Keynote der ProgrammatiCon 2016: Beyond Programmatic - Der Wandel beginnt erst (Dr. Wolfgang Faisst, SAP XM)

1. BEYOND PROGRAMMATIC –
DER WANDEL BEGINNT ERST
CONFIDENTIAL
Wien, 29. September 2016
Dr. Wolfgang Faisst, Head of SAP Exchange Media

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omissions in this document, except if such damages were caused by SAP intentionally or grossly negligent.
Disclaimer

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Let’s talk about the world of digital
media today…

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Global
Marketing
Spending
$522B(
52%)
$984B billion
$400B
$50B $12B (1%)
Adver-
tising
Marketing
Services &
Agencies
Data &
Intelli-
gence
Direct IT
Spending
52% of CMO external spending is for advertising Advertising is shifting to digital media channels
Advertising is most important spending topic for a CMO

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*eMarketer forecast
! Programmatic / algorithmic trading is the use of electronic platforms for entering trading orders with an
algorithm which executes pre-programmed trading instructions whose variables may include timing, price, or
quantity of the order, or in many cases initiating the order by a "robot", without human intervention.
! Widely used in financial services industry by investment banks, pension funds, mutual funds, and other buy-side
(investor-driven) institutional traders, to divide large trades into several smaller trades to manage market impact
and risk.
Population GDP Ad Spend Digital Spend Display Programmatic
0.7%
2.8% 4.6%
14.0%
21.4%
48.9%The programmatic market exploded in 2014. Growth forecast is $22 bn in programmatic in 2016.*
Digital Advertising - Point of Departure
Programmatic advertising outpacing global trends

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Source: Irene Aldridge (http://www.ablealpha.com), wikipedia.org
Digital Advertising - Point of Departure
Adoption of electronic trading in finance as proxy for media
Adoption of electronic trading in finance 2001-2010

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Challenges Description
Inefficient Value Chain
! Various middle men absorbing a significant portion of the media budget
(50-70%)
! Advertiser‘s media departments under-staffed compared
! Often loose control of the outsourcing service providers
Fraud & Viewability
! Software bots creating significant traffic (25-40%)
! Additionally, click shops hired to fake audiences
! Viewability often not guaranteed, but reported & paid
Complex Processes
! Large amount of manual and non-value creating activities
! Long lead times to prepare advertising campaigns
! Compliance issues in buying and payment
Fragmented
Technology Integration
! „Zoo“ of isolated tools per media channel & adformats
! Lack of integration between corporate systems
(in particular marketing system) and advertising systems
! Batch reporting and no real-time optimization capabilities
1
2
3
4
Digital Advertising - Point of Departure
Advertisers & agencies faced with four challenges

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Source: WFA Guide Programmatic Media, 2014
AOR= Agency of Record
ATD = Agency Trading Desk
DSP = Demand Side Platform
Value Adds: i.e. Data Enrichment,
Targeting, Reporting, Verification.
*
1
Digital Advertising - Point of Departure
Inefficient value chain with 60% absorption of ad budget

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Source:Stats of Digital Ad Fraud Q1 2015, Dr. Augustine Fou
2
Digital Advertising - Point of Departure
Fraud & View ability creating an additional loss of 25-40%

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Source: BCG Analysis
Need for a re-engineering of processes within the advertiser and with agencies
3
Digital Advertising - Point of Departure
Advertisers & agencies: Complex processes

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“Ad Tech will become a natural part of an integrated enterprise landscape.”
Source: LUMA Partners
4
Digital Advertising - Point of Departure
Fragmented technology landscape

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Digital Advertising - Point of Arrival
Advantages for a direct model procurement and consolidated
E2E solution stack

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Today (2016) Beyond Programmatic (2016-2018)
Value Chain Fragmented & complex Streamlined value chain; more direct connections
Control Outsourcing & delay in reports 100% transparency & control
Process Cumbersome processes Re-engineered and streamlined processes
Systems
20+ sited tools, no connection to
corporate systems
One system for Adtech , integrated with corporate
systems (complete Adtech & Martech integration)
Metrics Inconsistent measurements Measurable business KPI´s (purchases)
Targeting High media waste (reach) Personalized & context-aware (relevance)
Consumer Huge ad-blocker interest Advertising perceived as value-add information
Return on
media Non-Measurable Measurable & Manageable
Digital Advertising - Point of Arrival
The Transformation: Beyond Programmatic

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Media
Procurement
Agency controls and
operates entire media
lifecycle
Advertiser accesses
agency platforms for
analysis
Advertiser controls
media platforms, agency
executes
Advertiser operates
everything except
trafficking & creatives
Advertiser controls
and operates all
media platforms
Low level Full potential
Empowerment of
Marketing
Reporting documents
days/weeks after
campaign end
Reporting documents and
optimization during
campaign
Online reporting access
for Marketing and
optimization
Online reporting access
for Marketing; real-time
data, optimization
Real-time data and
optimization, most usable
user interface
Data, intelligence
& insight
No leverage of customer-
internal
data (CRM, …)
Initial leverage of
customer-internal data
(manual)
Manual processing of
CRM data & leverage for
advertising
Automated leverage
of customer data with
selected sources
Golden customer record
(all sources) + automated
leverage
Process Automation
Highly manual, partially
non-digital processes
between parties
First (automated) digital
workflows – advertiser
internal
First (automated) digital
workflows – advertiser /
agency
Automated digital
workflows – advertiser /
agency
Seamless digital
processes between all
parties (automated,
integrated)
Technology
Integration
Fragmented landscape
(siloed Adtech, many ad
platforms)
First integration AdTech
/ MarTech (workflow)
+ Consolidated AdTech
platform
+ Further integrations
(e.g. SRM / Ariba)
1 AdTech platform, fully
integrated with corporate
systems
E2E Measurement
Only costs, clicks &
impressions
+ Actions/ conversions
(downloads, purchases)
+ (Store) visits (online,
offline) and activities ?
+ Confirmed transactions
(online, offline)
+ Incremental
transactions (+ related
margins)
Digital Maturity
Digital Advertising - From Today to the Full Potential
Assess your Status

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Digital Advertising - Point of Arrival
Key value levers to transform digital advertising
! Advertising efficiency via premium private marketplace with most transparent brokerage
! Advertising effectiveness: E2E process excellence from planning to measurement to real-time
optimization
! Empowerment for people via simplification of user interface
! Assistance functions & automation powered real-time analytics & optimization capabilities
! Seamless integration: Connecting corporate systems & advertising technology (in particular MarTech &
AdTech) and
! One platform for all media channels
! Leveraging 360° data (internal and external) to drive customer relevancy
! Aggregation of first party, second party and third party data to „golden customer record“
! Attribution of incremental purchases (POS, eCommerce) to digital advertising campaigns
! Measurement and optimization of „Return on Media“
Media
Procurement
Empowerment of
Marketing
Data, intelligence
& insight
Process Automation
Technology
Integration
E2E Measurement
1
2
3
4
5
6

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Programmatic Media Buying Value Chain – “old world” SAP XM media buying value chain – “new world”
Lack of transparency and loss of budget due to ‘middle-man’
economy (intermediaries)
Increased ROI by connecting advertisers & publishers directly
through e-2-e integrated online media network
Media procurement
Premium private marketplace with brokerage model
1

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Empowerment for
marketing & agency
people: Simplification,
Assistance & Automation
2

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Empowerment for marketing people
Media mix optimization powered by algorithms & big data
Source: Harvard Business Review: “Advertising Analytics” (March 2013)
Define the optimal mix!
Siloed
consideration
of channels
(“swim lane”)
Assisted
consideration
of channels
2

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Speedup = 500/30 = 17
10
~0
10
10
~0.......
~0 ~0.......
Duration parallel = 30
10
100
10
100
10
Duration sequential = 500
Duration
Process to
be paral-
lelized
Main memory 125.000 faster than disk Parallelization via multi-core processors
Main Memory
Disk
CPU
Core Core
L1
Cache
L1
Cache
L2
Cache
L2
Cache
L3 Cache
1 NS
3 NS
8 NS
80 NS
SSD: 100 K NS
HD: 10 M NS
In-memory computing
Speed-up of >125K times possible with in-memory vs. disk
2

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Supports
any Device
Any Apps
Any App Server
SAP S/4 HANA
and BW/4 HANA
JSONR Open ConnectivityMDXSQL
Other AppsLocationsReal-timeBig dataMachineUnstructuredTransaction
SAP HANA Platform
SQL, SQLScript, JavaScript, HTML5, SAP River
Replication, Streaming and ETL Integration Services
Search
Application
Function Library
Data Virtualization
Text Analysis &
Mining
Spatial
Database
Services
Stored Procedure &
Data Models
Predictive &
Planning Engine
Business Rules
Application & UI
Services
SAP HANA Platform Converges Database, Data Processing and Application Platform
Capabilities & Provides Libraries for Predictive, Planning, Text, Spatial, and Business
Analytics to enable business to operate in real-time.
SAP HANA: In-memory platform leveraging libraries for
predictive, planning, text analysis, spatial & analytics
2

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Billing Systems &
other
Infrastructure
e.g., invoices, call-by-
call, payment history)
Billing Systems &
other
Infrastructure
e.g., invoices, call-by-
call, payment history)
(e. g., customer service,
shop requests,
complaints, inquiries,
emails, talk recordings)
(e. g., customer service,
shop requests,
complaints, inquiries,
emails, talk recordings)
ERP
(e. g., customer data,
transactions)
ERP
(e. g., customer data,
transactions)
360!!
Customer View
Market Research
e. g., Nielsen, GFK
Social Media
e. g., Facebook, Twitter,
Youtube, Blogs forums,
LinkedIn
ERP
e.g., refine & improve
brand experience, reduce
mark-downs & stock-
outs, payment history
CRM+
e. g., customer service,
complaints, inquiries,
emails, talk recordings
Internal sourcesExternal sources
Mobile Apps
e. g. consumer tracking
Website
(e. g., clickstream, requests)
External Websites
e. g., retail channel
In focus with Big Data
Text and voice
information
Data, intelligence & insight
360° customer view (internal and external)
Wholesale &
Retail (POS)
e. g., purchases, coupon
redemption
POS tracking
information via
beacons & sensors
3

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Marketing Planning
Create digital ad campaign
(incl. brief document)
Create campaign
(automatically) + receive task
for completion
Monitor marketing campaign
progress
Marketing Expert Media Expert
BusinessProcess
Setup ad campaign and settings
(tactics, inventory, targeting).
Send for approval.
Activation of ad campaign
Execution and (auto-) optimize
ad campaign
Marketing Suite
Procurement Expert
Create shopping cart w/ insertion
order
Review and approve
Consolidated Mgmt. Reporting
Process Automation
Marketing, media and procurement in one workflow
Supplier Relationship Management
4

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MarTech AdTech MarTech
! Comprehensive planning w
ithin advertiser‘s syst
em
! Campaign definition
! Data management
1. Plan 2. Execute 3. Measure
! E2E reporting
! Steering in real-time
! E2E advertising
! Execution across all digital cha
nnels
! Procurement optimization via
bidding engine
Media Mix Optimization.
Attribution
Digital/OnlineOwnCh.
Search (e.g. Google)
Video
Smart TV / Digital Radio
Social (e.g. Facebook)
DooH / IoT
Mobile
Web
Print
TV
Radio
Offline
Email / SMS
Social
Apps
Web
Marketing Suite
Marketing Mix
Optimization
Consumer
Technology integration
One simple platform for all customer channels
5

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Technology integration
Connecting all media channels to enable advertising along the
customer journey
In 500 m you reach
Starbucks
Early Bird Coffee
! 5
Coke to go
at just ! 0.50!
Stop at the next
gas station
in 5 km
5

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Balance Check Smart TV App
Thanks for visiting!
Hope you enjoyed
our services
Earned Savings Points
Mobile payment Office
Shopping
Driving home
End Office
Technology integration
Connecting all media channels to enable advertising along the
customer journey
5

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6
E2E measurement
Closed loop from planning to buying and optimization
SAP XM
Partner Solution
Other SAP Solutions
1st Party Data
3rd Party DMP
Media Planning & Mgmt Execution Publisher Corporate Systems
MediaMixPlanning&
Optimization
Desktop
Mobile
Video
Social
DooH
Search
Procurement
Desktop
Mobile
Video
Social
DooH
Search
SAP XM
ERP
CRM
eCommerce
Website, apps
E2E measurement and feedback loop
Marketing mgmt
Direct marketing
Handover to
compliant
approval

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Digital Advertising - Point of Arrival
Making “Return on Media” measurable & manageable
Return on
Media
RETURN
Current Return
(Campaign)
Incremental
revenue
Price Gross Price
Discounts
Volume
Reach
Conversion
Impressions
Clicks
Action
…
Future Return
(Brand Value)
…
…
Investment
MEDIABUDGET
Earned
Owned
Paid
TRADITIONAL
TV
Print
Radio
…
DIGITAL
Desktop
Mobile
Social
DooH
…INTERNAL
COSTS
PROCESS/PEOPLE
Time
Costs
IT SYSTEMS
Time
Costs
price x volume
+ fees &
commissions
price x volume
+ fees &
commissions
DIVISION
MULTIPLICATION
MULTIPLICATION
ADDITION
ADDITION

28. THANK YOU!
Dr. Wolfgang Faisst
STRICTLY CONFIDENTIAL
wolfgang.faisst@sapexchange.media
+49 160 90432577
www.sapexchange.media