This document provides a history and overview of key trends in the digital advertising industry from the 1990s to present. It discusses the fragmentation of media sources and audiences, the growth of automation and programmatic buying through real-time bidding exchanges. The complexity of the current ecosystem is examined, with a prediction that consolidation among the hundreds of vendors is needed. The roles of various players like advertisers, agencies, exchanges, and publishers are mapped out within the programmatic advertising model.

1. The Critical Trends in Digital
Media
By Eric Picard, CEO of Rare Crowds
Built around my deck – 5 Important Memes for the Digital Advertising Industry:
http://www.slideshare.net/ericpicard/

2. History of Digital Advertising
1990 2000 2014
1991
“Public” Birth of
The World Wide Web
1994
First Clickable
Banner Ad
1997
• Pop Up Ads
• Paid Search
1998
Ad Networks 1.0
(e.g. Value Click,
Advertising.com)
2002
• Behavioral Targeting
• Google AdWords
2003
AdExchanges
2005
• Dynamic Creative
• AdNetworks 2.0
2007
Demand-Side Platform
and Real-Time Biddiing
2004-2006
Video and Mobile Point Solutions
(e.g. Tremor, Millennial, YuMe)
2010
Data Management
Platforms
2012
Programmatic Direct
1995
• Ad Servers
• Rich Media Ads Emerge
2013
Native Ads

3. MEDIA FRAGMENTATION
3

4. Huge and Fragmented Ecosystem
Worldwide – Approximately 6,000 Advertisers account for >80% of all ad spending
(~5,000 in US account for >90% of US ad spending)
Most of the WW ad spend controlled by 5 major agency holding companies (6 with Dentsu)
Omnicom WPP Interpublic Publicis Havas
Hundreds of vendors across thousands of implementations, and thousands of internal IT
solutions – few of which communicate with each other
Media ownership rolls up to approximately 60 companies WW – with thousands of holdings
American Media Inc. Belo Corporation Bertelsmann AG Cablevision CanWest Global
Citadel Broadcasting Clear Channel Comcast Community Newsp. CBS
Copley Press Cox Enterprises Cumulus Media Dow Jones Corp. Emmis
Fisher Freedom Gannett General Electric Hachette Filapacchi
Hollinger Journal Register Knight Ridder Landmark Lee Enterprises
Liberty Media Lin TV Corp. McClatchy McGraw-Hill Media General
Meredith Corp. Morris News World News Corp New York Times
Primedia Pulitzer Reed Elsevier Rogers Scripps
Sinclair Standard Radio Stephens Media Time Warner Tribune Company
Advance Publications
Cisneros
Corus Entertainment
Entercom
Hearst
Liberty Group
Media News Group
Pearson
Sony Corporation
Viacom Vivendi Universal Vulcan Inc. Walt Disney Washington Post Young Broadcasting
4

5. Number of Media Types (1700 – 2005)
5

6. Number of Websites
6

7. Number of Blogs (03-07)
7

8. Internet User Growth
8

9. Media Fragmentation Changes Power Base
6,000
Advertisers 6
9,000
Advertisers
Agencies
Millions
Publishers
1977
2012
Hundreds
Publishers
9
>500,000
Advertisers
>400,000
Publishers
Google
Search & GDN
1
Google
$750B
$6B

10. AUTOMATION IS THE FUTURE
10

11. Manual Buy/Sell Process for premium
Reporting &
Analytics
Associate Media
Buyer
Media
Planning &
Buying
Workflow
Ad Operations
Campaign
Management
& Trafficking
Workflow
Billing &
Reconcilliation
Inventory
Availability &
Reservations
(Sales Tools)
Campaign
Management
Workflow
Reporting Billing
Media
Research
Tools
Media Buyer Associate Media
Buyer Ad Operations Billing Coordinator
Sales Executive
Sales Planner
1
2
3
3
5
7
Account Manager
6
8
1. Buyer decides what
web sites to buy
2. Buyer and Seller
negotiate deal
3. Hand off to internal
teams for workflow
4. Buyer ad ops sends
ads to publisher
5. Seller ad ops inputs
ads
6. Buyer reviews
results, compares
reports, compiles
7. Seller sends bill to
buyer
8. Buyer reconciles the
bill and pays
4
11

12. How Impressions are Bought in RTB
It works on a auction based model (think ebay). Each party
makes their bid, the highest bid wins, and pays $0.01 more than
the next highest bidder.
Bid
Which bid will win the impression?
Bid Amount #1 $.50
Bid Amount #2 $.65
Bid Amount #3
(Winning Bid)
$.80
Price Paid $.66

13. REVENUE DRIVERS FOR
PROGRAMMATIC ADOPTION

14. Publisher revenue against inventory
14
Hand Sold
Sponsorships
Hand Sold Premium Inventory
Hand Sold Audience Targeted Inventory
Targeted Inventory sold via Ad Exchanges
Remnant “Wholesale” Inventory sold to Ad Networks
Inventory Packages are made up of inventory from
each layer in the ‘layer cake’.

15. Purchase Funnel to Display Advertising Volume & CPM
Low CPM High CPM
Category
Awareness
Brand
Awareness
Brand
Consideration
Brand
Preference
Purchase
Intent
Purchase
Customer
Retention
Customer
Advocacy
High Imp. Volume Low Imp. Volume
15

16. Brand vs. DR by inventory and revenue
$$$
$$
¢
Brand
DR
Brand
DR Paid Search
DR
Inventory allocation of Online Advertising
within the purchase funnel
Ball Size Represents Proportional Revenue
16

17. Advertising Ecosystem Impression / Dollar Flow
5%
* Includes: Ad Networks, SSPs, Private Exchanges, and Ad Rep Firms
** Includes: Media Agencies, Creative Agencies, Trading Desks
*** Includes: Ad Exchanges and DSPs
This slide represents Display, Video, Mobile – based on Rare Crowds Analysis of Marketplace
FLOW OF ADVERTISING IMPRESSIONS (US)
Note: Ad Servers, Yield Management Systems,
Analytics, DMPs, etc… Take out about 8-10% of spend
in total as they pass through the ecosystem
20%
ADVERTISER
AUDIENCE
Agency**
Keeps
5-25%
Large
Publisher
(Direct
Reserved
“Premium”)
Keeps
75-95%
Large pub
(Remnant)
Keeps
40-80%
Publisher
Aggregator*
Keep
10-80%
(May include
multiple
vendors)
Small-Med
Publishers
Keeps
20-60%
65%
25%
20%
25%
25%
Percent impressions
40%
35%
40%
35%
Ad spend
100%
Exchanges,
DSPs ***
Keeps
10-20%
(may include
multiple
vendors)
FLOW OF AD SPEND (US)
Percent Dollars Captured (in yellow)
25%
5%
Per Impression Price Drops
17

18. INFRASTRUCTURE AND ECOSYSTEM
COMPLEXITY
18

19. Consolidation must happen
19
Hundreds of vendors in the ad tech ecosystem
• Each sector has significant number of competitors
• Probably not enough ecosystem scale to support more than 3 vendors per
category
• Consolidation will happen quickly once it starts
Ultimately there will be a handful of platform ‘stacks’
• One will be Google
• The others will be some subset or consolidated mix of the following:
• Yahoo
• MediaMath
• Adobe
• IBM
• AppNexus
• AOL
• Facebook
• Amazon
• SAS
• SalesForce.com
• Experian
• Accenture
• Ebay
• Rubicon Project
• Pubmatic
• Etc…

20. 20
Agencies
Buy Side
Technologies
Liquidity
Pools
(exchange
types)
Supply Aggregators
(Networks types)
Sell Side
Tech
P
U
B
L
I
S
H
E
R
S
M
a
r
k
e
t
e
r
s

21. 21

22. 22

23. Key Technology Players in the Market
Buy Side Ad Servers DSPs / Buying Tools Exchanges SSPs / Selling Tools Pub Side Ad Servers

24. The Google Stack
Ad Networks
Ad Sense
AdMob
Mobile
Publishers
DFP
DFA Google
Ad
Words
AdSense
Advertisers
Ad
Agencies
Data
Companies
Other
Vendors
Other
vendors
24
AdMeld
/ EDA
Invite
Media /
DCLK Bid
Manager
Google
Display
Network
Google / Doubleclick Ad Exchange

25. We're just at the beginning of the digital revolution
• Tablets may be the biggest driver we have ever seen of transition from
consumption of media (especially print) to digital delivery
• Connected Televisions are another huge driver of digital consumption
• This includes Xbox, Roku and other set top boxes
• Different media are good at different things, we’re still trying to determine what
new media types are good at
• Traditional media companies have intentionally slowed adoption of digital
because they get so much more money per ‘impression’ in traditional media
• The floodgates are opening up, and traditional media companies are embracing
digital completely
• The world is moving toward a programmatic media future!
25