Reinventing the videoadvertising marketWhy Teads is growing at breakneck speed

SHAPING THEFUTURE OF VIDEOADVERTISING

WHERE WE COME IN

PORTFOLIO STORY

WHY WE INVESTED

TRENDS TO WATCH

GIMV NEWS

Entrepreneurial lessons from our portfolio companies

Dear,

We are pleased to share the fifth edition of Gimv’s Insights. In additionto a brief update on Gimv’s strategy and portfolio, our goal is toprovide you with a number of important business insights thatillustrate our investment strategy. Specifically, we take a closer look atthe future of video advertising with our portfolio company Teads(formerly Ebuzzing). We hope you enjoy the article.

Kind regards from the Gimv team

SHAPING THE FUTURE OF VIDEO ADVERTISING

Demand for video is booming

Perhaps you have noticed that you are watching a lot more online videothis year. Facebook rolled out auto­play videos last year and as a result saw a551% increase in the number of content views, making it the second biggestvideo site. Leader YouTube says it serves over 6 billion hours of video contenteach month, up 50% from the previous year. In fact, video increasinglydominates internet IP traffic with Cisco forecasting that video traffic willmake up 79% of all consumer Internet traffic in 2018.

Unsurprisingly, advertisers have taken note. Online video advertising isgrowing rapidly. Analytics company ComScore reported that Americanconsumers watched 24.6 billion streamed video ads in 2013, up 148%compared to the previous year, and the Wall Street Journal reported thatseveral major advertisers are moving advertising spend from TV to onlinevideo. To meet this growing demand, publishers are scrambling to rampup their video inventory. The Huffington Post, for example, says it wants totriple its video content so that by next year 50% of its views come from video.However, most publishers will struggle to achieve such goals, becauseproducing video content is challenging and expensive. As it stands today,there is a supply crunch: industry insiders say that most pre­roll videoadvertising inventory for Q4 this year is already sold out, supply is struggling tokeep up with demand. That might have been bad news for both publishers andadvertisers, but a solution to the problem has recently been brought to marketby Gimv portfolio company Teads. In fact, Teads is reinventing the videoadvertising market in a number of fundamental ways, which is propelling thecompany forward with remarkable speed.

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WHERE WE COME IN

PORTFOLIO STORY

Four dimensions of a disruptive businessmodel Pierre Chappaz, Teads Executive Chairman, describes his company as asoftware company that specialises in digital branding using video. Morespecifically, and in the terminology of the sector, Teads is a video ad techcompany that offers a Supply Side Platform for publishers which allows them tocreate and monetize brand new video advertising inventory, sitting outside videocontent. The company’s technology has been adopted by the world’sleading media, including The Washington Post, Reuters, Forbes and TheFinancial Times, and major brands such as Samsung, Heineken and AT&T areleveraging this opportunity to roll­out their branding campaigns.

Pierre Chappaz ­ Teads Executive Chairman

As Pierre explains it, the company is outplaying the competition in four importantways:

#1 Outstream video format for premium publishers

Advertisers love video because it can be a particularly effective and engagingmedium. Its effectiveness is linked to the quality of the video ad itself, but alsothe context in which it is delivered. The host’s brand power is clearlyimportant; a video ad viewed on a premium publisher site such as The FinancialTimes or The Economist has more clout than a video ad displayed within a lowquality environment. The format matters too. Most inventory on the market is so­called 'pre­roll' or 'instream' advertising, where viewers are forced to watch the adbefore they see the video content they clicked on. Not only does this irritateaudiences but most viewers will bypass the ad as soon as they can.

To address these limitations ­ and the supply problem that publishers face ­Teads has developed ‘outstream' video advertising formats for its global networkof premium publishers. "Our software creates additional video advertisinginventory for publishers because we give them the means to inject video adswithin any content on a webpage, including text­based articles. In otherwords, publishers do not need to produce their own video content in order to

house outstream ads." Brands, for their part, now have access to a much largerinventory of high­quality video advertising opportunities in prestigiouspublications.

#2 [Better] monetizing advertising inventory

In addition to creating advertising inventory, Teads also helps publishers bettermonetize their inventory. Teads offers its specialised sales force services tointerested publishers, it can also help publishers create a private marketplaceso that they can benefit from real­time bidding (RTB) while maintaining controlover their inventory and prices. Publishers can also join the Teads exchange oreasily plug into the programmatic ecosystem of third party trading desks and adnetworks.

#3 Audience­friendly advertising format

Pierre explains: "We are opposed to advertising that forces itself on theaudience. We strive to create positive experiences. That is why all theadvertising we serve is based on voluntary action." The Teads inRead™ format(video in the body of an article, watch The Washington Post example) illustratesthis point well. When scrolling through an article, the video ad will start playingwithout sound once it is fully visible on the screen. To activate the audio the

"To date there had not been enough quality inventoryfor distributing video. Teads has changed that."

Pierre Chapaz ­ Executive Chairman Teads

reader needs to roll the mouse over the video. The sound switches off when themouse is moved away and the video completely disappears when it has beenviewed to the end.

#4 The viewability problem solved

Advertisers rightly expect that their advertising is 'viewable'. It may sound obviousbut the reality is that a growing proportion of purchased internet ads are in fact notseen. In their June 2013 study, ComScore estimated that 54% of all ads werenever seen, a jump up from 31% in 2012. This is a huge concern in the industryand if not solved will erode trust and hobble investment. Teads tackles thisproblem through its business model ­ advertisers only pay for user­initiatedcompleted views ­ and through technical innovations like the View­to­Playconcept, which ensures that a video only plays if it is viewable by the user.

Raising the bar

The above four strengths have made Teads a disruptive contender in the market.Pierre explains: "To date there had not been enough quality inventory fordistributing video. Teads has changed that. We have opened a huge inventory.Moreover, it is high­quality inventory. We have relationships with premiumpublishers such as Reuters, The Telegraph, O Globo, El Economista and Nikkei,our format is respectful of a user's browsing experience, and we guaranteeviewability. Most of our competitors are still focused on lower margin pre­rollinventory; they will have to reinvent themselves."

Managing growth

Teads took a major step forward this year following the merger withEbuzzing. The combined group now has more than 300 employees and is activeon three continents. And growth continues to accelerate. According to Pierre, the

company's year­on­year growth rate is approximately 50% this year and willaccelerate next year. Looking ahead, Teads will stick to its core video businessand focus on international expansion. Pierre: "We launched very successfullyin the U.S. last year. We also opened offices in Latin America and are currentlystarting activities in Korea, Japan, and other regions in Asia. Today we're active in18 countries with 25 offices; by next year we hope to complete our globalexpansion."

Focus on your team

So what were the critical success drivers for Teads? They understood wherethe market was going with video, and crucially, they both spotted and capitalisedon opportunities to outclass the competition. But for Pierre Chappaz, that is allbeside the point. “The most important success factor is the team, thefounders obviously but also the people we managed to attract. As founderswe had a degree of credibility in the market thanks to the success of earlierventures and that really helped attract some outstanding people. That is cruciallyimportant because with the right people you can respond to challenges andopportunities quickly, and most importantly, you can execute well. For example,the outstream format is a nice idea, but we could only succeed if we implementedit well. Execution is everything.”

Video ­ Why Teads is growing at breackneck speed

Why Gimv invested

In 2011, Gimv spearheaded the second financing round ofEbuzzing, the company that later merged with Teads andrebranded itself Teads. At the time, Ebuzzing was a rapidlygrowing specialist in social marketing and had carried out severalacquisitions in the area. Gimv partner Geoffroy Dubus explains:"We were particularly impressed with Ebuzzing'smanagement team and its execution capabilities inmonetizing social media. Social advertising was still nascent atthe time and mainly done through viral video formats. It was clearthat video would be the company's growth engine. Alsoinstrumental to the company's success is the way it hasacquired and built up a network of high­quality premiumpublishers and technologies, which reduces its reliance on theGoogle advertising ecosystem." The investment strengthenedEbuzzing's financial capabilities, allowed it to make keyacquisitions and helped speed up its growth in Europe andbeyond. Since the investment in 2011, the company has grown7­fold.

WHY WE INVESTED

We live and work in a rapidly changing world and market economy. As Gimv's missionis to help build companies that are working on tomorrow's solutions, we need to have afinger on the pulse in the market. Every month we spot a number of innovations, welike to share some of these trends in each edition of Gimv Insights.

Continued urbanization isshaping trends in consumergoods and housing markets

Urbanization continues unabated with52.7% of the world's population nowliving in urban areas. According tomarket researcher Euromonitor this isdriving demand for apartments andspace­saving consumer goods. –Source: http://blog.euromonitor.com/

Webrooming more popularthan showrooming

Studies show that 'webrooming' (whereshoppers do their research onlinebefore buying in physical stores) isactually more popular than'showrooming' (where shoppers try outproducts in physical stores beforebuying online). That's good news forphysical retail stores, but it doeshighlight the importance of a soliddigital strategy. ­ Source:http://www.wired.com/

TRENDS TO WATCH

Trends to watch

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