Marin Software Inc (MRIN) 2013 Q2 法說會逐字稿

Greetings, and welcome to the Marin Software Second Quarter 2013 Financial Results Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation.

(Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to introduce your host, Mr. Greg Kleiner, Senior Vice President of Technology Software for ICR. Thank you, Mr. Kleiner. You may begin.

Thank you. Good afternoon, everyone, and welcome to Marin Software's 2013 second quarter earnings conference call. Joining me today are Chris Lien, Marin's founder and CEO, and John Kaelle, Marin's EVP and Chief Financial Officer.

By now you should have received a copy of our press release, which crossed the wire approximately one hour ago. If you need a copy of the press release, you can go to investor.marinsoftware.com to find an electronic version.

Call participants are advised that the audio of this conference call is being recorded for playback purposes, and that a recording of this call will be made available on our website within a few hours. You can access these recordings through the investor relations section of our website.

Before we begin, I'd like to note that our discussion today will include forward looking statements within the meaning of the Securities Act of 1933, and the Securities and Exchange Act of 1934. These forward looking statements include statements about our business outlook and strategy, and the statements about historical results that may suggest trends for our business. We make these statements as of August 7, 2013, and disclaim any duty to update them.

For more information regarding these and other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward looking statements, as well as risks relating to our business in general, we refer you to the sections entitled Risk Factors in our more recent report on Form 10-Q and our other filings with the SEC.

I would also like to note that any forward looking statements made on this call reflect information and analysis as of today. This presentation contains certain financial performance measures that are different from the financial measures calculated in accordance with GAAP, and may be different from calculations or measures made by the companies.

A quantitative reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available on our Second Quarter of 2013 Earnings press release.

And with that, let me turn the call over to Chris.

Thank you, and welcome to everyone joining us on the call today. I'm pleased to report that Marin had another strong quarter in Q2, with revenue growth of 30% over the same period last year, and exceeded our guidance across the board.

As the $100 billion global digital advertising landscape continues to both shift and grow at a rapid pace, digital marketers are struggling to address the complexity, fragmentation, and scale challenges of online advertising.

Marin's SaaS-based platform enables marketers to measure, manage, and optimize their advertising spend across search, display, social, and mobile channels. We continue to lead the way in the revenue acquisition management, or RAM, market, providing a next generation solution to digital marketers that enables them to capitalize on this rapidly changing environment, driving better financial performance, time savings, and better business insights.

With the June quarter, Marin has now delivered 17 straight quarters of sequential quarterly revenue growth, with $18.2 million in revenue, exceeding the high end of our guidance. In addition, lower than expected expenses also contributed to bottom-line results that were better than our guidance.

We served 584 active advertisers during Q2, an increase of 42, from 542 that we served in Q1 of this year, and up 20%, from 487 active advertisers in Q2 of last year.

Some examples of the new deals we signed this quarter in the US included Microsoft, Dealertrack Technologies, Palo Alto Networks, and Sykes Cottages, among others. We also added Ford Retail Group, BRANDOS, and Web Guide Partner in EMEA, and NIM Digital, Bohemia, Shiseido, in the APAC region.

I'd like to share some additional details about a few deals in the quarter. We're very happy to announce that the US advertising division of Microsoft Windows selected the Marin platform to power their digital advertising initiatives. The Microsoft team chose Marin largely due to the strong integration offered by our platform into the Atlas ad serving and tracking platform. Atlas, which was recently acquired by Facebook, helps convert tracking data into actionable insights and automated bid optimization.

As we've mentioned in the past, our ability to seamlessly integrate third party data from a variety of sources is a key differentiator in competitive situations. In addition, Marin demonstrated the ability for Microsoft to glean insights across products, markets, and business divisions, with reporting flexibility not available through competing solutions.

In EMEA, Marin was selected by Ford Retail Group in the U.K. this past quarter. Boasting annual revenues of more than EUR1 billion, Ford Retail is the world's largest Ford dealer group, operating over 50 Ford dealerships. In an effort to enhance profits, Ford Retail's goal is to continuously optimize their cost per lead model.

With Marin, Ford Retail is now able to align regeneration outcomes to specific digital marketing activities. The improved program measurement and visibility will allow Ford Retail to optimize their campaigns with the goal of ultimately improving the profitability of their online advertising investments.

In addition to the direct customers I just mentioned, I also wanted to highlight an important new agency relationship that we added during the past quarter in Japan, which is the third largest online advertising market in the world.

During Q2, we signed a deal with OPT, Inc., one of the largest digital marketing agencies in Japan. OPT is now implementing the Marin platform as a standard service offering within OPT's digital marketing support system, which they call ADPLAN LS. OPT chose to leverage our platform due to advanced optimization technology, intuitive workflow, and our ability to integrate third party data.

OPT also joined the Marin software certificate agency program, and plans to build up a team of over 100 Marin certified specialists. As you can imagine, this was a highly sought after relationship by many companies. We are very proud of our win here and the further validation it provides for our people, technology, and domain expertise.

We also made great progress with our clients as we helped them to migrate their digital advertising campaigns, to take advantage of both Google's enhanced campaigns and Yahoo's Japan's unified campaigns.

These new offerings help advertisers to optimize ad performance by desk top, tablet, or mobile. More so than other vendors, Marin delivers this capability regardless of the tracking technology used. All told, this past quarter, we built or rebuilt more than 1 billion URLs, with a good portion of those migrations handled automatically by our platform. This required a great deal of effort by our teams worldwide, and demonstrates the ability of our platform to operate at scale, as well as our commitment to customer success.

From an innovation perspective, in the social arena, we launched a new version of our Facebook offering, Campaign Wizard, in the second quarter. This offering automates the campaign creation process, allowing clients to scale their Facebook programs quickly and efficiently.

The initial reception for these Facebook enhancements has been strong, as we are seeing an increasing number of clients taking advantage of this offering. Leading advertisers using Marin's Facebook advertising management functionality include Macys.com, and Disney.

As you saw this past quarter, both Google and Facebook's results, the mobile space is increasing in importance. On the mobile side, we launched additional functionality to help advertisers maximize their mobile performance. In particular, our platform now helps to automatically calculate and recommend optimal campaign level mobile bid adjustments, saving advertisers considerable time and effort, along with improving outcomes.

During Q2, in a representative sample of Marin customers, smartphones grew share of impressions, clicks, and ad spend, at the expense of desktop and laptop computers. Smartphones also showed higher ad spend per thousand impressions. Given these trends, thoughtful mobile ad management presents a growth opportunity for Marin, and an opportunity for Marin's advertisers to save time and drive better revenue outcome.

In addition to our product innovation and support of our customers, I'm happy to note that we continue to add to our management team in support of our global growth plans. I'm pleased to say that we recently added Matt Ackley as Chief Marketing Officer. Matt has over 15 years of leadership experience at eBay, Google, and other startup companies.

Matt has the experience as an advertiser from his time at eBay where he was the VP of advertising and internet marketing. In that role, Matt was directly responsible for some of the largest online advertising budgets, as well as leading the use of advanced online advertising technologies at scale.

Matt also has strong relevant product experience from his time at Google, where he was VP of media platforms market development, responsible for all product and industry marketing activities for the Google Display Network, DoubleClick platform, Google Analytics, and others.

We're also pleased to report that we hired industry veteran Brian Kaminski, as Senior Vice President of Customer Success. Brian joins our leadership team after nearly 15 years at one of the industry's largest digital marketing agencies, iProspect. Most recently, Brian served as the president of Business Performance, where he was responsible for all new business development.

At Marin, Brian will bring his expertise and knowledge to our customer facing groups, overseeing our account manager and online marketing manager teams, focused on our direct advertisers. We're very excited about both Matt and Brian's addition to our executive team at Marin, and look forward to their contributions going forward.

So, to sum up, as I look at our performance this quarter, we were pleased to deliver strong revenue growth and financial performance that exceeded our guidance. Marin continues to make good progress, solidifying our leadership position in this new category of online advertising management that we call revenue acquisition management, or RAM.

Marin Software as a service platform continues to be adopted by leading advertisers and agencies worldwide, as they seek to leverage technology to better measure, manage, and optimize their digital advertising investments across search, display, social, and mobile channels.

Leading marketers are leveraging Marin's platform to turn this dynamic online advertising market to their advantage, driving superior revenue outcomes, time savings, and better business insights. We are in the early innings of the multi-billion market opportunity, and we see a bright future for Marin, as more and more marketers choose our solution.

And with that, let me turn it over to John to run through the financials in more detail.

Thanks, Chris. As Chris mentioned a moment ago, our Q2 results were strong, with revenues coming in at $18.2 million, up 6% sequentially, and 30% year-over-year. This success is driven by strength across both our direct and agency clients, with revenues from our direct advertisers representing 51% of total revenues, and our agency advertisers contributing 49%, a mix consistent with recent periods.

Geographically, our international advertisers represented 31% of total quarterly revenues, up 5 percentage points from the 26% contribution in Q2 of last year, highlighting that our international investments are delivering strong results.

We served 584 active advertisers in Q2, up 42 sequentially from Q1. In addition to our healthy number of new advertisers added to the platform in Q2, the increase compared to Q1 was also due, in part, to a number of advertisers moving above the $2,000 revenue threshold used in our active advertiser definition.

As we discussed last quarter, there will be a certain degree of quarter-to-quarter variability in our active advertiser metric, due to advertisers that may move above and below the $2,000 revenue threshold in any given period. What is most important, from our view, is the long-term trend in this metric.

During the quarter we saw continued progress with both extending the length of our contracts, and collecting more of the contractual minimum fee payment up front. Regarding the length of our contracts, we had success in some customer opportunities with two-year deal structures, and we had one large customer renew for three years during the quarter.

Overall, we're finding that the average contract lengths are increasing. We believe this is a strong indication of the value that our customers are receiving from the Marin platform.

As for the trend in upfront minimum fee payments, this is more prevalent in renewals at the moment, but we are seeing growing acceptance of this approach in new business as well. Improvement on these fronts will likely continue to take time, but the contract guidelines we've put in place are generating increasingly positive results.

For the quarter, our revenue retention metric was in the high 90s. This metric tends to vary from quarter to quarter due to a number of factors, and though it's typically been above 100%, it has dipped below 100% in the past.

As a reminder, revenue retention tracks revenue from all advertisers in the corresponding prior year period that remained advertisers in the current period, and includes growth and spend from retained advertisers, net of churn. For the balance of the year, we expect this revenue retention metric to remain relatively consistent with recent results, ranging from the high 90s to around 100%.

So, before moving on to the profit and loss items, I'd like to point out that I will be discussing non-GAAP results going forward. Unless otherwise stated which, for the second quarter of 2013, excludes a total of $1.3 million in stock-based compensation, $73,000 of non-cash expenses from the issuance of warrants, and $256,000 of amortization of capitalized research and development costs, while adding back $916,000 of capitalized R&D costs. A detailed reconciliation of our GAAP results to the non-GAAP results can be found in our earnings release.

For the quarter, non-GAAP gross profit was $11 million, up 33% when compared to $8.3 million in the year ago period. Our non-GAAP gross profit margin came in at 61%, up from 59% in the year ago period, and 60% in Q1 of this year.

Our investments in both infrastructure and international expansion should continue in the short term, which impact the margin, though we plan to make annual progress towards our long-term target non-GAAP gross profit margins in the 70% to 72% range.

Second quarter non-GAAP sales and marketing expenses were $10 million, compared to $7.9 million in Q2 of last year, driven by expansion in both sales capacity and our marketing efforts. Our sales and marketing spend was down slightly on a sequential basis, reflecting some incremental marketing expenditures surrounding the IPO during the first quarter, that did not reoccur in Q2, along with a positive in some hiring and expenditures ahead of our new CMO, Matt Ackley's arrival.

Q2 non-GAAP research and development expenses grew to $5.5 million in the period, up from $3.5 million in the second quarter of last year. As we've indicated in the past, we will plan to continue to invest aggressively in R&D in the short term, to further our product differentiation in the market.

Non-GAAP G&A expenses were $3.6 million in the period, compared to $2.4 million in the prior year's Q2, driven largely by the cost of being a public company, along with our continued global footprint expansion and international office grows in London, Paris, Hamburg, Sydney, Tokyo, Dublin, and most recently Shanghai.

On the operating line, we produced a non-GAAP operating loss of $8.1 million in Q2, compared to a $5.5 million non-GAAP operating loss we posted in Q2 of last year. This was favorable to our guidance range, driven by revenue websites and the hiring and expenditure timing I mentioned earlier.

As we have previously discussed, we remain in investment mode currently, as we seek to further our leadership position in our large market. Our non-GAAP net loss for Q2 was $8.4 million, which led to a non-GAAP loss per share of $0.26, based upon a weighted average share count of 32.2 million. This compares to the Q2 2012 non-GAAP net loss of $5.7 million, and a non-GAAP loss per share of $0.26, still based upon a weighted average share count of 21.5 million shares last year.

Our adjusted EBITDA was a loss of $7 million in Q2, compared to the loss of $4.8 million in the same period last year. We ended the quarter with $120.6 million of cash and cash equivalents on our balance sheet, up from $115.5 million at the end of Q1. This figure includes the benefit of an incremental $14.6 million in net proceeds from the Q2 exercise of the over-allotment option from our initial public offering.

Our deferred revenue balance increased again in Q2, with a balance of $3.8 million at quarter's end, compared to $1.4 million at the end of Q1. While the sequential increase did include one large prepayment, the trend overall is reflective of our improved ability and intent to collect our contractual minimum payments up front.

However, as mentioned previously, a majority of our customer base still pays us monthly in arrears, based upon their spend. As such, the quarterly trend in this deferred revenue figure will likely remain volatile, and not act as a good proxy for the overall health of our business in any given period.

Now, let me turn to guidance for our September quarter, and the 2013 year as a whole. For the quarter ending September 30th, we expect revenues to range from $19.6 million to $20 million, or a growth of 26% to 29% year-over-year. And non-GAAP loss from operation should range from $8.5 million to $8.1 million. This should lead to a non-GAAP net loss per share in the range of $0.28 to $0.26, based upon a weighted average share count of 32.4 million.

For the 2013 calendar year, we now expect revenues to range from $76 million to $76.8 million, or growth of 28% to 29% year over year, an increase over our prior guidance of $75 million to $76.2 million. And non-GAAP loss from operations should range from $33 million to $32.2 million, an improvement compared to our prior guidance of a loss of $34.5 million to $33.5 million.

This should lead to a non-GAAP net loss per share in the range of $1.15 to $1.12, based upon a weighted average share count of 30.5 million, an improvement compared to our prior guidance of a net loss per share of $1.19 to $1.16.

So, in summary, we were pleased with our results in the quarter, and are encouraged by our momentum headed into the remainder of 2013. As we look ahead, we plan to continue investing in our growth initiatives. We are highly focused on further solidifying our leadership position in this large and growing market, helping digital marketers at the world's leading advertisers and agencies to measure, manage, and optimize their spend across search, display, social, and mobile channels.

With that, I want to thank you all for your time, and I'll turn it back over to the operator to open it up for questions.

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. (Operator Instructions). Our first question comes from Greg Dunham of Goldman Sachs. Please go ahead.

Hi. This is Jameson in for Greg. Could you speak a little bit more about the lower operating expenses than you expected in the quarter? And then, also, you've grown self-capacity pretty significantly over the past year. How do you look at that going forward with the growth in self-capacity? Thanks.

Sure, (inaudible). This is John. The first part of your question was just the operating expense? We -- I touched on it a bit on my script. One, just in terms of the [beef] for the [EPS] guide, revenue came in above the top end of the guidance, so we were pleased with that.

And then in terms of the operating expenses, we did hold back a little bit and pause as we were finishing off the recruiting process and bringing Matt Ackley on board. So that was part of the delay, a little bit of hiring delay related to that. But that spend should continue going forward.

I'd just also point out that as we -- we're still in investment mode, so we'll continue to, you know, invest in the business, but we are keeping an eye on our profitability goals in the next couple of years. And then I think the second part of your question, remind me again?

(Inaudible).

Yes, again, we're not, you know, we're not discussing or disclosing the number of quota-carrying reps, but we continue to add to the team. We're pleased with their productivity, pleased with how the team is doing, and, you know, continue to invest in that part of the business.

Okay. Thank you.

Thank you. The next question is from Nandan Amladi of DeutscheBank. Please go ahead.

Hey, guys, good afternoon. It's actually Stan Zlotsky sitting in for Nandan.

Thank you for taking my question. So, I'll start with the first one. So, then, in the quarter-on-quarter growth in new customer additions, it rebounded to 7.7%. Help us a little bit and understand how much of that came from your actual new customer adds, versus, you know, customers coming back above the $2,000 per month threshold?

Sure. Yes, so, how I'd characterize it is we had a really healthy set of new adds in the quarter. In fact, it was, obviously by the metric, a sequential increase.

What I'd say is the last quarter we talked about how that threshold, that $2,000 threshold -- and again, just to make sure you understand the metric and the definition. We count you as an advertiser if we've earned at least $2,000 of revenue with you in the particular quarter.

So, last quarter we had a set of advertisers, or an aggregate, who were still on the platform, but they fell underneath, from the fourth quarter into the first quarter, they fell underneath that $2,000 threshold, so they were not counted as an advertiser. So that was a net deduct from the quarter.

In this quarter, those advertisers, or group of advertisers, were actually a net add to the metric in the quarter. And we're not going to go into details and provide, you know, the specifics or the actual numbers, other than to say that we were pleased with the adds for the quarter and felt that it was a very healthy set of adds.

Okay. Sounds good. And then on the -- on, just, overall spend environment in -- that you saw in the quarter, and now that we're, you know, we're about halfway through the year, I mean, how is that trending, and have you seen any holdup in customer add spend as a result of the migration to Google's enhanced campaign?

Hey, it's Chris here. Spend continues to be healthy.

We don't disclose that on a quarterly basis, on the platform, but when we look at the trends through the course of this year to where we are in August, that the spend trend has been a healthy one. And then, in particular, we haven't seen a decrease in advertising spend due to the migration to enhanced campaigns with Google, or unified campaigns in Yahoo, Japan.

Just to be clear, that migration with Google occurred on July 22nd, so any impact from that would have been quite modest in the second quarter, but as we look out over the rest of the year, we see enhanced campaigns as a neutral to positive for the business. In general, advertisers are looking forward to leveraging this new functionality to further drive revenue outcomes through their mobile advertising.

Okay. Thank you. And then just the last one, just to follow up on the first. That's a question from the Goldman analyst. What -- help us characterize the productivity. I know you're happy with the productivity, but as the productivity been trending up? Or, I mean, I would presume so, but can you help us characterize it a little bit more?

Yes, so, at a high level, the sales team productivity has been consistent with prior periods. And by that, both tenured reps who are fully ramped and carrying quota have been producing at the -- consistent with historical levels. And then we've been very pleased with the new reps who are ramped and are taking quota are also producing at a level consistent with existing reps. So we're not seeing a falloff in quota achievement, as we add the new capacity.

Okay. Perfect. Thank you very much, guys.

Thank you. The next question is from Brent Thill of UBS. Please go ahead.

Good afternoon. Chris, beyond search, can you just help us understand the revenue impact to the model over time? And you had specifically called out mobile for Facebook. You know, when do you start to see these new initiatives show up in the business?

Sure. So we -- as of the second quarter, about 23% of the spend on the platform is due to mobile. So it's important for investors in the company to understand that the largest mobile ad unit is Mobile Search. So as mobile more widely adopted both by consumers and by advertisers, Marin inherently benefits from that.

With regard to social, or non-search, channels, that's still is at a level that's less than 10% of our revenue, although the overall dollars that are in social, and that are in performance display are -- continue to grow quarter-over-quarter for us. At the same time, obviously, our quarter-over-quarter revenues due to paid search also continue to show growth rates above the industry average.

Okay. And if you take -- just to the customer number, if you take the first half of this year versus last year, you're down about 45% on your net and your customer adds. And you mentioned some pretty high caliber customers, so I'm just curious if you could -- if you characterize the decline in net new adds just that you're starting to see a healthier mix of large enterprise clients as you shift your sales process, and in many ways that those clients can actually be a lot better than just looking at a pure net new customer add number.

Yes, I think your observation is a fair one. I mean, we are adding -- continue to add very large advertisers to the platform. Again, in the way that this metric is put together, we count an advertiser, like a Microsoft, as one advertiser, and clearly there can be a significant amount of additional business there as we land and then expand with that account.

But you're correct that the rate of net new adds has decline, although we did add a healthy number of active advertisers in this past quarter, both winning new agencies where we'll expand our business over time, such as with OPT, and then winning direct advertisers as well.

Okay. And, for John, just a quick follow-up. The contract length -- what is the average now? You mentioned it is increasing. What is the average now?

Yes, Brent, I -- I don't have the exact math in front of me. I believe it is right around a year mark, though.

Great. Thank you.

(Operator Instructions). The next question comes from Jason Maynard of Wells Fargo. Please go ahead. Mr. Maynard, your line is live.

All right, Manny, why don't we go to the next caller?

All right. The next question is from Jason Maynard. Please go ahead. Mr. Maynard, your line is live.

Can you guys hear me now?

Yes.

Can you guys hear me now?

Yes, we can, Jason.

Oh, there we go. All right. Awesome. I had a couple questions. I wanted to follow up, Chris, a little bit with -- some of your -- what do you think the drivers are, either externally in the market or perhaps internally with your go-to-market efforts to increase, if you will, adoption around mobile and social? Give maybe just some color commentary there.

And then, two, I'd love to get a little bit more granularity on some of the outperformance we saw in the international market, where you can figure out the evolution of penetrating those different regions, especially with some of the wins that you cited in Japan.

And then the last piece, you know, with the new CMO coming on, you know, how much of the focus is going to be on pushing this revenue acquisition management message into the marketplace? And how do you think that system will bring together, perhaps, greater usage of the various products within the platform, [something] a larger account. Thanks.

Sure, and thanks, Jason. So, the first question was -- or first part of the question, with regard to driving mobile and social, I mean, that'll come over time. But generally we are landing customers based on our paid search offering. And then, over time, they are adding or attaching social. I -- I, again, would highlight that.

We pick on mobile almost by default, in that mobile is -- the largest add unit in mobile is Mobile Search. So there isn't something separate that we do there, and then Google's activities with enhanced campaigns further make mandatory the use of Mobile's advertising with search.

For social, we're seeing growing adoption of the Facebook platform but, again, that's principally in our install base where customers who already know and see value in the Marin platform from paid search are then adding social.

On international, we began selling overseas in 2009. We are the most widely used in terms of media managed on our platform in Europe, although we still have very low penetration in much of continental Europe and also in the U.K., despite having many leading advertisers in Europe and many leading agencies.

So we count MoneySupermarket, which is the largest direct online advertiser in the U.K. as a customer, and yet there are many other direct advertisers and agencies that we're still seeking to sign up, be it in the U.K. or across continental Europe.

When we look over to Asia, in particular Japan and Australia, we only began selling there in the last two years, and we're seeing strong uptick in both of those markets. In Australia, two of the larger direct advertisers in that market also use our platform, which are Telstra and Hollard Insurance.

And then in Japan, we're seeing strong adoption across agencies, and also count large advertisers such as Recruit, which is one of those -- the five largest online advertisers in the Japan market, as customers of Marin. So, it's early days for us internationally, even though international is over 30% of our revenue this quarter. And we're seeing those growth rates higher than in our more established markets, just because we're newer in those markets.

And then the final comment or section of your question, on the revenue acquisition management positioning, and our new CMO, we'll continue to pursue a dual strategy which is our higher level marketing and positioning will speak to our evangelism of this new category, which is revenue acquisition management, and the idea that the battle for revenue has moved online and that, as consumers are spending more time online, ad budgets are following them, and that marketers need a platform to measure, manage, and optimize these digital advertising investments.

And that is an umbrella positioning that we can build off of our leadership and search and ad display, social, and mobile, and obviously grow those components of our business. But we'll also continue to have a strong marketing message of leadership in helping the marketer with his or her day-to-day tasks.

So, how do you perform campaign management more quickly, perform better reporting and analytics, and drive better financial performance. So it will still be a dual message, if you will, at the high level led by Matt Ackley, our new CMO, talking about revenue acquisition management, and then a more day-to-day, or day-in-the-life message of, how can we enable the digital marketer to have greater productivity and better financial performance.

The final comment that I would say is, you will see greater efforts from us in the coming quarters. To date, the industry has been largely silo-driven, by channels. So, the channels we think of are search, display, social, and mobile. And marketers have largely managed these channels separately.

And you'll see efforts from us in the coming quarters, building on initiatives that we already have underway, to highlight attribution and path to conversion, and leveraging marketers' own data to bring together these channels, so that you get a full picture of the journey of a prospect online, ultimately driving that person to a conversion event. So you will see more of that in our revenue acquisition management positioning, led by Matt Ackley, our new CMO.

So, Jason, I hope that's helpful to you with that multi-part question. Again, thank you for asking that.

Yes, no. You covered them all. Thank you very much.

Thank you. The next question is from Tom Roderick of Stifel. Please go ahead.

Sure. Hey, guys. It's [Greg Telfez] on for Tom. So, my first question -- I was hoping you could dig in a little bit on the renewal rates. You know, historically, if you look back at 2012, especially the first couple quarters, you were putting up, you know, 110%, 110% plus of renewal rates, and those have dropped since.

Maybe you could talk about, kind of, the dynamic of what's happening there, and whether you think that events will be, kind of -- get back to, you know, a greater than 100% dollar renewal rate? Thank you.

Sure, Greg. It's John.

Let me make sure, first, that you understand the metric, go over it and make sure everyone understands the metric. The revenue retention rate -- this is the year-over-growth in revenues from advertisers from a year ago, in the current period, during this quarter, net of churn. So this particular metric and the previous quarterly metrics were that year-over-year revenue -- growth from those advertisers from Q2 into this Q2, less any churn.

And when we went to unpack this particular metric, this quarter, what we found is, in 2012, so last year for this group of advertisers, the spending growth was very strong compared to 2011. So as we start to comp that here in 2013, the growth of this advertiser group was still very strong and well above our -- you know, the industry's digital advertising growth rate. It was just not enough to offset the churn, so it dipped below that 100%.

Going forward, and I talked about this is the script, we see over the next couple of quarters, probably at these levels to slightly up. But I would point you that we have been, you know, below 100% before, but we feel good about where the metric is right now.

Got it, and that's helpful. Thank you. And then, Chris, maybe you could offer some commentary on the recent announcement between Publicis and Omnicom and what that merger might mean for, uh, for the business.

Sure. So, to make everyone aware on the phone, as we've disclosed before, we do meaningful business with both Omnicom and Publicis worldwide. We do that across dozens of agencies within each one of those holding companies.

And we see the entities coming together as creating opportunities for us to do even more business with the combined entity, because they're likely to consolidate one or more of their service provider relationships. And we are widely adopted across Publicis and also heavily adopted across Omnicom globally.

But the deal is -- I was rereading the investor deck last night. It's slated to close either end of this year or early next year, and I would highlight that, prior to the merger Publicis and Omnicom used multiple platforms, although Marin has larger market share at both when you look across the agencies, compared to many of the other participants in our market. And I would envision that, even after the merger, the entity would continue to use more than one platform. So we're --

Got it.

-- we're excited about the merger. It's an opportunity for us to likely displace some of the other participants in the market, given our early leadership with both of those entities.

Well, thank you very much. I appreciate the color.

Thank you. We have no further question in queue at this time. I'll just turn the floor back over to management for any closing remarks.

I just wanted again to thank everyone for participating in the investor call. And we look forward to talking to you in the coming weeks. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.