Pubmatic audience selling part 1

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  • 2. Advertising ain’t what it used to be, Anonymous Andy.Advertisers and agencies are evolving theirstrategies to reach their target audience based on theirinterests, because in a world where ads are everywhere,individually tailored ones are the most effective.
  • 3. True that.Audiences are comprised of individuals with a uniqueset of interests, and online publishers have the greatestadvantage of any advertising medium to deliver individuallytailored, interest-based advertising.
  • 4. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel 86% of agencies intend to leverage audience targeting in 2011. Better targeting of ads is the #1 incentive for advertisers to increase online ad spending. If agencies and advertisers are interested in audience buying, publishers should be thinking about audience selling. PubMatic + Digiday Study 2010, Forrester
  • 5. 2011Audience Selling Augments thePublishers Existing Selling Strategy The Holistic Publisher Selling Strategy DIRECT [ Independent ] • Premium Sponsorships • Custom Campaigns • Non-Standard Ad Units • Guaranteed Placement INDIRECT DIRECT [ With Sell-Side [ With Sell-Side Platform Support ] Platform Support ] • RTB Sold by • RTB Sold by the Publisher DSPs and Ad Nets • Audience Packaging with 3rd Party Data
  • 6. Two Sales Channels, Two WhitePapers, One Holistic PublisherSelling StrategyTHE INDIRECT SALES CHANNEL THE DIRECT SALES CHANNEL Q1 2011 Q2 2011These white papers can be downloaded at copies can be requested by contacting us directly at
  • 7. Contents5 User Opinions on Audience-Based Advertising17 The Publisher Audience Selling Opportunity29 RTB for Publisher Audience Selling39 Publisher Transparency and Controls for RTB47 The Two Channel Audience Selling Strategy for Publishers52 Conclusion54 About PubMatic
  • 8. User Opinions on Audience-Based Advertising5
  • 9. Privacy issues have been part of the discussion at nearly every conference in theonline advertising space for the better part of two years. Most of us that work in onlineadvertising have our own personal opinions about how audience data is collected for thepurpose of advertising. And while every person that works in the online advertising spaceis also an Internet user, it is fair to say – no matter where you fall on the user privacyadvocacy scale – that individual opinions from people that work in online advertising donot represent the majority of the population. Clearly, if you work in online advertising, youknow more about how online advertising works than the general population.User privacy is paramount, no doubt, but despite all the discussion about privacy in ourindustry, at universities and now on Capitol Hill, little public data currently exists aboutwhat the U.S. general population actually understands about how online advertisingworks and how users feel about it.To be sure, studies do exist, but until now, there haven’t been any studies that askInternet users what they know about online “tracking” and how they feel about it acrossthree critical stages: Before they know how it works, after they know how it works, andafter they know how it works and with an understanding of the value-trade offs. 6
  • 10. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Audience-Based Advertising is Interest-Based Advertising DEMOGRAPHIC + CONTEXTUAL + BEHAVIORAL [ 3RD PARTY ANONYMOUS DATA ] Audience Selling is the act of publishers leveraging advanced audience targeting data, either directly through their sales forces or indirectly via intermediaries such as ad networks and Demand Side Platforms (DSPs), in order to sell and deliver relevant advertising based on individual interests. Traditionally, publishers have sold advertising largely based on contextual relevance and limited information about their audience by way of surveys and sparse registration information. With superior audience insights that combine contextual data with anonymous demographic and behavioral data from 3rd parties, publishers can exponentially expand the number of ways their audience can be targeted, which in turn, increases the number of advertisers to sell to. Just because a member of a publisher’s audience is reading about sports, doesn’t mean that audience member’s only interest is sports. That audience member may very well be in the market for a new car, computer, or perhaps looking to make home improvements. That audience member is valuable to a wide variety of advertisers, and advertisers will pay a premium to reach them if they know it is their target audience. Leveraging robust anonymous audience data, publishers can see their audience in new ways, have a better understanding of their interests, and deliver advertising that is more relevant to their audience. The result is a better user experience for the audience, better performing campaigns for the advertiser, and new monetization opportunities with greater ad revenue for the publisher.7
  • 11. 2011The Audience is at theCenter of the Data-DrivenAdvertising Ecosystem PUBLISHER ADVERTISER DATA PROVIDERS AUDIENCE AGENCY AD NETS DSPsYet, despite all of the industry discussion around userprivacy and interest-based advertising, little informationexists about how users feel about it. 8
  • 12. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Q: How do users feel about having anonymous data collected about them in order to deliver interest- based, relevant advertising? A: It depends on how much information they have. Semantics matter, especially when every word is a keyword. If someone asked you if you’d rather be “tracked” or “have anonymous data collected about your browsing behavior,” what do you think you’d choose? Perhaps one sounds better to than the other, but one thing is clear - it is impossible to make an informed decision about either one without having a clear understanding of what “tracked” and “anonymous data collected about your browsing behavior” means. As an industry, we make a lot of assumptions about how Internet users feel about anonymous online behavioral tracking without anybody really asking them how they feel. During the course of creating this white paper, we were unable to find even one study that asked Internet users how they felt about having some of their anonymous online behavior collected for the purpose of advertising, while also asking if they understood what that same tracking meant.9
  • 13. 2011Understanding of TwoTypes of Data INFERRED DECLARED+ No PII (Personally Identifiable + The user actively and knowingly Information) such as one’s name, declares information about oneself address, etc. + This data is NOT passed for+ Based on anonymous online the purpose of interest-based browsing behavior advertisingWith the limited number of studies that exist on useropinions about interest-based advertising…• It isn’t clear that users understand different types of data and how it is collected• It isn’t clear that users understand that behavioral tracking is based on inferred (anonymous) data• It isn’t clear that users understand the benefits of inferred (anonymous) data collection. 10
  • 14. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel User Opinions on Audience-Based Advertising + Survey of U.S. Internet Users The Internet user, the online publisher audience, is the center of our data-driven advertising ecosystem – and their privacy is paramount. Whether through self-regulation or Congressional legislation, Internet users should be able to choose what data collected about them can be used for the purpose of online advertising. The outstanding question is, when Internet users are presented with the option of deciding what type of data collection they support or do not support, do they have enough information to make a decision that is best for them? And will their opinion change depending on the amount of information they have? In order to find out the answer to those questions, PubMatic commissioned an independent online research firm, Knowledge Networks, to conduct a survey of 500 U.S. Internet users. The study was conducted in early 2011 and included a representative, random sample of individuals that categorized themselves as “Internet users.”11
  • 15. 2011Key Takeaway #1Users dont understand that the 3rd party data used forinterest-based advertising is anonymous. When the survey participants were asked if they knew that some of their online behavior might be tracked about them for the purpose of advertising, 71% ACKNOWLEDGED THEY KNEW. When the survey participants were asked if they knew the online data collected about them for the purpose of advertising was anonymous, ONLY 40% UNDERSTOOD IT WAS ANONYMOUS. 12
  • 16. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Key Takeaway #2 Users are far more accepting of interest-based advertising when they understand that the 3rd party data used is anonymous. When asked without an understanding that only anonymous data is used for interest-based advertising, 64% DISAPPROVED. When asked after understanding that only anonymous data is used for interest-based advertising, 40% OF THOSE WHO HAD DISAPPROVED CHANGED THEIR MIND AND APPROVED.13
  • 17. 2011Key Takeaway #3The more users understand the benefits associated withinterest-based advertising, the more they are supportive of it. When the survey participants were asked how they felt about having online data collected about them - without understanding it is anonymous data - for interest-based advertising, 64% DISAPPROVED. When the survey participants understood that the data collection was anonymous and they understood that one of the benefits was more relevant advertising, 40% CHANGED THEIR MINDS AND APPROVED. When the survey participants understood that the data collection was anonymous and they understood the benefits included more relevant advertising AND that it helped subsidize free content, 53% CHANGED THEIR MINDS AND APPROVED. 14
  • 18. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Knowing the "How" and "Why" Changes Everything The majority of Internet users say they don’t like having their browsing behavior tracked… … until they understand the data collected is anonymous and the benefits are explained. Privacy is paramount for Internet users. And it is fair to say that sentiment is echoed by the vast majority of companies that work within our ecosystem – including advertisers, data providers, DSPs / ad networks, SSPs, and publishers – because at the end of the day, the people that make up our industry are Internet users too. The vast majority of companies in the online advertising ecosystem, including PubMatic, adhere to strict policies that our industry has proactively created to protect the rights of the user. The PubMatic / Knowledge Networks study was not about whether or not legislation should be passed about tracking browsing behavior, because Internet users deserve to choose what information about them is tracked, regardless of whether or not the data collected is anonymous. Internet users should have the ability to easily activate a ‘do not track’ solution. However, the question that has not been adequately answered in previous studies is that when Internet users are given a choice about whether or not they support anonymous online behavioral tracking, will the users be given enough information for them to make a well-informed decision? U.S. Internet users, at present time, do not understand the difference between inferred (anonymous) data and declared (actively given) data, and how those different types of data are used for interest-based advertising.15
  • 19. 2011ConclusionThe PubMatic / Knowledge Networks study concluded that the overwhelming majority of Internet users donot understand how online advertising works, specifically interest-based advertising. U.S. Internet users donot clearly understand the difference between inferred data and declared data and how that data is usedfor advertising. While 71% of the respondents understood that information about them might be trackedonline for advertising purposes, 40% did not understand that online browsing behavior used for onlineadvertising targeting is anonymous.U.S Internet users do not consider the benefits they receive from having anonymous data collected,including more relevant advertising and access to free content, when simply asked how they feel aboutanonymous “tracking.”Content doesn’t pay for itself, advertising does. And even in the minority of cases where there is a fee toaccess content, it doesn’t guarantee the advertising goes away. If online content gets to a point wheremost publishers have to charge a fee to access it, that doesn’t mean ads will disappear. There wouldlikely be content pricing wars where publishers have to charge the minimum amount possible to staycompetitive, and they will still have to subsidize lower content fees with irrelevant advertising.According to the PubMatic / Knowledge Networks study, when U.S. Internet users understand the valuetrade-offs for anonymous browsing behavior tracking –specifically more relevant advertising and access tofree content - they are much more supportive of it Not all Internet users are opposed to anonymous datacollection, and during the course of the study, more than half of Internet users that understood the valuetrade-offs changed their minds and were, in fact, supportive of anonymous data collection.It all comes down to understandingWhether it is through self-regulation or legislation, when given a choice about anonymous tracking, Internetusers deserve to have all the facts about how it works and the benefits they derive from it before makinga decision. Once they are appropriately armed with this information, they should have the means at theirdisposal to easily implement a ‘do-not-track’ option if they prefer, or not to. 16
  • 20. The Publisher Audience Selling Opportunity17
  • 21. Audience selling is a broad term, but as it continues to gain momentum as the preferredtargeting method for advertisers, more and more advertisers consider the most effectivetype of audience targeting to be campaigns that include three key types of data:anonymous demographic data, contextual data, and anonymous behavioral data, all ofwhich are often used for a single ad impression. While demographic, contextual, andbehavioral data can all be used on a stand-alone basis for targeting purposes, it is thecombination of all three that enable publishers to deliver true interest-based advertising.Most publishers already sell “audience-based” campaigns and have for years, but asaudience targeting evolves, what some publishers consider to be audience targetingis not what many advertisers consider it to be. A recent PubMatic + Digiday studyshowed that while many publishers believe 80% of their direct sold campaigns includeaudience targeting, advertisers believe only 40% of the inventory they purchase directlyfrom publishers includes audience targeting. Advertisers have seen that 3rd party datasignificantly improves campaign performance, and until very recently, only intermediariessuch as ad networks and DSPs could deliver that for advertisers. The same studyrevealed that 74% of advertisers prefer to use intermediaries to reach their target audience.Premium publishers content is still king with audience selling, even when audiencecampaigns are sold via the indirect sales channel. In part two of “Audience Selling forPublishers,” the white paper will dive much deeper into how premium publisher can takeadvantage of their brand name to sell audience-based campaigns directly – and withanonymous 3rd party data. In the next year, premium publishers will have the opportunityto significantly increase the 20% of audience based ad spend that goes to publishers viathe publishers’ direct sales forces.Adding anonymous data to media drives up the CPM to reach a specific user, butultimately, advertisers want to reach their audience in a premium content environment.One of the major incentives for ad networks and DSPs to work with SSPs is to accesspremium publisher inventory in a way that is consistent with publishers’ objectives. 18
  • 22. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Meet Anonymous Andy He represents a member of your Website’s audience. His real name probably isn’t Andy. You don’t know his real name or any personally identifiable information (PII) – and you don’t want to unless he has actively chosen to give it to you. Hundreds of brands that may want to reach Anonymous Andy based on his inferred interests, if they knew what those interests were. The icons represent Anonymous Andys inferred interests based on 3rd party anonymous data.19
  • 23. 2011Unlock Your Audience Selling PotentialPublishers that previously only sold to advertisers thatmatched their content can now exponentially expandtheir advertiser prospects. n ds f Bra pl eo m Sa t ive t ra Ill us 20
  • 24. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel DEMOGRAPHIC + CONTEXTUAL + BEHAVIORAL Different Advertiser Categories Want to Reach Anonymous Andy Based on His Different Inferred Interests A travel company or airline may want to show Anonymous Andy the latest travel deals because he travels frequently. RETAIL SHOPPING GAMING TRAVEL AUTO WOMENS AIRLINE ELECTRONICS INTERESTS HEALTH & GREEN PETS INSURANCE FITNESS LIFESTYLE PARENTING & EDUCATION SPORTS FINANCE FAMILY FOOD & HOME & MUSIC REAL ESTATE DINING GARDEN21
  • 25. 2011 DEMOGRAPHIC + CONTEXTUAL + BEHAVIORALBecause Anonymous Andy appears to be interested inpurchasing electronics and MP3s, some electronics companies,watch brands, music labels, and shoe companies are interestedin reaching him. RETAIL SHOPPING GAMING TRAVEL AUTO WOMENS AIRLINE ELECTRONICS INTERESTS HEALTH & GREEN PETS INSURANCE FITNESS LIFESTYLE PARENTING & EDUCATION SPORTS FINANCE FAMILY FOOD & HOME & MUSIC REAL ESTATE DINING GARDEN 22
  • 28. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel DEMOGRAPHIC ONLY Demographic data is a critical component of interest-based advertising. Publishers can use proprietary and 3rd party demographic data as a stand alone method for audience targeting, but without behavioral information there is no way to gauge individual interests much less the level of interest, and without contextual data it is difficult to ensure that the audience is found not just on the right site, but on the right page, and near the right content.25
  • 29. 2011 CONTEXTUAL ONLYSimilar to demographic data, contextual data is acore part of interest-based advertising. Publishersoften use 3rd party companies to improve theaccuracy of their contextual targeting, but as astand alone method, contextual targeting does nottake into consideration an audience’s demographicsor interests. As a result, contextual targeting onlycan provide advertisers with the ability to targetrelevant content but without knowing anythingabout the user. In this graphic, the user is on asports-related website, and the advertiser has noinsight into his interests, other than sports. 26
  • 30. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Using All 3 Anonymous Data Types for a Single Campaign DEMOGRAPHIC + CONTEXTUAL + BEHAVIORAL Leveraging 3rd party anonymous data collected across the Web is the key for true interest-based advertising Anonymous Demographic Data: Anonymous demographic information collected across the Web means that more anonymous users have demographic data associated with them. Contextual Data: Contextual data can only be anonymous because it is not associated with a user, but leveraging powerful technology from 3rd party contextual companies increases the accuracy. Anonymous Behavioral Data: Robust anonymous behavioral data cannot be collected by one publisher because it is based on anonymous audience behavior that occurs across the Web.27
  • 31. 2011Determining the Value of DataAnonymous behavioral information helps advertisersdetermine where the user is in the purchase funnel AWARENESS $ THE FURTHER INTEREST DOWN THE FUNNEL, THE HIGHER THE PRICE PAID TO INTENT REACH THEM $$$Recency and Frequency are important indicators for purchase intent.Below are two anonymous users that have inferred interest in travel. The one on the left has visitedtwo travel Websites in the past three months. The one on the right has visited four in the past week.Advertisers are willing to pay more to reach the anonymous user on the right as the anonymous useron the right is more likely to purchase travel tickets sooner. TRAVEL TRAVEL INTEREST PURCHASE INTENT 28
  • 32. RTB for Publisher Audience Selling29
  • 33. Audience-based advertising using 3rd party anonymous data can be sold withoutleveraging Real-Time Bidding (RTB), but RTB is more efficient and provides publisherswith significantly greater revenue than non-RTB audience-based campaigns.Unlike non-RTB audience-based campaigns, RTB offers impression-level optimizationwith unique bidding precision for every ad impression. RTB can also include real-timecreative optimization, which is a major contributor to improved campaign performance.The improved targeting capabilities that RTB provides allows advertisers to pay exactlywhat they believe the combination of media and audience is worth, resulting in greaterROI for the advertiser. In September 2010, PubMatic conducted a multi-party casestudy with four leading DSPs that revealed advertiser ROI for RTB campaigns was 101%improved on average, as compared to the non-RTB campaigns that were monitoredduring the course of the study.The most commonly recognized publisher benefit of RTB is significantly increased revenuefor unsold ad inventory. Very simply, RTB campaigns perform better and provide a clearand measurably higher return on investment for advertisers than non-RTB campaigns dueto their greater efficiency and more precise targeting capabilities.RTB has leapfrogged what was previously considered “remnant inventory” on the CPMvalue chain – PubMatics data shows that over 10% of RTB bids are over $10 CPM. Asa result, RTB is becoming a major part of premium publishers’ overall revenue strategy.Even some publishers that were vocal critics of ad networks in the past are showinginterest and enthusiasm for an RTB-only solution.While the benefits of RTB are clear, it is not a perfect solution. Publisher concerns aboutRTB are generally formed around the possible negative impact that RTB will have ontheir direct sales efforts over the long-term – including channel conflict and data leakage.With technology advancement and improved processes, the risk for publishers using RTBis rapidly shrinking. 30
  • 34. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel RTB vs. Non-RTB AUDIENCE PUBLISHER ADVERTISER EXPERIENCE REVENUE SATISFACTION Based on More Based on Higher Based on Improved AUDIENCE TARGETING WITH RTB Relevant Advertising Priced Campaigns Campaign Performance X Unique bidding/pricing precision X Real-time creative optimization X Audience attributes Ad impression attributes X (ad tag type, atf/btf, etc.) X Site awareness/context relevance AUDIENCE TARGETING (NON-RTB) Unique bidding/pricing precision Real-time creative optimization X Audience attributes Ad impression attributes X (ad tag type, atf/btf, etc.) X Site awareness/context relevance SITE BASED TARGETING (CONTEXTUAL) Unique bidding/pricing precision Real-time creative optimization Audience attributes Ad impression attributes X (ad tag type, atf/btf, etc.) X Site awareness/context relevance31
  • 35. 2011RTB Growth is Unprecedented 50% *$5B+ % of Non- Guaranteed 20% Ad Spend (via RTB) 5% 0% 1.5% 2008 2009 2010 2011 2015Key Drivers:• Effective: RTB significancy improves revenue for publishers and campaign performance• Efficient: Programmatic ad buying is more automated than manual and reduces media waste• In Demand: Agencies have organized Trading Desks to leverage it, RTB will move into the direct sales channel *Based on industry market projections and PubMatic internal growth data 32
  • 36. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel RTB Increases Publisher Revenue Across All Verticals PubMatic’s Ad Revenue Report from October 2010 included the first ever case study that revealed solid evidence that RTB performs better for advertisers than non-RTB campaigns across several advertising verticals. Similarly, the study results concluded that RTB provides consistently higher CPMs for publishers than non-RTB campaigns, across multiple publisher verticals. During the course of four different ad campaigns run by four different DSPs, PubMatic publishers saw aggregate revenue lift of 64% over non-RTB inventory purchased for the same campaigns. The charts below provide further evidence that RTB consistently delivers higher CPMs for publishers across multiple verticals. The data in the charts represent aggregate RTB vs. Non-RTB eCPM by PubMatic publisher vertical during the months of June through December 2010. Two Week Intervals: June - December 2010 NEWS & REFERENCE eCPM Index PubMatic (with RTB) PubMatic (without RTB) WOMENS INTERESTS eCPM Index PubMatic (with RTB) PubMatic (without RTB)33
  • 37. 2011 Two Week Intervals: June - December 2010 GAMINGeCPM Index PubMatic (with RTB) PubMatic (without RTB) TRAVELeCPM Index PubMatic (with RTB) PubMatic (without RTB) ECOMMERCEeCPM Index PubMatic (with RTB) PubMatic (without RTB) 34
  • 38. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel RTB Trends 2011 RTB 2015 RTB vs. Non-RTB vs. Non-RTB (Projected) Percentage of Online Inventory Purchased via RTB 2011 Rich Media RTB 2012 Rich Media RTB vs. Standard Display RTB vs. Standard Display RTB (Projected) Percentage of Online Inventory Purchased via RTB that is Rich Media Sources: PubMatic proprietary data, PubMatic + Digiday Study 2010, Google, ComScore, Mobclix35
  • 39. 2011RTB TrendsPercentage of Percentage of PublisherPubMatic Publishers Revenue FlowingOpted in for RTB Through PubMaticsCampaigns Sell-Side Platform2011 Mobile RTB Standards for RTBvs. Mobile Non-RTB A growing group of companies are working together to improve standardization under the auspices of the OpenRTB group. OpenRTB was founded in 2010 and has a mission of providing open industry standards for communicationPercentage of between buyers of RTB advertising and sellers of publisherMobile Inventory inventory. Initial publisher focused objectives include creatingPurchased a method for automatically retrieving a list of publishervia RTB restrictions for each advertiser and RTB request standards for publisher creative restrictions. To learn more about Open RTB, visit 36
  • 40. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel RTB Campaign Flow for the Indirect Sales Channel [Basic View] DATA PROVIDERS ADVERTISERS PREMIUM DSPs & AGENCIES & AD NETS + Gets better performing campaigns + Gets audience data from data providers + Gains more customers + Sells the audience targeted advertising campaign to agencies and direct advertisers + Identifies where target audiences are in real-time + Implements creative optimization to ensure relevant advertising DEMAND SIDE3720
  • 41. 2011 PREMIUM PREMIUM SELL-SIDE PUBLISHER PUBLISHER PLATFORM AUDIENCE (SSP) PREMIUM • For Publishers: PUBLISHER Single Audience Sales Access Point • For Demand PREMIUM Partners: PUBLISHER Main Conduit to Access Premium Inventory (on behalf PREMIUM of advertisers and agencies) PUBLISHER PREMIUM PUBLISHER+ Facilitates RTB transaction + Receives premium pricing + Gets relevant advertising+ Ensures highest payer gets + Has creative controls in + Has better user experience ad space place and monitored+ Ensures against channel + Gets comprehensive conflict analytics from campaign from PubMatic+ Ensures data safety+ Ensures brand protection SELL SIDE 38 21
  • 42. Publisher Transparency and Controls for RTB39
  • 43. As the number of publishers that open up their inventory for RTB grows, and the overallscale of available RTB inventory grows, publishers need the highest levels of protectionto ensure that RTB is working for them as part of a holistic selling strategy. While it isdifficult to dispute that RTB improves publisher revenue – at least in the short-term -cautious publishers have voiced concern over the lack of control that RTB may present.Specifically, some publishers fear that RTB could possibly have a negative impact on theirdirect sales efforts because of channel conflict, transparency, and excessive pixeling thatcould lead to data leakage and slow ad loading speed.While publisher concerns about RTB are valid, recent technology advancements havebeen made that will allow publishers to have much greater transparency and control overRTB campaigns.One of the most anticipated breakthroughs for publishers in order to help them bettercontrol the pricing of RTB campaigns is the introduction of Dynamic Pricing Floors.Dynamic Pricing Floors will allow publishers to adjust their selling price during the courseof a campaign in order to encourage bidders to offer fair media value for their inventory,while making sure that the fill rate is optimal.Publishers can exercise additional control in an RTB environment by choosing to maketheir web site URL transparent or not in the bidding process. By making their URLtransparent, publishers can ensure the highest value advertising for their premium brand.However, some publishers are concerned about creating channel conflict for their directsales forces. In this case, publishers can go beyond restrictive blocklists by obscuringtheir URL in the bidding process so that advertisers cannot know where their ads willshow up. By using 3rd party content verification solutions, advertisers can ensure thatthey are transacting within a safe environment.Other recent technology advancements to help publishers gain greater control over RTBcampaigns include automated blocklist management, ad loading speed monitoring, anddata leakage protection to help to ensure that publishers are getting a fair value trade-offfrom pixel droppers on their site. 40
  • 44. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Channel Conflict Management & Creative Controls Having advanced brand control tools in place are critical to ensure that publishers achieve the maximum benefits of RTB without having creative violations or creating channel conflict with their direct sales forces. A robust Sell Side Platform (SSP) should scan every RTB ad to ensure compliance, and should provide publishers a full suite of controls to ensure the publisher is protected. These are the control tools PubMatic provides to publishers: Automated Blocklist Manager: • Allows publishers to manage blocklists in one simple to use interface • Automatically scans every ad tag in real-time • Checks both the click-through URL and redirected landing page URL for every ad • Blocks ads that violate the blocklist from being shown to the user Live Creative Monitor: • Allows publisher ad operations teams to view creative as they appear on the publisher’s site • Allows ad operations teams to view creative from around the globe • Alerts PubMatic service team for immediate action where necessary Creative Violations Report: • Allows publishers to view a summary of the ad violations that PubMatic has proactively detected and block from the publisher’s site Ad Inspector Browser Plug-In: • Gathers information on all text, image, and video ads on the publisher’s site • Allows publishers’ ad operations teams to mouse-over any ad and instantly determine which ad network or DSP served the ad and at what price • Alerts PubMatic service team for immediate action where necessary with the ability to easily screenshot and email debugging information41
  • 45. 2011Brand & Pricing ProtectionMalware Detector:• Protects against the threat of malware• Automatically scans for malware across thousands of ad tags• Alerts PubMatic service team for immediate action where necessaryGlobal Ad Speed Monitor:• Monitors global ad-tags for performance and latency• Suspends ad networks if latency crosses pre-determined thresholds• Alerts PubMatic service team for immediate action where necessaryDynamic Pricing Floors:In the coming months, Dynamic Pricing Floors for publishers will be one of the most significantmilestones to date in the evolution of RTB. With Dynamic Pricing Floors, publishers will have theopportunity to get closer than ever to capturing the fair media value of each ad impression.While RTB acquired inventory generally does demand a higher price than non-RTB inventory, thecompanies that represent advertisers and specialize in RTB are continually evaluating and refining theirbidding strategies in order to reach their audience at a price that maximizes their ROI. Publishers shouldhave the ability to evaluate and refine their selling price dynamically, by adjusting floors at the ad tag,user, and advertiser level, which will enable them to set the highest bid levels possible while maintainingoptimal fill rate. 42
  • 46. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Protection Against Data Leakage Publishers work hard to create premium audiences, so why should any 3rd party be able to identify and use it without giving the publishers what they deserve? PubMatic estimates that data leakage costs publishers $1B per year. Data leakage occurs when 3rd parties capture a publisher’s audience data and then use that data to target users outside of the site from which the data was taken, without an appropriate economic interchange. That leads to direct revenue loss for the publisher. This is a problem that has grown considerably in the past two years along with the increasing advertiser demand for audience-based advertising. The practice of dropping pixels is a core component of the data-driven advertising ecosystem that we are a part of, and many publishers have financially benefited from the practice – especially because publishers have, until very recently, lacked the ability to monetize their audience as well as 3rd parties. In the majority of cases, the publisher receives revenue – either directly or indirectly - from the 3rd party pixel droppers, but publishers should have extra protection to ensure they know who is dropping pixels on their site, how often, and what the revenue return is. Data Firewall 2.0: Audience Data Transparency Technology with Expert Guidance for a Better Understanding PubMatic’s Data Firewall is the only technology that helps publishers protect against data leakage by providing them with transparency and financial insight into third party pixeling. Data Firewall 2.0 gives publishers deeper insight into who is dropping pixels on a global level, so they can take action to prevent unfavorable pixeling. 1. White Lists for Pixel Droppers Not all pixel dropping is for collecting audience data. Publishers understand that pixels are dropped for a multitude of reasons including frequency capping, ad delivery confirmation, content verification, and more. Publishers need to be able to mark known and legitimate pixel droppers as safe or white-listed. 2. Protection for International Audience Data Pixel droppers are not restricted to any specific geo location. PubMatic understands this and has expanded its pixel scanning service across the globe. With additional geo locations, the publisher is better protected against pixels dropped on their international visitors. 3. Expansive Pixel Droppers Database PubMatic continues to provide publishers a comprehensive understanding of pixel droppers, how they function, and how publishers can best prevent data leakage. With this release, Data Firewall can now track more than 300 unique pixel droppers.43
  • 47. 2011Transparency Leads to ActionAudience data collection is complex and Data Firewall demystifies the pixel dropping process. As a result ofthe information the publishers receive from Data Firewall, they not only see who is dropping pixels, but theyalso understand the revenue contribution from the pixel droppers. Empowered with the right information,publishers can take action and take back control of their audience data.Actionable steps include:Adding Preferred Partners to the White ListMost of the 3rd party companies that drop pixels are excellent partners for publishers. For thosecompanies, publishers can add them to the white list to filter pixel dropping reports for non-white listed pixeldroppers.Renegotiating Contracts with Current PartnersFor publishers that have direct relationships with ad networks or DSPs that are dropping pixels, thepublisher has a new level of transparency to identify excessive pixel dropping or pixel dropping that isnot providing commensurate financial return. As a result, publishers can renegotiate terms with these adnetworks or DSPs.Adjust Pricing For Directly Sold Audience CampaignsInsights learned from knowing more about the publisher’s audience allows publishers to better understandthe value of their audience. This information can provide guidance to publishers for pricing direct soldaudience campaigns.The following chart represents a PubMatic publisher that has been using Data Firewall since October 2010,and took action based on their learnings. Publisher Transparency Understanding Action Top 10 Internet This leading Internet retailer PubMatic’s services team Armed with data, the Retailer used PubMatic’s Data Firewall advised the publisher in publisher renegotiated to create transparency into identifying excessive and contractual terms with which ad networks, ad unwarranted pixeling in order select ad networks to exchanges, and DSPs were to help the publisher ensure the remove unwanted pixels dropping 3rd party pixels security of its audience data and and reduce the pixel onto the publisher’s web site optimal user experience frequency to match the and how frequently they were revenue that each ad being dropped network provided 44
  • 48. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel RTB Campaign Flow for the Indirect Sales Channel [Detailed View] PUBLISHER 1. Page request and ad call request goes to PubMatic WEB MOBILE VIDEO 4. Dynamic floor pricing is activated - only demand 7. Winning demand partner partners bidding above serves ad to publisher floor price minimum proceed into competition 5. Publisher brand controls activated + Blocklist Manager + Ad Speed Assurance + Malware Detector45
  • 49. 2011 DEMAND PARTNERS WITH ADVERTISER2. PubMatic sends CAMPAIGNS ad request to RTB demand partner pool IN WAITING + AUDIENCE DATA3. Demand partners return bids in real-time6. Notification sent to highest paying demand partner meeting pricing and brand control requirements 46
  • 50. The Two Channel Audience Selling Strategy47
  • 51. Until very recently, publishers generally have not leveraged 3rd party audience data toincrease the value of their ad space for direct sales. The reasons publishers have nottaken advantage of 3rd party data include not understanding the value of the data andthe process and technology challenges of using 3rd party data. Demand-Side Platforms(DSPs) have exploded in popularity and scale specifically because of their ability to utilize3rd party audience data efficiently and effectively. Through the indirect sales channel,DSPs and advanced ad networks are becoming a key component of the publisher’soverall ad revenue strategy.Today, publishers do have the ability to sell media layered with 3rd party data, and withaudience-based campaigns in high demand from advertisers, publishers need a two-channel audience selling strategy. Each sales channel has its own benefits, so publishersshould understand those benefits and use that insight to create a holistic selling strategy.Publishers can take advantage of RTB for audience-based advertising as demand forRTB campaigns from advertisers levering the indirect sales channel continues to grow.According to Google, half of all non-guaranteed ad inventory will be purchased via RTBin 2015, and because of the large inventory scale that the indirect channel provides foradvertisers and the proven success of RTB campaigns, the number of advertisers thatleverage the indirect sales channel for RTB will increase for many years to come.In 2011, publishers have more choices for selling audience based campaigns, includingthrough the direct sales channel. Leveraging SSPs, publishers can now set up privatemarketplaces, which will enable them to sell RTB campaigns directly to agency tradingdesks and advertisers - all with greater control over those RTB campaigns. ThroughSSPs, publishers can also have easy access to 3rd party audience data that they canapply to their media and sell directly.As the opportunities for publishers to sell true audience-based advertising increase andimprove, publishers should have a strategy for balancing the two sales channels that willallow them to take advantage of the benefits that both sales channels deliver. 48
  • 52. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel The Two Channel Audience 2011 Selling Balance [Illustrative] AD PRICE PER IMPRESSION FOR PUBLISHERS Audience-Based Campaigns with 3rd Party Indirect Direct Anonymous Data Direct sold campaigns are at sold at much higher CPMs than campaigns sold by intermediaries because of their guaranteed placement and have no ad networks or DSPs take a percentage of the revenue. OVERALL REVENUE CONTRIBUTION FOR PUBLISHERS Audience-Based Campaigns with 3rd Party Indirect Direct Anonymous Data While direct sold campaigns command higher CPMs, the practice of publishers selling direct audience campaigns with 3rd party anonymous data is relatively new. Additionally, most publishers do not have specific audiences on their own site at large enough scale to satisfy advertiser demand for highly targeted audience campaigns.49
  • 53. 2011 The Two Channel Audience2015 Selling Balance [Illustrative]AD REVENUE PER IMPRESSION FOR PUBLISHERSAudience-BasedCampaigns Indirect Directwith 3rd PartyAnonymous DataDirect sold campaigns will always fetch higher CPMs than ones sold through the indirect sales channelbecause of their guaranteed placement and no ad networks or DSPs taking a percentage of the revenue.OVERALL REVENUE CONTRIBUTION FOR PUBLISHERSAudience-BasedCampaignswith 3rd Party Indirect DirectAnonymous DataRTB will be the preferred method to acquire publisher audience specific inventory. RTB campaigns will beroutinely sold by the publishers direct sales force. Additionally, audience extension will allow publishers tosell RTB campaigns directly for campaigns that run on their site and other sites giving advertisers the scalethey need for highly targeted campaigns.These factors will increase the overall revenue contribution from audience-based campaigns significantly. 50
  • 54. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Publisher Ad Revenue From Audience-Based Campaigns Ad Spend Publisher Ad Revenue Ratio From Audience by Year By Sales Channel [Illustrative] 2011 Direct Indirect $2.2B* 2015 Direct Indirect $5.2B* Example scenarios based on published growth numbers of: • Non-Guaranteed ad revenue & RTB • Audience targeting demand • Revenue opportunity & scale for direct audience selling *eMarketing and Jordan Edmiston Group51
  • 55. 2011ConclusionFor the first time in a decade, online advertising is on the brink of becoming a seller’s market. RTB andprogrammatic ad buying is improving efficiency for advertisers and publishers alike. More importantly, sellside technology is finally catching up to the sophistication of the demand side, allowing publishers to takeadvantage of new selling opportunities and grow their business. As opportunities for publishers increaseand improve, publishers will need to rethink their sales strategy.Specifically, as demand for audience-based advertising continues to grow at a rapid rate, publishers mustdevelop a holistic sales strategy that includes the use of audience data for both the direct and indirectsales channels. By utilizing a combination of anonymous contextual, demographic, and behavioral data,publishers can achieve several key objectives:• Level the playing field with advertiser intermediaries to achieve fair market value for their inventory and significantly increase their revenue• Attract a broader array of advertisers that can be sold to via both the direct and indirect sales channels• Protect the user’s privacy and deliver more relevant and interesting advertisements at the same timeIt’s clear that expertise in audience selling will be a critical part of the publisher revenue strategy in the nearfuture. Publishers must adopt newly created technology to protect their brands from unwarranted risk andtake advantage of the new opportunities that lay ahead. 52
  • 56. AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel Publisher Education Resources Ad Revenue Reports Part of the Annual Ad Revenue Premium Publisher Conference AD REVENUE 2010 REPORT AD REVENUE 2009 REPORT Ad Revenue Report A Supplemental Guide to the 2nd Annual Premium Publisher Conference presented by OCTOBER 8TH, NEW YORK CITY Other technology white papers53
  • 57. 2011About PubMaticOne Holistic Selling Platform to Protect Publishersand Increase Online and Mobile Ad Sales The PubMatic Sell MORE Side Platform for Premium Publishers REVENUE MORE BETTER CONTROL EXPERIENCEMore Revenue More Control Better Experience• RTB for Direct & • Publisher Controlled • High-Touch Expert Indirect Sales RTB Campaigns Guidance• Dynamic Pricing Floors • Creative Control Suite • Trusted Demand Partners• Audience Data • Data Leakage on Demand for Prevention • True Innovation & Direct Sales & Education Thought LeadershipSome of the most respected online publishers have chosen to work with PubMatic,including the Huffington Post, McGraw Hill, eBay, United Online, TV Guide, MSNBC,Scribd, and the majority of the ComScore Top 10.Contact UsPublishers interested in working with PubMatic should contact Sales@PubMatic.comDemand Partners interested in working with PubMatic should contact 54
  • 60. Empowering PublishersContact Us:Phone: (646) 706-7171Publishers contact: sales@PubMatic.comAd Networks contact: adnetworks@PubMatic.comFor General Information: info@PubMatic.comwww.PubMatic.comCalifornia Office: New York Office:444 High St. 100 Vandam St.Fourth Floor Third FloorPalo Alto, CA 94301 New York, NY 10013London Paris Amsterdam Pune Hamburg