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Thomvest Mobile Advertising Overview - February 2016

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This is an overview of the mobile adtech ecosystem. Research was conducted by Thomvest Ventures. It covers topics including mobile advertising spend, programmatic advertising, key mobile advertising vendors (i.e DSP, SSP, exchanges & networks), and key trends.

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Thomvest Mobile Advertising Overview - February 2016

  1. 1. Mobile Advertising Overview February 2016
  2. 2. Three trends that make us excited about the mobile advertising opportunity The mobile ad spend will surpass desktop spend in 2016 - eMarketer predicts that mobile ad spend will rise to $69B globally this year 
 (up 71% from 2014) - In 2016, the global mobile ad market will surpass $100B, accounting for more than 50% of digital ad expenditure for the first time - According to eMarketer, mobile accounted for 61% of all programmatic display ad spending in the U.S. in 2015 - Mobile programmatic ad expenditure in the U.S. is expected to surpass $20B by 2017 - MoPub saw brands account for the majority of spend in December 2014 through the holidays - According to MoPub, 60% of its top 25 private marketplace advertisers are brands (as opposed to performance advertisers) - An IAB study showed that brand spend on mobile increased 142% from 2011 to 2013 Mobile real-time bidding (RTB) spend is ramping up Brand ad dollars are flowing into mobile
  3. 3. Agenda Mobile advertising market size and growth The rise of programmatic advertising on mobile Ad formats and targeting capabilities on mobile Key mobile publishers & ad-tech vendors Evolving standardization & regulation environment
  4. 4. Ad spend on mobile is growing at a clip similar to early desktop advertising 4 $2 $4 $6 $8 Broadcast TV Cable TV Internet Mobile Year 1 Year 2 Year 3 Year 4 U.S. Advertising Media Annual Spend Growth for First Four Years ($B) 98% CAGR 72% CAGR 159% CAGR 123% CAGR Source: IAB, PWC, ComScore, Gartner (1949-1952) (1980-1983) (1996-1999) (2010-2013)
  5. 5. Mobile will drive all of the growth in digital ad spend over the next several years 5 $20 $40 $60 $80 2013 2014 2015 2016 2017 2018 2019 $65.9 $57.8 $49.8 $40.5 $28.7 $19.2 $10.7 $25.4$25.2$25.0 $26.6 $29.9 $31.6$32.4 Desktop Mobile U.S. Digital Advertising Spending, Desktop vs. Mobile ($B) Source: eMarketer, March 2015 Desktop: 
 -3.4% CAGR Mobile:
 29.7% CAGR 2016 will be the year mobile ad spend surpasses desktop
  6. 6. Mobile ad spend will be primarily funneled through apps 6 $15 $30 $45 2014 2015 2016 $10.8 $7.9 $5.5 $29.7 $20.8 $13.7 Mobile App Mobile Web U.S. Mobile Ad Spend, In-App vs. Mobile Web ($B) ~3/4s of mobile ad spend is in-app - According to comScore, U.S. consumers spend 6x more time in mobile apps compared to mobile web - 54% of total digital media time is spent in mobile apps, compared to 8% in mobile web Time spent in apps dwarfs mobile web - There is data that advertisers can glean from apps vs. web, most valuable being location & in-app activity - Apps rely on advertising identifiers (IDFA, Google Ad ID) vs. cookies (and third-party cookies are disabled by default on iOS devices) Rich targeting data available in the app environment - Deeper publisher integration via an SDK enables richer ad experience and a more “native” feel - Many app publishers work with vendors who pre-cache ad creative for a better user experience (faster load times) Better ad units in the app environment Source: eMarketer, March 2015
  7. 7. Agenda Mobile advertising market size and growth The rise of programmatic advertising on mobile Ad formats and targeting capabilities on mobile Key mobile publishers & ad-tech vendors Evolving standardization & regulation environment
  8. 8. Mobile programmatic advertising has already overtaken desktop programmatic 8 20% 40% 60% 80% $6 $12 $18 $24 2014 2015 2016 2017 Mobile Programmatic Ad Spend Mobile as a % of Total Programmatic Spend 76% 69% 61% 43% $20.5 $14.9 $9.3 $4.4 43% 61% 69% 76% U.S. Programmatic Mobile Ad Spending, 2014-2017 ($B) 47% CAGR Source: eMarketer, October 2015 Mobile accounted for more than half of programmatic in 2015
  9. 9. Illustrating the ad exchange buying process 9 User Publisher Ad Server, 
 SSP, or Mediation Ad exchanges auction ad requests on a real-time basis, often finishing under half a second. Many types of demand partners can bid on a single ad request. The winner of the bid is notified and the demand partner relays a tag that directs to the advertiser’s ad server to begin ad serving. User arrival initiates ad request. Publishers use various methods to determine ad fulfillment. 1 RTB Exchange 2 Ad content (text, images, video) is distributed to the user’s device via a content distribution network 4 The advertiser’s ad server is called to deploy the ad. This often occurs via a content distribution network. 3 Content Distribution Network Advertiser 
 Ad Server Programmatic RTB Auction Demand Side Platform Agency 
 Trading Desk Ad Network
  10. 10. Illustrating the ad exchange buying process 10 For each inbound ad request, bid requests are sent to bidders, responses are evaluated under an auction, the winner is notified & the ad markup is returned. Ads are usually delivered via a content distribution network (not depicted). RTB 
 Exchange Real-time auction Bidder Real-time decisioning engine 0. Ad Request 1. Bid Request (Auction, Site, Device, & User Data) 2. Bid Response (Bid, Ad URL or Ad Markup) 3. Win Notice (Settlement Price) 4. Ad Markup (If not in Bid Response)5. Ad Delivered Insertion Orders Tag Setup Setup & Traffic Control 
 (Config, Rate Throttling, Request Filters)
  11. 11. Comparing ad networks & exchanges Ad Networks Ad Exchanges Overview Aggregates publisher inventory via technology integrations (SDK, API, Server-to-Server etc.) & segments audiences to sell impressions to advertisers usually via direct sales Marketplace driven by real-time auction of ad inventory. Advertisers buy ads programmatically on an per-impression basis. The auction usually occurs in fractions of a second Ad Buying & Selling Process - Advertisers are sold audiences aggregated from the network’s publishers - Relies on human interaction (RFPs & insertion orders) - Advertisers purchase media with bidders (DSP, ATDs) or self-serve - Relies on integrations with DSPs, ad networks, and SSPs Pricing Model - 10-50% margins; sometimes as high as 80% - Media arbitrage commonly used to improve margin - 10-15% margin - Media arbitrage less common; exchanges provide transparency in pricing Publisher Integration - Publishers integrate directly with ad networks (SDK, API, Server-to-Server) - Publishers can also access ad networks via mediation platforms - Publishers integrate with an exchange via SDKs or APIs - Integrates with ad network intermediates like DSPs, SSPs, networks, and other exchanges Exchanges often provide higher fill rates than networks due to greater diversity of demand sources Exchanges have eroded the media arbitrage model common among ad networks In some cases, private exchanges provide restricted access to specific demand partners to bid on a publisher’s inventory 11
  12. 12. Comparing private & public ad exchanges Public Ad Exchanges Private Ad Exchanges Overview Open marketplace where demand partners bid for ad impressions from publishers. Public exchanges often have self-serve products that allow easy and open access to demand partners to bid on ads. Closed system where select publishers and ad buyers. Publishers often set up markets, select a group of buyers, and dictate market pricing and dynamics. Ad Buying & Selling Process - Multiple publishers can sell inventory - Many advertisers can purchase inventory - Publishers with private exchanges are usually large media houses due to initial IT setup cost - Advertisers are curated by the publisher; usually they are brands / other large advertisers Inventory - More remnant inventory than private exchange - Wider reach and more diverse user segments - Premium inventory from specific publisher Control - Publishers have limited control over which ads are displayed; however, blacklisting and whitelisting sources are often available - Advertisers may not know where ads are placed - Publishers have a wide range of control over advertiser access, ad content, and pricing - Private exchanges are used to facilitate guaranteed or direct deals Key Benefits - Large volume of inventory, often higher fill rates - Access to different categories of publishers & ads - Access to wider audience segments - Higher quality inventory, higher eCPMs - Provides publisher with more control over advertisers and advertisements on their platform - Easy to facilitate direct deals or guaranteed buys Concerns - Lower eCPM, more remnant inventory - Less control for publishers in terms of ads served; however blacklisting and whitelisting is an option - Less transparency for advertisers - Limited inventory and less diverse audience segments - Expensive to setup; usually only large publishers can create a private exchange 12
  13. 13. Agenda Mobile advertising market size and growth The rise of programmatic advertising on mobile Ad formats and targeting capabilities on mobile Key mobile publishers & ad-tech vendors Evolving standardization & regulation environment 13
  14. 14. Several mobile ad formats have emerged, which vary in pricing & performance Banner Video Rich Media Incentivized Native Overview Static images that link to mobile web or app store Video advertisements, often placed with rich media or incentivized Interactive ads, often html-5 based Ads that reward users for engagement (in-app purchases, installs, etc) Ads that are in-stream with the content of the app Ad Types - Partial screen: 320x50, 120x20,300x50, etc - Full-screen: pop-up, interstitial - Interstitial - Pre-, Mid-, Post-Roll - Click-to-view - Incentivized - Interstitial - Banners - Video, click-to-call, deep linking - Offer wall, Video, Banner, Rich Media - In-stream, Video Estimated 
 Average CPM - Full-screen: $3.00 (all OSs) - Banner: $0.60 (all OSs) - $5.50 (all OSs) - $6.60 (iOS) - $3.40 (Android) - Full-screen: $3.20 (all OSs) - Banner: $0.80 (all OSs) - Generally lower than non- incentivized - $5-$50, depending on publisher & content Inventory 
 Volume - Largest inventory available - Relatively low level of inventory, but growing - Moderate level of inventory - Not supported by most exchanges - Not supported by many exchange, but growing Primary Performance Metric - Effective cost per action (CPA) - DR: Cost per completed view (CPV) - Brand: Brand lift or recall - Cost per ad engagement (CPE) - Cost per install (CPI) - Cost per engagement (i.e. downloads) Source: Images from NativeX, Thomvest Research14
  15. 15. All mobile ad types are expected to grow over the next several years 15 $25 $50 $75 2013 2014 2015 2016 2017 2018 2019 $6.9 $6.0 $5.1 $3.9 $2.6 $1.5 $0.7 $27.0 $23.8 $20.6 $16.9 $12.1 $8.1 $4.6 $28.4 $25.0 $21.7 $17.9 $12.9 $8.7 $4.9 Search Banners, Rich Media, Other Video SMS / MMS / P2P Mesaging Other (Classifieds, Email, Lead Gen) U.S. Mobile Ad Spend by Ad Format (Billions, USD) - Mobile video is a top priority for many ad tech co’s - Publishers & media buyers are asking for mobile video - Vungle launched first in-app mobile video ad exchange - Greater adoption of IAB industry standards for mobile video like VAST and MRAID Growing Demand for Mobile Video - MoPub recently launched Native Ads specifications for all publishers - OpenX launched Native O|X, a mobile native advertising exchange - We’re also seeing an emergence of pure-play native exchanges (TripleLift, Nativo, Sharethrough, and others) Exchanges are Launching Mobile Native Ads Source: eMarketer, Flurry, Thomvest Research $0.6 $1.0 $1.6 $2.1 $2.8 $3.3 SMS $0.24
  16. 16. 16 Video, native & interstitial ads are the fasted growing ad formats on mobile These mobile formats have been proven to perform better than standard banners ads, driving up CPMs and prompting more publishers to integrate new ad units Q2 2014 Q2 2015 Video Enabled eCPMs Q2 2014 Q2 2015 Native eCPMs Q2 2014 Q2 2015 Interstitial eCPMs +31% +40% +46% - 50% more publishers with video ad units in Q2 2015 compared to Q2 2014 - According to Nanigans, mobile video ad units have a 39% higher CTR compared to static images - 1073% more publishers with native ad units in Q2 2015 compared to Q2 2014 - According to Fiksu, native ads convert at a rate 4x higher than standard banners - 52% more publishers with interstitial ad units in Q2 2015 compared to Q2 2014 - According to Fiksu, interstitial ads convert at a rate 2x higher than standard banners Source: Mopub Q2 2015 Marketplace Report
  17. 17. 17 Marketers expect to continue using video formats, but native formats may decline in popularity Pre/Mid Roll Video Display Banners Native Rich Media Display Interstitials Interstitial Video Interactive Overlays In-Banner Video IAB Rising Stars 31% 33% 35% 37% 37% 39% 45% 45% 46% 15% 43% 28% 28% 29% 46% 50% 63% 45% Currently Use Will Use in 2016 Source: Trusted Media Brands, Native & Video Mobile Advertising Whitepaper, January 2016 Mobile Ad Formats Current & Planned Usage According to a survey of 283 brand marketers & agency executives - Display banners & rich media formats are expected to decrease most significantly in 2016 - Usage of native formats may begin to wane as well, driven by difficulties in producing and measuring ads in this format - Usage of interstitial and overlay ad formats is expected to increase in 2016, likely driven by high viewability and performance relative to other formats
  18. 18. While the Android OS is more common, iOS devices generate over half of mobile ad revenue 18 - About 70% of the auctions that MoPub, Turn, and Smaato see are for 320x50 banners - According to Smaato, the 320x250 ad size for app and mobile web comprised 21% of inventory in 1H’15 Most Mobile Exchange Inventory is 320x50 - 18% of ad spend on Opera Mediaworks came from Social Networking, followed by News & Information and then Games in Q2’15. Music, Video and Media still comprised a good portion at 15% - Smaato saw spend coming from Entertainment (50%), Social Networking (16%) & Games (13%) at the end of 2014 Greatest Spend from Entertainment & Media - According to Opera Mediaworks and Smaato, Android accounted for more auctions than iOS in Q2 2015 - Android also leads iOS in terms of % of revenue in Q2’15 (48% Android vs. 47% iOS) Android Beats iOS on Traffic Not Revenue Smaato Global Top Operating System Share, Q3 2015 (% of Auctions) Android iOS Other 65% 29% 26% 6% of traffic 44% of revenue of traffic of traffic 52% of revenue 4% of revenue Traffic & Revenue Share by Publisher Category, Q3 2015 10% 20% 30% Business, finance & investing Entertainment Games Music, video & media News & information Social networking % of revenue % of impressions Source: Smaato, Turn, Opera Mediaworks, Thomvest Research
  19. 19. Targeting on mobile is becoming more sophisticated, driven by geo and in-app data 19 - Lat/long data is unique to mobile. However, there are concerns about the accuracy of the lat/long data provided through exchanges - Device IDs allow for behavioral targeting, data enrichment (first- and third-party), and other user level targeting Geo and Device ID are Important to Buyers - MoPub and Nexage have integrated with BlueKai to add third-party data to ad requests - Companies like LiveRamp are offering first-party data onboarding services - Many DSPs and DMPs offer data onboarding services Layering of First- and Third-Party Data - Industry experts admit that parameters in ad requests are not fully utilized for targeted mobile ad buys, even by sophisticated DSPs - Integration with third-party analytics and attribution providers like Apsalar and others are enabling richer user behavior capture Mobile Targeting Still Evolving Demographic Location Device Behavioral Ad Specific Publisher - Age - Gender - Marital Status - Children - Household income - Education - Occupation - Language - Latitude/ Longitude - Zip code - City - State - Country - DMA - MSA - Device ID - Device OS - Device type Carriers - IP address - Screen Resolution - Key words - Time of day - Neustar AdAdvisor Targets - Nielsen PRIZM clusters - Ad size - Ad type and specs (video, banner, etc) - App vs. mobile web - App category and type - Publisher name - Whitelist/ Blacklist Mobile Ad Targeting Paramaters Source: Nexage, Mocean Mobile, Thomvest Research
  20. 20. The challenge for advertisers is connecting users’ targeting profiles across devices - Unique IDs and cookies are deterministic models that are accurate but have limitations across app and mobile web (see right) - Probabilistic models like fingerprinting are less accurate but can work across app and web - Single sign-on is deterministic and works across app and web. However, typically only the provider of the sign-on (FB, TWTR, etc) can track user behavior Limitations of Mobile Attribution Methods - Fingerprinting and single sign-on can be used for cross app-web user measurement - AdTruth, TapAd, and Drawbridge provide methods for app-web and cross device attribution and tracking Cross App-Web Tracking and Attribution - Advertisers are demanding more granular information on conversion and other lower funnel metrics - As brands and, in particular, direct response advertisers enter mobile, ROI measurement will become increasingly important Industry Trend Towards Attribution and ROI ID-Matching Methods In-App Mobile Unique Identifier Matching (Device IDs) Unique ID strings for each mobile device. IDFA for iOS, Advertising ID for Android. Also, Google Play Install Referrer is available for app install attribution. Limited app-to-web attribution for IDFA. Yes No Cookies, Pixel Tags, Click Redirects Various methods on a mobile web browser that provides information on a user’s device and browsing information. Limited usage on Safari. No Yes Device Fingerprinting Probabilistic method that uses non-unique information from user’s device header (IP address, etc) to approximate uniqueness. Biggest limitation of fingerprinting is accuracy. Yes Yes User Log-ins Persistent log-in information across applications, websites & devices. Examples include Facebook, Twitter, and Linkedin accounts. Yes Yes 20
  21. 21. Agenda Mobile advertising market size and growth The rise of programmatic advertising on mobile Ad formats and targeting capabilities on mobile Key mobile publishers & ad-tech vendors Evolving standardization & regulation environment 21
  22. 22. The four largest mobile advertising companies together account for nearly 60% of total revenue 22 25% 50% 75% 100% 2014 2015 2016 2017 33%34%32% 27% 2%3%3% 3% 4%4%4% 4% 20%19%19% 19% 32%32%33%36% Google Facebook Twitter Yahoo! Apple (iAd) Pandora YP Yelp LinkedIn Amazon Millenial Media Other U.S. Mobile Ad Revenue Share, by Company GOOG & FB account for >50% of mobile ad revenue Source: eMarketer, September 2015
  23. 23. Mirroring the broader industry, mobile is the primary growth driver for FB, GOOG, TWTR & YHOO Mobile Ad Products Notable Recent Updates - Facebook Audience Network (mobile ad network) - LiveRail (mobile video, display and native ads) - Mobile app install and engagement ads - Page post video, photo, text ad - Page like, offer, event ads - January 2016 — Facebook Audience Network (FAN) has a $1 billion annual run rate - August 2015 — 88% of Facebook’s monthly active users are on mobile - April 2015 — LiveRail expanded to support non-video ads, including native & traditional units - July 2014 — Acquired LiveRail - April 2014 — Announced launch of mobile ad network to deliver ads on non-FB properties - August 2012 — Launched mobile app install ads - DoubleClick - AdMob (mobile apps) - AdSense for Mobile (mobile web) - Google Mobile Advertising (replaced AdMob) - November 2015 — Debuts programmatic ad sales for native & mobile video - May 2015 — Announced Native Ads beta - August 2015 — AdMob SDK sunset, switch to Mobile Advertising SDK - February 2014 — Deprecation of Android AdMob SDK, to be replaced by Mobile Advertising API - October 2013 — Released Mobile Advertising API which supports AdMob , Doubleclick for Publishers, and Doubleclick Ad Exchange - Mobile app promotion suite; app cards - MoPub Exchange - Twitter publisher network - Promoted tweets, follows, trends, videos, accounts - July 2015 — Announced video app card, optimized action bidding and CPI bidding - June 2014 — Acquired TapCommerce (mobile retargeting) and Namo Media (native ads) - April 2014 — Announced launch of 15 new ad types inc. mobile app install - April 2014 — Launched Twitter Publisher Network which runs self-serve campaigns from on MoPub exchange - September 2013 — Acquired MoPub - Yahoo Gemini (mobile search and native ads); available via Yahoo Ad Manager - Flurry Mobile Ad Network - Yahoo Ad Exchange (Right Media) - Flurry Analytics - February 2015 — Announces mobile in-app advertising network, powered by Flurry - November 2014 — Acquires BrightRoll - July 2014 — Acquires Flurry - February 2014 — Launched Gemini, an ad exchange for mobile search and native ads - February 2014 — Mocean Mobile and Yahoo launched premium mobile ad exchange - September 2013 — Yahoo launched Stream Ads; native ad placements on Yahoo properties 23
  24. 24. Product segments across mobile ad-tech vendors Ad Network Ad Exchange DSP SSP / Mediation Yes Yes Yes No Yes No Yes No Yes No No No Yes Yes Yes Yes No Yes No Yes Yes No Yes Yes Yes Yes No Yes No Yes No Yes No Yes No Yes Yes Yes No Yes Yes Yes No Yes Yes No No Yes Yes Yes No No 24
  25. 25. Ad formats across mobile ad-tech vendors Banner Video Rich Media Incentivized Native Yes No No No No Yes No Yes No No Yes Yes Yes No No Yes Limited Limited No No No Yes No No No Yes Yes Yes No No Yes No No No No Yes Yes Yes No Yes Yes Yes Yes No No Yes No Yes No Yes Yes Limited Yes No No No Yes Yes No Yes 25
  26. 26. Platform, device coverage and exchange type across mobile ad-tech vendors Mobile Web iOS (in-app) Android (in-app) Public Exchange Private Exchange No No Yes No Yes Yes Yes Yes Yes No No Yes Yes Yes No Yes Yes Yes Yes No Yes Yes Yes No Yes Limited (Jumptap) Yes Yes Yes No Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Yes Yes 26
  27. 27. Agenda Mobile advertising market size and growth The rise of programmatic advertising on mobile Ad formats and targeting capabilities on mobile Key mobile publishers & ad-tech vendors Evolving standardization & regulation environment 27
  28. 28. Regulations & standards on mobile have evolved significantly in the last several years - Dec 2015 – FTC issues guidance on native advertising, including information on disclosures used in ads - Jun 2015 – FTC warned publishers will be held responsible for misleading native ads - Sep 2014 – FTC held workshop to discuss transparency in segmentation - Dec 2013 – FTC held workshop to discuss transparency and disclosure in native ads Recent FTC Updates - Mar 2015 – IAB released OpenRTB 2.3 Specs - Dec 2014 – “State of Viewability” transaction report - Apr 2014 – MMA mobile video benchmark study - Mar 2014 – MRC green-lighted Viewable Impressions as a new impression metric Recent Industry Association Updates - Jul 2015 – Google Play allows apps to advertise in Google Play store - Mar 2014 – Google Play updated with additional provisions; clarification on content, in-app payment disclosure, promotion, malware, and ads policy - Feb 2014 – Apple announced it will reject apps that request advertising device IDs but do not show ads Recent Mobile Platform Updates Government Industry Associations Platforms Federal Trade Commission - The FTC is the federal oversight body for the advertising industry - Each state also maintains legislation pertaining to advertising in addition to FTC rules FTC Divisions Related to Advertising: - Division of Privacy and Identity Protection - Division of Advertising Practices - Division of Marketing Practices - Division of Consumer & Business Education Interactive Advertising Bureau - Industry guidelines, education, and events for the online and mobile advertising industry Apple (iOS) - Apple sets rules for advertising within the iOS app ecosystem (App Store) - Apple dictates tracking methods (e.g. IDFA) , ad types, privacy , etc. Mobile Marketing Association - Mobile-specific advertising and marketing association Google (Android) - Google sets rules for advertising within the Android app ecosystem (Google Play) - Google dictates tracking methods (e.g. Advertising ID), ad types, privacy and more Media Rating Council - Organization that sets standards for audience measurement 28
  29. 29. The OpenRTB spec provides industry standards for communication between ad buyers & sellers - The OpenRTB protocol provides open standards for the communication between buyers and sellers of ad inventory - Standards including the bidding protocol, information taxonomies, synchronization, and regulation - The IAB governs the OpenRTB specs and organizes updates with the help of contributing ad tech companies Standardizing RTB Ad Buying - Most exchanges and DSPs comply with OpenRTB standards - OpenRTB specs have helped spur adoption for RTB, particularly in mobile - However, a few notable companies such as Google DoubleClick do not follow the OpenRTB standard. DoubleClick has its own standard Adoption Increasing with Notable Exceptions OpenRTB Consortium Formed - Formed by DataXu, MediaMath, Turn, AdMeld, PubMatic, Rubicon Project - By April 2011, 70 companies joined the consortium and created committees for Video and Mobile Nov 2010 Mobile RTB 1.0 Spec 
 & Blocklist API Spec - Mobile RTB 1.0 Spec provides guidelines for RTB on mobile - Blocklist API Spec provided standardization for blocking ad requests based on specific attributes Feb 2011 IAB Takes 
 Over OpenRTB - The Interactive Advertising Bureau took ownership of the OpenRTB initiative - Organization renamed to the RTB Project Oct 2011 OpenRTB 
 2.0 Spec - Expanded object hierarchy and depth of standards - Expanded IAB categories - Video support - More parameters for bid requests (data, geo, ad type, content, publisher, segment) Jan 2012 OpenRTB 
 2.1 Spec - VAST video over RTB - IAB Tier-2 category support (more granular) - Location source - Clear identification of tablet inventory Oct 2012 OpenRTB 
 2.2 Spec - Greater support for Deal ID - COPPA regulation - Support for new types of video and mobile inventory - Differentiating secure (https) and non-secure - Buyers can send flags to publishers about bot traffic in real-time Apr 2014 OpenRTB 
 2.3 Spec - Adds support for Native Advertising inventory - Targeting and optimization for banner and video extended to native Mar 2015 Source: Nexage, DataXu, IAB, Thomvest Research29
  30. 30. MRAID & VAST specifications inform how ads are designed and served on mobile MRAID VAST Overview - Mobile Rich Media Ad Interface Definitions (MRAID) is an IAB standard to define a common API for mobile rich media ads that run in mobile apps - MRAID is only specific about providing a method for standardizing ad containers for rich media. This provides flexibility in terms of the ad displayed inside the container - Current Spec: MRAID 2.0 - Digital Video Ad Serving Template (VAST) is an IAB spec for a universal XML schema for serving ads to digital video players - VAST is often the preferred way to serve video; as an example, an agency can provide an exchange with a VAST ad tag that allows the agency to serve video assets themselves - VAST tags also allow the demand side, supply side, and exchanges to see and monitor video completions and other behavioral metrics - Current Spec: VAST 3.0 Ad Types - Closing and opening expandables - Inline (ex. a banner) - Interstitials - HTML 5 video - Calendar event - Most types of HTML ad with JavaScript rendering engine - Linear ads (video only) - Non-linear (overlaying image on top of video) - Skippable linear ads - Linear ads with companions - Ad pods (sequences of linear ads) Specifications - MRAID compliant rich media ads will run within MRAID complaint applications from any publisher using an MRAID complaint SDK - Two versions of MRAID: v1 and v2. v1 supports expandable and interstitial ads. V2 adds support for resizable ads and more features - VAST-complaint ad servers must conform to VAST XML schema - VAST-complaint video players must display the ad in a VAST response - Minimum requirements to conform to VAST include adherence to inline & wrapper ads, tracking events, error reporting, & industry icons 30 Why standards matter: MRAID & VAST create a common set of “rules” by which ads are served, measured & reported, allowing advertisers to more quickly and easily build rich ad creative that will run in different publishers’ mobile apps.
  31. 31. Similar to desktop web, mediation plays an important role in the mobile ad ecosystem Publisher Site Mediation LayerAd Request Network 1 Network 2 Network 3 Network 4 Priority Waterfall Mediation allows publishers to manage demand from multiple ad networks. Mediation can be either third-party or created in- house by a publisher. - Publishers integrates mediation SDK into their app - SDK for individual ad networks must be installed, unless the mediation SDK already includes an ad network’s SDK (called a wrapper) - Publishers set rules and parameters for mediation Publisher Integration Process - Mediation vendors create wrappers (explained above) or adapters to allow communication between the network’s and mediation layer’s SDK - Mediation is often offered as a free service. For example, MoPub provides mediation and requires publishers to use MoPub Exchange in mediation stack Mediation - While ad networks can technically be mediated without the network’s consent, almost all third-party mediation providers work with ad networks before launching mediation with that network to publishers Network Integration Process - Simple waterfall – Publisher sets which networks see an ad request first. If the first ad network does not fill the request, it will send request the second and so on - Probabilistic – Mediation solution determines which networks provide the highest eCPM through statistical methods Priority Waterfall 31
  32. 32. Mediation benefits and concerns & mobile mediation providers - Mediation provides publishers with a way to handle multiple ad networks, generally providing more fill than a single ad network - Mediation SDKs that are wrappers (includes the ad networks SDK within their own SDK) provides publishers access to many ad networks without individually installing each network’s SDK - For publishers, switching priority of ad networks in a mediation waterfall is easier with a mediation solution than hardcoding Key Benefits - Ad networks who are lower in the waterfall stack will generally receive worse quality impressions. The lower rank networks often receive impressions from users who have seen ads already and are subject to ad fatigue (lower engagement due to viewing each subsequent ad) - In a simple waterfall, it is difficult to determine the best performing ad networks due to its sequential nature. Well performing ad networks may be masked if put lower in the priority stack - Waterfalls are generally optimized around eCPM but not fill Primary Concerns Mobile Mediation Providers 32
  33. 33. Thank you! For questions or comments, please contact: Don Butler don@thomvest.com Nima Wedlake nima@thomvest.com Mark Prior mark@thomvest.com Thomvest Ventures 203 Redwood Shores Parkway, Suite 680 Redwood City, CA 94065 thomvest.com 33

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