Ad Exchanges, Targeting & Optimization

From Mad Men to X-Men

December 2010
First Published in September 2009 ] CONFIDENTIAL

A Word from Gridley & Company, LLC

Almost every slice of the advertising pie is undergoing major transformation. With new devices, channels, technologies, content, and formats, advertising has never been more complex. Ad exchanges, ad networks, optimizers, targeting platforms, new forms of data, and the explosion of online inventory have forced massive changes in the old ways of Madison Avenue. Todays Don Draper needs to be part Wall Street trader, part technologist, and part media maven the new X-Men. The stakes are high and new technologies are the change agents. The interest level in the landscape is taking off and has been a huge area for investment and M&A activity in 2010. We designed this Gridley Industry Overview to help you navigate this new landscape. The thinking behind this report began in the spring/summer of 2009 when it seemed to be the favorite topic of lots of major media, advertising, and data companies. We did comprehensive research, meeting with or talking to most of the leading emerging companies in the sector before launching the initial version of this report in the fall of 2009. This report was the first one written amongst the investment banking community and we believe served as a basis for future reports issued by others. We hope you enjoy this comprehensive industry overview and our perspectives. Please give us a call to discuss the content of this presentation Linda Gridley President & CEO linda.gridley@gridleyco.com 212-400-9710

Karen Yau Smith Vice President karen.smith@gridleyco.com 212-400-9718 December 2010

Pratik Patel Vice President pratik.patel@gridleyco.com 212-400-9712

Table of Contents
I. Industry Introduction and Overview

II. The Landscape of Players III. The Opportunities IV. How Gridley Can Help

December 2010

I. Industry Introduction and Overview

December 2010

Introduction
Almost every slice of the advertising pie is undergoing major transformation With new devices, channels, technologies, content, and formats, advertising has never been more complex Ad exchanges, ad networks, optimizers, targeting platforms, new forms of data, and the explosion of online inventory have forced massive changes in the old ways of Madison Avenue Todays Don Draper needs to be part Wall Street trader, part technologist, and part media maven the new X-Men The stakes are high and new technologies are the change agents The interest level in the landscape is taking off and investment and M&A activity is right around the corner We designed this Gridley Industry Overview to help you navigate this new landscape

December 2010

Stakes are High: Making Display Ads Effective

Improving economy + re-entry of financial and auto advertisers = almost double digit growth in 2010 Online display will continue to capture shifting ad spend from large brand marketers
U.S. Online Advertising Spending, by Format
($ in millions)

Channel Search Display Advertising Classifieds/Auctions Lead Generation/E-mail Total

2008

2009

2010

'09 - '10 Growth

2011

2012

2013

2014

'10 - '14 CAGR 13.5% 10.5% (0.3%) 1.9% 10.8%

$10,528 $11,055 $12,823 7,639 7,485 8,172 3,147 2,502 2,176 2,134 1,790 1,694 $23,448 $22,832 $24,865

16.0% $14,747 $16,811 $18,997 $21,276 9.2% 9,102 10,107 11,141 12,196 (13.0%) 2,133 2,154 2,154 2,154 (5.4%) 1,745 1,780 1,812 1,830 8.9% $27,727 $30,852 $34,104 $37,456

% Mix Search Display Advertising Classifieds/Auctions Lead Generation/E-Mail Total 44.9% 32.6% 13.4% 9.1% 100.0% 48.4% 32.8% 11.0% 7.8% 100.0% 51.6% 32.9% 8.8% 6.8% 100.0% 53.2% 32.8% 7.7% 6.3% 100.0% 54.5% 32.8% 7.0% 5.8% 100.0% 55.7% 32.7% 6.3% 5.3% 100.0% 56.8% 32.6% 5.8% 4.9% 100.0%

Source: Barclays Internet Data Book, February 2010

December 2010

But Online Display Faces Challenges

Too many vendors representing inventory Hundreds of ad networks in all shapes and sizes Horizontal, vertical, display, performance, video, in-game, social apps, and mobile Fragmented audiences Traffic is dispersed across the entire tail Lack of transparency in ad networks Advertisers dont know where and when their ads run Publishers are not guaranteed blind inventory No standard KPIs How do you measure success and attribution? Clicks? Engagements? Little control over pricing Advertisers want to maximize ROI = lower CPM + higher conversion Publishers want to maximize yield = higher CPM + more premium inventory Agencies / buyers are giving away a lot of margin to the ad networks Ad networks are making 30% - 40% margins
December 2010
7

New Technologies are Leading the Change

Real-time Exchanges offer promise of transparency, market pricing, and liquidity Demand Side Platforms offer the Holdcos and marketers a solution Trading Desks at the agencies are building in-house expertise in optimization Data Management Platforms offer online audience segmentation at a detailed level Ad Creative Optimization allows dynamic ad serving of the right ad to the right audience at the right time Social Targeting platforms enable marketers to target based on implicit and explicit social information Publishing Yield Optimizers aggregate inventory and maximize CPMs for publishers they look a lot like the exchanges Ad Networks are trying to hold on to their high margins by adding better targeting technologies, high value services, and / or going deep into a vertical

December 2010

The New Players are Staking Out Positions

New ad targeting, optimization, and data companies are redefining the landscape Demand Side Advertising $$
Ad Ad Traders Traders

Supply Side - Inventory

Advertisers / Agencies / Media Buyers

Direct Sales Force Demand Demand Side Side Optimization Optimization Platforms Platforms Data Data Management Management Platforms Platforms Display Ad Networks Data Management & Publisher Tools Data Measurement & Site Analytics

Data Management Tools

Ad Exchanges Ad Exchanges

Publishers

Social Social Targeting Targeting

Publishing Yield Publishing Yield Optimizers Optimizers

Rich Media Ad Platforms

Ad Creative Ad Creative Optimizers Optimizers

December 2010

The Emerging Online Advertising Ecosystem

Demand Side Advertising $$
Demand Side Optimization Platforms

Supply Side - Inventory

Ad Exchanges

Direct Sales Force

Data Management Tools

Advertisers / Agencies / Media Buyers

Ad Traders

Ad Networks Data Management & Publisher Tools

24/7 Acerno Adconion Adify Adroll Audience Science Bizo Brand.net BrightRoll Burst Media Casale Collective Media Connexus CPX Interactive Epic Advertising FOX Audience Network Glam Media Google Ad Network Gorilla Nation InterCLICK Kontera Lucid Media Microsoft Media Network Platform-A Specific Media Tremor Media Tribal Fusion Turn Inc. Undertone Network ValueClick Vibrant Media Yahoo Media Network Yume

Data Measurement & Site Analytics

Data Management Platforms

Publishers

Social Targeting

Rich Media
EyeWonder Mediamind Pointroll Unicast VideoEgg

Publishing Yield Optimizers Ad Creative Optimizers

December 2010

10

The Real World is Still Complicated

The ecosystem hasnt rationalized the intermediaries yet consolidation is coming! Demand Side
Ad Ad Traders Traders

Supply Side

Advertisers / Agencies / Media Buyers

Direct Sales Force Demand Demand Side Side Optimization Optimization Platforms Platforms Data Data Management Management Platforms Platforms Display Ad Networks Data Management & Publisher Tools Data Measurement & Site Analytics

Data Management Tools

The Ad The Ad Exchanges Exchanges

Publishers

Social Social Targeting Targeting

Publishing Yield Publishing Yield Optimizers Optimizers

Rich Media Ad Platforms

Ad Creative Ad Creative Optimizers Optimizers

December 2010

11

Capabilities Cross Over Multiple Platforms

Most platforms have multiple capabilities across both the demand and sell sides Many are still figuring out their core capabilities or repositioning them
Pre-Campaign Media Planning / Buying Audience Selection Advertiser Data Management Creative Dynamic Ad Serving Optimization & Targeting Campaign Deployment Post-Campaign Exchange & Ad Network Publisher Yield Publisher Site Publisher Data Data Analytics & Buy/Sell Enhancing Optimization Analytics Management Reporting

Creative

Agencies / Media Buyers / Ad Traders Advertiser Data Management Rich Media Platforms Dynamic Ad Creative Optimizers Demand Side Platforms Data Management Platforms Social Targeting Ad Exchanges Ad Networks Publishing Yield Optimizers Publisher Data Measurement & Site Analytics Publisher Data Management
Core Capability Component of Offering Some Capability

December 2010

12

Key Factors for Success

Industrial-grade technology platforms that deliver true real-time performance at scale Easy-to-use platform interfaces that minimize work flow disruptions Ability to provide transparency and trustability across platform or service offerings Strong customer services focus as new marketers and suppliers enter market Clear performance measurement and reports that dont require a Ph.D. to understand Ability to draw actionable insights out of reports, activate vast stores of data, and implement the call-to-action

December 2010

13

Relevancy & Sustainability in Ecosystem 2.0

Are the Change Agents in the new online ecosystem just another set of intermediaries? Who is staking out a long-term sustainable position? Do the optimization technologies grow margin or eliminate margin? Where are the long-term margins? Which is the better beachhead the publisher side or the advertiser side? Can you provide a solution to both? Has the value of the data surpassed the value of an ad unit? Will data become commoditized? Do the new entrants need to be principals in the media not just enabling tools/platforms? Will the ecosystem evolve to Google, Microsoft, and Yahoo and then everyone else?

December 2010

14

Participants at January 2010 Gridley Conference

Gridley has stayed in front of this emerging industry and continues to provide thought leadership PRESENTATIONS PANELISTS ATTENDEES

December 2010

15

II. The Landscape of Players

December 2010

16

The Ad Traders are at the Agencies

The ad holdcos are actively positioning themselves in the landscape Evaluating all the players but have never been successful at buying technology companies Ultimately will stay gate keepers of the media spend and utilize their traders and technology for execution and analysis
Havas
Trading Unit Adnetik

IPG
Cadreon

MDC Partners
Varick Media Management

Omnicom Group
Omnicom Media Group Digital N/A

Publicis
VivaKi Nerve Center

WPP Group
Media Innovation Group / B3

Head of Unit Edward Montes Description

Quentin George

Neeraj Kochhar

Sean Finnegan

Curt Hecht

Brian Lesser

Digital trading Custom audience Media traders using Partnering with Fox network and agency trading marketplace algorithms and data Audience Network to trade in real-time (FAN) for access to audience targeting tools DataXu Multiple platforms FAN's Audience Insights, Audience Planner and RealTime Bidding platforms Established in 2008 Announced October 2009 Multiple platforms

Digital media Optimizer of ad optimization agency network spend for premium inventory Private platform Private platform (Audience on Demand) ATOM Systems (Razorfish) Test mode in 2008; Went live in middle live clients today of 2008

Technology Platform

Status

Now operating in U.S., no longer owned by Havas

Out of beta and serving clients

December 2010

17

Demand Side Optimization Platforms (DSPs)

New breed of trading technology platforms that combine bid optimization, data integration, analytics, and supply relationships to optimize display ad buys Bloomberg terminals for the media buyers Trading desks provide the execution Adnetik, Cadreon, Varick Media, VivaKi, and B3 Attracting a lot of interest from investors and strategic buyers
Company www.adbuyer.com New York, NY www.adchemy.com Redwood City, CA www.appnexus.com New York, NY www.dataxu.com Cambridge, MA www.invitemedia.com Philadelphia, PA www.lucidmedia.com Reston, VA www.mediamath.com New York, NY www.triggit.com San Francisco, CA www.turn.com Redwood City, CA www.xplusone.com New York, NY Year Founded 2007 2004 2007 2007 2007 1999 NA Accenture, August Capital, Mayfield Fund First Round Capital, Khosla Ventures, Kodiak Venture Partners, Microsoft, Venrock Atlas Venture LLP, Flybridge Capital Partners, Menlo Ventures First Round Capital; acquired by Google in June 2010 Intel Capital, Lake Street Capital LLC, MMV Financial Inc., RBC Capital Markets Corporation, Redleaf Group Inc. Safeguard Scientifics, QED Investors LLC, European Founders Fund Bay Partners, DG Incubation, Inc., Foundry Group, Spark Capital Focus Ventures, Norwest Venture Partners, Shasta Ventures, Trident Capital ATV, Bantam Group, Inc., Blue Chip Ventures, Echelon Ventures, Hudson Ventures, Seed Partners, WS Capital Investors Capital Raised ($mm) NA $55.5 65.5 17.0 NA 22.4

2007 2006 2005 1999

16.6 4.7 38.5 30.8

December 2010

18

Data Management Platforms

Data management platforms provide cookie data to segment high value audiences Allows media buyers to target only the impressions they want Incorporating data from multiple sources offline and online Speaking the language of database marketers data management, audience segmentation, new marketing cohorts
Year Founded www.almondnet.com New York, NY www.audiencescience.com Bellevue, WA 1998 2000 Argoquest Inc. Angel Investors L.P., BDO Seidman, LLP, Cedar Grove Investments LLC, Clear Fir Partners, L.P., Deutsche Bank, Dot Edu Ventures, Gulf International Bank Private Equity, Integral Capital Partners, Mayfield Fund, MeriTech Capital Partners, Mohr Davidow Ventures, Pacific Partners, Second Avenue Partners, Staenberg Venture Partners, W Capital Partners Ascent Ventures, Bessemer Venture Partners, Venrock, Vulcan Capital Battery Ventures, BV Capital Management, eVenture Capital Partners, GGV Capital, Pinnacle Ventures, Redpoint Ventures, Sequel Venture Partners NA Capital Raised ($mm) $1.0 89.6

Company

Investors

www.bizo.com San Francisco, CA www.bluekai.com Bellevue, WA

2008 2007

6.0 35.1

www.brilig.com New York, NY

2006

NA

December 2010

19

Data Management Platforms (contd)

Company www.crosspixelmedia.com New York, NY www.datalogix.com Westminster, CO www.demdex.com New York, NY www.exelate.com Petach Tikvah, Israel www.lotame.com Elkridge, MD www.peer39.com New York, NY www.buysight.com (Formerly known as Permuto, Inc.) Palo Alto, CA www.quantcast.com San Francisco, CA Year Founded 2010 2002 2008 2006 2006 2006 NA Advantage Capital Partners, General Catalyst Partners, Sequel Venture Partners First Round Capital, Genacast Ventures, Shasta Ventures Carmel Ventures, Menlo Ventures Battery Ventures, Betaworks, Emergence Capital Partners, Hillcrest Capital Partners Canaan Partners, Dawntreader Ventures, Evergreen Venture Partners, JPMP Capital, Silicon Valley Bank Onset Ventures, Rembrandt Venture Partners Investors Capital Raised ($mm) 2.0 15.2 7.0 19.0 25.0 21.7

2008

16.0

2005

Cisco Systems, Glynn Capital Management, Polaris Venture Partners, Inc., Revolution Ventures, The Founders Fund, Western Technology Investment TA Associates, Inc.

53.2

www.targusinfo.com Vienna, VA

1993

60.0

December 2010

20

Social Targeting
Optimizing ads based on social marketing data Identifying the influencers through social connections Did you download a song? How big is your friends network? Did you comment on a picture? Activating data based on social graph and engagement
Year Founded www.33across.com New York, NY www.lotame.com Elkridge, MD www.media6degrees.com New York, NY www.seethroo.us Los Angeles, CA www.rapleaf.com San Francisco, CA 2007 2006 2008 Capital Raised ($mm) $1.3 25.0 11.8

Company

Investors First Round Capital, RoseTech Ventures, LLC Battery Ventures, Betaworks, Emergence Capital Partners, Hillcrest Capital Partners Contour Venture Partners, Coriolis Ventures, InMedia Management, U.S. Venture Partners, Venrock NA Active Starts, Dace Ventures, Felicis Ventures, JAIC America, Inc., Rembrandt Venture Partners, SoftTech VC, Inc., The Founders Fund

2007 2005

NA 1.2

December 2010

21

Ad Creative Optimizers
Dynamic ad creative optimizes ads using the best creative assets when the ad is served Ability to serve ads in different colors, images, messaging, and lay-out to different audiences in real-time and at scale Integrates third party data to determine most effective ad to serve to right audience at right time
Company www.adisn.com Long Beach, CA www.adroitinteractive.com Boston, MA www.aggregateknowledge.com San Mateo, CA Year Founded 2007 Investors Battery Ventures, MHS Capital Partners; acquired by CrowdGather in June 2010 for $7.8MM Acquired by MediaMath in April 2010 DAG Ventures, LLC, First Round Capital, FLOODGATE, Kleiner, Perkins, Caufield & Byers, NetService Ventures, OVP Venture Partners, Red Rock Ventures, VantagePoint Venture Partners, Western Technology Investment Accel Partners, eXeed Technology; acquired by Yahoo! in October 2010 Gold Hill Capital Management, KPG Ventures, New Enterprise Associates; acquired by Google in November 2009 Accel Partners, Shasta Ventures, Tenaya Capital, Time Warner Investments Capital Raised ($mm) $2.2

2008 2005

NA 34.2

www.dapper.net San Francisco, CA www.teracent.com San Mateo, CA www.tumri.com Mountain View, CA

2005

4.2

2006

7.8

2004

26.5

December 2010

22

The Ad Exchanges
Ad exchanges are the NASDAQ or NYSE for online ad inventory Provides transparent, dynamic pricing for advertisers Provides liquidity for publishers Big players already own this market

Other exchanges are getting in the game

Sell-side yield optimizers / inventory aggregators look a lot like the exchanges Today exchanges are for high volume, non-premium inventory In the future, exchanges will list premium inventory too

December 2010

23

Publishing Yield Optimizers

New platform technologies aggregate publisher inventory and optimize yield on the ad networks and exchanges Publishers sell impressions to the highest bidder Publishers can consolidate ad network relationships into a single optimizer Platforms operating in real-time bidding environment look like the exchanges
Year Founded www.admeld.com New York, NY www.pubmatic.com Palo Alto, CA www.rubiconproject.com Los Angeles, CA 2007 2006 2007 Capital Raised ($mm) $30.0 14.5 51.0

Company

Investors Foundry Group, Norwest Venture Partners, Spark Capital, Time Warner Investments Draper Fisher Jurvetson, Helion Venture Partners, Nexus India Clearstone Ventures, IDG Ventures, Mayfield Fund, News Corp., Peacock Fund, Stanford, UC Berkeley; acquired by Fox Audience Network on November 1, 2010

December 2010

24

Data Management Tools

Massive amounts of data on both the publisher side and advertiser side have opened up opportunities for companies to build data solutions Data management tools will help companies warehouse, access, monetize, and distribute data efficiently
Third Party Ad Servers Advertiser Data Management Traffic Measurement

Site Analytics

Publisher Site Ad Servers & Data Tools

December 2010

25

III. The Opportunities

December 2010

26

Lots of VC $$ Going into Ad Optimization

(Led by)

$50MM
(Led by) (Led by)

$11MM

$37MM
(Led by)

$9MM

$21MM

$8MM

(Led by) (Led by)

$15MM

$6MM

$15MM

$5MM

Source: CapIQ

December 2010

27

Ongoing Interest in the Sector, But Valuation and Fragmentation Remain Issues
Continued interest in the Ad Optimization & Targeting sector, but little action until winners are determined Strategic buyers = looking for new capabilities and/or agency relationships Internet "titans", big media, database and analytics companies, and software/diversified technology companies Finding value challenging in the market Private equity investors = looking at consolidation opportunities Solving online display advertising inefficiencies Attractive growth as marketing mix shifts online Media and research analysts have remained interested in the sector Tremendous interest in our "Mad Men to X-Men" report EVERYONE we've talked to is focused on sector Consolidation within sector Few companies with scale, growth and profitability. This will change by end of 2011
December 2010
28

Fewer Vendors, More Capabilities

Today, many companies offer pieces of the puzzle, but few offer the full suite Marketers and publishers want fewer vendors, which will drive consolidation Consolidators will seek to acquire stand-alone technologies or services to be the one-stop shop Look for acquisitions of stand-alone platforms like the DSPs (Google / Invite Media), data management platforms, ad creative optimizers (Yahoo! / Dapper), social targeting platforms, and publishing yield optimizers Ad networks should consolidate into a few power groups representing inventory and strong media relationships The Titans Arent Going Anywhere: 24/7, Google Ad Network, Microsoft Media Network, Platform A, and Yahoo! Media Network The Consolidators: Adconion, AudienceScience, Collective Media, Connexus, Specific Media, and the Titans The Targets: Adroll, Bizo, Brand.net, BrightRoll, Gorilla Nation, InterCLICK, Kontera, Tremor Media, Turn, Vibrant Media, and Yume The Question Marks: Burst Media, Casale, CPX Interactive, Tribal Fusion, Undertone Networks
December 2010
29

Who Will Own What?

The Ad Holdcos Specialized agencies with their own trading desks Traders will trade on the exchanges through multiple primary optimization platforms Will opportunistically acquire specialized technologies and services in online data, data analytics, market research, and ad creative technologies However, they are developing best of breed vendor relationships and likely wont be major acquirers in the industry The Titans Google, Microsoft, AOL, and Yahoo! will dominate the exchanges and networks Will acquire across entire spectrum of landscape Will compete for inventory listings by offering best execution and liquidity Since all have multiple capabilities across online ad technologies, they will be interested in many areas including real-time bidding, data management platforms, secondary vertical exchanges, social targeting, yield optimization
December 2010
30

Who Will Own What?

The Data Companies and Database Marketers Will pursue all data-centric technology platforms across landscape The data management platforms, demand side platforms, and social targeting companies will be a priority Database marketers with multi-channel agency services will also look at ad creative optimizers and rich media ad serving The Technology Players Look for technology leaders like Adobe, Akamai, Cisco, IBM, and others to make bestin-class technology platform acquisitions across landscape Some precedents have been set: Adobe / Omniture; Akamai / Acerno; Cisco / Tribe.net, Five Across, and Starent New entrants are also getting in on the action: Accenture / Adchemy

December 2010

31

Possible Strategic Buyers by Category

Demand Side Advertising $$
Ad Ad Traders Traders Demand Side Optimization Platforms
Ad Holdcos Ad Holdcos Data & Analytics Data & Analytics Database Database Marketing Marketing Diversified Media Diversified Media Internet Titans Internet Titans Technology Technology Ad Holdcos Ad Holdcos Data & Analytics Data & Analytics Database Database Marketing Marketing Diversified Media Diversified Media Internet Titans Internet Titans Technology Technology Ad Holdcos Ad Holdcos Data & Analytics Data & Analytics Database Database Marketing Marketing Diversified Media Diversified Media Internet Titans Internet Titans Technology Technology

Supply Side - Inventory

Ad Exchanges

Advertisers / Agencies / Media Buyers

Direct Sales Force Data Management & Publisher Tools Data Measurement & Site Analytics

Data Management Tools

Internet Titans Internet Titans Technology Technology

Publishers

Data Management Platforms

Social Targeting

Ad Holdcos Ad Holdcos Diversified Media Diversified Media Internet Titans Internet Titans Technology Technology

Display Ad Networks

Rich Media Ad Platforms

Ad Holdcos Ad Holdcos Data & Analytics Data & Analytics Database Database Marketing Marketing Diversified Media Diversified Media Internet Titans Internet Titans

Publishing Yield Optimizers Ad Creative Optimizers

December 2010

32

Opportunities by Category
Buy-side Optimization Platforms Platforms will power the trading desks of the media trading units Near-term high growth opportunity for arbs Long-term high growth opportunity as more $$$ is deployed on platforms Likely interested buyers: technology-centric agencies, data & analytics companies, database marketers, diversified media, internet titans, technology companies Data Management Platforms Near-term high growth opportunity as enhanced data drives high CPM and arbs can leverage spread Long-term high growth opportunity as audience segmentation becomes fundamental buying approach Getting high level of interest from all sides Interested buyers: technology-centric agencies, data & analytics companies, database marketers, diversified media, internet titans, technology companies

December 2010

33

Opportunities by Category
Social Targeting Near-term high growth opportunities as marketers seek social marketing buys Companies will either become data providers or agencies Likely interested buyers: technology-centric agencies, data & analytics companies, database marketers, diversified media, internet titans, technology companies Ad Creative Optimizers New breed of ad servers that optimize ad based on variable creative assets Long-term high growth opportunity as marketers adopt creative dynamic ad serving Likely interested buyers: technology-centric agencies, data & analytics companies, database marketers, diversified media, internet titans Ad Exchanges Look for the big, established exchanges to make strategic acquisitions to drive scale Near-term consolidation of niche/vertical exchanges Likely interested buyers: internet titans, technology companies

December 2010

34

Opportunities by Category
Publishing Yield Optimizers Aggregating publishing inventory and providing yield maximization from bidders Need to pick the right horse Near-term high growth opportunity for first-movers who aggregate high volume inventory Likely interested buyers: technology-centric agencies, diversified media, internet titans, and technology companies

December 2010

35

Select 2010 Acquisitions /

~$70MM

Google acquires realtime bidding capability for display ads Invite Medias technology will work within DoubleClicks display Ad Exchange

Amount unknown

Technology acquired: MyAds self-service ad-buying platform, FANs SDC publisher ad server, technology for targeting, and audience analytics and real-time bidding algorithms (excluded: FANs third-party ad network) Looking to build a platform that offers a portal for automating the buying process, realtime bidding, and access to ad exchange (April 2011 launch)

~$55MM

Provides Yahoo! the ability to serve dynamic, contextual display ads on its properties

December 2010

36

IV. How Gridley Can Help

December 2010

37

Gridley Can Help You

Understand the dynamics of this industry in transition Identify the companies on our market map that best fit your interest areas weve met with these companies and know their CEOs We know their strengths, weaknesses, and key market positioning We know their management teams and investors Navigate the Ad Holding Company, Database Marketing, and Data Management Platform worlds Identify the financial investors and strategic investors most interested in this emerging sector Execute your financial objectives Sell-side Advisory Services Buy-side Advisory Services Private Placement Agent Services
December 2010
38

Highly Focused Industry Expertise Underlies Our Investment Banking Services

Founded in 2001, headquartered in New York, NY Sharp focus provides valuable strategic insights and perspectives for clients Advertising & Marketing Services
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Internet Services
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December 2010

39

About Gridley
Leading boutique Investment Bank specializing in Information Services Comprehensive perspective on Advertising, Marketing, Financial Technology and Information Services trends and transactions Strong industry reputation on assignments led by senior bankers Sell-side = Excellent strategic positioning and valuation Buy-side = Deep knowledge and access to emerging companies and industry trends Trusted advisor and strategic matchmaker Thoughtful M&A ideas not just the logical public company combinations Deliver value to buyers and sellers alike Broad industry network developed over 20+ years Industry leaders, hot emerging growth companies, and senior investors Senior executives on Gridley Advisory Board Well-known thought leader Host of leading Annual Information Services Conference and participant in industry events Member of the Interactive Advertising Bureau Highly regarded quarterly newsletter 2,200+ distribution Sought after commentator and resource for the media
December 2010
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Significant Relevant M&A Experience

Gridley has expertise across database marketing and internet services

Undisclosed

Undisclosed

Undisclosed

Undisclosed

Undisclosed
Marketing One to One, Inc. d/b/a

Undisclosed

Database Marketing

Acquired by MDC Partners Inc. Advisor December 2009

Sold to Parthenon Capital LLC Advisor August 2006

Acquired by Schulman, Ronca, & Bucuvalas, Inc Advisor November 2004

Acquired by Valassis Communications Inc Advisor September 2004

Acquired by Carlson Marketing Group Advisor August 2003

Sold to Alliance Data Systems, Inc. Advisor January 2002

Undisclosed
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Undisclosed

Undisclosed

Undisclosed

Undisclosed
Acquired Silverlign Group Inc. Advisor April 2009

Acquired FetchBack Inc. Advisor May 2010

Acquired M3 Mobile Marketing Advisor April 2010

Acquired Pepperjam Advisor September 2009

Internet Services
$20,000,000
Investment by TZP Group LLC Placement Agent December 2008

Undisclosed

$157,000,000

Undisclosed
Email Business of

Undisclosed
Ad serving Business of

Acquired Ward Media, Inc. Advisor March 2008

Acquired e-Dialog, Inc. Advisor January 2008

Sold to One to One Interactive, Inc. Advisor July 2007

Sold to Aegis plc Advisor June 2007

December 2010

41

Leading Annual Industry Conference Showcases Our Extensive Network of Relationships

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December 2010

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December 2010

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Frequent Participation at Industry Events Further Extends Our Network and Showcases Our Thought Leadership
Conferences with Gridley Participation
Dec. 2010 Nov. 2010 Business Insider: IGNITION Digital Hollywood NYC: Media Disruption Speaker How to Build a $1 Billion Content Business in Three Years or Less Moderator - Private Equity and Investor Strategy Panel - The Technology and Entertainment Based Company: From First Round to Implementing the Revenue Growth Target Strategy Keynote Speaker Digital: Taking a BIG Bite out of the Big Apple Panelist: Im With the Brand: Is Ad Net Inventory Ready to Lift the Right Metrics? Speaker: Innovation and Shareholder Value: Why You Need to Take Analytics Real Time Speaker: How to Play Your Hand in the M&A Market Panelist: Pricing Private Companies: Whats the 2010 Strategy? Panelist: Is the Long Tail Wagging? Have the Vertical Networks Lived Up to Their Own Hype? Panelist: Role of Institutional Advertising in Shaping Internet Advertising Moderator: Are Verticals Standing Up? Panelist: Resolved: Sorry, Its Still Not Ready

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ad:tech NYC 2010

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Mar. 2010 Feb. 2010

SIIA Digital Media & Software Investment Conference OnMedia NYC 2010

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Audience is King: Targeting the Challenges of 2010 LeadsCon East Ad Network Gold Rush - Boom or Bust? Mobile Marketing

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December 2010

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More than 2,200 Senior Industry Executives Read Our Quarterly Newsletter
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December 2010

46

Selected Recent Gridley Transactions

Gridley clients include industry leaders and premier emerging growth companies Gridley provides strategic advisory work in addition to the transactions listed below
$20,500,000 Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed

Acquired by

Acquired by

Acquired

Acquired

Acquired by

Acquired

Acquired

The Dolan Company

Advisor

WPP Group plc

Advisor

FetchBack Inc.
Advisor

M3 Mobile Marketing
Advisor

MDC Partners Inc.

Advisor

Pepperjam
Advisor

Silverlign Group Inc.

Advisor

$20,000,000

$367,000,000

$157,000,000

Undisclosed

Undisclosed

Undisclosed
Email Business of

Undisclosed
Ad serving Business of

Investment by

Acquired by

Acquired

TZP Group LLC

Placement Agent

Roper Industries, Inc.

Advisor

e-Dialog, Inc.
Advisor

Acquired by

Acquired by

Sold to

Sold to

WPP Group plc

Advisor

Quest Software
Advisor

One to One Interactive, Inc.

Advisor

Aegis plc
Advisor

Undisclosed

$113,189,337

$17,450,000
PrePay Intelligent Network Solutions (INS) Business Unit of

Undisclosed

Undisclosed

$138,000,000

Undisclosed

Sold to

Secondary Offering

Acquired by

Acquired by

Acquired by

Acquired

Acquired by

Parthenon Capital LLC

Advisor Co-Manager

Verisign
Issued Fairness Opinion

Schulman, Ronca, & Bucuvalas, Inc.

Advisor

ISIS Equity Partners, Inc.

Advisor

Modem Media, Inc.

Advisor

Valassis Communications Inc

Advisor

$58,000,000

Undisclosed
Advisory Communications Systems, Inc. (ACS) d/b/a

$55,200,000

Undisclosed
Marketing One to One, Inc. d/b/a

Undisclosed

Acquired

Acquired by

Performics, Inc.
Advisor

ARAG Group
Advisor

Follow-On Offering
Co-Manager

Acquired by

Acquired by

Carlson Marketing Group

Advisor

Alliance Data Systems, Inc.

Advisor

December 2010

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Gridley & Company LLC 10 East 53rd Street, 24th Floor New York, NY 10022 212.400.9720 tel 212.400.9717 fax Twitter: @gridleyco www.gridleyco.com

December 2010

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