Digital Video Advertising Research Insights from a Universe of Branding Opportunities

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1 Digital Video Advertising Research Insights from a Universe of Branding Opportunities Q4, 2011 Update Includes data from

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3 Digital Video Advertising Research Table of Contents 01 Company Background 2 Methodology 2 Why Video Advertising? Best Medium for Driving Branding Goals 3 Going Viral Rare; Paid Media Increasingly Common 4 Why Real-Time Media Buying? Pre-Roll is Catching Up with Display in Terms of Real-Time Advertising Inventory Available in the U.S. 5 Inventory Snapshot 5 Same Sites; Very Different Prices 6 Data & Trends Creative: Custom or Repurposed TV? 8 What s Available? 10 In-Stream: Where It Works, Where it Falls Short 12 Comparisons to Social Video 12 Tradeoffs by Ad Format 13 A Day(Part) in the Life of Digital Video Ads 15 Maximizing Clicks, Purchases Much Different 18 U.S. Video Ad CPMs Steady, Rising Slightly 19 Owned Media: Video on Brand Sites How are Videos Discovered? 20 Should I Allow Embeds? 20 Rebuffering Nightmares 21 Earned Media: YouTube and Beyond Videos Live Fast, Die Young 22 Select Media Company Trends Peak Viewing Times 23 Broadcaster Completion Rates: Full-Length Episodes 23

4 Overview Company Background 02 TubeMogul is the only video marketing company built for branding. By integrating real-time media buying, ad serving, targeting, optimization and brand measurement into its PlayTime platform, TubeMogul simplifies the delivery of video ads and maximizes the impact of every dollar spend by brand marketers. Over half of the Fortune 500 use TubeMogul to simplify the delivery of video ads in any format, optimize the impact of their brand message and maximize the effect of every dollar they spend. Founded in 2006, TubeMogul is based in Emeryville, CA with offices in New York, London, Chicago, Los Angeles, Toronto and Sydney. Methodology As a real-time media buying platform for video advertising, TubeMogul processes billions of data points on ad spots available for bidding on a given day across pre-roll, display and other video ad formats. In all, these marketplaces are bigger than the New York Stock Exchange in terms of daily transactions. Data for this report leverages that data, as well as TubeMogul s unique history in video measurement, spanning paid, earned and owned media. Additional video data is tracked using APIs or crawlers. More specific methodology is outlined within the individual sections of the report. Additional data is provided by Brightcove, DynamicLogic and Knowledge Networks.

5 Best Medium for Driving Branding Goals 03 To brand advertisers, video presents an advertising format that is superior in effectiveness to other mediums, even stacking up well against traditional television buys. Leveraging brand survey benchmarks provided by Dynamic Logic and TubeMogul s own numbers for pre-roll video ads from Knowledge Networks, a clear picture emerges: while television remains the best medium for message association, TubeMogul outperforms TV on favorability and purchase intent. Intuitively, display advertising does not perform as strongly, supporting suggestions it is mainly a direct-response medium. 12% 10% 8% Average Brand Lift Television Display Online Video: General TubeMogul Platform 6% 4% 9.3% 11.6% 2% 3.6% 3.6% 3.2% 4.3% 4.2% 2.2% 2.2% 1.0% 2.5% 0.7% 0.7% 3.6% 0.7% 1.1% Awareness Message Assocation Brand Favorability Purchase Consideration / Intent

6 Going Viral Rare; Paid Media Increasingly Necessary 04 Fewer than 1% of videos ever exceed one million views, according to our research, which took a random sample of YouTube videos to compare all-time views. YouTube Videos by Number of Views 30 % % % of All YouTube Videos 20 % 15 % 10 % 5 % % Below K 1K-2.5K 2.5K-5K 5K-10K 10K-100K 100K - < 1 million > 1 million Even getting featured on YouTube s homepage yields fewer views than it used to, despite the site s meteoric growth (or perhaps because of it). Videos in the Featured or Spotlight spots on YouTube s homepage average 86,100 views per day that they are featured. That represents a 28.2% reduction compared to the same measurement in 2008, when videos featured averaged 119,864 views per day. The result is that paid media is now necessary to get videos watched, even in viral video campaigns.

7 Why Real-Time Media Buying? 05 Conventional wisdom assumes that video ad exchanges are comprised primarily of low-end inventory. That assumption, often taken for granted, is changing. Pre-Roll Is Catching Up with Display in Terms of Real-Time Advertising Inventory Available in the U.S. While it is widely known that display volume is large due to a glut in inventory, a less known fact is that pre-roll video advertising is steadily catching up. Aggregating across the major exchanges and sell-side platforms, from Doubleclick (which includes YouTube pre-roll) to Liverail and beyond and controlling for inventory pushed live due to new company partnerships, TubeMogul analyzed average growth in daily volume of ad spots available in the U.S. Pre-roll volume grew by an average of 34.9% per month for the past three months, far outpacing display advertising s 7.8% monthly growth rate. In November, TubeMogul saw an average of over 213 million auctions per day. Inventory Snapshot Running an internal analysis of inventory available for real-time media buying across a five-day sample of over 200 million streams and cross-checking against comscore s top 100 publishers in Video Metrix, we discovered a few interesting facts. 54 out of 100 companies listed in the comscore 100 have inventory available for real-time bidding on the top exchanges and supply-side platforms. 29.1% of pre-roll impressions available for real-time buying are from comscore 100 publishers. YouTube, despite its massive reach, only accounts for slightly over one-fifth (20.0%) of comscore 100 volume. Other sources, including top media companies, constitute a majority of sites. Real-Time Biddable Pre-Roll Inventory 29% comscore 100 (Video Metrix) 71% Other Sites

8 Why might this be happening? Publisher-direct sales, often involving faxes and IOs, are not always perfect. Unpredicted viewership spikes can mean unsold inventory. Also, top exchanges and supply-side platforms are increasingly giving publishers more control over how they monetize, letting them set minimum CPMs, parameters on who gets access, line-item controls and much more, freeing up available inventory. 06 This is not meant to imply that premium video inventory is not scarce, or that video is in any way analogous to display, where a glut in inventory led to more rapid adoption of exchanges. Recent discussions about private exchanges, and the role they could play in the marketplace, indicate that many top-tier publishers want additional tools to maximize revenue before they will be willing to drastically increase the inventory onto real-time exchanges and platforms. Same Sites; Very Different Prices. In display advertising, it is commonplace for publishers to plug into more than one automated monetization channel to liquidate unsold inventory. How prevalent is this in video, and what does it mean for brand advertisers? TubeMogul examined pre-roll inventory across its breadth of supply sources, including the Web s top private networks, platforms and exchanges. The sample spans million auctions for ad space over a five day period. From there, overlapping sites were reviewed and prices of winning auctions compared by both sites and volume. To control for differences in price by audience demographic, only campaigns without third-party data targeting were used. Not included in the scope of this study is to what extent publishers distribute different inventory slices to different liquidation sources, and how natural marketplace fluctuations contribute to pricing disparities over time, making this more of a market barometer than buying guide. The bulk of pre-roll volume available for real-time media buying comes from the small percentage of publishers (13.7%) that monetize on multiple platforms. 80 Sites Monetizing on >1 Platform % All Sites comscore % Share of Overall Site Lists 2.4% Share of Overall Auction Volume 28.7%

9 By volume, then, most pre-roll is on sites that monetize on multiple platforms. But why would it matter where duplicated sites were purchased, so long as each ad had a measurable impact and ran in a safe environment? 07 Where the exact same sites are purchased has a sizable impact on price. CPMs differ by $6.10, on average. This number is lower for comscore 100 publishers, likely due to the fact that many of these sites have higher average CPMs and more competitive bidding. Partnership limitations restrict what can be revealed by inventory source, but it is worth noting that no single platform stands out as more or less expensive than another -- price varies both within and between platforms. The broader point is simply that price varies. Absolute Average Price (CPM) Difference for Identical Sites $8 $7 $6 $5 $4 $3 $2 $1 $6.10 $5.01 All Sites comscore 100 (Video Metrix) Here are several conclusions from an advertiser s point of view, but TubeMogul obviously brings a perspective. We welcome your feedback. Publishers are plugging into multiple supply-side partners to meet their needs and maximize profits even in video. The market is still highly variable and not yet equilibrated even for identical sites. Demand side platforms (DSPs) plugged into the most video advertising partners are well-positioned to gain visibility into true supply/demand conditions and purchase accordingly. A demand side platform might pay for itself purely on the basis of price, given its position to optimize across duplicated sites. Since DSPs charge negotiated, transparent overhead (TubeMogul does, for instance), the calculations are straightforward. 2011

10 Creative: Custom or Repurposed TV? 08 A longstanding question TubeMogul is asked by agencies is: Should I repurpose my 15 and 30-second television ads or make custom creative for the Web? TubeMogul partnered with Dynamic Logic to find out, taking a sample of hundreds of video ad campaigns, and now have a clearer picture of the tradeoffs involved. It turns out that there is no one superior production format. Repurposed TV spots typically result in higher impact on awareness metrics, while made-for-web video content more ably persuades its viewers. Production Format: Repurposed TV Ads vs. Made-for-Web Content 5 % 4 % Repurposed TV Made-For-Web Percent Impacted 3 % 2 % 1 % % Aided Brand Awareness Online Ad Awareness Message Association Brand Favorability Purchase Intent / Consideration

11 In particular, viewers ages exhibit particularly positively impacted purchase intent when exposed to custom video content. 09 Age 6 % Percent Impacted 5 % 4 % 3 % TV Web 2 % 1 % 0 % 2.0 Aided Brand Awareness Online Ad Awareness Brand Favorability Purchase Intent/ Consideration Within each age segment, Made-for-Web content performs at, or above par for persuasion metrics Repurposed TV out performs Made-for-Web content in awareness across age groups The ability of made-for-web content to impact persuasion metrics is particularly evident among women. Percent Impacted by Gender Brand Favorability Male Female Repurposed TV Made-for-Web 1.9 Purchase Intent / Consideration , % 2%

12 Digital Video Advertising Best Practices 10 What s Available? Video advertising spans a variety of ad formats, most available for real-time media buying. While this is by no means an exhaustive list, here is an overview of several available units, to be used for comparisons later. In-Stream / Pre-Roll: 15, 30 Second Ads (Standard, Ad Selector, Interactive) In-Display: Any Length (Click to Play, Rollover to Play, Autoplay with Unmute Button, Full-Screen Click to Play)

13 Social Media: Any Length (In-Game and In-Application) 11 Mobile: Any Length (In-Stream, In-Display Click to Play)

14 In-Stream: Where It Works, Where It Falls Short 12 In-stream advertising is in high demand, and cost-efficiency is one reason why. According to our research, which took a sample of 119 million streams from video ad campaigns run through TubeMogul s media buying platform for video ads, pre-roll ads deliver a lower effective cost per minute viewed for 15 and 30 second ads than most other video ad types, including mobile, social media and user-initiated in-display video ads. 30 Second Ads: Spending Necessary to Achieve Same Minutes Viewed x x 0 Pre-Roll Social Media: In-App In-Banner Rollover to Play In-stream and pre-roll advertising are not without limits, however. While in-stream ads are superior at lifting favorability and intent metrics, videos run in social media lift awareness and message assocation metrics at higher rates. From campaigns run in 2011: Average Brand Lift by Ad Format: In-Stream vs. Social Media In-Stream 12% Social Media 10% 8% 6% 4% 2% 0 Awareness Message Assocation Brand Favorability Purchase Intent

15 Using pre-roll exclusively can also mean missing certain viewers. For instance, a marketer buying pre-roll on a newspaper s site might miss a broad swath of that site s audience. According to TubeMogul research in 2010, only 13.1% of unique visitors to a media company s homepage end up watching a pre-roll ad on average. By category: Percent of Unique Homepage Visits Resulting in a Completed Pre-Roll (2010) % % 10.5% 0 Broadcasters Magazines Newspapers Also, limiting a campaign to 15 and 30-second ads ignores longer-form ads (i.e. branded content). Given the opportunity, viewers will actually watch longer ads. Again, from campaigns run through TubeMogul s real-time media buying platform: 100 Average Seconds Watched per View by Ad Type: Ads >30 Seconds Branded Auto-Play Click-to-Play Social Media Rollover to Play

16 Other video ad units have unique benefits. For post-view interactions like clicks to brand microsites and social network sharing, in-banner units outperform pre-roll. 14 8% 7% 6% 5% Clicks, Social Network Sharing Rates by Ad Unit (per View) Brand Site: CTR Facebook Fan Page: CTR Facebook Like Rate 4% 3% 2% 1% 0 Click to Play Social Media Pre-Roll Rollover to Play 45.2 What should we conclude 38.6 from these findings? The data suggests that a campaign hoping to lift brand metrics across the purchase funnel should leverage multiple ad formats to meet its goals.

17 A Day(Part) in the Life of Digital Video Ads 15 While most video ad campaigns are designed to raise awareness and persuade customers, clicks remain a key metric for many advertisers. Whether the goal is getting people to share a link on Twitter, driving people to have a deeper conversation on a brand s Facebook fan page or getting viewers to take an action like filling out a product review or actually buying a product online, a large contingent of advertisers use clicks as a barometer of specific campaign goals, especially where survey and other metrics can fall short (i.e. measuring word-of-mouth sharing among friends). The question then arises for these marketers: you might have reached the right viewer, but did you reach them at the best time to drive these clicks? For broader marketers who might not care about click-rates, another question arises: is there an optimal time to buy to minimize cost per minute viewed? Is television primetime more expensive, for example? Analyzing over 23 million pre-roll ad views in the U.S., TubeMogul utilized its real-time-buying data and campaign statistics to take a closer look at pricing and click-through-rates by time of day. Campaigns spanned multiple industry categories, including top brands in the consumer packaged goods, restaurant and retail industries. Both 0:15 and 0:30 second pre-roll ads were included. Every timestamp in the data was localized in order to account for the differing time zones within the United States. Overall, completion rates do not differ significantly throughout the day. 0:30 second ads, while mostly stable, dip in the early morning hours and late afternoon, falling 10% by 3PM from their peak close at midnight. Completed Video Completion Rates by Hour of the Day Watched Half 15 Second Ads 30 Second Ads 4 AM Noon 8 PM

18 CPMs for 0:15 and 0:30 second pre-roll ads decline slightly late at night and rebound gradually during the day. However, the variance over the course of the day is only approximately 10% for both video lengths. 16 Cost per Thousand Viewers (CPM) by Time of the Day $12 $6 15 Second Ads 30 Second Ads 4 AM Noon 8 PM While CPMs for the two video lengths closely mirror each other over the course of a day, 0:30 second ads consistently commanded a higher CPM than 0:15 second ads ($9.96 on average, compared to $9.42). Cost-per-click (CPC) is very similar for both video lengths during the main part of the day (7am-7pm). However, as the CTR of 0:30 second ads fall in the evening, the CPC becomes more attractive for 0:15 second ads served between 8pm and midnight.

19 17 Cost-per Click by Time of the Day $2.50 $ Second Ads 30 Second Ads $1.50 $1.00 $ AM Noon 8 PM In contrast, click-through-rates follow a distinct pattern during the course of a day, peaking at 5pm and reaching a trough at 2am. Click-through-rates are slightly higher for 0:30 second ads during working hours, but fall below the rates for 0:15 second ads during the evening hours. 1.5% Click-Rates by Time of Day 1.2% 1.0% 0.6% 15 Second Ads 30 Second Ads 4 AM Noon 8 PM

20 Conclusions: 18 - Click-through-rates on pre-roll video ads follow a distinct pattern according to time of day, peaking at 5pm and reaching a trough at 2am. - Click-through-rates are slightly higher for 0:30 second ads during working hours, but fall off during the evening hours second ads see 6% higher CPMs than 0:15 second ads and pricing remains relatively steady throughout the day for both video lengths. Maximizing Clicks, Purchases Much Different It is important to keep in mind, however, that maximizing clicks or Likes and purchase intent are very different goals. Leveraging its partnership with leading survey vendors, TubeMogul executed brand surveys on five video advertising campaigns totaling 44.7 million impressions and 4,487 random survey-takers. Four of the five brands are from Fortune 500 companies, and the list reflects the automotive, consumer packaged good (CPG), insurance and restaurant industries. In terms of format, only 0:15 and 0:30-second pre-roll ads bought via real-time bidding on TubeMogul s platform were included. No 3rd-party audience segment data was used; campaigns only leveraged contextual targeting. Intuitively, the results indicate that purchase consideration and intent metrics tend to increase by the number of times someone is exposed to an ad, while click-through rates often peak at the first viewing. 15% 12% 14.3% Purchase Intent / Consideration Click-Rates 9% 6% 3.6% 3% 1.2% 2.0% 1.0% 0.9% 0 One Two Three Frequency

21 U.S. Video Ad CPMs Steady, Rising Slightly 19 U.S. Pre-Roll CPMs: comscore 100 Publishers $12 $10 $8 September October November As a real-time media buying platform for video advertising that empowers clients to buy across a diverse set of inventory sources and devices, TubeMogul is in a unique position to look at market trends, including on price. Think of it as Yahoo! Finance for brand advertising online, with this as the sneak preview. Taking a sample of million pre-roll ad streams in the U.S., TubeMogul averaged daily clearing price per 1000 viewers (CPM). For comscore top 100 Video Metrix publishers, including top media companies and popular sites like YouTube, CPMs are steady and growing slightly. The average CPM in October was $10.08, up 5.1% from August s average of $9.59 but down a few cents from September s average ($10.12). Expanding the sample to all sites, CPMs varied little, but were consistently several dollars lower than comscore-ranked sites. By category, the most pronounced trend occured in an index of comscore-ranked women s sites (i.e. Elle, Glam, Oprah.com), which saw a significant spike, rising to $10.10 in October. It should be noted that these are the prices from the real-time bidding exchanges, which do not reflect any overhead charged by TubeMogul or another third party (i.e. a data provider). How is TubeMogul able to publicly disclose pricing data this way? As noted, the company charges negotiated, transparent overhead to its platform users.

22 Owned Media: Video on Brand Sites How Are Videos Discovered? 20 Overall, 81.9% of views are discovered via direct traffic or navigation within a brand s own site. External sources of traffic are led by Google (58% of all referred streams), followed by Facebook and Yahoo! Facebook, however, is consistently the fastest-growing external source of views. 20% Average Monthly Growth in Referral Traffic 15% 10% 18.9% 5% 7.1% 10.2% 0.3% 0 Twitter Yahoo! Google Facebook Should I Allow Embeds? TubeMogul is often asked by social media teams managing brand microsites whether it is optimal to allow embeds. Although brands lose some control over where their content is being viewed, the data suggests the answer is yes. For one, embeds boost viewership by 2.6%, on average. Also, viewers discovering brands videos offsite tend to watch significantly longer than viewers on the brand site iteself. 2.0 Minutes Watched per View: On-site vs. Off-site Embeds : : Offsite Onsite

23 Owned Media: Video on Brand Sites Rebuffering Nightmares 21 While this seems like a minor technical issue, the stakes are high. Why? When viewers encounter a rebuffer (i.e. the spinning wheel denoting that a video is loading), they click away 81.2% of the time rather than wait for the content to load. To calculate this metric, TubeMogul recorded a sample of 192,268,561 streams from six top video sites and platforms over a 14-day period, tracking detailed data on video delivery quality. The data comes from the following top content delivery networks: Akamai, Edgecast and Limelight. The sample is primarily shortform content (i.e minutes), although long-form TV content is included. In detail: Rebuffers are commonplace, occurring in 6.8% of all streams. When encountering a rebuffer, viewers click away 81.2% of the time rather than wait for the video to re-load. Delays in start-time (the amount of time that passes between someone clicking play and a stream starting) were above one second for every network tested. How Common are Rebuffers? 6.8% 2.5% 1.0% Rebuffer % of All Streams % Streams >=2 Rebuffers % Streams >=4 Rebuffers When you consider that 1 of 15 streams experiences a rebuffer and most people click away when that happens, it s fair to conclude that far fewer ads are getting clicked (or watched) than advertisers believe.

24 Earned Media: YouTube and Beyond Videos Live Fast, Die Young 22 Way back in June 2008, TubeMogul released research looking at a typical YouTube video s lifecycle, breaking out views by number of days passed since a video was uploaded (i.e. one day old, two... 90). While TubeMogul no longer tracks this data, looking back at YouTube s evolution in the two years it did remains instructive. Back in 2008, for instance, it took two weeks for a video to get half of its 90-day view total, whereas in 2010 it only took six days. Similarly, a video in 2008 took 44 days to hit 75% of its total views, and in 2010 it only 20 days. As before, hundreds of media companies (i.e. CBS), news outlets (i.e. AP) and YouTube stars (i.e. ijustine) were included in the sample. 18 % Video Lifecycle: % of Total Views in 90 Days 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 %

25 Select Media Company Trends Peak Viewing Times 23 Overall, a disproportionate share of online video viewing (42.3%) occurs during the eight-hour workday, making online video one of the best ways to reach people at work. Broken out by category, an interesting trend emerges: broadcasters, unlike other media companies, have a primetime that mirrors broadcast television. 7 % Streams by Hour by Media Category (as % of Daily Views) 6 % 5 % Broadcasters Magazines Music Videos Newspapers 4 % 3 % 2 % 1 % 0 % Midnight - 1AM 1AM - 2AM 2AM - 3AM 3AM - 4AM 4AM - 5AM 5AM - 6AM 6AM - 7AM 7AM - 8AM 8AM - 9AM 9AM - 10AM 10AM - 11AM 11AM - Noon Noon - 1PM 1PM - 2PM 2PM - 3PM 3PM - 4PM 4PM - 5PM 5PM - 6PM 6PM - 7PM 7PM - 8PM 8PM - 9PM 9PM - 10PM 10PM - 11PM 11PM - Midnight Broadcaster Completion Rates: Full-Length Episodes Given their growth and size, broadcasters deserve special attention. While broadcasters often re-post full episodes online, much of their total title upload count is made up of shorter clips, including episode highlights, previews, webisodes and other short-form content. However, much of the minutes-watched -- and ad dollars -- are coming from full-length episodes. So we wondered: do episodes have higher completion rates than clips? To answer, Brightcove partnered with TubeMogul and took a cross-sample of hundreds of full-length episodes streamed in the first quarter of 2011, with episode lengths ranging from just over 20 minutes (for half-hour shows on broadcast television) to over 45 minutes (full-hour shows).

26 Select Media Company Trends The results: completion rates of full episodes are higher than clips. The dropoff at the end of episodes is likely due to people clicking away during credits. 24 Broadcaster Completion Rates: Clips vs. Full-Length Episodes Watches 75% Completes Video 70.7% 63.93% 58.8% 50.63% TV Clips Full-Length Episodes

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28 2011 TubeMogul