t PubMatic’sAd Revenue ’09 Report short extract of the full report –October 2009IMPROVE DIGITAL

short extract of the full report –

The 1st Channel is guaranteed inventory that is directly sold by a publisher’s direct sales forceThe 2nd Channel is non-guaranteed inventory sold through intermediaries

Non Guaranteed Display Forecast

New revenue opportunity

New Revenue Opportunity30% Non-Guaranteed Ad Revenue Growth**201115% Non-Guaranteed Ad RevenueGrowth** 2009$11B in Publisher Ad Revenue$4.1B in Non-GuaranteedPublisher Ad Revenue**200830% of Publisher Inventory Sold By Ad Networks*2007200620072008200920132011*Bain/IAB Digital Pricing Research, August 2008**ThinkEquity – The Opportunity in Non-Premium Display Advertising, May 2009

Drivers of this growthAd Abundance: A continued abundance of available ad inventory that can be much better monetized than in previous years. Data Management: Premium publisher ability to better utilize their audience data and manage data across multiple data providers, which will allow them to sell pre-packed media + data. Pinpoint Targeting: Better audience targeting and segmenting, including a much more sophisticated method of reaching users by “intent.” A Shift in Media Buying: As media agencies improve their technology and continue to see better performing campaigns through the 2nd Channel, they will proceed to use ad networks and ad exchanges more frequently than in previous years. Brand Protection: Significant gains in brand protection capabilities from intermediaries will allow premium publishers to consider the use of 3rd parties selling their inventory less risky. Better Ad Units: New ad units will be created and standardized that perform better than the banner ads that currently dominate the 2nd Channel. Premium Branding Campaigns: As all of the above points evolve, more premium priced branding campaigns will be sold via the 2nd Channel.

The Research – Premium PublishersMethodology All of the data was gathered during one hour sit-down interviews conducted over the course of four months (April 2009 – July 2009). The target publisher list included select members of the US ComScore250 list of publishers. The goal of the interviews was to find out directly from some of the largest publishers in the US what these challenges are in order to allow PubMatic to continue to develop industry leading solutions. Over 30 interviews were conducted with senior executives in the sales or ad operations function. Anonymity of the interviewees was guaranteed in order to receive open and candid input.

THE KEY FINDINGS

Key Finding #1: Revenue Matters Most

Key Finding #2: Drivers for Increased eCPMnot fully clear We asked the following question to the premium publisher executives: “What increased the eCPM for non-guaranteed inventory?” Many of the answers did acknowledge certain factors that contribute to increased eCPM, but many were focused on one or two specific reasons and lacked a full overview. Alternatively, a publisher might have identified several eCPM drivers but not clearly understood how to make those drivers actionable and with which priorities in order to generate more revenue.

Key Finding #3: Publisher feel optimizers exaggerate capabilities There is a consistent sense of frustration and lack of trust from premium publisher executives when working with outside companies to increase non-guaranteed inventory revenue. Select Premium Publisher Answers on What They Believe Solution Providers Exaggerate About (sorted in priority order): Creative management capabilities Who the company’s allegiance is with (Premium Publisher or Advertiser) Technological capabilities Ability to monetize consistently Reporting accuracy Everything

Further to be found in the full reportDemystifying BuzzwordsAn Interpretation of the 2nd Channel EcosystemAd Inventory Naming Chart2nd Channel Ecosystem Map2nd Channel Segment GuideDownload the full report at:www.improvedigital.com/pubmatics-ad-revenue-09-report-is-outwww.pubmatic.com/adrevenuereport

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