programmatic ADVERTISING April 6, 2017

What we’ll cover today Demystifying programmatic advertising Avoiding pitfalls that will hurt your revenue and reputation Opportunities to grow your revenue

‘Programmatic’ defined Programmatic Advertising is the automation of advertising/media transactions. This typically involves machine-learning decisioning and both biddable and non-biddable inventory, but currently relies on human input to create rules for both the buy and sell side. Some examples of programmatic: Ad Networks Search Real Time Bidding Automated Guaranteed

IN A FRACTION OF A SECOND.... PROGRAMMATIC PROCESS Exchange Notifies Bidder 3. Advertisers place different bids based on what they appear the value of Visitor A to be. Visitor Enters Website 2. Advertisers given visitor details, publisher site and ad unit info 1. Visitor A accesses site, server requests an ad from the ad exchange $11.00 Bid Advertiser A Ad Exchange Real-Time Bidding $10.50 Bid Advertiser B Visitor Sees Ad 5. Visitor sees creative and an impressions is counted $10.00 Bid Advertiser C 4. Ad Exchange selects the highest bidder and sends creative to the publisher

Programmatic explained Reservation Buying Ads sold directly between advertisers/agencies and publishers manually Ad Networks Ad networks aggregated inventory and sold it to advertisers. Helped publishers by selling inventory they could not sell themselves. Ad Exchanges & SSPs Real-time marketplaces with a large pools of liquid inventory not sold in direct buys; SSP’s have more controls for publishers to optimize yield Indirect/Programmatic/ Unreserved DSPs Bidding technology designed to help advertisers/agencies target and optimize their buys across multiple ad exchanges/publisher inventory pools Private Exchanges & Automated Guaranteed Exclusive advertiser-to- publisher inventory relationships for programmatic purchasing in brand safe environments Programmatic Premium Now Then Direct Sold/ Guaranteed/Reserved

prioritization in the ad server a.k.a. “The Waterfall” Typical Publisher High CPM and yield Direct Demand Non Standard Sponsorship Custom Executions PREMIUM DIRECT PREMIUM DIRECT Context Targeting Audience Targeting ROS & RON High Volume Guaranteed Delivery STANDARD DIRECT PREMIUM PROGRAMMATIC Prioritized remnant Repackaged media Audience Extension PMP PREMIUM PROGRAMMATIC STANDARD DIRECT SSP Ad Nets Undifferentiated media Demand-Supply imbalance OPEN PROGRAMATIC OPEN PROGRAMATIC

why is RTB growing so fast? From past to present Execution Transparency Cheap Media High liquidity High ROI on Direct Response Scale Data Collection Transparency Access to premium inventory Contextual Relevance Operational + Media efficiencies Flexibility in planning 1st party data access Yield Management Revenue for unsold media Sales Channel Conflict Premium Environments Control Operational Efficiency Higher Yield 1st Party Data Usage Buyers CHIP In the past there was a mismatch in usage and expectations Progression from cheap media to targeting at scale, transparency, operational efficiencies, etc Now, with more buyers thinking about programmatic premium/PMP, much more alignment Sellers Past Present

programmatic ad using third party data Targeted based on Audience Data to a golfer, on Bloomberg.com

Benefits/Challenges of programmatic For advertisers The top benefits of programmatic buying are: Better targeting Real-time optimization Meanwhile, the top challenges are higher bot fraud and potential for non- viewable ads. Transparency issues also are identified as challenges: Lack of transparency to the costs within the programmatic supply chain, i.e., only $.30 to $.40 of every dollar actually buys media Lack of transparency into the firms along the programmatic supply chain, i.e., not knowing all the firms that are touching my business

Programmatic demystified Advertisers want more control over which ad impressions to buy The market has shifted from buying all impressions on your website to buying those individual impressions that fit their needs They are using first party and third party data to better understand who is loading a web page

MARKETPLACE/EXCHANGES actors & acronyms What role each plays in the open auction ecosystem DSP MARKETPLACE/EXCHANGES SSP AGENCY TRADING DESK PUBLISHER AD SERVER ADVERTISER / AGENCY PUBLISHER LAUREN What role each plays in the ecosystem Differences for each (adnets, DSP’s, ATD’s, SSP’s, Exchanges, DMP’s) Positives and negatives in their business models Solutions grew before problems formalized, but those options can be simplified SERVICES SERVICES DMP DMP

Header bidding Header bidding allows publishers to receive bids from every partner simultaneously so the impression is always awarded to the highest bidder Header bidding increases ad revenue significantly, requires less ongoing maintenance, facilitates more accurate reporting and results in fewer discrepancies Another great aspect of header bidding? It’s low maintenance. While a traditional waterfall setup requires near-constant attention, header bidding allows for a “set it and forget it” approach In most cases, publishers traffic their line items once and then simply monitor performance

you can sell inventory you don’t own Your Site 10,000 Impressions

Successful Partnerships Trust Intentions Collaboration Transparency Deal Points Business Auction Desire for Mutual Success Understand the other side Outcomes no difference in our business from the past, except that majority of pmp deals will fail  (as defined by deal scale) without full transparency

Deals Done Right for Programmatic Standard Discussion Strategy  Objective & Measurements of success Daily desired spend Price Advanced Discussion Campaign parameters Unit winning price and/or closing price Preferred context Publisher Set up Creative type & vendor Reporting requirements “The power sits neither with the buyer or the seller; it rests in the effectiveness of the deal because both parties are equally responsible for its success” Not one way to do it right Be prepared to get wide and deep since both are critical for proper set up Deal validation, checklist, reco’s Strategy – how are you using programmatic as part of your plan? Our biz is full of problem solvers – share what you can and can’t do and you might be surprised by solutions that come back Advanced - 14 pt checklist Responsibility for all to educate initiates that programmatic does not mean low price – it means campaign effectiveness Campaign parameters (fcaps, pixels, data overlays)

Terminology: the painful stuff RTB Real Time Bidding –the technology that allows the selling and buying of inventory one impression at a time, i.e. Biddable Inventory Machine Learning The use of algorithms leveraging large quantities of data to maximize efficiency and/or improve effectiveness of a desired outcome Ad Exchange Transparent real-time marketplace where large pools of inventory are bought and sold. Now uses RTB to transact DSP Demand Side Platform - Technology company that powers RTB buying for advertisers and agencies. Leverages buy side decisioning SSP Supply Side Platform - Technology platform that powers RTB selling for publishers. AKA a ‘publisher biased exchange’. PMP Strategy to create a premium channel using RTB to execute direct buys, aka Private Exchange. Uses Deal ID technology Automated Guaranteed Workflow automation and execution channel for direct sold reserved inventory. AKA Programmatic Guaranteed Bid Request/ Bid Response Action in auction where SSP solicits all requests for bids, and DSPs respond with bids, one impression at a time

Terminology 201: the pro stuff Floor/Fixed Price Floor is the lowest price an advertiser will pay in a second price auction. Fixed price establishes a maximum. Mutually exclusive Bid Response Rate The rate at which a DSP responds to bid requests with >$0 bid responses Bid Price The first or fixed price bid that represents the maximum amount a buyer will pay for the impression Win & Clear Prices Win is the first price, clear is the ‘pay’ price to the media owner (in a second price auction). With fixed price, these are the same Win % The rate at which a buyer’s bids are awarded an impression Bid Metrics All the above together are called Bid Metrics. Use bid metrics to study the auction for deal improvement or incremental yield Header Bidding An approach to auction management that allows simultaneous bids from more demand sources into the ad server for pub side decisioning