Criteo Completes Its $250 Million Acquisition of HookLogic

November 10, 2016

picture2Today, Criteo announced the completion of its $250 million acquisition of HookLogic, a leading performance marketing company. By acquiring HookLogic, Criteo will be able to bolster its commerce-focused, performance marketing platform and strengthen its relationships with brand manufacturers and retailers.

LUMA represented HookLogic in the transaction.

Commerce companies are now finding new opportunities to monetize their large audiences and significant data assets by augmenting revenues through advertising and driving conversions on their properties. HookLogic has stood out as a leader in this space by providing the platform retailers utilize to sell advertising on their sites. By doing this, HookLogic has also provided brand manufacturers the ability to promote their products at the point of purchase, driving performance-based marketing tied to actual sales.  At LUMA, we expect this trend to continue as more companies work to tie advertising spend to business outcomes versus proxies.

Through the acquisition, Criteo will be able to expand its performance marketing business beyond retailers, to the brands that retailers sell, as well as increase its retail partner base. In addition to new clients, Criteo and HookLogic will also benefit from their collective data and predictive technologies, adding more value to existing clients.

Congratulations to HookLogic and Criteo!

SGN has agreed to acquire TinyCo

July 8, 2016

On Tuesday, July 5th, SGN announced the acquisition of TinyCo, the mobile gaming pioneer behind hit titles including Family Guy: The Quest for Stuff and Marvel Avengers Academy. Suli Ali, TinyCo’s founder & CEO and his 125-person team will help SGN expand into builder and simulation games and strengthen its position as a mobile gaming entertainment franchise, with TinyCo’s demonstrated ability to launch successful games incorporating IP from the world’s biggest brands.

LUMA represented TinyCo in the transaction and is thrilled to announce it’s first gaming deal, building upon Dick and Mark’s experience advising several leading companies in the sector.

In an increasingly competitive gaming market, scale and portfolio diversification are critical and this tie-up of two stalwarts of the Top Grossing charts accomplishes both. More than 100 million players have downloaded TinyCo’s current games and SGN boasts 50 million monthly active users. The combined company expects to generate $500 million in revenue in the next year and is poised for continued growth with 400 employees and a slate of exciting new titles in the works.

Congratulations to TinyCo, Andreessen Horowitz and SGN!

LUMA’s Digital Media Summit 2016

June 5, 2016

LUMA’s 8th Digital Media Summit was a huge success and that’s only thanks to the 500 industry decision makers, including over 300 CEOs, 100 investors and 100 strategic buyers that participated, who led the discussions or supported DMS 16 as sponsors and corporate partners.

With 2016 being the presidential election year and digital advertising supply chain issues becoming more of a focus in the industry, choosing this year’s theme was not difficult: “Scape of Cards” perfectly portrayed the sector suffering from a fragmented ecosystem. See what all happened on May 17th in our DMS video recap below.

At DMS, we presented our annual State of Digital Media which covers our views on the market, the industry trends and the future of the ecosystem. We hope you enjoy it.

The State of Digital Media video presentation at DMS, plus videos of all the main stage talks, participant list and photos are available at the DMS website.

The Marketing Cloud War Heats Up

June 2, 2016

It has been a big week for MarTech M&A. Yesterday it was announced that Vista Equity Partners is acquiring Marketo for $1.8B. Today, Salesforce announced it is acquiring Demandware for $2.7B.

It is no surprise that Marketo is being acquired, since in early May it was reported that they had hired an M&A advisor to “explore strategic alternatives.” At that time SAP and Microsoft were revealed as potential interested parties. These both made strategic sense. Microsoft could couple Marketo with Microsoft Dynamics (its CRM offering), similar to Salesforce with its Pardot offering. SAP also has a CRM offering that it could integrate with, though the more logical play would be for SAP to enter into the “marketing cloud” space with Marketo as its platform to build around, just as it entered the HR space with its SuccessFactors acquisition in 2012.

So what is surprising is the buyer: Vista Equity, a leading private equity (PE) firm. A “strategic” buyer, such as Microsoft, SAP or IBM, has the ability to layer in more synergies than a “financial” buyer, with both cost reductions (such as eliminating redundant positions and offices) and revenue synergies (such as cross-selling products to existing customers). A PE firm has less synergy “levers” to pull – and therefore typically cannot justify the same valuations that strategic buyers can pay. But Vista paid a “strategic” price: $1.8 billion, a 7x trailing revenue multiple. If this were a typical “PE play” where the firm is focused on profitability, Vista would need to make significant OPEX cuts while maintaining revenue growth in a competitive market. Vista is well known for driving exceptional results utilizing its “specific operational improvements” to optimize the operations of its portfolio businesses, but we don’t believe this is the only play here. At LUMA, we have been receiving an increasing number of PE firms asking to discuss potential MarTech or Ad Tech roll-ups, since these are fragmented ecosystems with many targets. And with VCs pulling back on investments, there is a greater incentive for private companies to sell. Therefore, look for Vista to move aggressively with other MarTech acquisitions using Marketo as its core asset. Now is the time, and Vista has the capital.

The Demandware acquisition by Salesforce is a very smart move that makes perfect strategic sense, though they paid a steep price for it (a 10x revenue multiple and 70% premium to its 30-day share price average). There has long been three leaders in the eCommerce platform space: IBM with its WebSphere Commerce offering, Oracle with its ATG acquisition and SAP with its Hybris acquisition. But all these are largely on-premise software solutions. Demandware has been the up-and-comer in the market and is a cloud-based solution that fits Salesforce’s “no software” mantra. More importantly, it is extremely complimentary to its Exact Target business. What is the top marketing channel with the highest ROI used by retailers? Email. While Demandware will also logically fit with Salesforce’s Sales and Service Clouds, it is the combination of the Marketing Cloud (Exact Target) with Demandware that will drive the most value. This acquisition definitely changes the dynamics in the battle of the marketing clouds, with only Adobe now lacking an eCommerce platform offering.

As mentioned above, the fundraising environment has been tightening for MarTech companies, and is even more constricted for Ad Tech start-ups. The number of investments are down, as are average valuations. This, plus the fact that both categories are very fragmented with thousands of players, has created a target-rich acquisition landscape of willing sellers. Additionally, at LUMA we have been discussing for some time how the buyer universe has been expanding, as shown in the graphic below.

Now add private equity to the mix – and expect many more deals to come!


Introducing the Knowledge LUMAscape

May 19, 2016

Digital media and marketing is a complex, dynamic and often convoluted space. Understanding the ecosystem is essential for all constituents from marketers to agencies, publishers, tech intermediaries and investors. At LUMA, we are committed to help foster better comprehension of the sector with the LUMAscapes that map the key players in each channel as well as other content we publish. But we are not alone. In fact, there is an entire network of knowledge sources from a variety of disciplines that can help with navigation of the digital landscape.

The Knowledge LUMAscape is our attempt to map these various knowledge sources.  We hope the Knowledge LUMAscape will become an invaluable tool to all constituents by presenting the key players in each discipline in a visually simple way you have come to expect from the LUMAscapes.

LUMA enjoys relationships with many of these players and welcomes collaboration to help serve client needs.

If you have any feedback, we would love to hear from you at lumascapes@lumapartners.com!