IAB Programmatic Ad Revenue Report...players, including ad tech vendors, web publishers, ad...

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:


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


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:


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


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


…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


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


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


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


29

July 2015



Desire forInventory












PwC


30

July 2015



Desire forInventory












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 [email protected]

Russ SapienzaPartner, Advisory [email protected]

Stephanie FaskowManager, Advisory [email protected]

34

PwC New Media GroupContacts

July 2015

Questions?

IAB AdLab Town Hall

IAB Programmatic Ad Revenue Report Presentation

David Silverman, Partner, PwC

Gold Sponsors:


John Swadener

IAB AdLab Town Hall

Publishers Shifting Towards Programmatic:Organizational Choices that Can Make or Break You

Principal, PwC

Gold Sponsors:


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.”


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


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


PwCPwCOctober 9, 2013

New York

John SwadenerPrincipal, Advisory [email protected]

David SilvermanPartner, Assurance [email protected]

Stephanie FaskowManager, Advisory [email protected]

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:


Carl Kalapesi


IAB Fee Transparency Initiative

VP Industry Initiatives, IAB

Gold Sponsors:


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 [email protected] to join the Working Group

2) First meeting to set out scope of work and agree on deliverables (August)


mailto:[email protected]

Questions?

Carl Kalapesi, VP Industry Initiatives, IAB

Gold Sponsors:


IAB Fee Transparency Initiative


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


IAB Programmatic Ad Revenue Report...players, including ad tech vendors, web publishers, ad...

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