Post on 26-May-2020
IAB Programmatic Revenue ReportConducted by PwC
IAB AdLab Town Hall
The IAB is Grateful to Our Gold Sponsors
for Underwriting the Costs Associated with Conducting this Study
http://www.iab.net/iabprogrammatic
Sherrill Mane
IAB AdLab Town Hall:
IAB Programmatic Revenue Report Intro
SVP Research, Analytics and Measurement, IAB
Gold Sponsors:
http://www.iab.net/iabprogrammatic
IAB Programmatic Ad Revenue Report
2IAB Programmatic Ad Revenue Report conducted by PwC
IAB Town Hall July 2015
Agenda:
• Introduction: Sherrill Mane, SVP Research, Analytics and Measurement, IAB
• Report Presentation: David Silverman, Partner, PwC
• Q&A on Report
• Publishers Shifting Towards Programmatic: Organizational Choices that
Can Make or Break You: John Swadener, Principal, PwC
• Q&A on Presentation
• Fee Transparency Initiative Update: Carl Kalapesi, VP Industry Initiatives, IAB
• Q&A on Update
http://www.iab.net/iabprogrammatic
20 Years of Tracking
Internet Ad Revenue
3IAB Programmatic Ad Revenue Report - IAB AdLab Town Hall
Source: IAB Internet Advertising Revenue Report conducted by PwC, FY 2014
In b
illi
on
s
2014
$49.5B
’97 ’98 ’99 ’09’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’10 ’11 ’12 ’13 ’14’96
First Internet Ad Revenue
Report
1996 1997 1998 2000 2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 20142003 2013
Mobile Subformats
Added
Mobile Added
1996
$267M
VideoAdded
Formats Added to Report:Banners,
Sponsorships, Interstitials, Email, Other
Social MediaAdded
Quarterly Internet Ad Revenue Growth Trends, in Billions 1996–2014
1999
Search Added
Rich Media, Lead Gen & Classifieds
Added
David Silverman
IAB AdLab Town Hall
IAB Programmatic Ad Revenue Report Presentation
Partner, PwC
Gold Sponsors:
http://www.iab.net/iabprogrammatic
PwC
IAB Programmatic Revenue Report
2014 Results
www.pwc.com
www.iab.net
PwC
Agenda
6
July 2015
Introducing the IAB Programmatic Study
Survey Methodology
Defining Programmatic
2014 Programmatic Environment
2014 Programmatic Study Findings
Driving Programmatic Forward
About PwC
PwCPwC
About the IAB Programmatic Advertising Study
July 20153
PwC
Programmatic Revenue Study Objectives
8
July 2015
Estimate Revenues associated with U.S. programmatic
selling and buying of advertising
Establish A Benchmarkfor measuring the growth of programmatic advertising
PwC
Study Methodology
9
July 2015
MethodologyThis study used three core methods to derive estimated programmatic revenues which include the following:
• A quantitative survey distributed to leading industry players, including ad tech vendors, web publishers, ad networks, mobile providers and other online media companies that generated revenue from programmatic during 2014.
• In depth interviews with senior executives at leading agencies, publishers and ad tech companies in the programmatic landscape conducted between August 2014 and March 2015.
• Publicly available corporate and industry data .
Study ScopeThe Interactive Advertising Bureau (IAB) retained PwC to produce an independent report and is part of an ongoing IAB mission to provide an accurate barometer of internet advertising growth.
• Altogether 46 companies participated in the study through survey or interview.
• To maintain the confidentiality of participating companies, interviews and survey data collected remain in strict confidence of PwC and only aggregate data is released.
• This report is representative of the 2014 programmatic landscape and does not address more recent programmatic developments such as the decentralization of agency trading desks (ATDs) or native programmatic.
PwC
Defining Programmatic
10
July 2015
“machine based buying and selling of digital media including auction based methods like RTB and private marketplaces as well as the
automation of direct sales, sometimes called programmatic direct”
PwC
Understanding Programmatic Types
11
July 2015
Programmatic type
Type of inventory1
Pricing2 Participation Other terms used in market
Other considerations
Automated Guaranteed
Reserved Fixed One-One Programmatic guaranteed
Programmatic premium
Programmatic direct
Programmatic reserved
Prioritization in the ad server
Deal ID
Data usage
Transparency to buyer
Price floors Unreserved Fixed Rate
Unreserved Fixed One-One Preferred deals
Private access
First right of refusal
Invitation-Only Auction
Unreserved Auction One-Few Private marketplace
Private auction
Closed auction
Private access
Open Auction Unreserved Auction One-All Real-time bidding(RTB)
Open exchange
Open marketplace
1 Reserved Inventory is advertising space on a publisher’s site that is put aside for a specific advertiser for an agreed price.2 Fixed Price is any arrangement where the buyer & seller agree on a flat price that the buyer pays rather than the highest bidder in an auction environment. Source: Programmatic Overview | IAB. Accessed May 1, 2015
PwC
To estimate programmatic revenue, we needed to understand how the ecosystem operated in 2014
12
July 2015
It takes a complex, variable ecosystem to execute programmatic campaigns
PwC
…And the complex ecosystem is made up of many different players
13
July 2015Source: Luma Partners LLC – Display LUMAscape. Accessed July 21, 2015
PwC
Limitations caused by definitional misalignment and reporting standards hindered revenue transparency
14
July 2015
MARKET COMPLEXITY
Programmatic Revenue Reporting
Reporting standards
Financial reporting
Performance reporting
Fee reporting
Definitional misalignment
Programmatic formats
Programmatic types
Programmatic
PwCPwC
Programmatic Revenue - 2014 FY Results
15July 2015
PwC
Programmatic revenues totaled $10.1 billion in 2014
16
July 2015
$10.1
FY 2014
In b
illi
on
s
Source: IAB Programmatic Revenue Study, 2014
PwC
Programmatic revenues totaled $10.1 billion in 2014
Programmatic revenues comprised approximately 20% of total internet advertising revenue in 2014
17
July 2015
$39.4
$10.1
FY 2014
In b
illi
on
s
$49.5
Source: IAB Programmatic Revenue Study, 2014
PwC
Programmatic revenues comprised approximately 52% of display related advertising* in 2014
18
July 2015
52%
48%
Programmatic Non-Programmatic
Display Related Advertising Revenues - 2014
Source: IAB Programmatic Revenue Study 2014, IAB/PwC Internet Ad Revenue Report, FY 2014*Display related advertising includes banner ads, digital video, rich media and sponsorship on desktop and mobile devices.
PwC
Approximately 80% of programmatic revenues were from display banner ads
19
July 2015
80%
20%
Display Banner Ads Other Formats
Programmatic Advertising Formats - 2014
52%
48%
Programmatic Non-Programmatic
Display Related Advertising Revenues - 2014
Source: IAB Programmatic Revenue Study 2014, IAB/PwC Internet Ad Revenue Report, FY 2014*Display related advertising includes banner ads, digital video, rich media and sponsorship on desktop and mobile devices.
PwC
Approximately 80% of programmatic revenues were from display banner ads
20
July 2015
Source: IAB Programmatic Revenue Study, 2014
…but over time we expect to see growth in the other display related formats as more inventory becomes available
80%
20%
Display Banner Ads Other Formats
Programmatic Advertising Formats - 2014
PwC
Open Auction was most prevalent in 2014, but definitional misalignment and reporting limitations across the industry created a blind spot for further breaking out Other type revenues
Open Auction accounted for approximately 70% of programmatic revenues
21
July 2015
70%
30%
Open Auction Other
Source: IAB Programmatic Revenue Study, 2014
Programmatic Advertising Types - 2014
PwC
Open Auction accounted for approximately 70% of programmatic revenues
Strong interest exists for the 30% and we expect growth in Other types (e.g. Unreserved Fixed Rate) as inventory becomes available and programmatic adoption continues
22
July 2015
70%
30%
2014
Future Growth
Source: IAB Programmatic Revenue Study, 2014
PwCPwC
Top 10 companies commanded 66% of programmatic revenues in 2014
66% vs. 71% Programmatic revenue was less concentrated at the top than across total internet advertising revenue
23
July 2015
66%
9%
25%
1-10 11-25 26+
% Share of Total Revenues by Company Rank -2014
Source: IAB Programmatic Revenue Study 2014, IAB/PwC Internet Ad Revenue Report, FY 2014
PwC
2014 ad tech programmatic revenues outweighed publisher revenues
24
July 2015
Publisher vs. Ad Tech Programmatic Revenues - 2014
45%
55%
Publisher Ad Tech
More than ½ of
programmatic revenues came from ad tech
Source: IAB Programmatic Revenue Study, 2014
PwC
The role of ad tech in the value chain is evident through the programmatic ad life cycle from the user’s click to when the ad loads on the browser…
25
July 2015
User clicks on publisher’s URL
www.website.com
www.website.com
BUY
Now!
Winning ad is served alongside publisher’s content
PwC
…and while that process only takes a fraction of a second, it is extremely complex, involving many ad tech components to execute successfully
26
July 2015
PwCPwC
Programmatic Landscape– What We Learned
27July 2015
PwC
Market desire is loud for programmatic shifts
28
July 2015
Ad buyers are seeking more from programmatic, ranging from greater demand for premium inventory to affirmation that programmatic investments are reaching the right audiences
Need for Standardization
Demand for Transparency
Desire forInventory
• Programmatic definition clarity
• Viewability standardization
• Reporting standards
• Brand safeguarding
• Ad fraud & verification controls
• Programmatic (fees)
• Premium inventory
• Reserved inventory
• Capabilities & campaign strategy
• Value of programmatic
PwC
Market desire is loud for programmatic shifts
29
July 2015
Need for Standardization
Demand for Transparency
Desire forInventory
• Programmatic definition clarity
• Viewability standardization
• Reporting standards
• Brand safeguarding
• Ad fraud & verification controls
• Programmatic (fees)
• Premium inventory
• Reserved inventory
• Capabilities & campaign strategy
• Value of programmatic
Ad buyers are seeking more from programmatic, ranging from greater demand for premium inventory to affirmation that programmatic investments are reaching the right audiences
PwC
Market desire is loud for programmatic shifts
30
July 2015
Need for Standardization
Demand for Transparency
Desire forInventory
• Programmatic definition clarity
• Viewability standardization
• Reporting standards
• Brand safeguarding
• Ad fraud & verification controls
• Programmatic (fees)
• Premium inventory
• Reserved inventory
• Capabilities & campaign strategy
• Value of programmatic
Ad buyers are seeking more from programmatic, ranging from greater demand for premium inventory to affirmation that programmatic investments are reaching the right audiences
PwC
Standardization & Adaptability
Trust & Simplification
Availability &Value
• Alignment in definitions and reporting standards
• Ad fraud accountability & enhance ad verification
• Increase volume of premium inventory
• Standardize viewability & performance measurement
• Increase dollartransparency
• Enhance quality & value of programmatic selling
• Adaptability of publisher operations
• Consolidation within the programmatic ecosystem
• Advance cross device targeting capabilities
Changes across the industry need to occur for continued programmatic adoption
31
July 2015
PwCPwC
THANK YOU
32July 2015
PwCPwC
PwC New Media Group
As business, accounting, and tax advisors to many of the world’s leading Entertainment, Media, and Communications (EMC) and Technology (Tech) companies, PwC (www.pwc.com) has an insider’s view of trends and developments driving the industry. With approximately 1200 practitioners serving EMC and Tech clients in the United States, PwC is deeply committed to providing clients with industry expertise and resources. In recent years, our pioneering work in EMC and Tech has included developing strategies to leverage digital technology, identifying new sources of financing, and marketplace positioning in industries characterized by consolidation and transformation. Our experience reaches across all geographies and segments of the EMC and Tech sectors, including broadband, wireless, the Internet, music, film, television, publishing, advertising, gaming, theme parks, computers and networking, and software. With thousands of practitioners around the world, we are always close at hand to provide deep industry expertise and resources.
PwC’s New Media Group was the first practice of its kind at a Big Four firm. Currently located in New York, Los Angeles, Boston, Seattle and the Bay Area, our New Media Group includes accounting, tax and consulting professionals who have broad and deep experience in the three areas that converge to form new media: advanced telecommunications, enabling software and content development/distribution.
Our services include:
• Business assurance services
• Web audience measurement and advertising delivery auditing and advisory
• IAB Measurement Certification Compliance auditing
• Privacy policy structuring, attestation and compliance advisory
• Mergers & Acquisition assistance
• Tax planning and compliance
• Capital sourcing and IPO assistance
33July 2015
PwCPwC
For information about our New Media Group, contact one of the following PwC professionals:New York
David SilvermanPartner, Assurance Services646.471.5421david.silverman@us.pwc.comYork
Russ SapienzaPartner, Advisory Services646.471.1517russell.j.sapienza@us.pwc.com
Stephanie FaskowManager, Advisory Services954.604.1968Stephanie.faskow@us.pwc.com
34
PwC New Media GroupContacts
July 2015
Questions?
IAB AdLab Town Hall
IAB Programmatic Ad Revenue Report Presentation
David Silverman, Partner, PwC
Gold Sponsors:
http://www.iab.net/iabprogrammatic
John Swadener
IAB AdLab Town Hall
Publishers Shifting Towards Programmatic:Organizational Choices that Can Make or Break You
Principal, PwC
Gold Sponsors:
http://www.iab.net/iabprogrammatic
PwC
Publishers Shifting Towards ProgrammaticOrganizational Choices that Can Make or Break You
www.pwc.com
www.iab.net
PwCPwC
Agenda
38
July 2015
1) Create new value propositions
2) Magnify the value delivered
3) Reorganize the team, with new roles and responsibilities and a new compensation structure
4) Become more productive and/or efficient to improve margins
5) Questions
PwCPwCOctober 9, 2013
How can publishers successfully adjust to the increasing demand from ad buyers to shift towards programmatic?
39
July 2015
PwCPwC
#1 Create new value propositions
40
July 2015
Make sure your sales team is focused on solving problems, not just selling impressions.
“We have to get deeper into the value behind
impressions, spending time thinking about
value of time spent and how that translates to
more brand lift and business impact”
Source: PwC Study: Reorganizing for a Digital Future, 2014.
20/80“20% of the sale is upfront, 80% is the
optimization of campaigns on an ongoing basis”
PwCPwC
#2 Magnify the value delivered
41
July 2015
1) Find the right balance of programmatic advertising in the solution/mix
2) Quantify the benefits of the changes in mix
3) Expand the use of inventory that is available programmatically
“We need sales people who can brainstorm
strategically with clients and understand how to create a multi-platform premium proposition to
meet their needs.”
Source: PwC Study: Reorganizing for a Digital Future, 2014.
PwCPwC
#3 Reorganize the team, with new roles and
responsibilities and a new compensation structure
42
July 2015
75%Of study participants
anticipate changing their compensation structure in the
future
>75%Of study participants do not
have the analytical skills required within their current
structure
Source: PwC Study: Reorganizing for a Digital Future, 2014.
PwCPwC
#4 Become more productive and/or efficient to
improve margins
43
July 2015
20%Estimated reduction in sales, ad ops and related
finance headcount over the next 3-5 years
Source: PwC Study: Reorganizing for a Digital Future, 2014.
PwCPwCOctober 9, 2013
New York
John SwadenerPrincipal, Advisory Services312.298.2479John.r.swadener@us.pwc.com
David SilvermanPartner, Assurance Services646.471.5421david.silverman@us.pwc.com
Stephanie FaskowManager, Advisory Services954.604.1968Stephanie.faskow@us.pwc.com
44
PwC Contacts
July 2015
Questions?
IAB AdLab Town Hall
Publishers Shifting Towards Programmatic:Organizational Choices that Can Make or Break You
John Swadener, Principal, PwC
Gold Sponsors:
http://www.iab.net/iabprogrammatic
Carl Kalapesi
IAB AdLab Town Hall:
IAB Fee Transparency Initiative
VP Industry Initiatives, IAB
Gold Sponsors:
http://www.iab.net/iabprogrammatic
Programmatic Fee Transparency
47
July 2015
What we’ve heard
Limited transparency around fees
being charged by the many different
actors along the programmatic
value chain has the potential to
undermine trust and liquidity in the
programmatic marketplace
IAB proposal
New Project on Programmatic Fee
Transparency to:
Explore implications of the
current fee transparency; and
Develop guidance around fee
disclosure and transparency
within programmatic
Next Steps
1) Email programmatic@iab.net to join the Working Group
2) First meeting to set out scope of work and agree on deliverables (August)
http://www.iab.net/iabprogrammatic
Questions?
Carl Kalapesi, VP Industry Initiatives, IAB
Gold Sponsors:
IAB AdLab Town Hall:
IAB Fee Transparency Initiative
http://www.iab.net/iabprogrammatic
IAB Programmatic Revenue ReportConducted by PwC
IAB AdLab Town Hall
The IAB is Grateful to Our Gold Sponsors
for Underwriting the Costs Associated with Conducting this Study
http://www.iab.net/iabprogrammatic