Hello, transparency.

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2 If you have nothing to hide, there is no reason not to be transparent. Mohamed ElBaradei Nobel Peace Prize Winner Hello, transparency. With one platform and a team of experts, you ll see it all: where and how your digital media dollars work.

3 Dear Attendees, Welcome to emarketer Attention! 2015, where professionals from across the digital marketing and media ecosystem have gathered to talk about one of the most important issues facing them today: how to get, keep, measure and maximize attention from customers and prospects. There s no question that it s more difficult than ever to cut through the clutter and get noticed and that s the case for content and ads alike. Media multitasking has helped propel US adults to consuming 12 hours of media each day in 2015, up from 11 hours, 8 minutes daily in And just as technology has brought consumers more to pay attention to, it s also brought more ways for them to avoid and block the things they don t like including ads. We ve put together an agenda to both inform and challenge you to think differently. We hope you enjoy a day packed with emarketer stats and insights, engaging speakers and active discussions. We ve also put together this collection of articles, key data and interviews that relate to and go beyond today s talks to spur continued thought and dialog. Please keep in touch. Best, Geoff Ramsey Co-Founder & Chief Innovation Officer emarketer PREMIER SPONSOR VIP SPONSORS CLOSING COCKTAIL PARTY SPONSOR WI-FI SPONSOR PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 3

4 GROWTH OF TIME SPENT ON MOBILE DEVICES SLOWS GROWTH TO SLOW TO SINGLE-DIGIT PACE STARTING IN 2016 Not surprisingly, Americans are spending an increasing share of their time on their mobile devices. But according to the latest emarketer forecast, the channel s growth rate is slowing considerably. Average Time Spent per Day with Major Media by US Adults, hrs:mins Digital Mobile (nonvoice) Radio Social networks Video Other Desktop/laptop* Video Social networks Radio Other Other connected devices TV** Radio** Print** Newspapers Magazines Other** Total :34 0:46 0:16 0:04 0:03 0:23 2:30 0:12 0:21 0:12 1:45 0:18 4:34 1:34 0:46 0:28 0:19 0:39 11: :10 1:28 0:26 0:09 0:09 0:44 2:24 0:20 0:22 0:07 1:35 0:18 4:38 1:32 0:40 0:24 0:17 0:38 11: :48 2:15 0:32 0:18 0:17 1:08 2:16 0:22 0:17 0:06 1:31 0:17 4:31 1:30 0:35 0:20 0:15 0:31 11: :09 2:37 0:39 0:23 0:22 1:14 2:14 0:23 0:16 0:06 1:28 0:19 4:22 1:28 0:32 0:18 0:13 0:26 11: :29 2:54 0:44 0:27 0:26 1:17 2:12 0:24 0:15 0:06 1:27 0:23 4:11 1:27 0:30 0:17 0:13 0:24 12: :45 3:08 0:49 0:30 0:29 1:20 2:11 0:25 0:14 0:06 1:26 0:26 4:03 1:25 0:28 0:16 0:12 0:22 12: :56 3:18 0:52 0:32 0:32 1:22 2:10 0:25 0:13 0:06 1:25 0:28 3:58 1:24 0:27 0:15 0:11 0:21 12:05 Note: ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking; for example, 1 hour of multitasking on desktop/laptop while watching TV is counted as 1 hour for TV and 1 hour for desktop/laptop; *includes all internet activities on desktop and laptop computers; **excludes digital Source: emarketer, Oct Much of the growth in time spent on mobile devices will come from people spending more time within apps. In 2015, US smartphone and tablet users will spend an average of 3 hours and 5 minutes a day using mobile apps, up from 2 hours 51 minutes in By 2016, mobile device users will spend 3 hours 15 minutes per day using apps. Time spent on mobile browser activities will hold steady at 51 minutes this year and next. Average Time Spent per Day with Mobile Internet Among US Smartphone and Tablet Users, In-App vs. Mobile Web, hrs:mins In-app 1:04 1:40 2:28 2:51 3:05 3:15 3:23 Smartphone 0:35 0:56 1:24 1:35 1:43 1:49 1:52 Tablet 0:29 0:44 1:04 1:16 1:22 1:27 1:31 Mobile web 0:29 0:38 0:50 0:51 0:51 0:51 0:52 Tablet 0:15 0:19 0:24 0:25 0:26 0:27 0:27 Smartphone 0:14 0:20 0:26 0:25 0:25 0:25 0:24 Note: ages 18+; time spent with each device includes all time spent with that device, regardless of multitasking; for example, 1 hour of multitasking on a smartphone while on a tablet is counted as 1 hour for smartphone and 1 hour for tablet Source: emarketer, Oct Despite the slowing growth rate, mobile is the only major medium emarketer expects to grow this year and next with respect to time spent. emarketer expects US adults will spend an average of 4 hours and 11 minutes watching traditional TV, down 4.1% from 4 hours 22 minutes in In 2016, time spent with TV will fall another 3.1%, to 4 hours and 3 minutes. Meanwhile, video consumption as a whole, across all channels, will hold roughly at current levels suggesting consumers are swapping TV time for digital video time. Nonvoice time spent on tablets and mobile phones will grow just 11.3% in 2015 to 2 hours and 54 minutes. Since 2012, there has been a considerable slowdown in the growth rate of time spent on mobile devices, and emarketer expects that slowdown to continue. In 2016, growth of time spent on mobile will fall into the single digits, with US adults spending an average of 3 hours and 8 minutes per day on mobile devices, excluding voice activities. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 4

5 CONSUMERS ARE IN A CRISIS OF ATTENTION Matthew B. Crawford Author The World Beyond Your Head: On Becoming an Individual in an Age of Distraction Matthew B. Crawford s book, The World Beyond Your Head: On Becoming an Individual in an Age of Distraction, documents the many ways that our attention gets chewed up and spit out on a daily basis. Naturally, that includes ads. Crawford is an advocate for people who want to take back their attention and given the consumer interest in ad-blocking software and digital detox retreats, we thought his perspective would be especially relevant for emarketer Attention! Tameka Kee of TJK Media spoke to Crawford for emarketer in advance of his keynote to get some quick thoughts about attention and online advertising. emarketer: You re an attention advocate. Does that mean you stay up to date on advertising trends and technology? Matthew B. Crawford: I stay up to date only in the sense that I am subject to them, like everyone else. As a writer, I tend to be especially alert to the more aggressive forms of advertising in public spaces, because their presence indicates something about how we understand the idea of a public. It was once an idea that had a certain dignity to it, but it seems to have evaporated as our shared cognitive space gets colonized by private commercial interests. emarketer: What do you think about the Internet of Things and connected cars? Connected houses and appliances? What kind of impact will these developments have on consumer attention? Crawford: As things get more complicated, and less self-contained, it will be harder to be responsible for your own physical environment. So I suppose the effect will be to lead us even further into passivity and dependence an expansion of the domain of life that we hand off to experts. Our attention will then be more free for amusements, which we will choose from an everexpanding menu of options. emarketer: So what do you think about ad-blocking? Is it inevitable? Crawford: It sounds like the beginning of an unpleasant arms race. emarketer: Are there any ads that you do like? Do you think we can strike a balance as an industry between being intrusive and actually getting people information they want? [O]f course some ads are brilliant consider how the spirit of sports shines through in Nike and Gatorade ads. Crawford: Yes shampoo ads! I can t get enough of them. And of course some ads are brilliant consider how the spirit of sports shines through in Nike and Gatorade ads. They feel like a tribute to human beings, and their struggle for superiority. They re so undemocratic! I mean that in the best way. emarketer: What inspired you to write The World Beyond Your Head? [W]e are living through a crisis of attention, and... it is only superficially due to technology. Crawford: It was my sense that we are living through a crisis of attention, and that it is only superficially due to technology. It becomes more comprehensible when understood as the culmination of a long cultural trajectory in which our experiences are increasingly manufactured for us. It s an argument for reclaiming the real. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 5

6 NOW THAT WE GOT YOUR ATTENTION. Flipboard is your all-the-time place for the stories you care about. The news, videos, pictures, blogs, and the social networks you love. 15 IN Power Your Perspective.

7 SEVEN IN 10 US INTERNET USERS WATCH OTT VIDEO THE VAST MAJORITY ARE REGULAR YOUTUBE VIEWERS This year, million people in the US will watch video via an app or website that provides streaming content over the internet and bypasses traditional distribution, according to emarketer s first-ever forecast of over-the-top (OTT) video viewership. US Over-the-Top (OTT) Video Service Users, OTT video service users (millions) % change % of internet users % of digital video viewers % 68.4% 88.4% % 69.7% 88.6% % 70.4% 88.8% % 70.9% 89.0% % 71.5% 89.1% % 72.1% 89.3% Note: individuals of any age who watch video via any app or website that provides streaming video content over the internet and bypasses traditional distribution; examples include Hulu, Netflix and YouTube Source: emarketer, Oct The forecast includes viewers of services like Hulu, Netflix and Youtube, and estimates that at this point, the population is already growing slowly. Nearly nine in 10 digital video viewers in the US already watch video content this way. That s largely because one provider of OTT video services is YouTube, which is already used by virtually all OTT video viewers. The YouTube audience will reach million monthly video viewers this year, emarketer estimates, or 94.3% of OTT video service users. Other services have lower penetration and much faster growth. US Over-the-Top (OTT) Video Service Users, by Service Provider, OTT video service users (millions) YouTube Netflix Amazon Hulu Total OTT video service user growth (% change) Netflix Hulu Amazon YouTube Total 19.7% 23.7% 16.1% 5.4% 5.6% 20.4% 16.2% 13.5% 4.4% 4.6% 11.1% 11.8% 12.3% 3.2% 3.3% 6.3% 9.9% 9.2% 2.6% 2.7% 3.3% 7.0% 6.6% 2.2% 2.3% 2.6% 4.3% 4.1% 1.6% 1.7% OTT video service user penetration (% of OTT video service users) YouTube Netflix Amazon Hulu 94.5% 54.9% 33.2% 29.8% 94.3% 63.2% 36.0% 33.1% 94.3% 67.9% 39.2% 35.9% 94.2% 70.3% 41.6% 38.4% 94.1% 71.0% 43.4% 40.2% 94.1% 71.7% 44.4% 41.2% Note: individuals of any age who watch video via any app or website that provides streaming video content over the internet and bypasses traditional distribution; examples include Hulu, Netflix and YouTube Source: emarketer, Oct Netflix, for example, will grow its US audience by more than 20% this year to million, or 63.2% of OTT viewers. Netflix will continue to penetrate the OTT video market, and will reach 71.7% of this audience by Hulu has a smaller audience, but it will overtake Netflix s growth rate again next year, reaching 82.2 million people by Amazon s video streaming service is larger than Hulu s and will reach 88.6 million OTT video viewers by the end of our forecast period. OTT video viewing is not limited to consumers with a smart TV or other internet-connected TV setup, but can occur directly on PCs and other internet-connected devices. emarketer estimates that the connected TV audience will reach million this year, with the largest share of connected TV users still getting online via a game console (36.8%). PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 7

8 MOBILE TV STREAMING MORE LIKELY AT NIGHT SMALLER AND LARGER SCREENS PREVAIL FOR EVENING AND LATE-NIGHT VIEWING Digital video viewers stream their favorite TV shows to PCs and mobile devices all day and all night. According to 2015 data on when accompanying pre-roll video ads were served, daypart plays a role in determining which devices they use. Mobile devices, including tablets, appear to be more congenial to late-night viewing. US Digital Video Ad View Share on Streaming TV Sites, by Daypart and Device, April-June 2015 % of total ads served on TubeMogul platform Tablet Mobile phone Computer 12am-3am 17% 16% 8% 3am-6am 5% 9% 4% 6am-9am 8% 12% 10% 9am-12pm 10% 12% 16% 12pm-3pm 10% 12% 16% 3pm-6pm 9% 10% 14% 6pm-9pm 13% 10% 16% 9pm-12am 28% 19% 17% Note: represents activity on the TubeMogul platform, broader industry metrics may apply; pre-roll video ads only; numbers may not add up to 100% due to rounding Source: TubeMogul as cited in company blog, Aug 27, A majority of TV streaming to computers occurred during the day, with 56% of ads served between 6am and 6pm. For mobile phones, the daytime share was 46%, and for tablets just 37%. US Digital Video Ad View Share, by Daypart and Device, Q % of total ads served by FreeWheel OTT device 13% 23% 16% 31% 17% Desktop/laptop 11% 31% 20% 28% 10% Smartphone 11% 27% 20% 31% 11% Tablet 10% 23% 20% 37% 10% 6am-10am 10am-4pm 4pm-7pm 7pm-1am 1am-6am Note: represents activity on FreeWheel's platform, broader industry metrics may vary Source: FreeWheel, "Video Monetization Report: Q2 2015," Aug 26, Q data from FreeWheel also found a stronger daytime share of digital video ad views for desktop and laptop computers, along with higher nighttime usage of smartphones and tablets. The FreeWheel data also included over-the-top (OTT) devices, which had the highest concentration of primetime and latenight viewing of any device and among the lowest daytime viewership. Results such as these are common, and mesh with what media consumers report about their device usage habits. According to TubeMogul data about activity on its platform from April through June 2015, among pre-roll ads supporting streaming TV being viewed on computers, just 12% were served overnight, from midnight until 6am. On mobile phones, the overnight share of pre-roll ads was more than twice as high, at 25%. Tablets saw a similarly strong 22% of streaming TV ads served between midnight and 6am. Evening viewing was stronger on all mobile devices, but heaviest on tablets. More than two in five (41%) streaming TV pre-roll ads served to tablets were served between 6pm and midnight. That compared to 29% of ads served to mobile phones and 33% of ads served to computers. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 8

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10 HOW YOUR REPTILE BRAIN RESPONDS TO MARKETING Patrick Renvoise Co-Founder & Chief Neuromarketing Officer SalesBrain As the co-founder of SalesBrain, a neuromarketing agency, Patrick Renvoise has spent years helping global companies like Boeing, BMW and even NASA sell more and do more, by understanding the science of attention. Tameka Kee of TJK Media spoke to Renvoise for emarketer in advance of his keynote at emarketer Attention! emarketer: What s one of the most fascinating things you ve learned about the human brain and how we pay attention? Patrick Renvoise: That it s all about the reptilian brain! Many years ago I read in a neuroscience book that the reptilian brain was the center of attention and that it played a key role in our perception and ultimate decisions. It then took me several years to understand the implications for sales and marketing, but one day I had a big aha moment. Since we all know that we need to sell to the decision-maker then we should be able to relate every sales and marketing activities to our reptilian brain. emarketer: What inspired you to go into this very specific area that blends marketing and science? Renvoise: For years I had been learning about sales and marketing, mostly by trial and error! But realizing that neuroscientists had established strong scientific foundations on the working principles of the brain and especially of the reptilian brain I decided to create a bridge between the world of neuroscience and the world of marketing. So I worked on defining a scientific yet easy-to-understand model the model is called NeuroMap for the business executive who does not have a PhD in neuroscience. emarketer: As a neuromarketer by day, what product or service really grabs your attention? Renvoise: I am puzzled that companies such as Apple, Starbucks or Domino s Pizza are so successful. Are their products that much better than those of their competitors? Do they really offer something unique and valuable that the consumer couldn t get elsewhere? Is there something in their product that is superior from a feature/benefit standpoint? [I]t really grabs me that the success of these companies is linked to the human brain reaction to those decision drivers! Of course, the answer is no (although if you are a fan of one these companies your neocortex will be quick to justify your answer). So it s all in their marketing. It s all about their brand promise! Many would agree that: For Apple it s cool to use For Starbucks it s the third place, a transitional environment between home and the office, according to Howard Schultz, Starbucks CEO For Domino s it s You have 30 minutes, a perfect cure to a top pain of the home delivery pizza buyers which is the anxiety of not knowing when the pizza will arrive So it really grabs me that the success of these companies is linked to the human brain reaction to those decision drivers! emarketer: What would you choose as the most successful example of neuromarketing in recent history? Renvoise: It s not one particular project that has gotten my attention it s the fact that neuromarketing is now used for many different applications such as package or web design, merchandising, movie trailer optimization, all the way to political campaigning. It s the fact that neuromarketing is becoming ubiquitous! emarketer: How do you stay up-to-date on the latest advertising trends and technology? Do you have a favorite publication? Renvoise: There is a lot of noise and very little signal in all these blogs and social media. Instead I prefer to read books or magazines where the authors have something valuable to communicate. My favorite magazine is Mind, and Move Up, the book I m currently reading, talks about the role of the reptilian brain in shaping cultures that will move up...or down! PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 10

11 NEARLY TWO IN THREE MILLENNIALS BLOCK ADS ADS ARE SOMETIMES RELEVANT, BUT OFTEN STILL BLOCKED Ad blocking has been around for a long time, but digital advertisers and publishers are seeing it as an increasing problem. Research suggests that a solid majority of internet users ages 18 to 34 are now blocking ads when they view digital content. US Millennial Internet Users Who Use Ad Blockers, July 2015 % of respondents No 33% Don't know 4% Yes 63% Note: n=748 ages Source: Fractl and Moz, "Inbound vs. Outbound: Consumer Perspectives on Marketing Effectiveness," Sep 1, That s what Moz and Fractl found in a July 2015 survey. Q data from GlobalWebIndex put the share much lower on a worldwide basis. It found that 34% of those ages 16 to 24 and 31% of 25- to 35-year-old internet users blocked ads. Ad blocking was significantly more common among these ages groups than among older users. Relevance of Digital Ads According to US Millennial Internet Users, by Type/Tactic, July 2015 % of respondents Ad retargeting 18.9% 34.3% 15.1% 13.9% 17.7% Social media ads 17.3% 35.1% 18.1% 15.4% 14.1% Paid search ads 13.4% 29.1% 22.6% 18.4% 16.6% Display ads 9.9% 29.2% 25.3% 23.1% 12.6% Sponsored story links 6.9% 28.5% 25.4% 23.4% 15.8% Mobile/in-app ads 6.5% 21.6% 25.3% 29.5% 17.1% Very relevant Somewhat relevant Somewhat irrelevant Very irrelevant Don't know Note: n=748 ages 18-34; among those who saw ads of each type/tactic in the past 30 days; numbers may not add up to 100% due to rounding Source: Fractl and Moz, "Inbound vs. Outbound: Consumer Perspectives on Marketing Effectiveness," Sep 1, Concerned advertisers would do well to note that millennials did not universally reject ads as irrelevant. A few digital ad types saw a majority of millennial internet users in the Fractl/Moz poll rating them at least somewhat relevant, including retargeted ads and social media ads. Millennials were also fairly warm to paid search ads, while mobile ads fared especially poorly. But respondents also said ads were just not the best way to reach them. Free content was the most effective way they recommended for companies looking to attract their business, followed by discounts or free trial offers by mail, and appearing high in search results. In February 2015, the Reuters Institute for the Study of Journalism at the University of Oxford found that 41% of US internet users used ad-blocking software on their desktop or laptop PCs, vs. 34% of internet users in the UK. Data remains scarce, but the research suggests substantial numbers of internet users in the US are blocking ads and millennials are even more likely to do so. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 11

12 WHAT ARE MILLENNIALS UP TO WITH DIGITAL VIDEO? MORE THAN NINE IN 10 WATCH DIGITAL VIDEO MONTHLY Millennials are the most active video viewers of any US age group. But understanding their video viewing habits can be difficult, thanks to the changing landscape for digital content viewing and shifting time spent with various screens. US Millennial Digital Video Viewers and Penetration, millions and % of millennial internet users % % % % 2016 Millennial digital video viewers % % % 2019 % of millennial internet users Note: internet users born between 1981 and 2000 who watch digital video content via any device at least once per month Source: emarketer, Feb 2015; confirmed and republished, July emarketer predicts there will be 77 million millennial digital video viewers in 2015, representing more than 92% of all US millennial internet users. Additional growth in new millennial digital video viewers is expected to remain mostly flat for the foreseeable future, given that video viewing is already near ubiquitous for this age group. emarketer forecasts that the total audience will increase by 1 million or fewer viewers annually through The video consumption habits of US millennials are more pronounced when compared with other age groups. In 2015, emarketer expects 25- to 34-year-olds to make up the largest segment of digital video viewers of any age group, accounting for more than 18% of the million digital video viewers in the US. Adults in the 18-to-34 age group, along with 12- to 17-year-olds (some of whom are millennials) have the highest levels of digital video viewer penetration among all age groups, reaching levels of more than 90%. Much as marketers and experts try, there is no single unifying theme that explains the video habits of US millennials. Instead, there is a shifting landscape of video viewing options, fluid boundaries between traditional TV and digital video, and changes in the millennial mindset toward video content all of which contribute to their screen time and content choices. Weekly Time Spent with Select Media Among US Consumers, by Age, Q hrs:mins Watching on traditional TV 18:33 24:52 32:24 42:31 50:00 Using the internet on a computer 4:45 5:51 7:13 5:37 3:07 Using a game console 4:09 2:56 1:06 0:22 0:07 Watching time-shifted TV 1:42 3:20 4:11 4:16 3:36 Watching video on internet 1:41 1:52 1:45 1:10 0:29 Using DVD/Blu-ray device 0:55 1:18 1:12 1:02 0:38 Watching video on a mobile phone 0:26 0:17 0:13 0:07 - Note: based on total users for each medium Source: Nielsen, "The Total Audience Report: Q4 2014" as cited in Barclays Capital and Television Bureau of Advertising (TVB), "Local Broadcast TV Media Planning and Buying," April 8, For example, they still watch lots of TV at least for now. According to Nielsen, US adults ages 18 to 24 watched more than 18.5 hours of traditional TV per week, while those in the 25-to-34 age group watched nearly 25 hours per week. While this is less time spent than older generations, it still made up the majority of millennials media time. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 12

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14 AD AVOIDANCE ISN T NEW IT S JUST EVOLVING Walt Horstman President AudienceXpress Whether you think it s a real problem or not, there s no denying that ad blocking is a lightning rod in the industry right now. With potentially hundreds of millions of dollars at stake for media companies, advertisers and advertising platforms, figuring out how to combat and counter ad-blocking behavior is top of mind. But avoiding ads isn t a new behavior. Remember the fear surrounding the launch of TiVo and DVR? AudienceXpress President Walt Horstman does. With more than a decade of experience working with cable, video and digital TV, Horstman says this year s ad-blocking frenzy has similar undertones to the fear of DVR 10 years ago. Tameka Kee of TJK Media spoke to Horstman for emarketer in advance of the ad avoidance discussion at emarketer Attention! emarketer: How would you define ad avoidance? Is it just about ad blocking, or is there something greater afoot? Walt Horstman: We should define it more broadly than just ad-blocking, to include non-ad-supported programming and content. By defining ad avoidance more broadly, we open up the discussion of the economics of media and what the various economic models are for providing high-quality content. And it s the economics that are driving the fear. [T]echnology has been at work trying to block ads for quite a while. Just look at the history of the DVR. emarketer: In our current advertising landscape, what do you believe is the most prevalent example of ad avoidance? Horstman: While this topic is extremely timely right now with the launch of the ad-blocker apps on mobile, technology has been at work trying to block ads for quite a while. Just look at the history of the DVR. When it was introduced, there was great concern over the health of TV advertising the adoption of the DVR and how consumers use it didn t bring about the catastrophe scenario that some worried it would. What it did inspire, was a change in the currency for TV advertising so the economic model can adapt to new technological introductions. The reaction of a number of publishers to the ad blocking apps on mobile has highlighted the economic issue as well. Many small publishers can t sustain themselves without ad dollars and it s healthy that this aspect is coming to the forefront of the discussion. The tech issues with how mobile ads get served and displayed do need to be resolved, but that is distinct from the economics of media. emarketer: Lots of research focuses on millennials, but have you seen interesting patterns or trends in terms of avoiding ads from other demographics? Horstman: Looking at TV or video specifically, we can define the new [over-the-top] OTT services that are not ad-supported as ad avoidance, and these services appeal to a fairly broad demographic. But again, it does ultimately come down to economics because high-quality programming requires a great deal of investment. Today, marketers have a wealth of advanced data sets, for example, that marry credit card spending activity with TV viewership and packaged-goods purchases with TV viewership. emarketer: You ve worked in traditional cable, and now with programmatic TV. What s the biggest change you ve seen in terms of how advertisers are trying to capture consumer attention with video? Horstman: Targeting on TV has become quite sophisticated in the last few years. Traditionally, marketers could target on TV only through broad age and gender demographics. Today, marketers have a wealth of advanced data sets, for example, that marry credit card spending activity with TV viewership and packaged-goods purchases with TV viewership. With these advanced data, marketers can now find their desired audiences, often in unexpected places. For example, most people expect that active Sephora shoppers are likely to watch traditional female-skewing TV networks. In fact, CNBC and Bloomberg TV have very high composition of this audience. The advanced data sets are enabling marketers to capture consumer attention by placing the right ad in front of the right audience at the right time. We also have the technology now at scale to execute TV campaigns using these advanced data sets. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 14

15 INTERNET USERS IN THE US BLOCK ADS LESS THAN IN WESTERN EUROPE YOUNGER INTERNET USERS MORE LIKELY TO BLOCK ADS WORLDWIDE Ad blocking is a headache for just about all the players in the digital media ecosystem. The issue has risen to the forefront of many analysts mind due to ios 9 making ad blocking available on many mobile devices for the first time, but US publishers and advertisers can perhaps take comfort: The country has among the lowest ad blocking rates in the world. Desktop Ad Blocking Rates in Select Countries in North America and Western Europe, by Age, June 2015 % of total visitors in each group France 36.1% 28.3% 22.5% 28.1% 27.2% 23.1% Germany 34.8% 25.8% 23.1% 19.8% 20.9% 23.7% Canada 30.5% 19.4% 11.5% 16.7% 11.3% 9.7% Spain 22.6% 16.3% 9.9% 12.5% 12.6% 12.1% Netherlands 22.4% 15.1% 9.8% 12.7% 14.2% 10.9% UK 19.8% 13.2% 8.2% 7.7% 7.6% 6.6% US 16.2% 11.7% 6.9% 7.4% 7.0% 6.2% Note: unique desktop site visitors who recorded an instance of ad blocker use; read as 36.1% of desktop site visitors in France who were ages recorded an instance of ad blocker use Source: comscore Inc. and Sourcepoint, "The State of Ad Blocking 2015," Sep 17, comscore and Sourcepoint found in June 2015 that desktop internet users in France were more likely to use ad blocking software than those in any other country studied, at 27%. Germany was No. 2 in ad blocking, at 24% of unique desktop site visitors, and Canada came in third at 16%. The US was at the bottom of the list, with just 9% of unique visitors blocking ads. The low US rate of ad blocking held true across age groups, as well as did most other rankings. In all countries studied, 18- to 24-year-olds were more likely to block ads than any other group. In the US, the proportion of ad blockers rose to 16.2% among this cohort, less than half the rate in France or Germany. Mobile Ad Blocking Rates in Select Countries, July 2015 % of total page views India China Germany Spain 0.5% 0.4% Canada 0.2% France 0.2% Netherlands 0.1% UK 0.1% US 0.1% 7.9% 9.0% Note: includes smartphones and tablets Source: comscore Inc. and Sourcepoint, "The State of Ad Blocking 2015," Sep 17, The US was also least likely among countries studied in July to block ads on mobile devices. A tiny 0.1% of total page views on smartphones and tablets in the US blocked ads. Mobile ad blocking rates were low in Western Europe as well. Mobile internet users in India and China were far more likely to block ads though it was still rare. Q research from GlobalWebIndex also found higher rates of ad blocking in Europe. Among internet users ages 16 to 64, 29% had blocked ads on their main PC over the past month. That compared with 27% in Asia-Pacific and 26% in North America. In June 2015 research covering the EU-5, Adobe and PageFair found that Germany had the highest rates, at 25.3% of internet users, followed by the UK, at 21.1%. That research put France at the bottom of the pile, with a comparatively low 10.3% of internet users blocking ads. Like comscore and Sourcepoint, GlobalWebIndex found significant variation in ad blocking depending on the age of the internet user. In Q2, GlobalWebIndex also found that male internet users were 8 percentage points more likely than females to block ads. While some patterns seem to hold true, like higher rates of ad blocking among younger users, differences in methodology make it difficult to determine which specific markets have higher or lower rates of ad blocking though Europe does appear above average in this department. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 15

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17 WEARABLES ADOPTION HEATS UP YOUNGER ADULTS, WOMEN ARE FASTEST ADOPTERS This year, 39.5 million people in the US will use wearable devices at least monthly, according to emarketer s firstever forecast for wearables usage. US Adult Wearable Users, Wearable users (millions) % change % of internet users % of population % 12.2% 10.2% % 18.7% 16.0% % 29.5% 25.5% % 33.9% 29.6% % 36.5% 32.0% % 38.3% 33.6% Note: individuals ages 18+ who wear accessories or clothing at least once per month that is embedded with electronics, software or sensors with the ability to connect to the internet (via built-in connectivity or tethering) and exchange data with a manufacturer, operator or other connected devices Source: emarketer, Oct In 2014, emarketer estimates, around one in 10 US adults wore accessories or clothing embedded with electronics, software or sensors that could connect to the internet and send or receive data. That translated to 25.1 million people with smart watches, activity trackers, smart glasses, virtual reality headsets and more last year. Growth of 57.7% this year has brought the population to an estimated 39.5 million a figure that will more than double by The bulk of wearables users are younger adults. emarketer estimates that 16.8 million wearables users this year will be under 35, and another 8.6 million will be 35 to 44. US Adult Wearable User Penetration, by Age, % of internet users % 21.9% 35.5% 41.8% 44.9% 46.5% % 25.1% 40.0% 46.6% 49.9% 51.6% % 23.1% 37.4% 43.8% 47.0% 48.7% % 17.1% 25.9% 28.7% 31.0% 33.3% % 13.5% 20.8% 23.6% 25.7% 27.8% % 9.7% 15.1% 17.2% 19.0% 20.7% Total 12.2% 18.7% 29.5% 33.9% 36.5% 38.3% Note: individuals who wear accessories or clothing at least once per month that is embedded with electronics, software or sensors with the ability to connect to the internet (via built-in connectivity or tethering) and exchange data with a manufacturer, operator or other connected devices Source: emarketer, Oct Penetration will remain highest among under-45s throughout our forecast period. In 2019, 25- to 34-yearolds will become the first group of internet users with majority wearables usage and 35- to 44-year-olds won t be far behind. In terms of gender, wearables are bucking the usual trend of young males as early adopters. Last year, a majority of US wearables users were women, largely due to the strong appeal fitness trackers have for females. Men are increasing adoption levels and will pull even with women this year, but the parity will be temporary, we estimate. Still, penetration is low: just 18.7% of adult internet users in the country will use wearable devices this year. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 17

18 HOW FANCY DO CONSUMERS WANT THEIR WEARABLES? FUNDAMENTALS AS WELL AS HEALTH AND POINT-OF-SALE FEATURES ARE MOST DESIRABLE Wearable device awareness is high, but ownership and purchase intent remain low. Indeed, May 2015 polling by Altimeter Group found that just 7% of US internet users owned a wearable, and a March 2015 study by DigitasLBi put wearables penetration among internet users worldwide at 17%. Most Desirable Wearable Device Features According to US Smartphone Owners, April 2015 % of respondents Touchscreen 48% GPS 46% Waterproof 44% Calorie tracker 42% Pedometer 41% Heart rate monitoring 41% Blood pressure monitoring 39% Mobile wallet (POS payments) 39% Receive notifications from phone 38% Alarm function 36% Basic features including touchscreens, GPS and water resistance were desired most. Consumers have already shown interest in using wearables to track fitness and health, so it comes as little surprise that calorie trackers, pedometers, and heart rate and blood pressure monitors were highly in demand as well. Nearly four in 10 smartphone owners wanted mobile wallets, too, though all respondents in the pool had used a mobile wallet on their phone in the past six months, so they re likely more interested in this than the general public. May 2015 polling by Avangate found that 29.4% of US digital buyers were comfortable purchasing products via wearable technology. On the flipside, 35.4% weren t at all comfortable. And in April 2015 research by PowerReviews, 22% of US smartphone owners were interested in using touchless/one-click payments on wearables while shopping. However, other research suggests consumers may not know what they want from wearables, so CMB s results are just one example of in-demand features. In research released in June 2015, International Data Corporation (IDC) estimated that wearable device shipments worldwide totaled 26.4 million in 2014 and forecast they would rise 173.3% this year to 72.1 million. IDC projected that in 2019, global wearables shipments would reach million. Meanwhile, in May 2015 research, TECHnalysis Research estimated that wearable device shipments worldwide totaled 23 million last year and forecast this would hit 175 million in Battery life 2 weeks 33% Voice control 32% Note: ages 18+; among those who have waved or tapped a mobile wallet at a cash register to pay for a purchase in the past 6 months Source: Chadwick Martin Bailey, "The Future of the Mobile Wallet: Barriers and Opportunities for the Next Stage of the Mobile Payment Revolution," June 16, What could urge consumers to take the plunge? When April 2015 polling by Chadwick Martin Bailey (CMB) which found that six in 10 US smartphone owners were familiar to some extent with wearables asked about the most desirable features, respondents stuck with three categories: fundamentals, health and point-of-sale payments in other words, nothing overly fancy. PERSPECTIVES ON ATTENTION: ROUNDUP 2015 EMARKETER INC. ALL RIGHTS RESERVED 18

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