13%

21%

19%

17%

14%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

ANALYTICS



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Valuation Expectations for Key ContentSectors

Q. In your view, which multiples of EBITDA are reasonable today in valuing the followingcontent businesses?


For additional content valuation results, please see p. 27

10%

2%

27%

22%

22%

17%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

DIGITAL MEDIA


15%

24%

15%

22%

12%

12%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

INFORMATION/DATABASE

PUBLISHING


44%

33%

14%

2%

2%

5%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

TRADITIONALMEDIA

5 EBITDA or Less77% of Respondents


14/36

Disruptive Industry Trends

- As mentioned by one-quarter (25%)of respondents, mobile technology

is seen as a particularly disruptiveindustry issue.

- Social media (13%) and digital (12%)are also viewed as disruptive

technologies.

- Despite big data and analyticsreceiving a lot of press coverage,these were not named by many as

disruptive technologies.

Q. What trends and technologies are most disruptive to your industry?


Digital marketing andtechnological services will be the

most disruptive. If you cannotdeliver these to your client base

alongside the more traditionalmarketing services, you will have a

very difficult time competing.Social media marketingremains the flavor of the

month, which cuts into addollars.

The most disruptivetrend for my industry is

that people believethey should get

information for free onthe web.

1. Mobile 25%2. Social media 13%3. Digital 12%4. Free information/free content 6%5. Speed of change/ever-changing environment 4%6. Big data 4%7. Analytics 3%8. Automated marketing 3%9. Move from print to digital 3%10. The economy 3%

The Internet coupled with mobile isthe big gorilla, eyeballs continue tomigrate, and marketers and service

firms must follow.

Mobile is in constantdevelopment flux. Other

technologies are changingfaster than agencies can

cope with.

Fig. 14 Most Cited Disruptive Trends and Technologie


15/36

New Competitors - Services

- It is notable that 40% ofrespondents in the services sector

are seeing new competition from

marketing or media technology

firms (although this is significantlydown from last years 66%).

- Likewise, 38% of servicesrespondents are seeing content

companies as new competitive

threats.

Q. For those in services, are you seeing new types of competitors from any of thefollowing sectors outside of your traditional competitive set?


*Not asked in 2012

60%

40%

38%

25%

66%

43%

Services*

Marketing or mediatechnology firms

Content companies

No new entrants*

2013 2012

Fig. 15 2013 vs. 2012 Additions to Competitive Landscape


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Content Delivery and Monetization

- The importance of transmedia contentdistribution continues to grow as 62%

expect to use a full suite of print, web,

mobile and tablet in 2013, compared

to 48% in 2012.

- More than one-half (52%) of thosewho distribute content via print say

they have a subscription model and

nearly as many (45%) say their

content is ad-supported.

- Consistent with 2012, 47% ofrespondents say their web content

is ad-supported while the use of

subscription models increasedslightly, from 22% to 28%.

- Free content is most often distributedvia mobile devices - 40% for mobile

phones and 36% for tablets. Both ofthese figures represent notable

increases over last year.

- Revenue sharing has decreasedslightly for web and tablet, butincreased to 12% for mobile phones.

Q. For those who distribute content, what delivery channels do you use? What is yourcurrent monetization model for each media/device?


Note: numbers exclude mentions of Not this Method

*Not asked in 2012

62%

28%

9%

2%

Print, Web, Mobile &Tablet

Web, Mobile & Tablet

Print & Web

Web Only

Fig. 16 - Content Owner Delivery Channels

Fig. 17 - Content Monetization Models

Content Monetization

Print* Web Mobile Tablet

2012 2013 2012 2013 2012 2013 2012 2013

Subscription - 52% 22% 28% 22% 21% 24% 29%

Ad-supported - 45% 47% 47% 44% 36% 41% 38%

Free - 18% 18% 23% 24% 40% 22% 36%

Revenue Share - 6% 11% 6% 9% 12% 10% 7%

Other - 6% 3% 11% 2% 7% 2% 10%


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Advice to Prospective Buyers and Sellers

-Just over half (51%) of respondents would advise sellers to act now, while 70% gave that advice to buyers.

- The differential between advising buyers and sellers to act now has been narrowing for the last five years, and isalmost at a twelve year low.

- Respondents in content are significantly more likely than those in services/other respondents to suggest thatprospective sellers act now.

Q. Given the M&A environment that you foresee for 2013, would you advise prospective buyers toact now or wait? Would you advise prospective sellers to act now or wait?


Fig. 18 - Advice to Prospective Buyers & Sellers Act Now

51%

57%

51%

32%

27%

60%

52%50%

31%34%

23%20%

70%

83%

88%

92%

64%

68%

85%84%87%

80%77%

79%

201320122011201020092008200720062005200420032002

SellersBuyers


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Reasoning Behind Advice to ProspectiveBuyers and Sellers

- The top explanation given by thoseoffering advice to prospective buyers

and sellers is that the timing seems

right (25%).

- Nearly as many (21%) say thateconomic uncertainty motivated

their suggestions.

- Another 15% are concerned overtaxes or tax rate changes and theeffect they may have on future

transactions.

Q. Why would you give such advice to prospective buyers and sellers?


With all the uncertainty around theeconomy and the shift from print todigital, now is the time to buy/selland optimize business models.

The market is evolvingquickly. Sellers should bedriving value by taking

advantage of that evolution.Buyers should be looking at

strategic purchases today.

The market ispoised to moveand it would be

good to beactive and

moving with it.

25

21%

15%

13%

13%

6%

4%

4%

4%

2%

2%

2%

Timing seems right

Economic uncertainty

Concerns over taxes/tax rates

Market will continue to improve

Depends on specific goals/needs

Not the right time yet

Market is quickly evolving/changing

Multiples are low/buyers market

Good deals

Market will get worse

Shift from print to digital

Sellers have low expectations

Fig. 19 - Advice to Buyers and Sellers

The fog of uncertainty hasbeen lifted. If you want to

sell, you probably don't wantto wait for another politicalcycle to take your business

to market. For buyers: hop toit! Opportunity is waiting.

Given uncertain tax changes better to get cash on hand now

if you're a seller.


19/36

Growth Expectations for 2013

- Nearly one-third (32%) ofrespondents expect increases

between 5 and 10% in 2013.

However, this figure increases to

50% among those in the Contentindustry.

- Similar to last year, nearly one-fifth(17%) believe their company will

grow by more than 30% in the

coming year, although this outlookwas only shared by 5% in the

content industry.

- Continuing the trend firstobserved in 2011, the medianexpected growth rate forrespondents own businesses

remains at 13%.

- In general, respondents in theservices/other sectors were more

bullish on their own business

prospects than respondents in

the content sector.

Q. What growth rate do you anticipate in 2013 for your own businesses revenue?


Note: numbers exclude mentions of Dont Know

16%

32%

13%

12%

6%

5%

17%

11%

30%

11%

13%

9%

4%

21%

18%

50%

23%

0%

0%

5%

5%

22%

22%

9%

19%

3%

6%

19%

0 - 5%

5 - 10%

10 - 15%

15 - 20%

20 - 25%

25 - 30%

Over 30%

Fig. 20 - 2013 Business Growth Expectations

13%13%13%

10%

5%

20%

15%

2013201220112010200920082007

Fig. 21 - Overall Median Business Growth Expectations

ServicesOverall Multiple/OtherContent


20/36

Advertising Growth Expectations for 2013

- Over two-thirds (69%) ofrespondents expect a growth

rate between 0 to 4% for overalladvertising spending in 2013.

- Respondents in the servicesindustry are more apt to expect

a growth rate of 0 to 2%, while

those in the content industry are

more likely to anticipate growth in

the 2 to 4% range.

- The overall median expectedgrowth rate for ad spending is

consistent with the past three

years at 3%.

- Respondents in the content sectorare generally more bullish on the

outlook for ad spending than

those in the services sector (thereverse of expectations for their

own business growth, as detailed

on p. 19).

Q. What growth rate do you anticipate in 2013 for overall advertising spending?



5%

29%

40%

10%

7%

5%

3%

6%

42%

35%

2%

8%

4%

2%

5%

11%

53%

16%

11%

5%

0%

4%

19%

41%

19%

4%

7%

7%


21/36

Advertising Growth Expectations by Category

- Interactive advertising isexpected to continue its strong

growth. Nearly one-half (45%) of

respondents believe this category

will grow by 10 to 15% in 2013.The median growth rate remains

consistent with the last two years

at 13%.

- Mobile ad spending is expected togrow substantially in the comingyear: four in ten of respondents

(40%) say they expect to see an

increase of at least 20% in thiscategory.

- The majority (53%) expect videoad spending to grow between 10

and 20%, and over one-half (55%)

anticipate social ad spending to

grow between 10 and 20%.

Q. What growth rate do you anticipate in 2013 for interactive, social, mobile and video adspending?



18%

45%

24%

7%

3%

1%

2%

18%

34%

21%

13%

6%

4%

5%

13%

26%

20%

16%

11%

7%

6%

27%

31%

22%

9%

6%

1%

4%

0 - 10%

10 - 15%

15 - 20%

20 - 25%

25 - 30%

30 - 35%

Over 35%

Interactive Social Mobile Video

Fig. 24 - 2013 Advertising Growth Expectations by Category

13%13%13%

10%

5%

20%

15%

2013201220112010200920082007

Fig. 25 - Median Interactive Advertising Growth Expectations


22/36

Economic Expectations for 2013

- More than four in ten (43%)respondents believe the economy

will be stronger in 2013, up from

36% in 2012.

- Over one-third (36%) expect theeconomy to remain the same in

the coming year, a notable

decrease from 57% in 2012.

- Just over one-fifth (21%) believethe economy will be weaker in

2013, an increase of 14 percentage

points over what was reported

last year.

- Respondents in the content sectorwere more polarized on economic

expectations, with larger groups in

both the stronger and weaker

categories than services/otherrespondents.

Q. In 2013, do you expect the economy to be stronger, about the same or weaker than in2012?



43%

36%

21%

42%

38%

19%

50%

23%

27%

39%

42%

19%

Stronger

About the same

Weaker

Fig. 26 - 2013 Economic Predictions

Fig. 27 - 2012 vs. 2013 Economic Expectations

Overall 2012 2013

Stronger 36% 43%

About the same 57% 36%

Weaker 7% 21%

ServicesOverall Multiple/OtherContent


23/36

Valuation Expectations for Additional KeyServices Sectors

Q. In your view, which multiples of EBITDA are reasonable today in valuing the followingservices businesses?


15%

11%

20%

20%

18%

15%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

SOCIALMARKETING

27%

24%

17%

15%

8%

8%

Less than 5

5

6

7

8

9 or Greater

18%

19%

31%

13%

8%

11%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

USEREXPERIENCE /

DESIGN


in Valuing Firms in

INTEGRATEDADVERTISING

AGENCIES


24/36



18%

19%

24%

18%

11%

10%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

INTERACTIVEAGENCIES/WEB

DEVELOPMENT

21%

13%

30%

21%

10%

6%

Less than 5

5

6

7

8

9 or Greater

Fig. 32 - Multiple ofEBITDA Reasonablein Valuing Firms in

CRM/DATABASEMARKETING

26%

16%

24%

20%

9%

6%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

EXPERIENTIALMARKETING

Valuation Expectations for Additional KeyServices Sectors, Continued


25/36



38%

13%

26%

13%

6%

3%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

MARKETRESEARCH

41%

21%

25%

4%

6%

3%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

CORPORATECOMMUNICATIONS

23%

20%

23%

24%

10%

1%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

SEARCHMARKETING



26/36



21%

24%

31%

11%

9%

3%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

MARKETING /STRATEGIC

CONSULTING

27%

17%

27%

20%

7%

1%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

SHOPPERMARKETING



27/36

Valuation Expectations for Additional KeyContent Sectors



17%

10%

17%

17%

20%

20%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

BIG DATA

24%

24%

14%

17%

12%

10%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

USER-GENERATED

CONTENT

24%

12%

21%

19%

17%

7%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

APPDEVELOPMENT


28/36



15%

12%

34%

20%

7%

12%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

VIDEO

29%

17%

24%

10%

12%

7%

Less than 5

5

6

7

8

9 or Greater


LEADGENERATION

27%

27%

24%

10%

7%

5%

Less than 5

5

6

7

8

9 or Greater


PLACE-BASEDMEDIA

Valuation Expectations for Additional KeyContent Sectors, Continued


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22%

34%

22%

15%

5%

2%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

MARKETINGSERVICES

32%

15%

27%

10%

15%

2%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

AD NETWORKS

21%

17%

33%

14%

14%

0%

Less than 5

5

6

7

8

9 or Greater


in Valuing Firms in

CUSTOMCONTENT

Valuation Expectations for Additional KeyContent Sectors, Continued


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METHODOLOGYMethodology


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- In November 2012, AdMedia Partners conducted its 19th annual survey on the outlook for M&A for media, marketingservices and marketing technology firms in the coming year. Over 7,400 domestic and international executives inadvertising, marketing services, digital marketing, marketing technology, media technology, media or digital media

were invited to take part in a 5-minute online survey.

- At the beginning of the survey, respondents were asked to describe the nature of their businesses and wereclassified into one of three groups/industries. Below is a summary of the makeup of the respondents.


Nature of Business % of Total

Services/Marketing or Media Technology 52%

Content 16%

Multiple/Other Business 32%

Total 100%

- Throughout this report, results are reported in the aggregate and by group/industry.- Respondents were also segmented into sub-groups based on annual revenue.- Significance testing (t and z tests) at the 95% Confidence Level (+5%) was conducted to detect differences amongrespondent segments. When applicable, these findings are noted.- Data from all respondents was analyzed regardless of whether they completed the survey in its entirety.- Participants were asked several open-ended questions to aid in understanding the "whys" behind the numbers.

Responses to these questions have been coded and tabulated.

- Where historical data is available, comparisons between years have been made. When necessary, to matchhistorical data, new answer choices for this years survey were excluded from analysis. In these cases, a note is

included to indicate which answer choices were suppressed.

- All percentages were rounded up or down to the nearest whole number. As such, percentages may not addto 100%.

Background & Methodology

Analytical Summary


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% of Total Interviews

Annual Revenue$50 Million or less 78%

$51 - $500 Million 15%

Over $500 Million 3%

Dont know/refused 5%

Ownership StructureFounder/management 75%

Private equity-backed 13%

Public company 6%

Don't know/refused 6%

Sample Profile


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METHODOLOGYAbout AdMedia Partners


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AdMedia Partners is a leading M&A advisor that provides middle-market mergers and acquisition advisory services todigital and traditional media, marketing and information businesses. Founded in 1990 and located in New York City, the

firm has completed over 210 transactions worth over $8 Billion.

Founded by former advertising, media, and financial executives, the firm focuses on mergers & acquisitions,

divestitures, valuations and strategic consulting. AdMedia has provided transactional services and strategic andfinancial advice to the world's leading advertising and media companies. The firm's industry knowledge and strong

transactional skills provide the best outcomes for both buyers and sellersthe strategic value that AdMedia Partners

brings to every assignment.

AdMedia's group of managing directors is among the most experienced financial advisors in the media, marketingservices, and Internet industries. Their diverse backgrounds as former operating and financial executives and

entrepreneurs provide unique insights into both the strategic and operating issues that surface during mergers,

acquisitions and divestitures. Management teams and shareholders benefit from the managing directors' keen and

unique perspectives into the current themes and trends within the sectors that AdMedia covers. Most importantly, the

managing directors speak the same language and have shared backgrounds with the clients they serve.

The combination of AdMedia's industry expertise and financial advisory experience provides clients with a unique

offering of industry-focused deal strategy and strong transactional experience. Unlike other financial advisory firms

that provide more junior staff as the day-to-day contact, AdMedia assigns two managing directors to every assignmentwith a lead MD as the main point of contact. A team of experienced professionals supports the managing directors,allowing them to dedicate 100% of their time to working on behalf of clients.

About AdMedia Partners, Inc.

- Advertising- BPO/KPO- Consulting- Corporate Communications- CRM/Loyalty- Database Marketing/Services- Direct Marketing- Entertainment Marketing- Experiential Marketing- Government Affairs- Healthcare Marketing- Market Research- Media Buying & Planning- Promotional Marketing- Shopper Marketing

- Analytics- eMarketing- Interactive TV- Mobile Marketing, Content &

Applications- Online Advertising & Measurement- Online Market Research- Performance Marketing & Lead

Generation- Search Marketing- Social Media Marketing- Software Development- UX/User Experience Design- Web & Application Development

- Affiliate & Ad Networks- B2B Publishing- Consumer Magazines- Directories- Information Publishing- Newsletters- Online Communities- Online Media- Out-of-Home- Tradeshows- User-Generated Content

Marketing & Business Services Digital Marketing & Technology Media & Digital Media
http://www.admediapartners.com/about_admedia/index.html


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Select AdMedia Partners, Inc. Transactions
http://www.admediapartners.com/transactions/index.html


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AdMedia Partners, Inc.Three Park Avenue, 31st Floor

New York, NY 10016

t: 212-759-1870

[email protected]

Contact
http://www.admediapartners.com/http://www.admediapartners.com/contact_us/index.html

2013 adpartners annual m&a outlook / media / marketing services / related technology firms

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