Growing New Markets Prof. Markus Christen INSEAD Singapore May/June 2007 Prof. Markus Christen INSEAD Singapore May/June 2007

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session What They Did ( )  Agencies (existing target expanded value proposition) Allowed regular banner at competitive rates Introduced a 100k Polite Banner (3 times greater file size than standard) Behavioral ads  Agencies - creative arm (expanded target same value proposition) Set up a Creative Services Department (to understand needs and serve) Launched industry first Creative Spec Database with Validation Tool Enhanced Offline Ad-Demo Generator Led to the synchronized ad format (later)  Publishers (“new” target “expanded” value proposition) VideoClip Module Video Strip

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Did not accept any deals based on CPA or CPC! What They Did

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Developments ( )  Regular banners used primarily as a monitoring tool a comparison to show you difference in effectiveness (“bait and switch”)  Direct Response only if fit with interactive components not if desired with the pure performance based pricing  E-Commerce/Corporate Sites still slow, small part of business (eBay)  Promotions: primarily for new formats to end user Volume Discounts: specific times of year (academy awards) Many more deals with publishers – but those not heavily publicized

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session What Happened  2003 Results Served more than 1400 total campaigns (40% increase) Delivered more than 2 billion impressions Revenues of $8.5 million (up 70%) Operating margins still around 30% Clients running multiple format campaigns increased 250% $8 million in VC funding (Insight Venture Partners)  2004 Results: Served more than 2,285 total campaigns (60% increase) Delivered more than 5.5 billion impressions (up 180%) Revenues of $14 million (up 65%) Floating ads less than 30% of all impressions  Over 500 agencies use the Eyeblaster Platform; over 1,500 web publishers are Eyeblaster-enabled

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session What Happened  2005 Results Revenues near $20million and operating profit of 28% Served more than 32,000 ads Served more than 3,100 campaigns –While the number of campaigns increased by only 14%, the size of the average campaign increased significantly and more of these ads contained a video component Delivered more than 11 billion impressions –The average number of impressions per ad increased 50% Served more than 12,000 video ads –The percentage of ads containing video increased from 9% in 2004 to 38%  Firm Global employee base grew to 114 by end of 2005 (48 in 2003, 75 in 2004) New offices opened: Eyeblaster now operates in 16 offices in 11 countries Increased client base of agencies, advertisers and publishers around the world –More than 700 agencies (media and creative shops) –More than 1,200 publishers –More than 1,300 advertisers

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Developments 2006  Eyeblaster dedicated time and investment to develop More Video Solutions with Pre-Roll –Pre-Roll is the online version of television commercial spots and can be placed before, between, and after online video content, providing more interactivity and measurable results than standard television ads. Synchronized ads –Several coordinated parts of the ad appear on the page (different locations, different times, reflect a behavioral component) Gaming Initiatives and Gaming Survey –Started development of tools and access to enable rich media ads in the gaming environment –Eyeblaster also conducted a survey, to determine the attitudes of online gamers towards watching video ads in the gaming environment ( 78% of the total respondent population said they would watch a short video in exchange for free game plays 71% of total respondents do not find video ads intrusive in the free game environment Mobile Initiatives –Eyeblaster started investigating way to enable rich media ads on mobile devices

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Competition  Point Roll purchased by Gannett for $100million (estimated 6 times revenues for past 12 months)  DoubleClick purchased by Click Holding (subsidiary of private equity investment) for $1.1Billion

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Competition Single Solution for All Rich Media Broad Range of Formats & Features Publisher Focused RM Programs & Tools Tiered Services & Expert Support Video Capabilities Tracking, Reporting & Analytics Integrated Ad Server Offering Templitized Rich Media Full Yes Full Gannett/ PointRoll Limited Yes Limited No Klipmart Limited NoYesHighLimited No Double Click Limited No LimitedFullProprietary onlyNo aQuantive Atlas Limited No LimitedFullProprietary onlyNo

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Online Advertising  What do you think the effectiveness of online advertising will be in 5 years?  Will rich media be eventually ignored?  Will consumers prefer to pay for content and not endure ads?  Can companies like eyeblaster keep coming up with new formats that will make us endure ads and not tune out?

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Online Ad Spending Will More Than Double by 2009, Totaling $22.3 Billion Source: eMarketer, 9//2005 Dollars in billions Online Advertising Trends

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Source: eMarketer, 2/2005 Broadband Penetration Continues to Increase: By 2008, More Than 50% of U.S. Households Will Have Broadband Percent of all US households Online Advertising Trends

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Source: eMarketer, 11/ 2005 In Billions Rich Media Spending Continues to Rise: Spending Will Grow an Average of 30% Each Year for The Next 4 Years Online Advertising Trends

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Source: eMarketer / Nielsen//NetRatings AdRelevance, DoubleClick, May 2005 Financial Services and Telecom Are Leading Categories for Rich Media Advertisers: Financial Services Telecommunications Web Media Consumer Goods Automotive Retail Goods/Services Entertainment Travel Hardware/Electronics Health Public Svcs 7.20 Software 6.20 B2B 5.56 Rich Media Ad Impressions in The US, By Industry (in billions) Online Advertising Trends

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Source: eMarketer, November 2005 Online Video Ad Spending in the US: (in Millions) Online Video is On the Rise: Spending Will Total More Than $1.5 Million by 2009 – Up 11x from 2004 Online Advertising Trends

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Source: OPA, Drivers & Barriers to Online Video Viewing, 2/2005 The Power of Rich Media and Video: Video Prompts Action 34% Checked out a related website 15% Requested more information 14% Went to a store to see the product 10% Forwarded an ad 9% Made a purchase Of consumers who have seen a product advertised in an online video ad: Online Advertising Trends

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Continued Improvement Value Extraction Innovation Value Creation Market realities after first generation product Launch Innovation and Marketing

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Value Proposition Target Market Do we need to change: Communication Strategy Go-to-market Strategy Pricing/revenue Strategy ExistingNew Existing New Where to Go After First Success?

Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session Renowned leader in rich media Best in providing digital marketing solutions across multiple channels Explain and create awareness for rich media The out of banner ad platform The rich media platform The unified digital marketing solution Change in Positioning