The Status of

Programmatic Tradingin CEEMEA

2014

2

Executive Summary 3

The Survey 4

What a Wonderful (Digital) World 5

The Level of Programmatic “Literacy” 6

The Key Benefits of Programmatic Trading 7

Rising to the Challenge(s) 8

Adoption: Still a Work in Progress, but… 9

Barriers Preventing further Adoption 10

From Adoption to Execution 1 1

Budget Allocation & Programmatic 12

2015: The Year of further Adoption 13

Is Programmatic the Future of Digital Advertising? 14

Introducing “Project Agora” 15

The Insiders’ View 16-17

CONTENTS

3

With Digital being central to customer interaction and with online ad spending expected to reach a new high in 2014, Programmatic Trading has emerged as the driving force for a new vision of Digital Advertising that integrates paid media into real-time Marketing.

This report by TailWind & AppNexus has been created to help identify the current “Status of Programmatic Trad-ing” across MEA, CEE & SE Europe, and to highlight the major trends, challenges and opportunities, shaping the future of Programmatic Trading.

What are some of the main findings? For starters, it seems that no longer is Programmatic Trading the puzzling term that only a few knew what it really was all about. For, over 85% of publishers and 78% of advertisers and agency executives claim they understand the big picture. Both the demand and the supply sides seem to have realized that Programmatic Trading offers multiple benefits such as “Better Targeting of Audiences” & “Reduced Budget and Impressions Wastage” or “Bringing Efficiencies through Automation”. Therefore, it won’t be long before Programmatic reaches mainstream status. Over 34% of publishers & sales houses in our region already use Programmatic Trading to monetize their inventory, while 61.5% of advertisers & agencies say they currently buy inventory in a Programmatic fashion.

That being said, for this to actually happen a number of issues have to be addressed. Advertisers are still skeptical about Programmatic Buying, partly due to the fact that there’s “Not enough premium inventory” (43.7%), whereas 50% of publishers believe that there’s “Not enough demand for my inventory”. Moreover, the “Lack of budget” and the “Skills shortage in our company” have been identified as two of the most compelling reasons deterring both sides from adopting Programmatic Trading wholeheartedly.

Are advertisers willing to channel a bigger percentage of their budgets through Programmatic means? Will publishers create a more coherent Programmatic strategy in the near future?

Clearly, there are reasons to be optimistic and 2015 seems to be the big bang year. Over 60% of respondents from CEEMEA nodded when asked if they would consider adopting Programmatic Trading in 1 year from now. Addi-tionally, 76.5% agreed that, sooner rather than later, Programmatic will evolve into a vital/important part of Digital Advertising. And then is the feedback we have received while engaging directly with advertisers and publishers and during the launch of TailWind’s local Private Marketplaces under the brand “Project Agora” in the region. Stakeholders are eager to team up and create an environment of cooperation and trust that will cater for the need of buyers for brand safe top-tier inventory, as well as the need of publishers for quality ads that acknowledge their context’s value.

So, to put it simply, the stage is set for Premium Programmatic Trading. Are we ready to grasp the opportunity?

Managing Director, TailWindElias Gagas

EXECUTIVE SUMMARY

4

Survey MethodologyThe survey was conducted jointly by TailWind & AppNexus in May 2014 through Online Questionnaires. Our objec-tive was to capture the level of understanding and adoption of Programmatic Trading on both the demand and the supply side. Therefore, we sought feedback from senior and highly respected representatives of Brands, Publishers, Media Buyers, Sales Houses and Advertising Agencies from across MEA, CEE (Russia excluded) & SE Europe. In total, we received 212 responses on our multiple choice questions about Digital Advertising & Programmatic Trading. Among the participants were senior execs from premium publishers, advertisers and agencies including Accuen, Adaptive Media, Addictivemobility, Antenna TV, Attica Media, Carat, DDB, DOL, Globul, Fastbridge, Havas Digital, IAS Media, Kanal D, Lowe, Markavip, Media Direction, Mega TV, Mindshare, Nestle, RBBi, Realitatea, Sam-sung, Star, Starlink, Unilever, United Media, Vivaki and ZenithOptimedia. Then, we were able to compare part of this information with the equivalent findings from AppNexus’ May 2014 report run jointly with Warc & IAB in Western Europe.

About TailWindTailWind, a TDG company, energizes publishers, advertisers and advertising agencies to cut through the complex-ity of digital business and drive their business fast forward through automated, data driven, ad-technology solutions. TailWind owns and operates Project Agora, a network of Programmatic publisher marketplaces across CEE, SE Europe and MENA. Project Agora’s mission is to bring laissez faire in advertising by creating trusted, brand safe marketplaces that add value to advertisers while protecting the interests of local publishers.TailWind is also Appnexus’ Preferred Partner in CEE, SE Europe & MEA, and Sizmek’s partner for CEE.Find out more @ www.tailwindemea.net

About AppNexusAppNexus is a technology company that provides trading solutions and powers marketplaces for Internet adver-tising. Our open, unified, and powerful Programmatic platform empowers customers to more effectively buy and sell media, allowing them to innovate, differentiate, and transform their businesses. As the world's largest independ-ent ad tech company, AppNexus is led by the pioneers of the web's original ad exchanges. Headquartered in New York City, with ten global offices, we employ hundreds of the brightest minds in advertising and technology who believe that advertising powers the Internet.Find out more @ www.appnexus.com

THE SURVEY

5Legend: Western Europe • Central East & South Europe • Middle East & Africa

How important is Digital Advertising within your overall advertising strategy?

100%95.1%96%

Digital is crucialor important

Digital is crucialor important

Digital is crucialor important

Not Important

In 2013 Digital Advertising enjoyed sustained growth across Europe and MENA. According to IAB Europe’s AdEx Benchmark research, the CEE market was the finest example of this trend with an impressive 21.2% surge. At the same time, in the MENA region, Digital Advertising spend grew 37% in 2013 and is expected to reach an astounding $1 billion in 2017 (source: the CMO Council Middle East, February 2014)

So, will Digital Advertising keep outgrowing all other formats and cement its status as the fundamental ingredient of the marketing mix? Judging from the survey responses the answer is a resounding “yes”.

I WHAT A WONDERFUL (DIGITAL) WORLD

6sellersbuyersLegend: Central East & South Europe • Middle East & Africa

How well do you think you understand Programmatic Advertising?

Excellent:I have a clear understanding of what it means & how it can be applied

Fair:I’ve been reading about it and understand the big picture, but still have some questions regarding details

Limited:I’ve heard about it, but don’t really know enough to assess its potential

Not at all:I haven’t heard of Programmatic before

0%

10%

20%

30%

40%

50%

60%

70%

80%

Excellent Fair Limited Not at all

12.2% 47.4% 65.9% 47.4% 18.2% 5.2% 3.7% 0.0%

70.73%56.67% 14.63%16.67% 0.0%5.0%14.63%21.67%

Programmatic Trading is one of the hottest trends/buzzwords in Digital Advertising and it grows like wildfire. Nonetheless, according to a 2014 US research, which was released by the Association of National Advertisers and Forrester, 29% of respondents said they've heard the term “Programmatic” but don't have a clear understanding of it, whereas an extra 12% are unaware of this way of buying.

What’s the case in this neck of the woods? How familiar are marketers, publishers and agency executives with this term and to what extent are they confident about having a good understanding of Programmatic”?

Needless to say, there’s still much room for improvement, however the good news is that, based on the feedback we received, only 14.63% of publishers & 21.67% of advertisers & agency executives don’t really know enough to assess its true potential (i.e. have limited or no knowledge).

II THE LEVEL OF PROGRAMMATIC ‘LITERACY’

7Legend: Western Europe • Central East & South Europe • Middle East & Africa sellersbuyers

Rank what you consider to be the top 3 benefits of Programmatic Advertising

11.2%

11.6%

20.5%

12.4%

13.0%

14.9%

19.9%

21.5%

Better Targetingof Audiences

54.0%

19.9%

23.2%

Ability to better trackthe success of advertising campaigns

30.0%

13.3%

3.6%

Ability to refine/adjustadvertising campaigns in real time

50.0%

14.6%

26.8%

Reduced budgetand impressions wastage

16.1%

13.3%

35.0%

Chances are, you are among those who have realized that the term “Programmatic Trading” is being used to describe an entire Paradigm Shift in the way Digital Media & Digital Advertising are being traded.

Why is it though so important and what are the game-changing advantages of Programmatic Trading? In our research, we asked participants to identify the key benefits.

For publishers and sales houses the ones that topped their list were the “Better Targeting of Audiences” (21.5%), the “Ability to manage a bigger number of advertisers automatically” (14.9%), the “Reduced budget and impressions wastage” (14.9%) & the “Ability to refine/adjust advertising campaigns in real time” (12.4%).

The “Ability to refine/adjust advertising campaigns in real time” (20.5%) was the primary option for advertisers and agency executives, along with “Better Targeting of Audiences” (19.9%), “Reduced budget and impressions wast-age” (13%) & the “Ability to better track the success of advertising campaigns” (11.6%).

So, all in all, there is a consensus between Sellers and Buyers, which signifies the growing level of a shared under-standing.

III THE KEY BENEFITS OF PROGRAMMATIC TRADING

8Legend: Central East & South Europe • Middle East & Africa sellersbuyers

Rank what you consider to be the top 3 challenges of Programmatic Advertising

14.3%

14.8%

6.8%

14.8%

15.6%

16.5%

17.7%

19.1%

Lack of understanding amongst buyersas to how Programmatic works

16.7%

25%

Programmatic skills shortagein advertising agencies

12.9%

21.2%

Difficulties in ‘valuing’ digital property

10.5%

9.6%

Buyers' fear of adverts appearingon ‘undesirable’ sites

15.4%

16.2%

15.6%

7%

Perceived lack of transparency on whereadvertisements will end up being displayed

12.9%

7.7%

Programmatic Advertising, despite the intriguing opportunities that it brings to the table, still faces a number of challenges, with perhaps the biggest one being the “Lack of understanding amongst buyers as to how Program-matic works”, which rather surprisingly was the no1 challenge not only among Sellers but was also highlighted by Buyers.

IV RISING TO THE CHALLENGE(S)

9Legend: Central East & South Europe • Middle East & Africa

Are you currently using Programmatic to sell inventory?

Are you currently using Programmatic to buy inventory?

0%

20%

40%

60%

80%

100%

YES YES NO

19.51% 18.2% 26.83% 81.8% 48.78% 0%

for performance campaigns for performance & brandcampaigns

we don’t use Programmatic

sellers

no42.9% yes

57.1%

yes23.5%

no76.5%

buyers

Today, billions of dollars & euros are transacted programmatically across the globe. Having looked at the world’s 9 most advanced markets (US, UK, Germany, France, The Netherlands, Australia, Japan, China & Spain), MAGNA GLOBAL estimated in October 2013 that the value of impressions being traded programmatically will grow from over $12.0bn in 2013 to more than $32.5bn in 2017 - http://tiny.cc/0zvcjx

Then again, while it seems that it’s only a matter of time before Programmatic Trading becomes mainstream, the truth is that in the same research, North America still claims a considerable share (57%) of the total market world-wide, with the rest of the markets clearly lagging behind. And this trend was evident in our findings, as only 34.15% of respondents accross CEEMEA from the supply side replied affirmatively to the question “Does your organization use Programmatic?”.

Here is an interesting stat though that could easily turn the tide: 61.5% of advertisers & agency executives in CEEMEA, who participated in the survey, said they currently use Programmatic to buy inventory! Therefore, demand is already there, which means it’s about time premium local publishers start taking action instead of keep-ing contemplating on their strategy.

V ADOPTION: STILL A WORK IN PROGRESS, BUT…

10Legend: Western Europe • Central East & South Europe • Middle East & Africa

Key issues with Programmatic

The main barriers

sellers buyers

I don’t haveany issues12.5% 0%

I don’t haveany issues28.6% 27.3%

Maintaining control of who/whatis displayed in my inventory12.5% 50%

Implementationcomplexity33.3% 0%

Implementationcomplexity25% 0%

Not enoughpremium inventory33.3% 63.6%

Not enough demandfor my inventory50% 50%

Not enoughinventory4.8% 9.1%

Skills shortage

IN MEA,CEE & SEE

in our companyFear

of the unknownLack of

“transparency”I don’t knowNo budget

available

0%

10%

20%

30%

40%

29% 23.9% 33.3% 26% 21.7% 0% 12% 6.5% 16.7% 13% 6.5% 16.7%

20.7%17.4% 14%0% 6.9%7%

0% 30.4% 33.3%

31%30.4%14%39.1%

According to our Western European colleagues, one of the most compelling reasons why they are not using Programmatic Trading (yet), are the skills shortage within their company (29%) along with the lack of budget avail-able (26%) and worries over transparency (13%).

Similarly, these are, more or less, the barriers that the ecosystem in CEEMEA will need to overcome. That said, a finding that jumps out is the % difference between Sellers (14%) and Buyers (39.1%) in their reply on whether they experience a “Skills shortage in our company”.

This is the one side of the coin, as there are also those who have already embraced Programmatic Trading and have identified the “teething troubles” that we need to get over in order to leverage its full potential. Their verdict with regards to the key issues they currently face with Programmatic Trading is, among advertisers and agencies, the “Implementation Complexity” & the fact that there’s “Not enough Premium Inventory”.

On the other hand, publishers and sales houses are worried because there’s “Not enough demand for my inven-tory” and the chance of “Losing control of who/what is displayed in my inventory”, something that resonates well with the feedback we have accumulated through our direct project with publisher clients in both regions.

VI BARRIERS PREVENTING FURTHER ADOPTION

11Legend: Central East & South Europe • Middle East & Africa

How do you access Programmatic Inventory?

How do you buy Programmatic Inventory?

0%

20%

40%

60%

80%

100%

66.7% 18.2% 23.8% 81.8% 9.5% 0%

Via a partnerusing managed service

Via our owntechnology / DSP

I don’t know

buyers

0%

20%

40%

60%

80%

100%

50% 0% 13.6% 63.6% 4.5% 27.3% 31.8% 9.1%

CPC CPM CPA I don’t know

buyers

Does Programmatic enable organizations to gain a competitive advantage over competitors? From those who have already adopted Programmatic, 90% of respondents from CEE & SE Europe, 82.4% from MEA & 70% from Western Europe, certainly think so.

Given the vast potential and the novelty factor associated with Programmatic Trading, that’s hardly a surprise. This is the main objective & that’s fine as the starting point. How about execution though? We asked advertisers and agencies how they are buying Programmatic inventory. Here, replies were split between CPC (33,3%) and CPM (30,30%), however a closer look shows that MEA players, unlike what’s the case in CEE & SE Europe, are heavily inclined towards CPM and CPA.

This geographic and scale disparity is also obvious in the way Buyers access Programmatic inventory, For, in CEE & SE Europe the prevalent answer (66.7%) was “Via a partner – using a managed service”, whereas in MEA 8-out of-10 do it “Via our own technology / DSP”.

VII FROM ADOPTION TO EXECUTION

12Legend: Central East & South Europe • Middle East & Africa sellersbuyers

Roughly what’s the value of ad spend that you expect to...

and what’s the % of your total ad budget that you expect to...

sellers buyers

4.8%

0%

0% 10% 20% 30% 40% 50%50% 40% 30% 20% 10% 0%

I don’t know / I would prefer not to say

100.000 or less

100.001 to 250.000

250.001 to 500.000

500.001 to 1.000.000

1.000.001 to 5.000.000

5.000.001 or more

amount (€)... investin display advertising in 2014

... generatefrom display advertising in 2014

... invest in Programmatic in 2014? ... generate from Programmatic in 2014?

25%

33.3%

50%

0%

0%

16.7%

12.5%

0%

0%

0%

12.5%

16.7%

0%

33.3%

33.3%

27.3%

I don’t know / I would prefer not to say

0 to 1%

1 to 5%

5 to 10%

10 to 20%

20% or more

14.3%

0%

9.5%

9.1%

19.1%

9.1%

14.3%

9.1%

4.8%

45.5%

0% 27.3%

25% 27.2%

37.5% 0%

12.5% 0%

0% 36.3%

25% 9.1%

0% 16.7%

25% 16.7%

37.5% 50%

12.5% 16.7%

0% 0%

25% 0%

Digital budgets are bound to grow across CEEMEA. At the same time, since one of Programmatic Trading’s main benefits is the reduced budget wastage, it goes without saying that, as the cost of adoption drops down, it will soon become the norm, generating a significant percentage of total ad budgets.

As of now, what strikes the most –albeit hardly surprising- is the much higher budgets allocated in MEA compared to CEE & SE Europe. This is something in line with the overall maturity of the MEA market (especially the Dubai Hub players) and its scale compared to the developing and fragmented CEE market.

VIII BUDGET ALLOCATION & PROGRAMMATIC

13Legend: Central East & South Europe • Middle East & Africa

Would you consider adopting programmatic in 1 year from now?

sellers

NO: 8.8%

DON’T KNOW: 26.5%

YES:64.7%

NO: 5.8%

DON’T KNOW: 32.4%

YES:61.8%

NO: 9.1%

DON’T KNOW: 27.3%

YES:63.6%

NO: 6.5%

DON’T KNOW: 30.5%

YES:63.0%

buyers

So, what does the (near) future hold for Programmatic Trading? Are stakeholders willing to close the knowledge gap, see the big picture and further capitalize on the power of Programmatic Technology? Over 60% of respond-ents from across CEEMEA answered affirmatively.

IX 2015: THE YEAR OF FURTHER ADOPTION

14Legend: Western Europe • Central East & South Europe • Middle East & Africa

To what extent do you believe thatProgrammatic will become the future of Digital Advertising?

10%

28.6%

30%

65%

50%

59%

10%

7.1%

11%

0%

0%

0%

15%

14.3%

0%

0% 10% 20% 30% 40% 50% 60% 70%

Programmatic will becomedominant in Digital Advertising

Programmatic will be an importantpart of Digital Advertising

Programmatic will only playa limited role in Digital Advertising

Programmatic willcease to be used

I don’t know

Programmatic Trading seems to be showing up everywhere these days, finding its way in all kinds of articles, reports and discussions on the future of Digital Advertising. The question now is not “if it’s going to grow”, but “how much”. Programmatic is already here and is expected to grow globally for the foreseeable future. Therefore, a better topic to ponder upon is whether Programmatic is going to rise to such an extent that it will become the future of Digital Advertising.

Well, if this report is any indication, then there’s no doubt about the key role Programmatic will play in the years to come.

X IS PROGRAMMATIC THE FUTURE OF DIGITAL ADVERTISING?

15

Owned and operated by TailWind, “Project Agora” is a network of local publisher-led ad marketplaces across CEE, SE Europe and MENA.

Project Agora’s bold mission is to create a trusted automated environment where advertisers and local publishers will be transacting in a way that adds value to advertisers while, at the same time, protects the interests of publish-ers. Project Agora is powered by AppNexus, the global ad-tech leader. The AppNexus platform is an exchange-based ad serving solution built from the ground up to address the challenges and opportunities presented by program-matic display buying.

email: adam.smith@projectagora.com

XI INTRODUCING “PROJECT AGORA”

16

Programmatic Advertising in CEEMEA: Entering a new stage?It seems like we have moved light years ahead from when what we now term as Programmatic Advertising was simply referred to as RTB. During this journey our industry seems to have entered a new sophistication level, as it has developed a much clearer and consistent view of the business value coming with it.

We are witnessing this everyday now in our encounters with publishers and advertisers across the CEEMEA region and we have seen this further while analyzing the results of our first report on the Status of Programmatic Trading. Yes, CEE and MEA are different in many ways, however stakeholders in both markets seem to have grasped the need to develop a coherent Programmatic Advertising Strategy. In the course of pulling this report together, we saw three key insights emerge:

• Onboarding premium local inventory is paramount in the developmentof Programmatic Advertising in our region.

• Transparency and control are differently perceived between sellers and buyers,but they are key notions to increased investments.

• It is not a zero-sum game. Sellers and buyers feel the need to cooperateto reap the real value of Programmatic Advertising.

What’s next then? With no intention of preempting our 2015 report, we do anticipate hearing more on direct programmatic deals, private marketplaces and data driven strategies across industry water coolers in Dubai, Buda-pest, Bucharest, Prague, Athens and Istanbul during the coming year. The launch of Project Agora, TailWind’s network of publisher-led local marketplaces, is definitely going to further accelerate this process.

Odysseas NtotsikasFounder, TDG

XII THE INSIDERS’ VIEW

17

Why marketers need to understand Programmatic.We are at an inflection point for the marketing industry.The digitally empowered consumer is harder to reach, more difficult to engage and actively hostile to much of the marketing they receive. To stand out, brands are living in the moment; seeking to be contextually relevant, useful and engaging.

This real-time revolution is fuelling a new level of interaction, but is proving difficult to sustain and integrate across all media. The Superbowl or Oscars moment remains largely isolated from broader campaigns, burning brightly but dying fast. No matter how strong the idea or how deep the engagement, the industry has lacked the agility to react, adapt and scale. Unsurprising when the way that advertising is bought and sold often owes more to the last century than the digital era.

Yet, over the last decade, a revolution has been quietly brewing. It’s been called many things – RTB, RTA, AdTech, Programmatic – but the goal has always been the same: to give agencies and publishers a better way to connect brands and consumers.

As consumers migrate to an always-connected, mobile, multiscreen and real-time world, advertisers must follow or risk losing relevance. Traditional models do not scale and so Programmatic has emerged as the major driver of real-time digital engagement, with analysts predicting that it will account for as much 60% of all digital advertising by 2017.

AppNexus is powering the shift towards Programmatic. Today, we're over 500 AppNexians worldwide dedicated to making advertising a more efficient and effective tool for marketers, publishers, programmatic media compa-nies, and data providers alike. We provide trading solutions and power marketplaces that enable the whole adver-tising ecosystem — and eventually, the Internet — to work better. We worked with Tailwind on this research to empower our partners to see the whole system so that they can capitalize on this rising tide.

Graham WylieSenior Director, EMEA & APAC Marketing, AppNexus

XII THE INSIDERS’ VIEW

www.tailwindemea.net

Athens Office:225-227 Kifissias Ave, 14561 Kifissia Athens, Greece greece@tailwindemea.netTel: +30210 8026050

Bucharest Office:Str. Sevastopol, 17C, Sector 1, Bucuresti, Romania bucharest@tailwindemea.netTel: +4021 4101038

Budapest Office:Forrás street 3. Budapest, 1115, Hungarybudapest@tailwindemea.netTel: +36 1 7004320

Dubai Office:1001-41, 10th Floor, Swiss Tower, Plot Y3, Jumeirah Lakes Towers, Dubai, mea@tailwindemea.netTel: +302610 431779

Patras Office:37 New National Road Patron-Athinon, Patras, Greece, 26442 patras@tailwindemea.netTel: +302610 431779

Sofia Office:25 P. Parchevich Str, Sofia, 1000, Bulgariasofia@tailwindemea.netTel: +359 2 4219174

CONTACT US NOW