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WATCHING THE

GAP SHRINK BETWEEN PROGRAMMATIC AND DIRECT

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03 Overview

04 Programmatic usage by top 1000 advertisers

05 Programmatic usage by top 500 publishers

06 Programmatic usage by top 3000 publishers

07 Top Programmatic Verticals

09 Methodology

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In the past year brands, publishers and the press have fully seized upon the benefits of programmatic advertising. From AOL’s Programmatic Upfront event at Advertising Week to the IAB standardizing programmatic terminology, 2013 has truly been the year of programmatic. We at Adomic have been eyewitnesses to this trend as we gather unique information about the advertising ecosystem across the roughly top 4,000 publishers on the internet. In this report we have gathered together highlights of our data from 2013 which speak to the impact these trends have had on both advertisers and publishers.

Key findings:

• Advertisers moved significant volumes to programmatic in 2013, bringing direct and programmatic impressions to roughly equivalent volumes.

• Publishers from the largest to the long tail saw programmatic replace a significant share of their direct sold volumes in 2013.

• Top categories using programmatic were still primarily direct response focused, including gifts & occasions, dating and gaming.

Overview

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The chart below plots direct vs. programmatic and ad network volumes since August 2012. We see programmatic increasing in volume from 28% of delivery in December of 2012 to 36% in December 2013.

• At the start of the period, advertisers strongly favored direct over programmatic channels (43% vs. 31%)

• By holiday season 2013 programmatic and direct were roughly equivalent, with most of programmatic’s gain coming at the expense of direct sold impressions

• Ad networks also saw a gain in late 2012/early 2013, but their volume slowly decreased during the remainder of 2013

Programmatic usage by

top 1000 advertisers

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The following chart plots direct, programmatic, and ad network impression volumes on average across the top 500 publishers over the last one and a half years.

• The top 500 publishers are a very interesting group as they contain the largest direct sales teams, however even this premium group saw a roughly 8% decrease in the volume of direct sold impressions since December of 2012.

• Programmatic appears to be the beneficiary of all of this lost direct volume with programmatic increasing roughly 9% in the same time period. However, even at year end there is still a large gap between direct at 53% of volume and programmatic at 31% of volume, highlighting that large publishers are holding back a significant portion of their inventory for directly sold campaigns.

Programmatic usage by

top 500 publishers

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Dir ect % V olume AdNet % V olume Pr ogrammatic % Volume

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The following chart plots direct, programmatic, ad network impression volumes on average across the top 3000 publishers over the last one and a half years.

• When looking at the top 3,000 publishers, we see average direct sales take a precipitous drop from 55% in December of 2012 to 41% in December of 2013.

• As we saw with the top 500 publishers, this decrease in volume is taken up almost exclusively by programmatic, which posts a large increase from 29% in December 2012 to 40% in December 2013.

• The largest increase in programmatic volume appears to have happened between December of 2012 and January of 2013 with a 6% jump over just one month.

• Ad network volume across this time period shows a slight uptick from 16% to 19% on average.

Programmatic usage by

top 3000 publishers

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40%

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10%

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Dir ect % V olume AdNet % V olume Pr ogrammatic % Volume

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While programmatic has shown impressive gains in the last year, adoption has not been uniform by all advertisers. Below we are the verticals that used programmatic the most as a percentage of their volume among the top 1,000 advertisers in 2013.

• Top users of programmatic in 2013 include many direct response categories (Gifts & Occasions, Dating, Fitness & Weight Loss, etc.) This is no surprise as programmatic is very well suited to optimizing ROI for direct response advertisers.

Top Programmatic

Verticals

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40

30

20

10

0

Gifts &

Occ

.Datin

g

Gaming

Fitness

/ Weight L

os s

Home & Gar den

Busines s

Jobs &

Educatio

n

Real Esta

te

Softwar e

60

70

80

Average programmatic % of volume

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MethodologyAdomic uses intelligent crawlers to sample the display ads shown on top publishers. These intelligent crawlers utilize patent pending PathSourcetm technology to decipher the delivery method for each impression served (direct, programmatic, ad network.) The charts and tables presented in this report are based on Adomic’s sample of publishers from August 1, 2012 to December 31, 2013.

Definitions

Programmatic - Impressions delivered through automated placement or optimization. More specifically impressions delivered through: DSPs, SSPs, Exchanges, Trading Desks (VivaKi, Accuen, etc.), and the Google Stack (GDN, AdX, etc)

Ad Network - Impressions delivered through entities that identify themselves as ad networks. (Collective Media, Adconion, Advertising.com, etc.) Note that many ad networks use programmatic technology to source and deliver their impressions, however for the purposes of this report those impressions were included in the Ad Network counts.

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Adomic provides breakthrough transparency in digital advertising. The Company’s patent-pending technology analyzes digital advertising activity and delivers actionable intelligence to many of the world’s largest advertisers, agencies, publishers and adtech providers. Adomic users have a unique competitive advantage - real-time data covering more than 20,000 advertisers, 4,000 publishers, 200+ ad services, and 1.5 million creative executions. By delivering on the promise of transparency in digital advertising, we make business more efficient and more effective for all industry players.

For more information or to schedule a demo, please contact: Carey Fischercarey@adomic.com310.913.3152

Adomic 1411 5th St., Ste 405Santa Monica, CA 90401(310) 382-1577www.adomic.com

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