Don’t count out traditional media companies just yet.

That’s one of the many conclusions from a panel discussion on “M&A in Digital Media and Technology: 2013 & Beyond.” The panel was hosted by the Association for Corporate Growth. Lloyd Rothenberg, a partner at the law firm Loeb & Loeb, moderated the discussion; the panelists included Ron Shah, vice president, Stripes Group; Paul Cianciolo, vice president, FirstMark Capital; Jeffrey Gross, vice president, Allegiance Capital Corp., and Melissa Stepanis, managing director, Silicon Valley Bank.

This story first appeared in the March 29, 2013 issue of WWD. Subscribe Today.

According to Shah, traditional media firms such as Gannett, Hearst and Condé Nast are approaching the shift in digital media differently, which is impacting what they are interested in by way of mergers and acquisitions.

“Each one has its own expertise. They are moving their historical assets [in each’s own way] to build an infrastructure to use technology that serves their customers,” Shah said.

Years ago during the dot-com craze, many retailers waited and watched and learned before acting. Gross said traditional media firms shouldn’t be ruled out since they’re now doing the same thing.

On the early-stage investing side, Cianciolo noted that two to three years ago not many chief marketing officers were all that familiar with online advertising, but that consumers are now forcing companies to know about content marketing.

“They now have to engage consumers with interesting content,” the early-stage venture capitalist said.

He cited a firm called Outbrain, a content-discovery platform, as an example of the new breed of companies that work with brands and agencies to reach a targeted audience through distribution on publishing sites via recommended links to increase traffic and revenue.

Stepanis said she’s noticed that in the last five years, particularly with the technological sophistication of cloud storage, it’s “cheaper” to start up a company with a lower investment level than before. She also pointed to “incubators and seed schools” that help the new firms raise less than $1 million and gain some traction, which “helps the funnel at the bottom part of the pyramid. It gives companies the ability to get out there.”

They also don’t have to be “home runs” in terms of investment returns, and many don’t need to formally raise Series A funding, she noted.

That also means mergers and acquisitions don’t necessarily translate into high-valuation deals. In M&A activity in 2012, “Ninety percent of the companies acquired were [purchased at] under $50 million,” according to Cianciolo.

Cianciolo said traditional media firms facing the build-or-buy question are really deciding whether to “change the DNA of the company and change direction [organically] or be acquisitive and change the DNA that way.” He concluded that so far it’s been the latter because acquisitions are far more palatable. “It’s difficult to cannibalize your own business,” he explained.

Shah told attendees, “Advertisers are less comfortable buying media without a measurable [return on investment].” While before it was OK to buy via a magazine budget, chief marketing officers today are becoming focused on online marketing. He explained that older media tools that “can’t show ROI see the media dollars going away.”

He likened it to the interplay between Mywebgrocer and the local newspapers, and how they tie in loyalty cards in the brick-and-mortar world to advertising dollars in measurable ways that can’t be had via the traditional approach of coupons and print circulars because those techniques can’t be tracked.

For Gross, the capital markets can present the greatest challenge for digital-media companies. That’s because investors need to look at how quickly the market is changing and whether valuations are based on sustainable trends.

Shah gave as an example the valuations for LinkedIn and Groupon, where the valuation of the former is steady due to three or four predictable revenue streams while the valuation for the latter comes down once investors understand the model is based solely on “repeat buying behavior and renewal rates.”

As for predictions, Cianciolo said some media firms depend on third-party consumer data, which could be “trouble in the next couple of years.” That’s because the ability to use that data could change over time, he cautioned.

Shah said that while some firms think it’s good that consumers watching a television show can buy an item of apparel that an actor or actress is wearing, he thinks the better vehicle is a “Shazam-type” option through which a user can find the item later on to buy so the experience of watching the show “doesn’t get interrupted.”