Advertising Exchanges - Open the market!

Advertising Exchanges: Open the Market!DFW Interactive Marketing Association

March 11, 2008

Jay SearsSenior Vice President, Strategic Products and Business Development

ContextWeb, Inc.917-408-6300 or sears@contextweb.com

IAB ConferenceFebruary, 2008

“My Space is Your Space”

Current state is “daunting but exhilarating”The “consumer is calling the shots”There are many “strange bedfellows”Let’s sell value, not priceLet’s “distinguish between quality and commodity”We “must not trade our assets like pork bellies”

Wenda Harris MillardIAB ConferenceFebruary, 2008

Brian McAndrewsSVP of Advertiser and

Publisher SolutionsMicrosoft, Inc.

Former CEO, aQuantive

IAB ConferenceFebruary, 2008

Rob Norman, Group MIAB ConferenceFebruary, 2008

“Holy crap!!What now?”

Ad Exchanges

Why Now?Media Fragmentation

Current Marketplace ResponsesPortals, Sites, Ad Networks React

What is an Ad Exchange?What Problems are Being Solved

Questions to Ask Your Ad Exchange

Media Fragmentation Started in the 1980s

2004

Friends – Series Finale

12.8 Nielsen rating

Most‐watched showin 4 years

1986

Head of the Class

12.8 Nielsen rating

#40 show that year

Today, media is fragmented• 13,500 radio stations (4,400 in 1960)

• 17,300 magazine titles (8,400 in 1960)

• 82.4 TV channels per home (5.7 in 1960)

And the Web…• Millions of sites

• Billions of pages

More Choice - The Proliferation of Media

Where Did Everybody Go?

• Decreased attention - consumers are tuning out

• Fragmented audience - there are more places for them to go

• Proactive advertising avoidance – less ability to be seen

• Decreased media efficiency – audiences going down, but prices are increasing or holding

• Increased consumer control - pull vs. push

• Evolution of a completely new set of consumer habits & expectations

• Democratization of content – consumers as creators as well as consumers: “Citizens Media”

Media Fragmentation

While portals were once the dominant source of news and information, page views on the top 3 portals declined 18% from August 2004 to August 2007 vs. an overall 21% total internet growth in page views.BUT, media spend is still lopsided—over 75% of media spend goes to the top 10 Internet properties

15-month Trend Line

The Long Tail is The Passion Tail

TheStreet.com & Cramers-Mad-Money.comFoodNetwork.com & JoyOfBaking.com

SI.com & ChicagoHoops.com

Consumers use the “Long Tail” to pursue their passions.

Brands want passionate users.

Passionate users are in the right mindsetfor a brand message.

Consumers live their “passion” across sites of all sizes

Pages of “Passion”The “Passion Tail” is composed of pages – not sites.75% of site entry is a “deep dive” via search.

The Street.com

Home Pag

e

Investi

ng

Mutual Funds

Cramer’

s

Mad M

oney

Google

AOLTheS

treet.

com

Cramers

-mad

-money

.com

# of

Vis

its

# of

Vis

its

The Web

Passion Passion

Offline vs. Online: Time Should Mean Money

* Forrester Research, 2006

** Internet Advertising Bureau

Online Time Online Money

5.8%19%

Fat Tail vs. Passion Tail

CareerBuilder

Gannett

Fox Interactive

IAC

Monster

AOL

MSN

eBay

Yahoo!

Google

Property26%1

15%2

8%3

7%4

7%5

4%6

3%7

2%8

2%9

2%10

2007(est)

77% of dollars

Size

of S

ites

Passion

# of Sites

Pages of Passion

Marketplace Response

Portals Acquire to Create “Platforms”Yahoo! buys RightMedia ($850M), BlueLithium ($300M)

Google buys DoubleClick ($3.1B)

Microsoft buys aQuantive ($6.1B), AdECN ($75M)

AOL buys Tacoda ($275M), Quigo ($300M) to create Platform A

Marketplace Response

Branded Sites create Extended NetworksMartha Stewart creates Martha’s CircleReader’s Digest, Forbes, Warner Brothers, Glam Media

Marketplace Response

Ad NetworksGeneral networks are in decline

- Inefficiency- Biased

Category specialty- Adify estimates there are @ 75 niche networks- Travel Ad Network, Gay Ad Network

Technology specialty- Behavioral, contextual

Vertical Ad Networks

Marketplace Response – Travel Vertical

ComScore February 2008

Behavioral Targeting

Contextual Targeting

Remaining IssuesBut there is still FRICTION in the process

Paper IOs, faxes, phone callsLack of control, lack of transparency

Ad Exchanges can automate and provide control and transparency to buyer and seller.

Where is the Long Tail in these solutions?Portals have no “tail”Branded sites create small networks with limited scaleAd networks are typically “mid-tail” remnant solutions

Ad Exchanges can allow Long Tail publishers to participate and control pricing.

Where is brand-safe media that can scale for the advertiser?Advertisers that use portals and site specific buys need more reachMore brand dollars are coming onto the web

Ad Exchanges can allow the advertiser various placement controls.

Questions for Your Ad ExchangeInventory

Remnant or premium inventory?Spot market (bided) vs. futures market (reserved inventory)?Safe for brands or direct only?Designed for agency and/or SEM workflow?

PricingControl of pricing for buyer and seller?Pricing models: CPM, CPC, CPA?

Targeting availableContextual, behavioral, other?Graphical, rich media, text formats?

Publisher typesLong Tail and/or large site and/or ad network inventory?Inventory from content sites and/or social media?

Randall Rothenberg

IAB

Jerry YangCEO, Yahoo!

Sue DeckerCFO, Yahoo!

IAB ConferenceFebruary, 2008

Randy FalcoChairman and CEO

AOL

From Brian McAndrewsMicrosoft, Inc.

IAB ConferenceFebruary, 2008

Rob Norman, GroupM

“Today, we plan and trade on behalf of our clients. Tomorrow and in some places today we also trade on our own behalf where we can create value and deserve our place in the chain”

“We charge at the moment for the cost of inputs but again if we charge on the basis of the valueof the outputs we are perfectly entitled to do that too.”

Photo credit: IAB

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Jay SearsSVP, Strategic Products and Business Development917-408-6300 or sears@contextweb.com

In DallasScott Bowdouris

Senior Account Executive800-452-7967 or

sbowdouris@contextweb.com

After this slide is all extra / junk for now

What Does This Mean to Advertisers?Trends Implications

Increasingly fragmented media environment and declining ratings for traditional media vehicles

Need for diverse media mix to generate reach

The empowered consumer and the development of personalized media

Customize message and have a plan that includes emerging technology

Standing out amongst the clutter/competition by seeking out media apertures that resonate with consumers

Integrated communication to surround consumer with greater more relevant impact

The reality of today’s media environment

Fragmented audience

Decreased media efficiency

1980

MEDIA

CONSUMERS

•Broadcast TV

•Radio

•Print

•Outdoor

•

a world of

LIMITED

options

PUSHED

to mass

consumers

a world of

LIMITED

options

PUSHED

to mass

consumers

•Broadcast TV

•Cable TV

•Print

•Outdoor

•Digital Radio

•Satellite Radio

•Internet

•DVRs/VOD

•IPTV

•Video Search

•Blogs

•Podcasting

•Advergaming

•Mobile Phones

•

a world of

INFINITE

options

PULLED

by individual

consumers

a world of

INFINITE

options

PULLED

by individual

consumers

2010

MEDIA

CONSUMERS

37

The True Exchange

DIRECT

Agency Network AuctionPricing Exchange

Advertisers

Agency Agency

The Publisher’s Media InventoryPremium Inventory >>>>> Remnant Inventory

Negotiated

Automated

True control for publishers and advertisers throughthe new exchange model.

True Exchange

ContextWeb

Agency

PublishersPremium

Advertisers

Redundant – may be deleted

Online Advertising Marketplace Has Evolved

DIRECT

Negotiated

Automated

Control of pricing has

been driven by advertisers.

Advertisers

Agency Network AuctionPricing Exchange

Agency Agency

The Publisher’s Media Inventory

Premium Inventory >>>>> Remnant Inventory

True Exchange

ContextWeb

PublishersPremium

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