MOBILE BUYER SURVEY February 25, Rubicon Project All Rights Reserved

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1 February 25, 2014 Rubicon Project All Rights Reserved

2 buyers EXECUTIVE representing SUMMARY more than 100,000 globally. Global mobile advertising spending is forecast to reach $18 billion in 2014, and the market is expected to grow to $41.9 billion by 2017, according to a report from IT research firm Gartner. and In early audiences 2014, Rubicon through Project open auction surveyed real-time representatives of leading advertising agency trading desks bidding throughout and Europe, private marketplaces, Asia Pacific and including USA: the the goal was to gauge buyers views on the mobile ad market, packaging and provide of a first benchmark party data. for the state of mobile advertising in Seller Key Findings: Cloud also includes support for Though mobile ad spend was relatively low in 2013 (7% of overall spend), agency trading desks anticipate it will more than double in 2014, to account for 16% of their digital advertising budgets. Nearly all trading desks (95%) intend to purchase, or have already purchased, inventory via mobile private marketplaces in These one-to-one orders between buyer and sellers may provide a solution to the challenges faced by both buyers and sellers in mobile Rubicon advertising Project up Reporting to this point Suite namely, quality inventory for the buyer, targeted with robust data and higher yields for the seller. and Buying trading patterns desks are and shifting. over 100,000 The majority of trading desks (90%) are buying mobile inventory advertiser through Demand-Side brands Platforms (DSPs) versus just 49% a year ago. This may indicate a growing acceptance amongst buyers that this form of buying represents a more effective, efficient method Global than reach via ad networks (38%) and via publishers directly (36%). Another contributing factor may be an increase in the number of high impact rich media formats, such as the IAB s Rising Star units, Leading that can brand now protection be traded through suite automated advertising. World In 2014, class agency technology trading desks expect mobile spending will be relatively evenly split across in-app inventory (36%), mobile optimized sites (31%) and standard web formats delivered to tablet devices Dedicated (33%). In-app support inventory and consultative may be slightly more popular because Advertiser it offers Real-Time buyers richer Bidding targeting Report (or approach retargeting) data. Award-winning 69% of trading user desks interface measure their marketing campaigns around cost per action (CPA) or cost per install (CPI) metrics, while a similar number measure to click through rates (CTR). The real Customised surprise, however, and actionable is that slightly reporting more than a quarter (26%) measure for reach, an indication that advertisers may be beginning to extend brand spend to mobile, rather than reserving the channel strictly for direct response campaigns Overall, the survey provides a useful overview of buyers attitudes to mobile in Read on for a more detailed breakdown of each of the data points listed above, as well as additional buyer responses around tracking methodologies and mobile ad formats. 2

3 1. Ad Spend globally. bidding and private What marketplaces, percentage including of your the 2013 spend went to mobile advertising? packaging of first party And data. what percentage do you predict will go to mobile in 2014? Seller Cloud also includes support for % 16% In her 2013 Internet Trends report, Mary Meeker predicted that in May of last year 15% of all web traffic would World originate class from technology mobile devices, while emarketer predicts that by the end of this year, some 1.75 billion consumers worldwide will carry smartphones. In the approach same report, Mary Meeker also suggested that there is a large imbalance between mobile usage and mobile ad spend, which according one count earned just 3% of the total digital spend compared to 12% Award-winning of time spent in user interface Respondents Customised to the and Rubicon actionable Project reporting Buyer Survey 2014 suggest this gap may be starting to close, with trading desks saying their mobile ad spend will more than double from 2013 to 2014, as advertisers seek to engage consumers on the devices they use more frequently. 3

4 globally. 2. How Agency Trading Desks Are Accessing Inventory bidding and private marketplaces, including the packaging of first party data. How do you currently access mobile inventory? Seller Cloud also includes support for advertiser brand Publisher and pricing controls. Direct 22% Ad Networks 30% DSPs 49% 2013 Access Ad spend Networks from more than 100 DSPs Publisher Direct 36% 38% Agency World trading class desks technology surveyed for this report suggest they are relying more on automated advertising technology than last year for their mobile campaigns. When Rubicon Project conducted a similar survey of trading desks in 2013, just 49% of trading desks said they bought mobile approach inventory through demand side platforms (DSPs), while in 2014 some 90% say they purchase mobile inventory through automated technologies. Award-winning user interface 90% These responses support a key finding from the 2013 report on mobile Forrester Research Customised and actionable reporting produced in conjunction with Rubicon Project: that agency trading desks see automated trading as a part of the solution to challenges they have faced in the past around scaling mobile campaigns. 4

5 advertiser 3. brands Private globally. Marketplaces Have you in the past, or are you planning to in 2014, buy mobile or bidding and private marketplaces, including the packaging of first party tablet data. inventory through private marketplaces (aka direct orders)? Seller Cloud also includes support for YES 95% NO 5% Nearly all agency trading desks (95%) have either already purchased mobile inventory via a private marketplace, World class or plan technology to do so in This Dedicated high adoption support rate may and reflect consultative a belief among buyers that private Advertiser marketplaces Real-Time provide Bidding a Report solution approach to some of the challenges that the mobile market has faced to date, namely limited targeting data, inconsistent tracking methodologies, and concerns with regards to transparency, context Award-winning and brand safety. user interface Private Customised marketplaces and actionable (also known reporting as direct orders) are deals agreed between an individual seller and buyer, based on pre-negotiated terms. They provide privileged access to premium inventory and placements, as well in many cases as access to exclusive audiences through the packaging of first party data. Private marketplaces can enable sellers to command higher yields for their inventory, and both sides can benefit from increased efficiency and lower overheads by executing orders through this channel. 5

6 globally. 4. Spending by Inventory Type bidding and private marketplaces, What including percentage the of your 2014 mobile spend packaging of first party data. will go to each of the following: Seller Cloud also includes support for advertiser brand MOBILE and pricing OPTIMISED controls. TABLET SITES (STANDARD WEB) IN-APP 31% 33% 36% Respondents World class to the technology survey suggest that mobile ad spend is fairly evenly split between in-app display, mobile-optimized sites and standard banners delivered to tablets. Agency approach trading desks seem to show a slight preference for in-app advertising, which according to their responses receives the greatest share of mobile budgets (36%), followed by tablet (standard web) Award-winning at 33% and mobile user optimized interface sites at 31%. The Customised app installation and process actionable often reporting requires users to opt-in to share certain types of data, and it is this access to richer data that may explain the higher popularity of in-app inventory. In-app mobile inventory that is sold through private marketplaces may provide sellers with even greater opportunities to reach and engage the right mobile audiences in meaningful ways. This approach combines the rich data options of in-app inventory, with the transparency, brand safety and contextual relevance of private marketplaces. 6

7 advertiser 5. brands Ad Formats globally. bidding and private marketplaces, Which ad formats including do the you see most demand for in mobile? packaging of first party data. Seller Cloud also includes support for Standard Formats Rich Media Video 54% Survey respondents saw the greatest demand from sellers for standard mobile ad formats (69%), followed by rich media formats at 59% and mobile video formats at 54%. World class technology The high demand for rich media formats is notable. The increasing standardization of these high impact Dedicated formats, support such as and the IAB s consultative Rising Star units, and their adoption Advertiser in automated Real-Time advertising Bidding Report may approach to some extent explain their strong showing in these results. Moreover, a 2013 IAB study shows that Rising Star units attract nearly double the interaction rate of standard banners and generate Award-winning positive brand user impact. interface Customised video formats and actionable are also popular reporting with trading desks, with more than half (54%) highlighting strong demand for them. The advent of HTML5, with its improved playback and offline storage, may be playing a part in driving this. 59% 69% 7

8 advertiser 6. brands Tracking globally. Solutions bidding and private marketplaces, What including tracking the technologies are you using packaging of first party data. to measure your mobile campaigns? Seller Cloud also includes support for Device IDs Mediamind Medialets Adelphic Adform Ad-X Proprietary DFA DBM Don t know OAS SDK AdOcean Hasoffers Omniture DCM Cookies/pixels Flurry Rubicon World Project class asked technology respondents which tracking technologies they use to measure their mobile campaigns. The approach broad range of responses may be indicative of a still nascent market - that like the early days of desktop advertising, mobile still lacks a robust cookie or cookie-like solution, making accurate campaign Award-winning reporting and user true interface frequency capping a challenge. Customised and actionable reporting As a result, a number of different solutions are present in today s marketplace. 8

9 advertiser 7. Performance brands globally. Metrics What performance metrics are you measuring bidding and private marketplaces, including the packaging of first party data. in your mobile ad campaigns? Seller Cloud also includes support for CPI/CPA CTR REACH 69% 69% 26% In terms World of class which technology performance metrics buyers use to measure their mobile campaigns, survey respondents suggested that the most frequently used are the cost per action (CPA) / cost per install (CPI) Dedicated metric (69%) support alongside and consultative click through rate (CTR - also 69%). approach Traditionally, mobile has been considered to be a channel used predominantly for performance or Award-winning user interface direct response campaigns. However, 26% of respondents suggest that their campaigns are also measured by reach. Customised and actionable reporting These results may suggest that agency trading desks are beginning to use mobile for branding campaigns, or perhaps for campaigns that incorporate a combination of direct response and branding elements. 9

10 advertiser 8. Reasons brands to globally. Be Excited The For the platform final question provides of Sellers the survey, with Rubicon actionable Project asked agency trading desks to state the one insights thing that and excites robust them functionality most about to take mobile control advertising in the coming months. The results (below) offer a striking range of responses, which may point to the broad range of bidding and private marketplaces, including the packaging opportunities of first buyers party currently data. see in mobile, and in particular around advertising automation: Seller Cloud also includes support for Standardisation World class technology approach What are you most excited about in mobile in 2014? Algorithmic learning ios New formats Growth Social Cookieless tracking Finger printing Creativity PMPs More campaigns Tracking Branding DMP ibeacons More Concentration of the market - fewer players New tracking possibilities Interactivity Reach Reach in RTB Video Premium Single user profile Greater advertiser interest Conversion tracking & retargeting Tracking across apps & in-browser Integration with other media channels Cross-device targeting Award-winning user interface It is a fitting end to our report, as each of the areas highlighted by buyers above could play an important Customised role in and mobile actionable advertising, reporting and would each merit further study a testament to the breadth and potential in this market, as well as buyers appetite for it. 10

11 advertiser Methodology brands globally. The data platform in this provides report is Sellers taken from with a actionable survey that Rubicon Project fielded to agency insights trading desks and robust across functionality the globe in to January take control and early February The survey received 39 responses from trading desks across APAC, Europe and the USA. bidding and private marketplaces, including the packaging of first party data. About Rubicon Project Seller Cloud also includes support for advertiser Rubicon Project brand pioneered and pricing advertising controls. automation and is now doing for advertising what companies like NASDAQ did for stock trading. The company s automated advertising platform is used by more than 500 of the world s premium publishers and applications to transact with over 100,000 advertising brands globally. A company driven by innovation, Rubicon Project has engineered the Rubicon Advertising Project Automation Reporting Suite Cloud, one of the largest real-time cloud and Big Data computing systems, processing trillions of transactions Access spend within from milliseconds more than each 100 month. According to comscore Jan 2014, Rubicon Project reaches buying 96 platforms, percent of U.S. all major Internet agencies users per month and is ranked #1 in reach. Headquartered in Los Angeles, Rubicon Project has ten offices across the globe including New York, San Francisco, Paris, Hamburg, Sydney, London and Tokyo. World class technology approach Award-winning user interface Customised and actionable reporting 11

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