INDUSTRY REPORT. Real-time Bidding: The Online Ad Exchange

Transcription

1 INDUSTRY REPORT Real-time Bidding: The Online Ad Exchange

2 Attribution Executive Editor: Tricia Parks Editor: Harry Wang Authored by Heather Way Published by Parks Associates July 2012 Parks Associates Dallas, Texas All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America Disclaimer Parks Associates has made every reasonable effort to ensure that all information in this report is correct. We assume no responsibility for any inadvertent errors. Quality Review Analyst HW EE Wang 6.30 EE TP 7.8 Attribution i parksassociates.com

3 Table of Contents Attribution... i Disclaimer... i Table of Contents... 2 List of Figures... 3 The Bottom Line... 4 Data Points Report Summary Purpose of Report Scope of Report Research Approach Data Sources Glossary of Terms Defining Real-Time Bidding (RTB) The Buy-side Media Buying Desks (MBDs) Demand-side Platforms (DSPs) Data Management Platforms (DMPs) The Sell-side Supply-side Platforms (SSPs) Online Buying/Selling Intermediaries RTB Ad Exchanges Ad Networks Ad Monitoring and Verification Services Real-time Bidding Online Advertising Revenue Forecasts in North America (N.A.) Forecast Methodology Forecast Assumptions Market Implications & Recommendations Resource Book... A-43 Appendix A Company Profiles: Media buying desks... A-43 Appendix B Company Profiles: Demand-side Platforms (DSPs)... B-45 Appendix C Company Profiles: Data Management Platforms (DMPs)... C-48 Appendix D Company Profiles: Supply-side Platforms (SSPs)... D-50 Appendix E Company Profiles: RTB Ad Exchanges... E-51 Appendix F Company Index... F-52 Table of Contents 2 parksassociates.com

4 List of Figures Figure 1: Source of Data... 7 Figure 2: Glossary of Terms... 9 Figure 3: The Core Benefits of RTB Figure 4: Real-time Bidding (RTB) Technical Workflow Figure 5: Real-time Bidding Online Advertising Ecosystem Figure 6: Who's Who in Real-time Bidding Figure 7: RTB Advertising Revenue Flow Figure 8: Media Buying Desks (MBDs) Figure 9: Demand-side Platforms (DSPs) Figure 10: Data Management Platforms (DMPs) Figure 11: Pubmatic Ad Price Prediction Workflow Figure 12: Supply-side Platforms (SSPs) Figure 13: RTB Ad Exchanges Figure 14: Private Ad Exchanges Figure 15: DoubleVerify's 6 Critical Areas of Media Verification Figure 16: RTB Online Display Ad Revenue Forecast Methodology Figure 17: Drivers and Barriers of Growth of RTB Ad Market Figure 18: RTB Online Display Advertising Revenues North America Figure 19: Total Internet, Online Display, and RTB Advertising Revenues in N.A List of Figures 3 parksassociates.com

5 The Bottom Line The core market sectors comprising the real-time bidding (RTB) market include: Platforms that serve the buy-side (media buying desks and demand-side platforms); Platforms that serve the sell-side (supply-side platforms and private ad exchanges); and Intermediaries that facilitate the exchange of data, bids, and ad expenditures. Ad networks are experiencing competitive pressure as RTB enablers offer greater transparency, control, and accuracy. Moving forward, ad networks must integrate RTB capabilities to avoid losing market share, as digital ad revenues will gravitate towards performance and efficiency. Reallocated ad spend, away from traditional online display advertising will shift to the RTB ad market as buyers become more comfortable with the concept and realize the benefits such as cost efficiencies, reduced ad waste, scalable reach, and control and transparency. In 2012, RTB advertising revenues in North America (U.S. and Canada) will reach $1.6 billion, rising to $6.9 billion by 2017 and growing at a five-year 34% compound annual growth rate (CAGR). At present, the U.S. RTB market accounts for 98% to 99% of RTB ad expenditures in N.A. The Canadian RTB industry is in its formative stages of development with few display ad impressions bought and sold in real-time. In 2012, Parks Associates forecast pegs total online display advertising at $13.7 billion, with that sector accounting for approximately 35% of total Internet advertising expenditures in N.A. Through the fiveyear forecast period, online display advertising revenues, including RTB, will grow to $20.1 billion, in line with the overall rise in Internet advertising. Of all online display ad revenues, RTB accounts for 12% in 2012; its share will increase to 34% by Agency demand for cross-platform ad synergies drives the development and adoption of RTB sell-side platforms for emerging media - online video, mobile, and social. Even so, Parks Associates predicts these new RTB markets will remain small with growth contingent on the maturation of the online display RTB ad market. The Bottom Line 4 parksassociates.com

6 Data Points When placing bids on RTB ad avails, buyers set a maximum bid using a CPM-based pricing model on an impression-by-impression basis (e.g., $1.00 CPM = $0.001 per impression or 1/1000 CPM for each impression won). The highest bidder wins at $0.01 per ad impression above the next highest bidder. For example, if Brand A bids a $1.00 CPM and Brand B bids a $2.00 CPM, Brand B wins the auction and pays a $1.01 CPM. Demand-side platforms (DSPs) adhere to a service or technology fee business model (aka buying fee) based on the percentage of media spend. These fees typically range from 10% to 20% of total media budget (e.g., agency spends $100,000; DSP earns $10,000 to $20,000). Supply-side platforms (SSPs) assume ad revenue sharing models retaining a percentage, typically 10% to 15%, of ad revenues flowing to the RTB ad inventory owner. For example, the SSP receives payment from an ad exchange, takes a 10% to 15% cut, and then sends remaining revenues (around 85% to 90%) to the online publisher. Ad exchanges generate revenue by charging DSPs a percentage fee on ad revenues processed by the exchange. The fees range from 10% to 30% and vary based on the size of media budget. Some ad exchanges deduct a flat fee from the CPM paid by the winning bidder. In both cases, the ad inventory holder (online publisher) receives the remaining revenue. Facebook Exchange is a driving force of RTB ad inventory availability through the five-year forecast period. According to comscore s U.S. Digital Future in Focus 2012, the social network serves approximately one-third of U.S. display ad impressions, which opens up a large source of display ad inventory to the RTB market. Data Points 5 parksassociates.com

7 1.0 REPORT SUMMARY 1.1 PURPOSE OF REPORT This report provides an assessment of the major business segments comprising the real-time bidding (RTB) online display advertising market in North America (N.A.). 1 The study serves as an educational tool for executives who are unfamiliar with the inner workings of RTB and provides industry insight and strategic direction for companies operating in the space. 1.2 SCOPE OF REPORT Real-time Bidding: The Online Ad Exchange evaluates the online RTB landscape from two viewpoints primarily the buy-side (ad agencies and advertisers) and the sell-side (online publishers). While real-time bidding technology exists for online video and mobile media, this report focuses on online display advertising. The strategic analysis is as follows: Evaluation of the primary market sectors including ecosystem positioning, business role, and technical workflow Review of the key companies using competitive profiling Identification of industry segments influenced by RTB-enabled technology platforms Assessment of factors defining market growth Projection of five-year online display advertising revenues generated from RTB methods in North America (N.A.) 1 U.S. and Canada Report Summary 6 parksassociates.com

8 1.3 RESEARCH APPROACH DATA SOURCES This report uses data for analysis from the following sources (Figure 1): Public Information Company websites, press releases, and blogs Industry-related news articles In-depth Company Interviews Figure 1: Source of Data SOURCE OF DATA Interviews with approximately 20 top-level executives employed at leading ad agencies, demand-side and supply-side firms, ad networks, ad exchanges, and online publishers. 2 Industry Sponsored Research comscore, Inc., U.S. Digital Future in Focus, 2012 Digiday and Google, Real-Time Display Advertising: State of the Industry, 2011 BlueKai, Data Management Platforms Demystified, 2011 Google, The Arrival of Real-Time Bidding and What it Means for Media Buyers, 2011 comscore, Inc., The 2010 U.S. Digital Year in Review, 2011 Interactive Advertising Bureau (IAB) of Canada, 2010 Actual Estimated Canadian Online Advertising Revenue Survey DETAILED REPORT, 2011 PubMatic, Ad Revenue Report, 2011 PubMatic, Understanding Real-Time Bidding (RTB) From the Publisher Perspective, To protect the anonymity of our industry partners, and depending on the research topic, Parks Associates does not directly source individuals or companies who provide industry insight and perspective in company interviews. Report Summary 7 parksassociates.com

9 1.3.2 GLOSSARY OF TERMS The following glossary, Figure 2, defines key industry terms used in the report. Above the Fold Ad Avails Ad Call Ad Exchange Ad Tag Term Media Buying Desk (MBD) Below the Fold Cookies Cost-per-thousand (CPM) Creative Customer Relationship Management (CRM) Data Management Platform (DMP) Demand-side Platform (DSP) GLOSSARY OF TERMS 3 Industry Definition Industry term referring to the top area of a webpage that a consumer sees without having to scroll down. Industry term describing ad inventory such as display ad units, commercial time slots, etc. Technical function when a web browser asks an ad exchange or ad server to send an ad. The ad call includes information from browser cookies and ad tag information such as publisher ID, size, location, referring URL, etc. Ad marketplace where multiple ad buyer and seller platforms meet to exchange media in real-time bidded auctions. Ad exchanges provide technical workflow and reporting tools for demand and supply sources. HTML area located on a webpage that communicates with an ad server and requests an ad. Buy-side platform employed by ad agencies to consolidate the process of planning, buying, serving, and reporting online media campaigns in real-time. MBDs typically integrate with a demand-side platform (DSP) to leverage the technology stack offered by DSPs in lieu of building the technology required to access RTB inventory. Industry term describing the bottom portion of a webpage that is obscured from the user requiring them to scroll down to access it. Small text files that websites place on web browsers to detect when a user returns to a website or interacts with an ad. Method of evaluating media efficiency and payment. CPM is a ratio based on how much it costs to reach or achieve 1,000 persons/viewers/ad impressions. Actual graphical or video advertisement. Common creative formats include GIF, JPEG, JavaScript, HTML, and Flash. Business strategy used to help a company understand its current and prospective customers. Customer data is captured, stored in a central database, analyzed, and distributed to internal touch points such as sales divisions, call centers, websites, point-of-sale, and direct marketing channels. Centralized data management platform that allows ad agencies to create customized audience segments based on first party and third party data sources. Buy-side technology platform that allows ad agencies to manage multiple ad exchanges and data exchanges through a centralized interface. 3 The report summarizes the industry terms based on information obtained from secondary sources including, but not limited to, AppNexus Display Advertising Glossary, +Glossary Report Summary 8 parksassociates.com

10 Reach Real-time Bidder Real-time Bidding (RTB) Real-time Bidding API Remnant Inventory Supply-side Platform (SSP) Yield Optimization Source: Real-time Bidding: The Online Ad Exchange Figure 2: Glossary of Terms GLOSSARY OF TERMS 3 Number of unduplicated viewers exposed to a video program or TV application or an advertiser's schedule over a specific time period. Also known as cume. Formula: Reach = Unique Target Audience Target Universe Size Server-to-server optimization engine that allows MBDs, DSPs, and ad networks to evaluate and bid on individual ad impressions instantaneously. Industry term used to describe the technology infrastructure and management systems that enable the automated purchase and selling of online display advertising in real-time. Software-to-software interface provided by ad exchanges that connects RTB-enabled ad inventory offered by SSPs and ad exchanges to buy-side platforms such as Media Buying Desks (MBDs) and demand-side platforms (DSPs). Low-cost advertising space or time that is relatively undesirable or otherwise unsold. Sell-side technology platform that allows online publishers to increase advertising revenue and manage ad inventory. Technique that boosts the performance of online display ad inventory by linking online publishers to various ad networks and ad exchanges to maximize ad inventory fill rates and increase ad revenues. Report Summary 9 parksassociates.com

11 1.4 DEFINING REAL-TIME BIDDING (RTB) WHAT IS RTB? Real-time bidding (RTB) describes the technology infrastructure and management systems that enable the automated, real-time purchase and selling of online display advertising. RTB is neither a technology nor an ad platform but rather a term describing the entire process. Real-time bidding is a data-driven buying model through which ad agencies place auction-based bids for individual ad impressions instantaneously. The alternative buying model is a static auction through which audience segments are purchased in bulk of 1,000 ad impressions. By contrast, the RTB auction process takes place in milliseconds (one thousandth of a second), hence the label real-time. WHY RTB? The evolution of the RTB market began with the emergence of ad networks. For the past decade, ad networks have been the primary way ad agencies reached online audiences at scale and ad sellers monetized remnant (aka unsold) ad inventory. In a manner similar to traditional media buying practices (e.g., TV buying), agencies pay ad networks a CPMbased rate to reach audience segments with the understanding that a portion of the online ads will not reach intended consumer Figure 3: The Core Benefits of RTB targets. However, as algorithms and data analytic strategies began to support the digital advertising market, advertisers quest for cost efficiencies and greater media campaign control and transparency intensified. As a result, a new breed of advertising tool (media buying desks MBDs, DSPs, SSPs, and ad exchanges) emerged in 2007 to facilitate a more precise and timely digital media placement and sales approach. However, it was not until around 2009 that these platforms began to offer real-time bidding (RTB) solutions, providing even greater efficiencies, and control over the online display adverting process. Since then, ad buyers and sellers focus on leveraging the benefits of RTB (Figure 3). Report Summary 10 parksassociates.com

12 HOW DOES RTB WORK? In an RTB environment, ad buyers analyze the multiple variables of an ad impression such as demographics, geography, and publisher attributes. To do this, they overlay first 4 and third party audience data to determine the value of online display ad impressions. The pre-determined inventory value guides the bidding process. RTB also allows agencies to reduce the time required to scale media buys as well as the complexity of scaling media buys across multiple supply sources (e.g., supply-side platforms, ad exchanges, ad networks, and publisher websites). Today, there are four primary ways agencies execute RTB-based advertising strategies 5 : 1. Acquire or license a media buying desk (MBD) 6 that uses demand-side platform (DSP) technology 2. Buy from a DSP direct that provides a built-in real-time bidder 3. Partner with an ad network which supports real-time bidding 4. Develop a real-time bidder into a MBD to access RTB APIs While there are several paths for agencies to take when employing RTB, most use a media buying desk (MBD) that relies on demand-side platform (DSP) technology to access and bid on RTB ad impressions. In most cases, ad agencies prefer to leverage the technology stack offered by DSPs in lieu of building the technology required to access RTB inventory. Additionally, greater control is obtained when planning and buying media through an agency-owned MBD. Therefore, option 1 is the most common way large ad agencies set up RTB ad campaigns. Presently, only a few small and medium agencies buy RTB inventory due to lack of knowledge regarding the emerging ad space as well as limited required company resources to develop or license the technology to facilitate RTB media buys. There are two core technology elements encompassing the real-time bidding process the RTB applicationprogramming interface (API) and the RTB bidder: The RTB API is a software-to-software interface provided by ad exchanges that connects RTBenabled ad inventory offered by SSPs and ad exchanges to buy-side platforms such as MBDs and DSPs; A RTB bidder is a server-to-server systems integrator that connects all RTB-enabled APIs between buyer and seller platforms. These enable the automated exchange of ad dollars in real-time. 4 First party agency data may include customer relationship management (CRM) sources. 5 See Figure 4: Real-time Bidding (RTB) Technical Workflow 6 Detailed in Section 2.0: The Buy-side Report Summary 11 parksassociates.com

13 While this report focuses mainly on RTB business sectors, operations, revenue models, and key market trends, Figure 4 outlines the RTB technical workflow from a high-level perspective. 7 The RTB workflow includes the following: 1. User visits a website 2. Web server delivers HTML code to web browser with direct to ad server via ad tag link 3. Ad server returns ad tag for RTBenabled SSP or ad exchange 4. User cookie ID sent to SSPs 5. Ad exchange begins auction using RTB APIs 6. Buyers (MBDs, DSPs, ad networks 8 ) value the ad impression using first party and third party data based on user s cookie ID and sets bid using RTB bidders 7. Ad exchange determines winning bid and delivers ad server redirect to user 8. User calls the winning bidder to obtain ad server location 9. Ad server delivers ad to user s browser Real-Time Bidding (RTB) Technical Workflow Publisher Ad Server Advertiser Ad Server MBD DSP 1 MBD 2 SSP Figure 4: Real-time Bidding (RTB) Technical Workflow 2 8 Website 4 SSP 5 Ad Exchange SSP 6 6 DSP 2 DSP 3 Ad Network 7 The graph intends to illustrate the technical workflow; however, Parks Associates acknowledges that demand-side platforms can choose to purchase RTB ad inventory from either an ad exchange or SSP (i.e., SSPs are not dependant on ad exchanges to sell impressions). 8 Traditionally ad networks are the sellers of online ads; however, in RTB these firms assume the role of ad buyer bidding on RTB ad impressions competing directly with MBDs and DSPs. Report Summary 12 parksassociates.com

14 Advertisers/Ad Agencies Real-time Bidding: The Online Ad Exchange When placing bids on RTB ad avails, buyers set a maximum bid using a CPM-based pricing model. The highest bidder wins at $0.01 per ad impression above the next highest bidder. For example, if Brand A bids a $1.00 CPM and Brand B bids a $2.00 CPM, Brand B wins the auction and pays a $1.01 CPM. Unlike traditional CPM buying models where ad rates are based on the cost to reach 1,000 ad impressions in bulk, buyers place bids on an impression-by-impression basis (e.g., $1.00 CPM = $0.001 per impression or 1/1000 CPM for each impression won). WHO ARE THE KEY RTB PLAYERS? Figure 5 provides an illustration and description of the core business sectors comprising the RTB advertising market. The ecosystem is segmented by platforms that serve the buy-side, sell-side, and the intermediaries that facilitate the exchange of data, bids, and ad dollars between them. Real-time Bidding Online Advertising Ecosystem B U Y S I D E Media Buying Desks (MBDs) Internal agency ad management platform used on top of a demand-side platform (DSP) or other bidbased buying technology Demand-side Platforms (DSPs) Centralized system that allows ad agencies/ advertisers to manage multiple supply sources and data management accounts Ad Exchanges Automated auction based ad-pricing system facilitating real-time ad exchanges between multiple demand and supply sources Ad Networks Aggregator of ad inventory for multiple web sites or applications. Ad networks service both advertisers and publishers Supply-side Platforms (SSPs) System that enables content owners/ publishers to manage and optimize ad inventory Data Management Platforms (DMPs) Intakes, aggregates, and outputs data from multiple sources to design custom audience segments Online Publishers S E L L S I D E Ad Verification Service employed to ensure RTB ads are displayed in brand-safe content and adhere to media campaign goals and guidelines Figure 5: Real-time Bidding Online Advertising Ecosystem Report Summary 13 parksassociates.com

15 Figure 6 highlights the main RTB players by type. 9 ad exchange sectors in full 10 and in summary 11. The report profiles firms in the MBD, DSP, DMP, SSPs, and Who s Who in Real-time Bidding B U Y S I D E Ad Agencies A d A g e n c i e s Media Buying Desks (MBDs) Demand-side Platforms (DSPs) Ad Exchanges Private Ad Exchanges Ad Networks Supply-side Platforms (SSPs) S E L L S I D E Data Management Platforms (DMPs) Ad Verification Figure 6: Who's Who in Real-time Bidding 9 Modeled after LUMA Partners Display Advertising Technology landscape infographic. Available at partners.com/resource-center/ 10 Resource Book Appendix A-E 11 Summarized company profiles included by report section. Report Summary 14 parksassociates.com

16 HOW DO RTB AD REVENUES FLOW? To provide a holistic view of RTB economics, Figure 7 illustrates the RTB advertising revenue streams. The buy-side and sell-side analyses found in Section 2, Section 3, and Section 4 of the report offer a full description of each business model approach. RTB Advertising Revenue Flow Brand Advertiser $100,000 Budget B U Y S I D E Ad Agency $15,000 15% Agency Commission $85,000 Ad Spend Media Buying Desk (MBD) 10% Service/Tech $8,500 Fee $76,500 Ad Spend Demand-side Platform (DSP) 10% Buying Fee $7,650 $68,850 Ad Spend Indicates the sector that is charged the fee/commission Ad Exchange $6,885 Sell-side Platform (SSP) $6,797 10% Service Fee $61,965 Ad Spend 10% Revenue Share Online Publisher $55,168 Ad Revenues S E L L S I D E Figure 7: RTB Advertising Revenue Flow Report Summary 15 parksassociates.com

17 2.0 THE BUY-SIDE 2.1 MEDIA BUYING DESKS (MBDS) Ad agencies employ media buying desks (MBDs) to consolidate the process of planning, buying, serving, and reporting bid-based online media campaigns. 12 By leveraging the power of technology, agencies eliminate labor-intensive media planning and buying processes. Additionally, media buying desks (MBDs) compile proprietary audience intelligence profiles and integrate these data models into third-party DSP decisionmaking processes. Revenue models vary by agency holding company type; however, most MBDs operate under a service or technology business model with fees for their use based on total media spend. The exact percentage of media spend charged is unknown as many agencies negotiate MBD fees as part of agency commissions. Those are historically 15% of the client s total media budget. Parks Associates presumes MBDs charge clients an additional 10% to 15% of media spend for the right to use the platform to reach audiences in realtime ad markets. 13 While MBDs offer multiple benefits such as enhanced audience targeting, consistent workflow, site-level transparency 14, and impression-level control 15 to agencies and their clients, the sector nonetheless endures client scrutiny. For instance, agency clients express concern that they are being charged double by agencies - first for media planning and buying services via agency commissions and then again, to employ the agency s proprietary MBD. Additionally, some platforms, like WPP s Xaxis, buy ad inventory in bulk and resell it to clients at a premium rate (similar to the ad network model) leaving clients questioning overall cost efficiencies. Finally, agency holding companies are accused of mandating that proprietary MBDs are used by sister agencies to process all online display ad transactions. In this case, agencies are able to secure 12 Parks Associates labels the sector media buying desk because ad agencies are sensitive to the term agency trading desks as it implies that the platform manages ad impressions like a stock market exchange and competitively trades inventory between client accounts. 13 Based on knowledge of demand-side platform service fee percentages 14 Gives ad agencies full disclosure on the number of ads served to exactly what types of sites helping them evaluate the quality of publisher partners. 15 Allows ad agencies to purchase individual ad impressions that met specific campaign goals versus in bulk of 1,000 impressions. The Buy-side 16 parksassociates.com

18 incremental revenues on media buying services that are typically covered in the standard agency commission rate. Many MBDs consider themselves system integrators because of their platform s ability to connect digital marketplaces. As a result, MBDs focus on establishing cross-platform RTB capabilities and support investments in display, online video, mobile, and social media technology infrastructure to scale media strategies. Most, if not all, solutions enable multiplatform real-time bid-based buying to achieve this goal. In addition, because full-transparency (when, where, and how an ad is displayed) is a benefit of RTB, industry compliance recognition is valued among buying and selling platforms. Using multiple ad verification criteria, media monitoring firms report non-compliance incidents. 16 Non-compliance occurrences include, but are not limited to, ads displayed on inappropriate websites, ads served outside of designated geographic regions, and ads appearing on the same web page as a competitor. Industry compliance confirms the RTB ad platform adheres to media campaign guidelines and goals. This is a critical aspect to ensure overall transparency and trust required by ad buyers to justify media budget allocation to the RTB market. Three of the four agency-owned MBDs met industry compliance standards measured and reported by leading ad verification firm, DoubleVerify. Figure 8 provides an overview of the leading agency and independent media buying desks. 17 MEDIA BUYING DESKS (MBDs) Ad Agency AGENCY-OWNED 2011 Agency Revenues 18 Product Metrics Launch Proprietary Agency Platform 19 Most Compliant Platform 20 $14.4 billion Executed 4,000 + campaigns for clients 2011 $12.5 billion na See Figure 15: DoubleVerify s 6 Critical Areas of Media Verifications in Section 4.3 Ad Verification Services 17 Full company profiles found in the Resource Book, Appendix A 18 Ad Age DataCenter, April 2011, worldwide revenues 19 Used solely by agency holding company sister agencies 20 DoubleVerify Trust Index Insights, Benchmarks and Findings on Online Advertising Compliance 2H 2011 DoubleVerify Trust Index Insights, Benchmarks and Findings on Online Advertising Compliance 2H 2010 The Buy-side 17 parksassociates.com

19 $7.18 billion 78 + billion ad impressions served 2008 $6.5 billion Private 50 + billion ad impressions served INDEPENDENT 3,000 + fullymanaged media Audience Optics campaigns to date Private na 2009 Source: Real-time Bidding: The Online Ad Exchange Figure 8: Media Buying Desks (MBDs) Omnicom s Accuen and IPG s Cadreon function like independent MBDs, making their service available for use by third-party agencies whereas WPP s Xaxis and Publicis Groupe s Audience on Demand (AOD) are proprietary to the agency holding company. The independent status of Omnicom and IPG allows these firms to extend service to small or medium sized agencies that do not have the internal resources to build a proprietary RTB technology interface. While this strategy seems advantageous, today, Accuen and Cadreon process far fewer RTB ad impressions and revenues than Xaxis and AOD. Typically, agencies integrate one to three DSPs along with a MBD to maximize RTB buying opportunities. This strategic approach gives MBDs access to large pools of RTB ad inventory as well as the technology infrastructure provided by DSPs. Industry use of MBDs will increase as firms focus on educating internal and external agencies on the ways MBDs can drive value for brand advertisers as well as on the benefits of using an MBD to replace historically used solutions for buying online display ads (e.g., ad networks). The Buy-side 18 parksassociates.com

20 2.2 DEMAND-SIDE PLATFORMS (DSPS) Demand-side platforms (DSPs) aggregate and manage multiple ad inventory sources and help agencies determine the relative value of different supply sources. DSPs connect to ad inventory using RTB APIs provided by ad exchanges. DSPs primary functions are as follows: Serve as a centralized access point to RTB inventory across all ad exchanges Evaluate websites and ad impressions against media campaign goals Add a layer of first party and/or third-party user data to identify and develop custom audience segments Provide ad serving and post-performance reports DSPs adhere to a service or technology fee model (aka buying fee) based on the percentage of media spend. Interviews with leading providers indicate these fees typically range from 10% to 20% of total media budget (e.g., agency spends $100,000; DSP earns $10,000 to $20,000). Large DSPs place a minimum monthly spend requirement of $50,000 per brand while smaller providers fees range from $2,500 and $10,000 per month. DSPs also offer self-service tools and managed service support. DSPs provide enhanced control over the media planning and buying process, including the ability to reallocate media budget at a moment s notice based on campaign performance. This speed is much better than that of working with an ad network. It may take days to weeks to change an underperforming media schedule using an ad network. In addition to the advantages of integrating real-time bidding for new digital mediums online video, mobile, and social, the ability to offer data management solutions sets the major DSPs apart. Nearly half of the leading DSP providers offer integrated data solutions reducing the need for third party data partnerships and, most importantly, eliminating service fees required to use such services. One variable potentially limiting the long-term growth of RTB is DSPs inability to access non-display ad supply offered by online video, mobile, and social media publishers. The ability to access new media and develop cross-platform ad campaigns through a single buying interface is increasingly in demand by ad buyers - particularly in high-growth digital markets with ever-growing audiences. To the industry s delight, such needs are beginning to be addressed as many RTB-enabled systems on both the buy-side and sell-side are adding features to monetize new media via the real-time bidding ad models. For instance, WPP s The Buy-side 19 parksassociates.com

21 GroupM launched the industry's first DSP advertising solution for mobile media in and major online video ad network SpotXchange offers RTB capabilities alongside its traditional online video ad network service. In early 2012, DSP and SSP provider, AppNexus and BrightRoll Exchange (BRX), a video ad exchange announced a strategic partnership to integrate BRX s online video inventory into the AppNexus platform. This partnership creates new opportunities for ad buyers to extend RTB features for online video buying. Parks Associates believes DSPs with early RTB launches (in 2009) that offer integrated data management services and multiplatform presence will achieve long-term sustainability. DataXu, Triggit, Turn, and AppNexus meet these criteria. These DSPs also have strong ad exchange partners, which give RTB buyers access to large swaths of inventory. Early on, AppNexus formed partnerships with the leading ad exchanges - Microsoft, Google, Admeld, and OpenX. The firm also offers an end-to-end solution not offered by any other DSP; AppNexus also powers the sell-side via its SSP and offers data management solutions. DataXu is another market leader. Alongside its wide-range of ad inventory, technology, and service provider partners, DataXu, offers a data management solution and receives recognition from DoubleVerify as one of the most compliant DSP platforms. Sorted by RTB launch date, Figure 9 highlights the major DSP providers including ownership, product, data competencies, and industry compliance recognition. 22 DEMAND-SIDE PLATFORMS (DSPS) Company Parent Company Product Company and RTB Launch Data Management Platform (DMP) Most Compliant Platform 2324 Private DX RTB launch in 2009 Private Full-service, Selfservice, Data Management & Analysis 2005 RTB launch in Full company profiles found in the Resource Book, Appendix B 23 Top Most Compliant Platform, DoubleVerify Trust Index Insights, Benchmarks and Findings on Online Advertising Compliance 1H Top Most Compliant Platform, DoubleVerify Trust Index Insights, Benchmarks and Findings on Online Advertising Compliance 2H 2011 The Buy-side 20 parksassociates.com

22 Private Private Google Private Private Private Turn Media, Turn Audience, Crosschannel AppNexus Technology Bid Manager TerminalOne The DESK The ADSERVER SiteScout RTB Platform 2004 RTB launch in RTB launch in RTB launch in RTB launch in RTB launch in RTB launch in 2010 Private Origin Digital Marketing Hub 1999 RTB launch in 2010 Private RTB launch Source: Real-time Bidding: The Online Ad Exchange Figure 9: Demand-side Platforms (DSPs) A potential disruptor to the DSP sector is the entry of established ad planning, buying, and billing system, MediaOcean 26. MediaOcean executives assert that ad agencies no longer need ad network partnerships or DSP integration to process real-time online display ad campaigns. In summer 2012, MediaOcean will roll out a cross-platform media product based on an open platform with universal APIs. The product plugs into a wide range of agency-managed services and platforms. This interoperability allows an agency to customize services to create and maintain a competitive advantage and increase company margins by eliminating DSP service fees. The ability to add new media services directly on top of an MBD in a plug-and-play manner is a compelling option for agencies. MediaOcean s open system may prove a formidable disruptor to the DSP industry as nearly 70% of all agency ad dollars in the U.S. pass through Donavan Data System (DDS) or MediaBank (rebranded MediaOcean) billing systems. Its entry may give agencies a turnkey and more efficient approach to RTB advertising in the long-term. 25 Canada s first demand side platform- integrated with Casale Media, Doubleclick and AppNexus platforms 26 In late 2011, Donovan Data Systems (DDS) and MediaBank announced a merger to form MediaOcean, a universal, open operating system for advertising management technology. The Buy-side 21 parksassociates.com

23 2.3 DATA MANAGEMENT PLATFORMS (DMPS) Data is the single most important element supporting the RTB value chain. Data variables include, but are not limited to, purchase intentions, household demographics, and behavioral patterns. Primarily used in buy-side services, DMPs collect, manage, and evaluate online user information obtained from multiple media sources to identify and create audience segments. These data sources determine the value of ad inventory relative to the advertiser s campaign goals. They also enable the delivery of the right ad unit to the right consumer on the most effective media channel. While DMP services are essential to the RTB process, DMP also provides audience intelligence across the entire digital ad ecosystems - not just the RTB ad market. DMPs collect anonymous, non-personally identifiable information (non-pii), such as age, gender, education level, and household income. Personally identifiable information (PII) or other sensitive personal information, such as name, phone number, address, Social Security Number, or credit card information is never collected or used to develop targetable audience segments. DMPs mine online user metrics via cookie IDs or pixel tags obtained from a user s web browser. It is important for DMPs to adhere to self-regulatory practices established for online data collection and supply consumer privacy controls in order to maintain trust with agencies and consumers alike 27. All of the major DMPs offer opt-out tools for users. DMPs generate revenues in one of two ways: Technology License Fee: Fixed monthly or yearly rate based on the number of service modules licensed as well as the volume of data processed 2. Service Fee: Fixed monthly or yearly fee based on unique visitors. This may be ½ cent per cookie or a set fee based on the number of ad impressions processed The single most important factor when assessing DMP value is whether the platform has universal access to all sources of digital media including direct publisher sites, ad networks, and ad exchanges. The leading DMPs have comprehensive networks of industry alliances including media and data partners. These 27 Consumer opt-out tools available via Network Advertising Initiative (NAI), an industry self-regulatory program for online behavioral advertising. 28 In order to access and sell data, DMPs share a percentage of revenues with publisher partners that produce the user metrics. The Buy-side 22 parksassociates.com

24 networks are essential for obtaining a unified view of audience behavior so buyers are able to establish and achieve RTB campaigns goals. Parks Associates rates BlueKai, exelate, and Lotame as the top performing DMP providers based on strong industry alliances, universal data access, and media platform reach. Figure 10 lists leading DMP providers with service launch dates, products, and notable industry alliances. 29 DATA MANAGEMENT PLATFORMS (DMPS) Company Product Launch Notable Industry Alliances Contextual Data Brand Protection Data Audience Interest Data BlueKai Data Management Platform BlueKai Data Exchange max Data Adaptive Audience Intelligence DataLinX Premium Data 2006 Late Crowd Control 2008 Adobe Audience Manager (formerly Demdex) 2009 ebay, Admeld, TubeMogul, AppNexus, Bizo, Dedicated Media, adbrite, Pubmatic 24/7 Real Media, adbrite, Adap.tv, BrightRoll, Collective, DataXu, Dedicated Media, FreeWheel, Fox Digital Media, Interclick, Insight Express, MediaMath, Meebo Omnicom, Tremor Video, TubeMogul, YuMe, Expedia, Forbes Adap.tv, BrightRoll, AppNexus, Google Display network, Collective, Interclick, MediaMath, PubMatic, Turn, Videology, Invite Media, Alliant, Bizo, Nielsen, Forbes, Acxiom Alliant, Acxiom, Bizo, TARGUSinfo, BrightTag, LiveRail, AppNexus, adbrite, Adap.tv, Audience Science, Interclick, Xaxis, Videology, Turn Acxiom, Bizo, datalogix, exelate, TARGUSinfo Source: Real-time Bidding: The Online Ad Exchange Figure 10: Data Management Platforms (DMPs) AdAdvisor 1999/2009 Dealix, Leads360, LeadPoint While several leading DSPs - such as AppNexus, DataXu, Triggit, and Turn - provide data solutions, codevelopment and strategic partnerships are forming between agency-owned MBDs and DMPs, giving agencies even more control over the RTB process. Publicis VivaKi Nerve Center 30 recently announced an agreement with leading DMP BlueKai to develop a solution that synchronizes BlueKai data with agency 29 Full company profiles found in the Resource Book, Appendix C 30 Publicis Groupe s VivaKi research and development center The Buy-side 23 parksassociates.com

25 cookie tracking systems to enhance audience profile schemes. This very well may be a proactive move in reaction to major brands (agency clients) recently taking an interest in the RTB process. Some brand advertisers now approach DMPs with interest in licensing data management services. Consequently, DMP providers are beginning to target agency clients directly. While the negative impact appears minimal, agencies must determine whether data evaluation at the client level (the brand advertiser) breaks down established workflows and, more importantly, damages agency/client relationships. Will brands take the data obtained by DMPs and work directly with DSPs or ad exchanges to circumvent MBD service fees? Parks Associates considers this unlikely since brand managers rely on agency expertise. Even so, ad agencies must demonstrate to their clients their expertise skill sets required in managing the online ad exchange process in a way that is superior to the client s skills. Agencies must also reposition ad planners and buyers as media strategists with deep understanding of advanced ad technology and markets. The Buy-side 24 parksassociates.com

26 3.0 THE SELL-SIDE 3.1 SUPPLY-SIDE PLATFORMS (SSPS) Supply-side platforms are algorithm-driven systems used by online ad sellers to monetize remnant, or unsold, ad inventory. Sellers employ SSPs to increase the value of indirect ad inventory through yield optimization 31 techniques. SSPs enable sellers to pinpoint and bundle the most valuable audiences and sell individual ad impressions at premium rates typically achieved only by direct ad sales (in-house ad sales division working with ad agency). While SSPs initially assisted publishers in unloading remnant ads, publishers are beginning to release premium inventory avails to SSPs to capture larger shares of ad budgets processed in RTB markets. Online publishers rarely plug into more than four or five SSPs to monetize ad inventory. SSPs allow publishers to select demand partners (i.e., who gets access to inventory such as an MBD, DSP, ad network, or ad exchange) and manage supply selection (i.e., when buyers get access, volume of RTB ad avails, and pricing minimums). SSPs manage many types of ad inventory levels not just RTB. For example, PubMatic s Ad Price Prediction service accepts bids from non-rtb enabled demand sources such as ad exchanges, ad networks and direct-to-agency orders. As such, an RTB bid wins only if it is the highest demand-side price entering the system (Figure 11). Figure 11: Pubmatic Ad Price Prediction Workflow 31 Yield optimization is a technique that boosts the performance of online display ad inventory by linking online publishers to various ad networks and ad exchanges to maximize ad inventory fill rates and increase ad revenues. The Sell-side 25 parksassociates.com

27 Most SSPs use ad revenue sharing models, retaining a percentage, typically 10% to 15%, of ad revenues flowing to the RTB ad inventory owner. For example, the SSP receives payment from an ad network, ad exchange or DSP, takes a 10% to 15% cut, and then sends remaining revenues (around 85% to 90%) to the online publisher. Unlike the DSP market sector, which contains privately owned firms, several major media companies (or publishers) control the SSP industry. Yahoo! acquired Right Media in 2007, Rubicon Project purchased News Corp. s Fox Audience Network in 2010, and Google followed suit in 2011 with the acquisition of Admeld. These acquisitions served to strengthen and expand the advertising portfolios of major media companies; evidence of their market dominance is present in comscore data. In 2011 Yahoo! sites delivered more than 500 billion ad impressions, Google sites served around 175 billion ads; and both were behind the leader, Facebook, which delivered 1.3 trillion ad impressions. 32 These acquisitions also bring sell-side services closer to the content owner, thereby reducing or eliminating the ad revenue sharing required by ad networks. Figure 12 highlights key SSPs provider information pertinent to RTB. 33 Company SUPPLY-SIDE PLATFORMS (SSPS) Parent Company Company and RTB Launch Demand-side Platform (DSP) Service Google (Acquired in 2011) 2007 RTB launch in 2009 Private Private Private Yahoo! (Acquired in 2007) 2006 RTB launch in RTB launch in RTB launch in 2010 Late-2006 RTB launch in comscore U.S. Digital Future in Focus Full company profiles found in the Resource Book, Appendix D The Sell-side 26 parksassociates.com

28 Source: Real-time Bidding: The Online Ad Exchange Figure 12: Supply-side Platforms (SSPs) CasaleX RTB launch in 2012 Moving forward, sell-side stakeholders will embrace RTB and holistic service approaches to gain greater control over the RTB process. For example, Yahoo! s Right Media offers DSP, SSP, and ad exchange services. This allows Yahoo! to maximize margins by providing a one-stop buying and selling experience, long an attractive value proposition for stakeholders seeking to navigate and manage complex media markets. AppNexus, too, offers services for both buyers and sellers via its DSP and SSP platforms. Finally, Admeld stepped outside of its role as a SSP provider to develop private ad exchanges on behalf of its publisher clients - The Weather Channel and NBC Universal. These strategies permit these firms to capture the highest margins from both the demand and sell sides of the RTB ecosystem; they also signal strategic plays by Google and Yahoo! to attain the highest possible RTB market share. The Sell-side 27 parksassociates.com

29 4.0 ONLINE BUYING/SELLING INTERMEDIARIES 4.1 RTB AD EXCHANGES RTB-enabled ad exchanges aggregate ad impressions across many online channels and connect ad sellers to buyers. Primarily a sell-side service, ad exchanges provide ad inventory details, such as website type, ad unit size, and user geography to the ad bidder (e.g., MBD, DSP, ad network). They also manage the entire ad auction process receiving the bid, determining the winner, and facilitating ad placement. Ad exchange benefit sellers by controlling price, reducing or eliminating ad network revenue shares (ranging from 40% to 50%), and assisting in filling otherwise unsold ad inventory. While ad exchanges benefit ad sellers most, buyers use ad exchanges to their advantage as well. Benefits include: Providing full-transparency in ad pricing and placement; Optimizing ad inventory and strengthening return on advertising spend (ROAS) via RTB-enabled audience targeting capabilities; and Expanding audience reach. Ad exchanges generate revenue by charging DSPs a percentage fee on ad revenues passing through the exchange. The fees range from 10% to 30%, varying based on size of media spend. Some ad exchanges deduct a flat fee from the CPM paid by the winning bidder. In both cases, the ad inventory holder (online publisher) receives the remaining revenue. Ad exchanges process non-rtb ad impressions as well. It is difficult to ascertain the exact number of RTB ad impressions passing through ad exchanges on a monthly basis, as most firms do not publically release these metrics. They do however release the total number of ad impressions exchanged on a daily and monthly basis (non-rtb and RTB). In early 2011, Parks Associates obtained executive insight from a leading ad exchange; the firm indicates that RTB accounts for around 35% of the ad exchange business (at least in 2011). Based on the number of annual ad impressions served 34, Parks Associates postulates that the large publishers such as Yahoo! s Right Media Exchange and Google s DoubleClick Ad Exchange are the leaders in 34 comscore U.S. Digital Future in Focus 2012 In 2011, Yahoo! sites delivered more than 500 billion ad impressions and Google sites served around 175 billion ads. Online Buying/Selling Intermediaries 28 parksassociates.com

30 the exchange of RTB ad impressions and achieve the largest revenues of all ad exchanges. In addition, OpenX is proving to be a formidable competitor posting remarkable growth since its RTB launch in In 2011, the company achieved revenue growth of nearly 700% compared to 2010 and claims to process close to 200 billion ad impressions each month. 35 In order of RTB launch date, Figure 13 highlights the leading RTB ad exchanges. 36 RTB AD EXCHANGES Company Parent Company Private Company and RTB Launch 2008 RTB launch in 2009 Operational Metrics Around 1 billion ad impressions exchanged per day/ 30 billion each month Google RTB launch in 2009 Average ecpm increase of 130% across unsold inventory pool compared with directly booked deals with ad networks OpenX Limited Private Formerly ADSDAQ/Contextweb Microsoft Corp. (Acquired in 2007) Formerly AdECN 2007 RTB launch in (ADSDAQ) RTB launch in RTB launch in 2011 More than 200 billion ad impressions per month Reach: 154 million unique visitors 37 Around 8 billion ad impressions per month Yahoo! (Acquired in 2007) Late-2006 RTB launch in 2012 Facebook Exchange RTB launch in 2012 More than 11 billion ad impressions processed per day/ 330 billion each month Partnering with eight DSPs including Triggit, Turn, DataXu, MediaMath, AppNexus, and TheTradeDesk Source: Real-time Bidding: The Online Ad Exchange Figure 13: RTB Ad Exchanges 35 OpenX Becomes First Ad Exchange to Support The Interactive Advertising Bureau's "Rising Stars" Ad Units. Available at %E2%80%9Crising-stars%E2%80%9D-ad-u (Accessed June 2012). 36 Full company profiles found in the Resource Book, Appendix E 37 comscore, January 2012 Online Buying/Selling Intermediaries 29 parksassociates.com

31 In mid-2012, Facebook announced the expansion of its growing display ad business into the RTB marketplace, a significant announcement for the market. For the first time, brand advertisers can target Facebook users based on web browsing history (i.e., ad is displayed on Facebook page based on third party web browsing habits). Facebook Exchange opens up a large source of display ad inventory to the RTB market; comscore estimates Facebook s share of U.S. display ad impressions reached approximately 28% in Facebook Exchange connects with eight leading DSPs including AppNexus, DataXu, MediaMath, Triggit, Turn, and The Trade Desk. According to TechCrunch, the Facebook Exchange workflow includes: User visits a website that uses a DSP linked to the Facebook Exchange 2. Cookie is placed on the user s computer, typically when purchase intent is identified 3. DSP contacts Facebook and gives them the anonymous user ID they wish to target 4. Advertiser pre-loads ad creative to be displayed to the user 5. User visits Facebook and DSP installed cookie is recognized 6. DSP is notified and makes a real-time bid to target individual Facebook users 7. DSP with the highest bid displays ad to targeted Facebook user 8. Facebook user can click X on the display ad, which links to an opt out tool that blocks future Facebook Exchange ads Another recent trend in RTB is the formation of Private Ad Exchanges. In late 2010, select online publishers initiated white-labeled private exchanges to balance premium, direct ad sales efforts with the monetization strategies of unsold ad avails. In private ad exchanges, content owners assume the role of an ad network and ad exchange, making premium inventory available to groups of buyers via an exclusive, invitation-only marketplace. Moving forward, premium online publishers will develop private ad exchanges, or at the very least create joint ventures, in lieu of using a third-party ad exchange or ad network. In doing so, publishers eliminate ad network revenue shares and increase the value and fill rates of ad inventory. This approach will attract buyers that seek high quality RTB ad impressions over remnant avails. Listed by launch date, Figure 14 lists the notable private exchanges. 38 comscore U.S. Digital Future in Focus TechCrunch, Facebook Exchange: A New Way For Advertisers To Target Specific Users With Real-Time Bid Ads. June 2012). Online Buying/Selling Intermediaries 30 parksassociates.com

32 PRIVATE AD EXCHANGES Content Owner/Exchange Parent Company Launch Product/Technology Time Warner November 2010 Category 5: Digital marketplace that connects advertisers to more than 50 million consumers across Time Warner s web and mobile properties Private Joint venture of Tribune Company, Gannett Co., Inc., Hearst Corporation and The New York Times Company Comcast Corp. Joint venture of CBC/Radio-Canada, Rogers Media and Shaw Media Source: Real-time Bidding: The Online Ad Exchange Figure 14: Private Ad Exchanges January 2011 February 2011 Mid-2011 May 2012 Powered by Admeld Tech Media Exchange (TMX): First private ad exchange focused on the technology vertical Powered by Admeld Q-Exchange: First private ad exchange targeting premium local audience Powered by Admeld Universal Audience Platform (UAP) Powered by Admeld Canadian Premium Audience Exchange (CPAX) Powered by AppNexus In November 2010, major SSP technologist Admeld introduced the industry s first private ad exchange on behalf of Time Warner Cable s The Weather Channel. TWC seeks to increase the overall value of its online display and mobile ad inventory. By setting up a private ad exchange, TWC is taking control of ad pricing levels and fostering closer relationships with advertisers, with the end goal eliminating ad network deals. NBC Universal created the Universal Audience Platform (UAP) to do much the same - evolve agency relationships and reduce sales channel conflicts (i.e., ad networks selling against its media brands). Presently, Admeld powers all of the U.S.-based private ad exchanges. In pursuit of this growing market following Admeld s success, another SSP provider, PubMatic introduced private exchange management services targeting premium publishers in Online Buying/Selling Intermediaries 31 parksassociates.com

33 4.2 AD NETWORKS For years, ad networks were the main sales agent of remnant online advertising, aggregating multiple supply sources providing advertisers with a scaled, cost efficient means to display advertising. As RTB advertising technology platforms penetrate the market, ad networks experience intense competitive pressure to remain relevant as RTB platforms offer increased ad impression value, transparency, control, and accuracy. These advantages are the catalysts for agency re-routing media budgets from ad networks to MBDs and DSPs. They also drive publishers to release more inventories to SSPs and open and private ad exchanges. As ad spending continues to shift to real-time bidding systems, ad networks must compete for ad dollars historically earmarked for purchase via ad networks. For online publishers, the central issues are margin and increasing the value of ad inventory. Ad networks are an intermediary in the online ad buying and selling process but take upwards of 50% of publisher ad revenues while ad exchanges and SSPs receive a managed-service fee typically, around 10% to 15% of media spend. Additionally, publishers employing RTB strategies realize better CPM rates when their ad inventory is placed in an RTB market versus being sold by an ad network. Performance data released by Pubmatic, a major SSP, indicate RTB increases publisher CPMs by 100%, on average. 40 For ad agencies, the core issues are improved campaign effectiveness, transparency, and control. For agencies, the ad network model has its drawbacks. First, ad networks are considered blind-buys; that is, buyers do not have control over ad placement so ads can appear on any website located in the network. Additionally, if an ad network underperforms to media campaign goals, it can take weeks to adjust the campaign strategy. The automated nature of RTB allows buyers to adjust media schedules immediately based on the performance of individual sites and ad impressions. RTB ad placement methods also lift ROAS with the use of dynamic, customized ads based on real-time feedback on campaign performance. According to PubMatic, agency executives report increasing campaign performance from 20% and 150% 41 when using RTB. 40 PubMatic, Ad Revenue Report, PubMatic, Ad Revenue Report, 2011 Online Buying/Selling Intermediaries 32 parksassociates.com

34 Presently, there is confusion regarding the role of the ad network within the RTB landscape as well as the long-term effects of RTB on ad networks business models. The core question is with what do ad networks directly compete? To put it in another way, which RTB segment is most likely to displace ad networks MBDs, DSPs, SSPs, ad exchanges, none of the above, all the above, or a combination thereof? The conclusion is all of the above. Any solution that enables ad inventory and ad revenues to enter and exit the RTB platform while bypassing the ad network is a direct threat to incumbent networks, despite their seemingly different business roles and motives. Because of RTB adoption and growth, ad networks are experiencing an identity crisis. Within the RTB, ad networks now assume the role of the buyer, competing directly with buy-side platforms (MBDs and DSPs) for RTB ad impressions. In this role, ad networks buy via RTB exchanges then resell the impression to a client based on a variable markup. From an ad sales perspective, ad networks are beginning to lose ad selling and revenue share opportunities as online publishers make more ad inventory available to RTBenabled sell-side platforms. Interestingly, almost all ad networks now secretly buy their inventory from major SSP, AppNexus, which serves as a wholesaler of RTB inventory for ad networks. Despite established relationships with agencies and publishers, ad networks will eventually realize their business is vulnerable to RTB systems. Ad network survival is dependent on investing in RTB technology to match the efficiency, transparency, and scalability offered by RTB. An immediate competitive approach is to collaborate with leading DSP and SSP providers that offer ad network RTB integration. For example, AppNexus, a major DSP and SSP provider, offers ad networks the technology to manage both demand- and sell-side partners and RTB-enabled systems. Another major SSP, PubMatic, extends its service offering to ad networks so they can access to the same ad inventory released to ad exchanges. Online Buying/Selling Intermediaries 33 parksassociates.com

35 4.3 AD MONITORING AND VERIFICATION SERVICES For advertisers, ad monitoring and verification services are employed to ensure RTB ads are displayed in brandsafe content and adhere to media campaign goals and guidelines. These services also allow content owners to block unwanted ads or unsavory advertisers from displaying on a website. Due to the automated process of RTB, ad verification services give industry stakeholders particularly ad agencies - a level of transparency, trust, and accountability on ad impressions bought and served. Non-compliance includes measures such as the number of ad impressions verified as non-compliant, rate for inappropriate content, off white list 42, on black list 43, and incorrect geographic targeting. Figure 15 outlines DoubleVerify s media verification criteria. Figure 15: DoubleVerify's 6 Critical Areas of Media Verification DoubleVerify and Adsafe are the leading online monitoring and verification services. DoubleVerify processes and verifies more than 60 billion online ad impressions each month (non-rtb and RTB ads). The company publishes a free, biannual benchmark compliance standards report highlighting non-compliance measures among major publisher sites and ad buying and selling platforms. 44 Industry compliance assurance is a crucial component for the growth of the RTB market because it ensures platform accountability and establishes advertiser trust. Once trust and accountability exist, more dollars flow through RTB systems. 42 Off white list: Ads not displayed on a set of predetermined websites that are preferred by the agency. 43 On black list: Ads displayed on a set of predetermined websites for which ads should not be served. 44 DoubleVerify Trust Index Insights, Benchmarks and Findings on Online Advertising Compliance 2H 2011 Online Buying/Selling Intermediaries 34 parksassociates.com

36 5.0 REAL-TIME BIDDING ONLINE ADVERTISING REVENUE FORECASTS IN NORTH AMERICA (N.A.) FORECAST METHODOLOGY Parks Associates forecasts include RTB ad revenues generated from online display ads in North America (U.S. and Canada) from 2012 to Figure 16 provides an illustration of the bottom-up forecast methodology used to estimate revenues. 5.2 FORECAST ASSUMPTIONS Parks Associates applies assumptions and crosscheck references to the revenue forecasts based on the following primary and secondary research sources: Parks Associates Global Digital Living Forecast Workbook, December 2011 Edition o o o o Total households Internet households Broadband households # of unique Internet users Industry executive interviews o o o % of ad-supported Internet sessions % of RTB ad impressions RTB CPMs RTB Online Display Ad Revenue Forecast Methodology U.S. Total Households Internet Households Broadband Households # of Internet users per household # of unique monthly adult Internet users # of Internet sessions daily/monthly/yearly per user Total # of Internet Sessions Annually % of ad-supported Internet sessions # of Internet Display Ad Impressions/Annual % of RTB Display Ad Impressions # of RTB Display Ad Impressions RTB CPM Canada RTB Online Display Ad Revenues N.A.$ Source: Real-time Bidding: The Online Ad Exchange, 2012 Figure 16: RTB Online Display Ad Revenue Forecast Methodology Real-time Bidding Online Advertising Revenue Forecasts in North America (N.A.) parksassociates.com

37 Industry sponsored research and press releases from comscore, Interactive Advertising Bureau (IAB), DataXu, Turn Media, Accordant Media, PubMatic, and SiteScout 45 o o o o # of yearly Internet sessions per user % of ad-supported Internet session % of RTB ad impressions RTB CPMs Figure 17 provides a snapshot of the key drivers and barriers taken in to account when estimating the growth of the RTB ad market. Improved audience targeting Increased campaign performance rates Transparency (site-level) and Control (impression-level) Improved yield optimization Increased CPMs Facebook Exchange launch Lack of Agency Education Devaluation of premium ad inventory Withholding of premium ad inventory from RTB market Displacement of publisher ad sales divisions and ad networks Noncompliance of ad placement standards Fear of automated, algorithmic process replacing human interaction Figure 17: Drivers and Barriers of Growth of RTB Ad Market In 2012, RTB advertising revenues will reach $1.6 billion (Figure 18). Revenue growth will accelerate, rising to $6.9 billion in 2017, representing a 34% five-year CAGR. Within the forecast period, the U.S. RTB market represents the vast majority of RTB ad expenditures, accounting for 98% to 99% of total revenues. The Canadian RTB industry is in its formative stages, with few display ad impressions yet bought and sold in realtime. According to industry estimates, the Canadian RTB ad market lags 12 to 18 months behind the U.S Referenced in Data Sources 46 Microsoft Advertising, May 2012, Behind the Buzz: When Will Real-Time Bidding Break Big in Canada? (Accessed June 2012) 20-%20FINAL%20PRINTED.pdf Real-time Bidding Online Advertising Revenue Forecasts in North America (N.A.) parksassociates.com

38 In Billions Real-time Bidding: The Online Ad Exchange $8.0 RTB Online Display Advertising Revenues - North America $ $ $ $4.0 $3.0 $ $ $ $1.0 $ Source: Real-time Bidding: The Online Ad Exchange Figure 18: RTB Online Display Advertising Revenues North America Real-time Bidding Online Advertising Revenue Forecasts in North America (N.A.) parksassociates.com

39 In Billions Real-time Bidding: The Online Ad Exchange Figure 19 measures RTB market share in relation to total Internet ad expenditures and as a component of online display ad figures in N.A. At present, RTB ads are all display ads; therefore, the revenue projections place RTB revenues as derivative of online display ad earnings. Parks Associates recognizes that online video and mobile ad avails are moving to RTB markets; however, the forecast addresses RTB online display ads exclusively because the largest share of RTB ad revenues are earned in online display markets. In 2012, the forecast pegs total online display advertising at $13.7 billion, with those revenues accounting for approximately 35% of total Internet advertising expenditures in N.A. Through the five-year forecast period, online display advertising revenues will increase in line with total Internet advertising spend, rising to $20.1 billion. Of total online display advertising, RTB revenues account for 12% in 2012 but its share will increase to 34% by Total Internet, Online Display, and RTB Advertising Revenues in N.A $25.0 INTERNET ADVERTISING REVENUE - N.A.* (all formats) $20.0 $15.0 $10.0 $5.0 $0.0 $37.5 $12.0 $1.6 $42.6 $12.4 $47.5 $13.2 $51.6 $13.6 $54.6 $13.7 $2.7 $3.6 $4.6 $5.7 $56.8 $13.2 $6.9 INTERNET DISPLAY ADVERTISING REVENUES- N.A.* RTB ONLINE DISPLAY ADVERTISING REVENUES- N.A Source: Real-time Bidding: The Online Ad Exchange Figure 19: Total Internet, Online Display, and RTB Advertising Revenues in N.A * Parks Associates estimates benchmarked against Interactive Advertising Bureau/Pricewaterhouse Coopers, Magna Global, and ZenithOptimedia ad revenue projections. Real-time Bidding Online Advertising Revenue Forecasts in North America (N.A.) parksassociates.com

40 6.0 MARKET IMPLICATIONS & RECOMMENDATIONS MARKET OUTLOOK FOR BUY-SIDE STAKEHOLDERS As buyers realize the benefits of RTB including cost efficiencies, reduced ad waste, scalable reach, transparency, and control, ad spend will quickly transfer from traditional display advertising to RTB platforms. The ability to cherry pick the placement of targeted, exclusive ad impressions is an attractive value proposition for ad buyers as it improves campaign effectiveness and strengthens agency relations with brand advertisers. Since just 2009, ad agencies have quickly adapted to the RTB process. More and more, ad buyers are realizing improvements in online display ad campaigns when they are purchased in automated, real-time markets. As even more ad buyers become comfortable with RTB for online display ads, they will apply these ad buying systems to online video, mobile, and social media. MARKET OUTLOOK FOR SELL-SIDE STAKEHOLDERS Better yield management and increased CPMs will encourage publishers to allocate more remnant and premium online inventory to the RTB ad market. Publishers also look to monetize ad inventory via SSPs and ad exchanges as a way to reduce the sharing of revenue with ad networks. However, they must balance employing RTB ad sales strategies with protecting their own direct sales divisions. The next frontier is extending sell-side RTB services to online video, mobile, and social media markets. Facebook s newly launched ad exchange is a driving force through 2017 as the social network serves approximately one-third of U.S. display ad impressions. The Facebook Exchange opens up a large source of display ad inventory to the RTB market. Several other firms are set to capitalize on this burgeoning market as well. Major online video advertising firm, SpotXchange launched an online video RTB solution in 2010 and Nexage, a leading mobile ad exchange, offers RTB technology for mobile buy-side and sell-side platforms. In early 2012, Google expanded its RTB footing with the integration of AdMob s mobile ad inventory with the Doubleclick Ad Exchange. While agency demand for cross-platform ad synergies drives the development and adoption of RTB sell-side platforms for emerging media, Parks Associates predicts these markets will remain small, with growth contingent on the maturation of the online display RTB ad market. Market Implications & Recommendations 39 parksassociates.com

41 CHALLENGES Despite the advantages of RTB, industry stakeholders will face obstacles in pursuit of market expansion. New media consumption, multi-device adoption, and ad technology advancements produce complex business environments. Their markets are difficult to comprehend and navigate. Agency executives consistently struggle to understand the inner workings of new forms of digital media and their impact on media campaigns. The lack of understanding creates uncertainty, and often breeds distrust, among ad buyer communities, which results in the reluctance to experiment with emerging advertising platforms. A major fear among the demand-side and sell-side players is that automated media buying technology and processes will replace human touches. The people versus the machine concern may slow RTB ad inventory from entering the marketplace as well as the redistribution of media budgets from traditional online display to RTB ad markets. While agencies argue RTB technology will not replace ad planners and buyers because of deep rooted personal and network connections, history shows that machines will at the least shift many responsibilities of today s employees. Many RTB-enabled systems require only one or two employees to do work typically performed by 20 people. These cost efficiencies may incent agencies to reduce head count in favor of adopting automated ad buying/planning technology infrastructures. Until recently, some online publishers were leery of RTB technology platforms based on the belief that RTB sell services (e.g., SSPs and ad exchanges) potentially damage direct sales efforts. Some publishers fear the automated RTB process devalues ad inventory and degrades content owner and/or publisher brand equity. On the other hand, many publishers are growing more comfortable with RTB ad exchange methods and are placing more unsold and premium ad inventory into RTB systems to capture larger market shares. Based on Parks Associates interviews, it is unlikely that RTB will compromise internal sales units. Executives predict that remnant ad impressions will continue to be sold via RTB (via indirect relationships with buyers), but maintain that the bulk of direct, premium ad inventory will be sold by direct sales teams. The bottom line is that RTB supplements publisher ad revenues and these third-party ad seller relationships are essential, as even the most successful publishers are unable to sell out all ad inventories at any given time. Campaign effectiveness is directly tied to how, when, and where an ad is viewed by consumers. More than ever, agencies have to deal with the issue of ad viewability and its impact on campaign effectiveness. Ad agencies struggle to verify viewable ad impressions as well as the length of time the ad remained in the consumer s view. For instance, some online display ads are served below the fold (i.e., shown at the bottom of the computer screen) and users are unable to see the ad without scrolling down the webpage. In these Market Implications & Recommendations 40 parksassociates.com

42 instances, an agency still pays full price for the ad(s). Consequently, agencies usually place restrictions on below the fold ad placement to eliminate wasteful ad spending. Such challenges still exist for RTB-based ad buying and selling processes. The need for quality control of RTB placements increases due to automation. DoubleVerify launched a product, AdView in May 2012 to address this industry challenge. 47 RECOMMENDATIONS Ad Agencies Educate your personnel in the nuances of emerging ad platforms and technologies in order to benefit from advanced advertising technology and prove agency value for major brands. The alternative to investing in this education is vulnerability to agencies that do understand the platforms and technologies. Educate clients about the value of RTB, experiment with new media and technologies, and adapt their business models accordingly. This helps keep both the agency and its clients on the high performance edge of possibilities. Work closely with ad monitoring and verification solution providers, such as DoubleVerify or adsafe, to ensure RTB campaign accountability. Going forward, the pressure from the agency client side to hold agencies accountable for every single ad impression purchased will intensify. Over-charging and overcounting of ad impressions, or worse, mismanagement of client s media funds will result in lost contracts and even termination of business relationships. Guarantee appropriate brand exposure and offer accountability for every ad impressions bought and served to gain new clients. All these tasks require agencies to make informed buying decisions, therefore partnerships with ad monitoring and verification solution providers are critical to agency s future success. Publishers Explore private ad exchange opportunities but at the same time maintain adequate ad inventory to meet agency demand via direct sales channels or third-party ad networks/exchanges. Private ad exchanges are an attractive option for publishers seeking to eliminate sales channel conflicts but for the near future will 47 AdView is a technology that monitors and verifies the viewability of an ad impression to preserve brand exposure and improve ad viewability According to the IAB and Making Measurement Make Sense (3MS) guidelines, an ad is considered viewed when at least 50% of the ad is displayed on a user s browser window for at least one second. Market Implications & Recommendations 41 parksassociates.com

43 remain as a complementary sales channel compared with direct ad sales. Despite the control benefits of private exchanges, publishers must keep strategic partnerships with third-party ad exchanges and SSPs intact to maximize ad sales leveraging all available ad sales channels to fill 100% of ad inventory, 100% of the time. Ad Networks Redefine business roles and overall functionality within online display advertising by adding RTB technology components to embrace market evolution. Integrating RTB services for both the buy-side and sell-side enables ad networks to better promote current service offerings and enhance product value for ad agency and publisher partners. Ad networks that continue to rely on old business models and technologies will find themselves displaced by RTB ad platforms. Market Implications & Recommendations 42 parksassociates.com

44 RESOURCE BOOK Appendix A Company Profiles: Media buying desks MEDIA BUYING DESKS Ad Agency Product & Description Platform Integration Xaxis: Proprietary audience buying technology platform used by WPP s GroupM agency partners, Maxus, MEC, MediaCom, and Mindshare Universal and media agnostic Company Notes Company Notes Founded in 2011 Digital audience buying platform for online display, online video, mobile and social Broad portfolio of audience buying capabilities that have been independently developed and optimized in various parts of GroupM and WPP Digital including B3, targ.ad, GoldNetwork, GroupM DSP, and the GroupM Marketplace Executed 4,000 + campaigns for clients in 13 markets around the world including North America, UK, Europe, and Australia Received Most Compliant Platform Award by DoubleVerify Accuen: Digital media acquisition platform that combines media, data, technology, and strategy to buy targeted audiences Social media platform, BLiNQ Media AOL s AdLearn Open Platform (AOP) TubeMogul, online video ad network Founded in 2009 Agencies within Omnicom Group are not required to use Accuen; however, it is strongly preferred. Audience on Demand (AOD): Centralized online display audience management marketplace and systems integrator, which includes bid management technology and data partnerships. AOD is used by Publicis Groupe s VivaKi agencies - Starcom MediaVest Group, ZenithOptimedia, Razorfish, and Digitas. Google Doubleclick ad serving and ad exchange AdMob for in-app mobile advertising Company Notes Founded in 2008 Live in nine countries including the U.S., U.K., China, Spain, Sweden, Australia, France, Netherlands and Germany 78 + billion ad impressions served on 13,500 + campaigns on behalf of 300 advertisers Received Best in Audience Targeting Award by TARGUSinfo Received Most Compliant Platform Award by DoubleVerify Resource Book A-43 parksassociates.com

45 MEDIA BUYING DESKS Ad Agency Product & Description Platform Integration Company Notes Company Notes Cadreon: Media buying desk with three core service areas - Audience Discovery, Audience Acquisition, and Audience Verification AOL s AdLearn Open Platform (AOP) Visible World advanced TV ad technology platform Founded in 2009 Mediabrands Audience Platform is a standalone business unit within the IPG Mediabrands family, which includes the digital practices of Reprise Media, Cadreon, Ansible Mobile, and Spring Creek Group Operates from 6 different cities over 4 different countries 50 + billion ad impressions served Received Most Compliant Platform Award by DoubleVerify Audience Optics : Independent media buying and optimization platform that integrates strategy, technology, and execution to help agencies in exchange-traded media and audience targeting. Platform combines the capabilities of a demand side platform (DSP) and a data management platform (DMP) Founded in 2010 Delivered its 3,000th fully-managed media campaign in Q Audience Investment Management (AIM): Proprietary real-time bidding for display, video and mobile advertising with data management, custom audience targeting and proprietary modeling solutions adap.tv, adbrite, AdMeld, Google DoubleClick, AppNexus, OpenX, Nexage, Right Media, Yahoo!, RMX, Rubicon and Improve Digital Founded in 2009 Independent advertising technology funded by Groupo ISP (Barcelona, Spain) Offices in the U.S., U.K., Spain, Netherlands, Mexico, and Brazil Company Notes In 2010, received the DPAC Award for Best Targeting Technology In 2011, recognized for Most Effective Online Campaign by Institute of Practitioners in Advertising (IPA) London Source: Real-time Bidding: The Online Ad Exchange Resource Book A-44 parksassociates.com

46 Appendix B Company Profiles: Demand-side Platforms (DSPs) DEMAND-SIDE PLATFORMS (DSPS) Company Product & Description Platform Integration Company Notes Company Notes Company Notes Company Notes AppNexus technology designed to power both buy- and supply-side platforms Microsoft Advertising Exchange, Google Ad Exchange, Rubicon Project, OpenX, Admeld, Pubmatic, BrightRoll Exchange (BRX) Founded in 2007 RTB launch in 2010 Only ad server built specifically for the real-time advertising business In 2010, announced integration with BrightRoll Exchange to offer RTB for online video DX3: Digital marketing management platform providing campaign management, audience management, attribution management, cross channel media buying, targeting, and advanced reporting DX Mobile DX Brand DX Video DX Social Wide-range of inventory, technology, and service provider partners Founded in 2007 RTB launch in 2009 Recently acquired Mexad, a leading European demand-side platform service provider with local digital marketing expertise in Germany, UK, Spain, France, Italy and Brazil Received Most Compliant Platform Award by DoubleVerify Bid Manager: Self-service, universal real-time bidding buying platform for online display media Founded in 2007 RTB launch in 2010 Acquired by Google in June 2010; part of the DoubleClick division Received Most Compliant Platform Award by DoubleVerify TerminalOne: Industry s first DSP providing full service solution for media buying, data management, and analytics Integrates across every ad exchange and online aggregator including DoubleClick, Yahoo, Google, AdBrite, Microsoft and Right Media Wide-range of inventory, technology, and service provider partners Founded in 2007 RTB launch in 2010 Offices in New York, Chicago, Boston, Los Angeles, London, San Francisco Signed a joint-venture agreement with Publicis Groupe to provide services for Switzerland, Germany and Austria ad markets Received Most Compliant Platform Award by DoubleVerify Resource Book B-45 parksassociates.com

47 DEMAND-SIDE PLATFORMS (DSPS) Company Product & Description Platform Integration Company Notes Company Notes Company Notes The DESK: Integrated buying suite enabling marketers to buy all types of online media from a single platform The ADSERVER: Stand-alone tracking and reporting platform providing a holistic view of the purchase funnel, all the way from impression, to click, to conversion. Founded in 2009 RTB launch in 2010 Turn Media: Manages budgets, audience segments, context-targeting strategies, and frequency caps across all channels from a single application. Turn Audience: Targeted data management platform (DMP) that connects with leading DSPs Cross Channel: Creates audience segments across video, online display, and mobile Company founded in 2004 RTB launched in 2009 Wide-range of inventory, technology, and service provider partners Integrated with AT&T AdWorks Available in North America, South America, Latin America, and Europe Origin Digital Marketing Hub Origin Media DSP: Utilizes targeting and analytic capabilities provided by Patented Decision Engine (POE) to expand and optimize audience segments Origin Data Management Platform (DMP): Enterprise DMP integrated with POE decision engine; executes complex logic and export instructions to multiple digital channels, including ad servers, content management servers, chat systems, systems, and DSPs to coordinate target messages and restrictions in real time Origin Analytics Founded in 1999 RTB launch in 2010 Full Service: Full CRM data integration, strategy development, Boolean retargeting, trafficking, management, reporting, and optimization services tailored to campaign goals Self Service: Access to entire platform including DMP to reporting suite Data Management and Analysis: Custom solutions including CRM-DMP integration services, proprietary treatment & control testing, and serverside cookie stores for mapping audience and 3rd party data Wide-range of inventory, technology, and service provider partners including Atlas, BlueKai, Eveonline, CCP Games, Delta.com Google, Rubicon, Admeld, OpenX, AppNexus, AdBrite, PubMatic Resource Book B-46 parksassociates.com

48 DEMAND-SIDE PLATFORMS (DSPS) Company Product & Description Platform Integration Founded in 2005 RTB launch in 2009 Company Notes One of the first bidders integrated into the Google Ad Exchange in 2009 Over 10 billion ad impressions managed daily Source: Real-time Bidding: The Online Ad Exchange Resource Book B-47 parksassociates.com

49 Appendix C Company Profiles: Data Management Platforms (DMPs) DATA MANAGEMENT PLATFORMS (DMPS) Company Product & Description Notable Industry Alliances Contextual Data Brand Protection Data Audience Interest Data Company Notes Launched in 2006 BlueKai Data Management Platform: Open platform for publishers, marketing organizations, and ad agencies to evaluate private 1st party data, create audience segmentation, and reach target audiences. BlueKai Data Exchange: Enables partners to buy and own data to boost ad targeting across media. Publishers can also participate as data sellers to increase revenue. Company Notes Launched in December 2007 Company Notes Company Notes Launched in 2008 max Adaptive Audience Intelligence: Data collection, analysis and optimization methodologies; recognizes the characteristics of best performers and builds a robust model of targets and updates attributes in real time DataLinX Platform: Enables publishers and data owners to manage access to data through a system of configurable plugs and helps reduce the website impact of pixels by monitoring site latency and leveraging pixel-free integrations Premium Data: Premium online behavioral and purchase intent data verified by comscore Launched in 2007 ebay, Admeld, TubeMogul, AppNexus, Bizo, Dedicated Media, adbrite, Pubmatic 24/7 Real Media, adbrite, Adap.tv, BrightRoll, Collective, DataXu, Dedicated Media, FreeWheel, Fox Digital Media, Interclick, Insight Express, MediaMath, Meebo, Omnicom, Tremor Video, TubeMogul, YuMe, Expedia, Forbes Adap.tv, BrightRoll, AppNexus, Google Display network, Collective, Interclick, MediaMath, PubMatic, Turn, Videology, Invite Media, Alliant, Bizo, Nielsen, Forbes, Acxiom Offline and custom modeled data sets across 350 million online consumers worldwide Crowd Control: Allows clients to organize and evaluate target audiences to monetize data and find the right audience for online marketing campaigns. Adobe Audience Manager (formerly Demdex): Enterprise-level technology that manages advertising data to action multisource visitor profiles into complex Alliant, Acxiom, Bizo, TARGUSinfo, BrightTag, LiveRail, AppNexus, adbrite, Adap.tv, Audience Science, Interclick, Xaxis, Videology, Turn Acxiom, Bizo, datalogix, exelate, TARGUSinfo Resource Book C-48 parksassociates.com

50 DATA MANAGEMENT PLATFORMS (DMPS) Company Product & Description Notable Industry Alliances Company Notes multi-partner advertising distribution Demdex launched in 2009 Adobe acquired Demdex in 2011 Ad Advisor, OnDemand Insight: On-Demand Identification, On-Demand Verification, On-Demand Scoring, On-Demand Location Source: Real-time Bidding: The Online Ad Exchange Dealix, Leads360, LeadPoint Resource Book C-49 parksassociates.com

51 Appendix D Company Profiles: Supply-side Platforms (SSPs) SUPPLY-SIDE PLATFORMS (SSPS) Company Product & Description Clients Company Notes Company Notes Company Notes PubMatic s Ad Auction Engine: Real-time mediaselling platform Founded in 2006 RTB launch in 2009 Offices in the US, Europe, and Asia Purchased MobiPrimo in March 2012 Platform access to Demand Side Platforms (DSPs), agency trading desk, and ad networks Offers real-time analytics The Huffington Post, ebay, United Online MSNBC, TV Guide The Weather Channel, NBC Universal, Answers.com FOX News, IDG TechNetwork Discovery Founded in 2007 RTB launch in 2009 Headquarter in New York City with offices in San Francisco, London, Berlin, and Toronto Acquired by Google in 2011 First supply side platform to introduce the private exchange and integrate mobile support For sellers: Inventory sold to external demand sources at real-time in auctions held on Right Media's exchange. External supply sources can make inventory available on a single impression basis For buyers: Inventory purchased from external supply sources on a single impression basis using Right Media's prediction algorithm. External buyers can use their own bid valuation technology to decide whether to bid on the impression placing their bid into an auction. Founded in 2006 RTB launch in 2012 AppNexus technology is designed to power both buyand sell-side business models and works with top-tier data and technology partners including ad networks and demand-side platforms Microsoft Advertising Exchange, Google Ad Exchange, Rubicon Project, OpenX, Admeld, Pubmatic, BrightRoll Exchange (BRX) Founded in 2007 Company Notes RTB launch in 2010 Only ad server built specifically for the real-time advertising business REVV: Real time trading platform for publishers ABC, Forbes, NBC Universal Time Inc., The Tribune Company Founded in 2007 RTB launch in 2010 Company Notes Headquarter in LA, with offices in New York, Seattle, London, Paris, Hamburg and Sydney Acquired Fox Audience Network (FAN) in 2010 Source: Real-time Bidding: The Online Ad Exchange Resource Book D-50 parksassociates.com

52 Appendix E Company Company Profiles: RTB Ad Exchanges Parent Company Yahoo! (Acquired in 2007) Private RTB AD EXCHANGES Company and RTB Launch Late-2006 RTB launch in RTB launch in 2009 Metrics More than 300,000 active buyers and sellers, including Yahoo!, and more than 11 billion ad impressions processed per day Around 1 billion ad impressions exchanged per day Private Formerly ADSDAQ/Contextweb Microsoft Corp. (Acquired in 2007) Formerly AdECN 2009 (ADSDAQ) RTB launch in RTB launch in 2011 Reach: 154 million unique visitors 48 Around 8 billion ad impressions per month Google RTB launch in 2009 Average ecpm increase of 130% across unsold inventory pool compared with directly booked deals with ad networks OpenX Limited Source: Real-time Bidding: The Online Ad Exchange 2007 RTB launch in 2009 Facebook Exchange RTB launch in 2012 Processed more than 1 trillion ad impressions in 2011 More than 200 billion ad transactions per month 700% revenue growth in 2011 versus 2010 Integrated with Samsung s AdHub Service announcement in June 2012 Partnering with eight DSPs including Triggit, Turn, DataXu, MediaMath, AppNexus, and TheTradeDesk 48 comscore, January 2012 Resource Book E-51 parksassociates.com