Online Advertising Technology Overview

1. Online Advertising Technology Overview Online Advertising: Technology Overview © 2014 Demand Metric Research Corporation. All Rights Reserved. Technology Overview By: Clare Price, VP Research With: Kristen Maida, Senior Research Analyst November 2014

2. Table of Contents 3 7 10 12 Executive Summary Online Advertising Market Overview Online Advertising Vendor Landscape Evolution of the Landscape 16 About Our Technology Overview Methodology 14 15 Analyst Bottom Line About the Research Analysts 17 About Demand Metric Table of Contents 3 7 10 12 Executive Summary Online Advertising Market Overview Online Advertising Vendor Landscape Evolution of the Landscape 16 About Our Technology Overview Methodology 14 15 Analyst Bottom Line About the Research Analysts 17 About Demand Metric

3. “Half the money I spend on advertising is wasted. The problem is I don’t know which half.” That quote attributed to John Wanamaker, a 19th century retail merchant, is familiar to many of us. That’s the real beauty of Online Advertising platforms. Unlike Wanamaker, modern marketers do know which of their ads are working, converting, selling and driving revenue. Often down to the last click. Even better, not only do marketers know which Online Advertising programs are working and how well, they can change the ads that aren’t performing--in real-time. Today, Online Advertising can be characterized as fast, responsive and immersive. Fast because online ads, especially those on mobile devices, must catch the consumer at the very moment of consideration. Responsive because the ads must respond to behavioral or interest triggers to be relevant to clients. Increasingly, ads are also immersive, requiring interactivity from the user to get the message and issue a call to action. The two biggest trends in Online Advertising are Real-Time Bidding (RTB) and Programmatic Media Buying. RTB enables advertisers to bid for available ad space with publishers at the precise moment a potential customer is looking for that type of solution. Programmatic Media Buying enables marketers to automate the buying, placement and optimization of advertising based on preset parameters for budgets, audience segments, number of impressions and other key criteria for optimizing advertising ROI and reach. This will be covered in more detail later in this report. EXECUTIVE SUMMARY Online Advertising: Technology Overview 3 © 2014 Demand Metric Research Corporation. All Rights Reserved. “Half the money I spend on advertising is wasted. The problem is I don’t know which half.” That quote attributed to John Wanamaker, a 19th century retail merchant, is familiar to many of us. That’s the real beauty of Online Advertising platforms. Unlike Wanamaker, modern marketers do know which of their ads are working, converting, selling and driving revenue. Often down to the last click. Even better, not only do marketers know which Online Advertising programs are working and how well, they can change the ads that aren’t performing--in real-time. Today, Online Advertising can be characterized as fast, responsive and immersive. Fast because online ads, especially those on mobile devices, must catch the consumer at the very moment of consideration. Responsive because the ads must respond to behavioral or interest triggers to be relevant to clients. Increasingly, ads are also immersive, requiring interactivity from the user to get the message and issue a call to action. The two biggest trends in Online Advertising are Real-Time Bidding (RTB) and Programmatic Media Buying. RTB enables advertisers to bid for available ad space with publishers at the precise moment a potential customer is looking for that type of solution. Programmatic Media Buying enables marketers to automate the buying, placement and optimization of advertising based on preset parameters for budgets, audience segments, number of impressions and other key criteria for optimizing advertising ROI and reach. This will be covered in more detail later in this report. EXECUTIVE SUMMARY Online Advertising: Technology Overview 3 © 2014 Demand Metric Research Corporation. All Rights Reserved.

4. This report will also take a close look at the benefits of Online Advertising platforms, the state of the market and the complex ecosystem of Online Advertising. This report will also provide an overview of the top solutions for both general Online Advertising and Mobile Advertising solutions so that organizations can choose the solution that is right for them. From our research, one conclusion is clear: Online Advertising is driving increased revenue and profits. Organizations doing more than 20% of their advertising online should consider investing in an Online Advertising platform. Demand Metric defines Online Advertising solutions as the technologies, tools and platforms that create, purchase, distribute, manage, measure and optimize online media buying across advertising exchanges and publisher private- marketplaces. Online Advertising platforms manage the exchange of media between the demand side (advertisers) and the supply side (apps, websites) for video, display, social and mobile advertising. In the ecosystem of Online Advertising, there are three main ways companies can use to purchase their ads: Directly from the site or publisher (or through that publisher’s affiliate program). Through an ad network such as AdSense (Google) or The Destination Travel Network. Through an online exchange (DoubleClick by Google, OpenX or Yahoo! Ad Exchange) that matches advertisers to publishers. Advertising options range from the traditional Paid Search or Pay Per Click (PPC) and banner ads (web, mobile, social) to the new native and immersive ads that directly link sponsored and unsponsored content and/or require direct participation of the consumer to provide the message. Then there are the marketing options: standard advertising, retargeting, real-time ad versioning, direct response campaigns, dynamic segmentation models, etc. The features of Online Advertising solutions will be discussed more in the State of the Marketing sub-section and the Online Advertising Vendor Landscape section of this report. Online Advertising: Technology Overview 4 © 2014 Demand Metric Research Corporation. All Rights Reserved. This report will also take a close look at the benefits of Online Advertising platforms, the state of the market and the complex ecosystem of Online Advertising. This report will also provide an overview of the top solutions for both general Online Advertising and Mobile Advertising solutions so that organizations can choose the solution that is right for them. From our research, one conclusion is clear: Online Advertising is driving increased revenue and profits. Organizations doing more than 20% of their advertising online should consider investing in an Online Advertising platform. Demand Metric defines Online Advertising solutions as the technologies, tools and platforms that create, purchase, distribute, manage, measure and optimize online media buying across advertising exchanges and publisher private- marketplaces. Online Advertising platforms manage the exchange of media between the demand side (advertisers) and the supply side (apps, websites) for video, display, social and mobile advertising. In the ecosystem of Online Advertising, there are three main ways companies can use to purchase their ads: Directly from the site or publisher (or through that publisher’s affiliate program). Through an ad network such as AdSense (Google) or The Destination Travel Network. Through an online exchange (DoubleClick by Google, OpenX or Yahoo! Ad Exchange) that matches advertisers to publishers. Advertising options range from the traditional Paid Search or Pay Per Click (PPC) and banner ads (web, mobile, social) to the new native and immersive ads that directly link sponsored and unsponsored content and/or require direct participation of the consumer to provide the message. Then there are the marketing options: standard advertising, retargeting, real-time ad versioning, direct response campaigns, dynamic segmentation models, etc. The features of Online Advertising solutions will be discussed more in the State of the Marketing sub-section and the Online Advertising Vendor Landscape section of this report. Online Advertising: Technology Overview 4 © 2014 Demand Metric Research Corporation. All Rights Reserved.

5. Benefits of Online Advertising Platforms You can advertise online without investing in an Online Advertising solution. Marketers can purchase ads directly on a website or through a publisher for placement as they have in traditional media buying or by joining an Affiliate Marketing program. Ad Networks such as Google AdSense, Adversal or Chitika (Leadbolt or Mojiva for Mobile Advertising) continue to be the most popular way to purchase Online Advertising whether that is for paid search, PPC, banner or display ads. However, given the current complexity of the market, the trends toward functionality, such as retargeting, RTB and local geo- targeting, means that any company looking to place 20% or more of its ads online will get a better ROI using an ad exchange and DSP. Success in the rapid fire, high volume exchange environment requires the right tool, which usually means implementing an Online Advertising platform or solution. These are often called a Demand Side Platform or DSP, which automate the purchase of Online Advertising. Online Advertising: Technology Overview 5 Benefits to Demand Side Platforms Online DSPs enable marketing organizations and advertisers to: Build optimal audiences with targeting and retargeting by finely tuning customer segmentation. Reach larger audiences with custom retargeting for discovery. Provide relevant ads based on optimized frequency, placement and timing. Design more effective and efficient ad campaigns. Offer real-time personalization of image/display/mobile ads. Reduce production costs. Optimize ad timing when the customer is in the mood to buy. Reach customers across multiple devices to reinforce message. © 2014 Demand Metric Research Corporation. All Rights Reserved. Benefits of Online Advertising Platforms You can advertise online without investing in an Online Advertising solution. Marketers can purchase ads directly on a website or through a publisher for placement as they have in traditional media buying or by joining an Affiliate Marketing program. Ad Networks such as Google AdSense, Adversal or Chitika (Leadbolt or Mojiva for Mobile Advertising) continue to be the most popular way to purchase Online Advertising whether that is for paid search, PPC, banner or display ads. However, given the current complexity of the market, the trends toward functionality, such as retargeting, RTB and local geo- targeting, means that any company looking to place 20% or more of its ads online will get a better ROI using an ad exchange and DSP. Success in the rapid fire, high volume exchange environment requires the right tool, which usually means implementing an Online Advertising platform or solution. These are often called a Demand Side Platform or DSP, which automate the purchase of Online Advertising. Online Advertising: Technology Overview 5 Benefits to Demand Side Platforms Online DSPs enable marketing organizations and advertisers to: Build optimal audiences with targeting and retargeting by finely tuning customer segmentation. Reach larger audiences with custom retargeting for discovery. Provide relevant ads based on optimized frequency, placement and timing. Design more effective and efficient ad campaigns. Offer real-time personalization of image/display/mobile ads. Reduce production costs. Optimize ad timing when the customer is in the mood to buy. Reach customers across multiple devices to reinforce message. © 2014 Demand Metric Research Corporation. All Rights Reserved.

6. Test advertising strategies, messages and creative design. Experiment with new ways to reach an audience without major production costs and ad spends. Measure response in real-time and immediately adjust advertising strategies. Link ad spend to KPIs. Increasingly, as we see above, the quantifiable benefits to Online Advertising platforms are better converting sales and higher revenue advertising campaigns Benefits to Supply Side Platforms On the other side of the equation, Supply Side Platforms (SSPs) enable publishers to maximize ad revenue as well as ensure their web visitors get relevant advertising that works well with the content the site is providing. Like DSPs, SSPs enable fast, real-time advertising, help fill advertising space at the best available price through RTB and reduce sales costs. Mobile SSPs offer these same benefits to app developers and mobile websites. Most of the Online Advertising platforms reviewed in this report support both DSP and SSP functionally to some extent. Online Advertising: Technology Overview 6 © 2014 Demand Metric Research Corporation. All Rights Reserved. Test advertising strategies, messages and creative design. Experiment with new ways to reach an audience without major production costs and ad spends. Measure response in real-time and immediately adjust advertising strategies. Link ad spend to KPIs. Increasingly, as we see above, the quantifiable benefits to Online Advertising platforms are better converting sales and higher revenue advertising campaigns Benefits to Supply Side Platforms On the other side of the equation, Supply Side Platforms (SSPs) enable publishers to maximize ad revenue as well as ensure their web visitors get relevant advertising that works well with the content the site is providing. Like DSPs, SSPs enable fast, real-time advertising, help fill advertising space at the best available price through RTB and reduce sales costs. Mobile SSPs offer these same benefits to app developers and mobile websites. Most of the Online Advertising platforms reviewed in this report support both DSP and SSP functionally to some extent. Online Advertising: Technology Overview 6 © 2014 Demand Metric Research Corporation. All Rights Reserved.

7. © 2014 Demand Metric Research Corporation. All Rights Reserved. Technology Overview ABOUT DEMAND METRIC Demand Metric is a global marketing research & advisory firm serving a membership community of over 40,000 marketing professionals, CEOs, and business owners with advisory services, custom research & benchmarking reports, vendor studies, consulting methodologies, training, and a library of 500+ tools and templates. Using Demand Metric resources, members complete projects faster and with greater confidence, boosting respect for the marketing team and making it easier to justify needed resources. Our 1,000+ clients range from start-ups to members of the Global 1000. To read the rest of this report, become a Demand Metric member today! © 2014 Demand Metric Research Corporation. All Rights Reserved. Technology Overview ABOUT DEMAND METRIC Demand Metric is a global marketing research & advisory firm serving a membership community of over 40,000 marketing professionals, CEOs, and business owners with advisory services, custom research & benchmarking reports, vendor studies, consulting methodologies, training, and a library of 500+ tools and templates. Using Demand Metric resources, members complete projects faster and with greater confidence, boosting respect for the marketing team and making it easier to justify needed resources. Our 1,000+ clients range from start-ups to members of the Global 1000. To read the rest of this report, become a Demand Metric member today!