Post on 02-Nov-2014
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PART ONE OF A TWO PART SERIES:
REAL-TIME BIDDING & THE
INDIRECT SALES CHANNEL
Advertising ain’t
what it used to be,
Anonymous Andy.
Advertisers and agencies are evolving their
strategies to reach their target audience based on their
interests, because in a world where ads are everywhere,
individually tailored ones are the most effective.
True that.
Audiences are comprised of individuals with a unique
set of interests, and online publishers have the greatest
advantage of any advertising medium to deliver individually
tailored, interest-based advertising.
86% of agencies intend to leverage audience targeting in 2011.
Better targeting of ads is the #1 incentive for advertisers to increase online ad spending.
If agencies and advertisers are interested in audience buying, publishers should be thinking about audience selling.
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
PubMatic + Digiday Study 2010, Forrester
Audience Selling Augments the
Publisher's Existing Selling Strategy
The Holistic Publisher Selling Strategy
DIRECT [ With Sell-Side
Platform Support ]
• RTB Sold by the Publisher
• Audience Packaging with 3rd Party Data
INDIRECT [ With Sell-Side
Platform Support ]
• RTB Sold by DSPs and Ad Nets
2011
DIRECT
[ Independent ]
• Premium Sponsorships
• Custom Campaigns
• Non-Standard Ad Units
• Guaranteed Placement
Two Sales Channels, Two White
Papers, One Holistic Publisher
Selling Strategy
Q1 2011
THE INDIRECT SALES CHANNEL
Q2 2011
THE DIRECT SALES CHANNEL
These white papers can be downloaded at PubMatic.com/AudienceSelling.
Hard copies can be requested by contacting us directly at Sales@PubMatic.com.
Contents
5 User Opinions on Audience-Based
Advertising
17 The Publisher Audience Selling Opportunity
29 RTB for Publisher Audience Selling
39 Publisher Transparency and Controls for RTB
47 The Two Channel Audience Selling Strategy
for Publishers
52 Conclusion
54 About PubMatic
User Opinions on Audience-Based Advertising
5
Privacy issues have been part of the discussion at nearly every conference in the
online advertising space for the better part of two years. Most of us that work in online
advertising have our own personal opinions about how audience data is collected for the
purpose of advertising. And while every person that works in the online advertising space
is also an Internet user, it is fair to say – no matter where you fall on the user privacy
advocacy scale – that individual opinions from people that work in online advertising do
not represent the majority of the population. Clearly, if you work in online advertising, you
know more about how online advertising works than the general population.
User privacy is paramount, no doubt, but despite all the discussion about privacy in our
industry, at universities and now on Capitol Hill, little public data currently exists about
what the U.S. general population actually understands about how online advertising
works and how users feel about it.
To be sure, studies do exist, but until now, there haven’t been any studies that ask
Internet users what they know about online “tracking” and how they feel about it across
three critical stages: Before they know how it works, after they know how it works, and
after they know how it works and with an understanding of the value-trade offs.
6
7
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Audience Selling is the act of publishers leveraging advanced audience targeting data, either
directly through their sales forces or indirectly via intermediaries such as ad networks and Demand
Side Platforms (DSPs), in order to sell and deliver relevant advertising based on individual interests.
Traditionally, publishers have sold advertising largely based on contextual relevance and limited
information about their audience by way of surveys and sparse registration information. With
superior audience insights that combine contextual data with anonymous demographic and
behavioral data from 3rd parties, publishers can exponentially expand the number of ways their
audience can be targeted, which in turn, increases the number of advertisers to sell to.
Just because a member of a publisher’s audience is reading about sports, doesn’t mean that
audience member’s only interest is sports. That audience member may very well be in the market
for a new car, computer, or perhaps looking to make home improvements. That audience member
is valuable to a wide variety of advertisers, and advertisers will pay a premium to reach them if they
know it is their target audience.
Leveraging robust anonymous audience data, publishers can see their audience in new ways,
have a better understanding of their interests, and deliver advertising that is more relevant to their
audience.
The result is a better user experience for the audience, better performing campaigns for the
advertiser, and new monetization opportunities with greater ad revenue for the publisher.
Audience-Based Advertising is
Interest-Based Advertising
DEMOGRAPHIC + +CONTEXTUAL BEHAVIORAL
[ 3RD PARTY ANONYMOUS DATA ]
8
2011
The Audience is at the
Center of the Data-Driven
Advertising Ecosystem
Yet, despite all of the industry discussion around user
privacy and interest-based advertising, little information
exists about how users feel about it.
AUDIENCE
PUBLISHER
DATAPROVIDERSADVERTISER
AGENCY AD NETS DSPs
Q: How do users feel about having
anonymous data collected about
them in order to deliver interest-
based, relevant advertising?
A: It depends on how much
information they have.
Semantics matter, especially when every word is a keyword. If someone asked you if you’d rather be
“tracked” or “have anonymous data collected about your browsing behavior,” what do you think you’d
choose? Perhaps one sounds better to than the other, but one thing is clear - it is impossible to make an
informed decision about either one without having a clear understanding of what “tracked” and “anonymous
data collected about your browsing behavior” means.
As an industry, we make a lot of assumptions about how Internet users feel about anonymous online
behavioral tracking without anybody really asking them how they feel. During the course of creating this
white paper, we were unable to fi nd even one study that asked Internet users how they felt about having
some of their anonymous online behavior collected for the purpose of advertising, while also asking if they
understood what that same tracking meant.
9
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Understanding of Two
Types of Data
INFERRED DECLARED
+ No PII (Personally Identifi able
Information) such as one’s name,
address, etc.
+ Based on anonymous online
browsing behavior
+ The user actively and knowingly
declares information about oneself
+ This data is NOT passed for
the purpose of interest-based
advertising
With the limited number of studies that exist on user
opinions about interest-based advertising…
• It isn’t clear that users understand different types of data and
how it is collected
• It isn’t clear that users understand that behavioral tracking is
based on inferred (anonymous) data
• It isn’t clear that users understand the benefi ts of inferred
(anonymous) data collection.
10
2011
Survey of U.S. Internet Users The Internet user, the online publisher audience, is the center of our data-driven advertising
ecosystem – and their privacy is paramount. Whether through self-regulation or Congressional
legislation, Internet users should be able to choose what data collected about them can be
used for the purpose of online advertising. The outstanding question is, when Internet users are
presented with the option of deciding what type of data collection they support or do not support,
do they have enough information to make a decision that is best for them? And will their opinion
change depending on the amount of information they have?
In order to fi nd out the answer to those questions, PubMatic commissioned an independent online
research fi rm, Knowledge Networks, to conduct a survey of 500 U.S. Internet users.
The study was conducted in early 2011 and included a representative, random sample of
individuals that categorized themselves as “Internet users.”
User Opinions on Audience-Based Advertising
+
11
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
12
2011
Key Takeaway #1
Users don't understand that the 3rd party data used for
interest-based advertising is anonymous.
When the survey participants were asked if they knew that some
of their online behavior might be tracked about them for the
purpose of advertising, 71% ACKNOWLEDGED THEY KNEW.
When the survey participants were asked if they knew the online
data collected about them for the purpose of advertising was
anonymous, ONLY 40% UNDERSTOOD IT WAS ANONYMOUS.
Key Takeaway #2
Users are far more accepting of interest-based
advertising when they understand that the 3rd party data
used is anonymous.
When asked without an understanding that only anonymous
data is used for interest-based advertising, 64% DISAPPROVED.
When asked after understanding that only anonymous data
is used for interest-based advertising, 40% OF THOSE WHO HAD DISAPPROVED CHANGED THEIR MIND AND APPROVED.
13
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Key Takeaway #3
The more users understand the benefi ts associated with
interest-based advertising, the more they are supportive of it.
When the survey participants were asked how they felt about
having online data collected about them - without understanding
it is anonymous data - for interest-based advertising,
When the survey participants understood that the data collection
was anonymous and they understood that one of the benefi ts
was more relevant advertising, 40% CHANGED THEIR MINDS AND APPROVED.
When the survey participants understood that the data collection
was anonymous and they understood the benefi ts included
more relevant advertising AND that it helped subsidize free
content, 53% CHANGED THEIR MINDS AND APPROVED.
14
2011
64% DISAPPROVED.
Knowing the "How" and
"Why" Changes Everything
15
The majority of Internet users
say they don’t like having their
browsing behavior tracked…
… until they understand the data
collected is anonymous and the
benefi ts are explained.
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Privacy is paramount for Internet users. And it is fair to say that sentiment is echoed by the vast majority
of companies that work within our ecosystem – including advertisers, data providers, DSPs / ad networks,
SSPs, and publishers – because at the end of the day, the people that make up our industry are Internet
users too. The vast majority of companies in the online advertising ecosystem, including PubMatic, adhere
to strict policies that our industry has proactively created to protect the rights of the user.
The PubMatic / Knowledge Networks study was not about whether or not legislation should be passed
about tracking browsing behavior, because Internet users deserve to choose what information about them
is tracked, regardless of whether or not the data collected is anonymous. Internet users should have the
ability to easily activate a ‘do not track’ solution. However, the question that has not been adequately
answered in previous studies is that when Internet users are given a choice about whether or not they
support anonymous online behavioral tracking, will the users be given enough information for them to make
a well-informed decision?
U.S. Internet users, at present time, do not understand the difference between inferred (anonymous)
data and declared (actively given) data, and how those different types of data are used for
interest-based advertising.
Conclusion
The PubMatic / Knowledge Networks study concluded that the overwhelming majority of Internet users do
not understand how online advertising works, specifi cally interest-based advertising. U.S. Internet users do
not clearly understand the difference between inferred data and declared data and how that data is used
for advertising. While 71% of the respondents understood that information about them might be tracked
online for advertising purposes, 40% did not understand that online browsing behavior used for online
advertising targeting is anonymous.
U.S Internet users do not consider the benefi ts they receive from having anonymous data collected,
including more relevant advertising and access to free content, when simply asked how they feel about
anonymous “tracking.”
Content doesn’t pay for itself, advertising does. And even in the minority of cases where there is a fee to
access content, it doesn’t guarantee the advertising goes away. If online content gets to a point where
most publishers have to charge a fee to access it, that doesn’t mean ads will disappear. There would
likely be content pricing wars where publishers have to charge the minimum amount possible to stay
competitive, and they will still have to subsidize lower content fees with irrelevant advertising.
According to the PubMatic / Knowledge Networks study, when U.S. Internet users understand the value
trade-offs for anonymous browsing behavior tracking –specifi cally more relevant advertising and access to
free content - they are much more supportive of it Not all Internet users are opposed to anonymous data
collection, and during the course of the study, more than half of Internet users that understood the value
trade-offs changed their minds and were, in fact, supportive of anonymous data collection.
It all comes down to understanding
Whether it is through self-regulation or legislation, when given a choice about anonymous tracking, Internet
users deserve to have all the facts about how it works and the benefi ts they derive from it before making
a decision. Once they are appropriately armed with this information, they should have the means at their
disposal to easily implement a ‘do-not-track’ option if they prefer, or not to.
16
2011
The Publisher
Audience Selling
Opportunity
17
Audience selling is a broad term, but as it continues to gain momentum as the preferred
targeting method for advertisers, more and more advertisers consider the most effective
type of audience targeting to be campaigns that include three key types of data:
anonymous demographic data, contextual data, and anonymous behavioral data, all of
which are often used for a single ad impression. While demographic, contextual, and
behavioral data can all be used on a stand-alone basis for targeting purposes, it is the
combination of all three that enable publishers to deliver true interest-based advertising.
Most publishers already sell “audience-based” campaigns and have for years, but as
audience targeting evolves, what some publishers consider to be audience targeting
is not what many advertisers consider it to be. A recent PubMatic + Digiday study
showed that while many publishers believe 80% of their direct sold campaigns include
audience targeting, advertisers believe only 40% of the inventory they purchase directly
from publishers includes audience targeting. Advertisers have seen that 3rd party data
signifi cantly improves campaign performance, and until very recently, only intermediaries
such as ad networks and DSPs could deliver that for advertisers. The same study
revealed that 74% of advertisers prefer to use intermediaries to reach their target audience.
Premium publisher's content is still king with audience selling, even when audience
campaigns are sold via the indirect sales channel. In part two of “Audience Selling for
Publishers,” the white paper will dive much deeper into how premium publisher can take
advantage of their brand name to sell audience-based campaigns directly – and with
anonymous 3rd party data. In the next year, premium publishers will have the opportunity
to signifi cantly increase the 20% of audience based ad spend that goes to publishers via
the publishers’ direct sales forces.
Adding anonymous data to media drives up the CPM to reach a specifi c user, but
ultimately, advertisers want to reach their audience in a premium content environment.
One of the major incentives for ad networks and DSPs to work with SSPs is to access
premium publisher inventory in a way that is consistent with publishers’ objectives.
18
Meet Anonymous Andy
He represents a member of your Website’s audience. His
real name probably isn’t Andy. You don’t know his real name
or any personally identifi able information (PII) – and you don’t
want to unless he has actively chosen to give it to you.
The icons represent
Anonymous Andy's
inferred interests
based on 3rd party
anonymous data.
Hundreds of brands
that may want to reach
Anonymous Andy based
on his inferred interests,
if they knew what those
interests were.
19
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Unlock Your Audience Selling Potential
Publishers that previously only sold to advertisers that
matched their content can now exponentially expand
their advertiser prospects.
20
2011
Illust
rativ
e Sample of Brands
2011
Different Advertiser Categories Want to Reach Anonymous
Andy Based on His Different Inferred Interests
A travel company or airline may want to show Anonymous
Andy the latest travel deals because he travels frequently.
RETAIL
FOOD & DINING
AIRLINE
HEALTH & FITNESS
EDUCATION
GAMING
HOME &GARDEN
AUTO
PETS
PARENTING &FAMILY
SHOPPING
MUSIC
ELECTRONICS
GREENLIFESTYLE
SPORTS
TRAVEL
REAL ESTATE
WOMEN'SINTERESTS
INSURANCE
FINANCE
21
DEMOGRAPHIC + +CONTEXTUAL BEHAVIORAL
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Because Anonymous Andy appears to be interested in
purchasing electronics and MP3s, some electronics companies,
watch brands, music labels, and shoe companies are interested
in reaching him.
22
DEMOGRAPHIC + +CONTEXTUAL BEHAVIORAL
2011
RETAIL
FOOD & DINING
AIRLINE
HEALTH & FITNESS
EDUCATION
GAMING
HOME &GARDEN
AUTO
PETS
PARENTING &FAMILY
SHOPPING
MUSIC
ELECTRONICS
GREENLIFESTYLE
SPORTS
TRAVEL
REAL ESTATE
WOMEN'SINTERESTS
INSURANCE
FINANCE
Auto and insurance companies want to
reach Anonymous Andy because he has been
looking into purchasing a new automobile.
23
DEMOGRAPHIC + +CONTEXTUAL BEHAVIORAL
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
RETAIL
FOOD & DINING
AIRLINE
HEALTH & FITNESS
EDUCATION
GAMING
HOME &GARDEN
AUTO
PETS
PARENTING &FAMILY
SHOPPING
MUSIC
ELECTRONICS
GREENLIFESTYLE
SPORTS
TRAVEL
REAL ESTATE
WOMEN'SINTERESTS
INSURANCE
FINANCE
Insight Into Inferred Interests Expands the Number
of Advertiser Categories that Want to Reach Your
Anonymous Audience
24
DEMOGRAPHIC + +CONTEXTUAL BEHAVIORAL
2011
RETAIL
FOOD & DINING
AIRLINE
HEALTH & FITNESS
GAMING
HOME &GARDEN
AUTO
PETS
PARENTING &FAMILY
SHOPPING
MUSIC
ELECTRONICS
GREENLIFESTYLE
SPORTS
TRAVEL
REAL ESTATE
INSURANCE
FINANCEEDUCATION
WOMEN'SINTERESTS
DEMOGRAPHICONLY
Demographic data is a critical component of
interest-based advertising. Publishers can use
proprietary and 3rd party demographic data as a
stand alone method for audience targeting, but
without behavioral information there is no way to
gauge individual interests much less the level of
interest, and without contextual data it is diffi cult
to ensure that the audience is found not just on
the right site, but on the right page, and near the
right content.
25
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
CONTEXTUALONLY
Similar to demographic data, contextual data is a
core part of interest-based advertising. Publishers
often use 3rd party companies to improve the
accuracy of their contextual targeting, but as a
stand alone method, contextual targeting does not
take into consideration an audience’s demographics
or interests. As a result, contextual targeting only
can provide advertisers with the ability to target
relevant content but without knowing anything
about the user. In this graphic, the user is on a
sports-related website, and the advertiser has no
insight into his interests, other than sports.
26
2011
DEMOGRAPHIC CONTEXTUAL BEHAVIORAL
Using All 3 Anonymous Data Types
for a Single Campaign
Anonymous Demographic Data: Anonymous
demographic information collected across the
Web means that more anonymous users have
demographic data associated with them.
Contextual Data: Contextual data can only be
anonymous because it is not associated with a
user, but leveraging powerful technology from 3rd
party contextual companies increases the accuracy.
Anonymous Behavioral Data: Robust
anonymous behavioral data cannot be collected by
one publisher because it is based on anonymous
audience behavior that occurs across the Web.
27
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
++
Leveraging 3rd party anonymous data collected across
the Web is the key for true interest-based advertising
Determining the Value of Data
Recency and Frequency are important indicators for purchase intent.
Below are two anonymous users that have inferred interest in travel. The one on the left has visited
two travel Websites in the past three months. The one on the right has visited four in the past week.
Advertisers are willing to pay more to reach the anonymous user on the right as the anonymous user
on the right is more likely to purchase travel tickets sooner.
Anonymous behavioral information helps advertisers
determine where the user is in the purchase funnel
THE FURTHER
DOWN THE FUNNEL,
THE HIGHER THE
PRICE PAID TO
REACH THEM
$
$ $ $
TRAVEL
PURCHASE INTENT
TRAVEL
INTEREST
AWARENESS
INTEREST
INTENT
28
2011
RTB for Publisher Audience Selling
29
Audience-based advertising using 3rd party anonymous data can be sold without
leveraging Real-Time Bidding (RTB), but RTB is more effi cient and provides publishers
with signifi cantly greater revenue than non-RTB audience-based campaigns.
Unlike non-RTB audience-based campaigns, RTB offers impression-level optimization
with unique bidding precision for every ad impression. RTB can also include real-time
creative optimization, which is a major contributor to improved campaign performance.
The improved targeting capabilities that RTB provides allows advertisers to pay exactly
what they believe the combination of media and audience is worth, resulting in greater
ROI for the advertiser. In September 2010, PubMatic conducted a multi-party case
study with four leading DSPs that revealed advertiser ROI for RTB campaigns was 101%
improved on average, as compared to the non-RTB campaigns that were monitored
during the course of the study.
The most commonly recognized publisher benefi t of RTB is signifi cantly increased revenue
for unsold ad inventory. Very simply, RTB campaigns perform better and provide a clear
and measurably higher return on investment for advertisers than non-RTB campaigns due
to their greater effi ciency and more precise targeting capabilities.
RTB has leapfrogged what was previously considered “remnant inventory” on the CPM
value chain – PubMatic's data shows that over 10% of RTB bids are over $10 CPM. As
a result, RTB is becoming a major part of premium publishers’ overall revenue strategy.
Even some publishers that were vocal critics of ad networks in the past are showing
interest and enthusiasm for an RTB-only solution.
While the benefi ts of RTB are clear, it is not a perfect solution. Publisher concerns about
RTB are generally formed around the possible negative impact that RTB will have on
their direct sales efforts over the long-term – including channel confl ict and data leakage.
With technology advancement and improved processes, the risk for publishers using RTB
is rapidly shrinking.
30
Unique bidding/pricing precision
Audience attributes
Ad impression attributes (ad tag type, atf/btf, etc.)
Site awareness/context relevance
Real-time creative optimization
X
X
X
RTB vs. Non-RTB
AUDIENCE TARGETING WITH RTB
AUDIENCE TARGETING (NON-RTB)
SITE BASED TARGETING (CONTEXTUAL)
AUDIENCE
EXPERIENCE
Based on More Relevant Advertising
PUBLISHER
REVENUE
Based on Higher Priced Campaigns
ADVERTISER
SATISFACTION
Based on ImprovedCampaign Performance
Unique bidding/pricing precision
Audience attributes
Ad impression attributes (ad tag type, atf/btf, etc.)
Site awareness/context relevance
Real-time creative optimization
X
X
X
X
X
Unique bidding/pricing precision
Audience attributes
Ad impression attributes (ad tag type, atf/btf, etc.)
Site awareness/context relevance
Real-time creative optimization
X
X
31
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
32
2011
RTB Growth is Unprecedented
0%
50%
20%
5%
1.5%
Key Drivers:
• Effective: RTB signifi cancy improves revenue for publishers
and campaign performance
• Effi cient: Programmatic ad buying is more automated
than manual and reduces media waste
• In Demand: Agencies have organized Trading Desks to
leverage it, RTB will move into the direct sales channel
*Based on industry market projections and PubMatic internal growth data
*$5B+
2008 2009 2010 2011 2015
% of Non-
Guaranteed
Ad Spend
(via RTB)
eCP
M In
dex
PubMatic (with RTB)
PubMatic (without RTB)
eCP
M In
dex
PubMatic (with RTB)
PubMatic (without RTB)
RTB Increases Publisher Revenue
Across All Verticals
PubMatic’s Ad Revenue Report from October 2010 included the fi rst ever case study that revealed solid
evidence that RTB performs better for advertisers than non-RTB campaigns across several advertising
verticals. Similarly, the study results concluded that RTB provides consistently higher CPMs for publishers
than non-RTB campaigns, across multiple publisher verticals. During the course of four different ad
campaigns run by four different DSPs, PubMatic publishers saw aggregate revenue lift of 64% over
non-RTB inventory purchased for the same campaigns.
The charts below provide further evidence that RTB consistently delivers higher CPMs for publishers
across multiple verticals. The data in the charts represent aggregate RTB vs. Non-RTB eCPM by
PubMatic publisher vertical during the months of June through December 2010.
Two Week Intervals: June - December 2010
NEWS & REFERENCE
WOMEN'S INTERESTS
33
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
eCP
M In
dex
PubMatic (with RTB)
PubMatic (without RTB)
eCP
M In
dex
PubMatic (with RTB)
PubMatic (without RTB)
eCP
M In
dex
PubMatic (with RTB)
PubMatic (without RTB)
Two Week Intervals: June - December 2010
GAMING
TRAVEL
ECOMMERCE
34
2011
2011 RTB vs. Non-RTB
2015 RTB vs. Non-RTB (Projected)
2011 Rich Media RTB vs. Standard Display RTB
2012 Rich Media RTB vs. Standard Display RTB (Projected)
RTB Trends
Sources: PubMatic proprietary data, PubMatic + Digiday Study 2010, Google, ComScore, Mobclix
Percentage of Online
Inventory Purchased
via RTB
Percentage of
Online Inventory
Purchased via RTB
that is Rich Media
35
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
RTB Trends
Percentage of PubMatic Publishers Opted in for RTB Campaigns
Percentage of Publisher Revenue Flowing Through PubMatic's Sell-Side Platform
2011 Mobile RTB vs. Mobile Non-RTB
Percentage of
Mobile Inventory
Purchased
via RTB
Standards for RTB
A growing group of companies are working together to
improve standardization under the auspices of the OpenRTB
group. OpenRTB was founded in 2010 and has a mission
of providing open industry standards for communication
between buyers of RTB advertising and sellers of publisher
inventory. Initial publisher focused objectives include creating
a method for automatically retrieving a list of publisher
restrictions for each advertiser and RTB request standards
for publisher creative restrictions. To learn more about Open
RTB, visit http://www.OpenRTB.info.
36
2011
ADVERTISERS & AGENCIES
DATA PROVIDERS
PREMIUM DSPs & AD NETS
+ Gets better performing campaigns
+ Gains more customers
+ Gets audience data from data
providers
+ Sells the audience targeted
advertising campaign to agencies
and direct advertisers
+ Identifi es where target audiences
are in real-time
+ Implements creative optimization to
ensure relevant advertising
DEMAND SIDE
20
RTB Campaign Flow for
the Indirect Sales Channel
[Basic View]
37
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
PREMIUM PUBLISHER
+ Facilitates RTB transaction
+ Ensures highest payer gets
ad space
+ Ensures against channel
confl ict
+ Ensures data safety
+ Ensures brand protection
+ Gets relevant advertising
+ Has better user experience
+ Receives premium pricing
+ Has creative controls in
place and monitored
+ Gets comprehensive
analytics from campaign
from PubMatic
PREMIUM PUBLISHER AUDIENCE
SELL-SIDEPLATFORM
(SSP)
• For Publishers: Single Audience
Sales Access Point
• For Demand Partners: Main Conduit to
Access Premium
Inventory (on behalf
of advertisers and
agencies)
SELL SIDE
PREMIUM PUBLISHER
PREMIUM PUBLISHER
PREMIUM PUBLISHER
PREMIUM PUBLISHER
2138
2011
Publisher Transparency and Controls for RTB
39
As the number of publishers that open up their inventory for RTB grows, and the overall
scale of available RTB inventory grows, publishers need the highest levels of protection
to ensure that RTB is working for them as part of a holistic selling strategy. While it is
diffi cult to dispute that RTB improves publisher revenue – at least in the short-term -
cautious publishers have voiced concern over the lack of control that RTB may present.
Specifi cally, some publishers fear that RTB could possibly have a negative impact on their
direct sales efforts because of channel confl ict, transparency, and excessive pixeling that
could lead to data leakage and slow ad loading speed.
While publisher concerns about RTB are valid, recent technology advancements have
been made that will allow publishers to have much greater transparency and control over
RTB campaigns.
One of the most anticipated breakthroughs for publishers in order to help them better
control the pricing of RTB campaigns is the introduction of Dynamic Pricing Floors.
Dynamic Pricing Floors will allow publishers to adjust their selling price during the course
of a campaign in order to encourage bidders to offer fair media value for their inventory,
while making sure that the fi ll rate is optimal.
Publishers can exercise additional control in an RTB environment by choosing to make
their web site URL transparent or not in the bidding process. By making their URL
transparent, publishers can ensure the highest value advertising for their premium brand.
However, some publishers are concerned about creating channel confl ict for their direct
sales forces. In this case, publishers can go beyond restrictive blocklists by obscuring
their URL in the bidding process so that advertisers cannot know where their ads will
show up. By using 3rd party content verifi cation solutions, advertisers can ensure that
they are transacting within a safe environment.
Other recent technology advancements to help publishers gain greater control over RTB
campaigns include automated blocklist management, ad loading speed monitoring, and
data leakage protection to help to ensure that publishers are getting a fair value trade-off
from pixel droppers on their site.
40
Channel Confl ict Management
& Creative Controls
Having advanced brand control tools in place are critical to ensure that publishers achieve the maximum
benefi ts of RTB without having creative violations or creating channel confl ict with their direct sales forces.
A robust Sell Side Platform (SSP) should scan every RTB ad to ensure compliance, and should provide
publishers a full suite of controls to ensure the publisher is protected. These are the control tools PubMatic
provides to publishers:
Automated Blocklist Manager:
• Allows publishers to manage blocklists in one simple to use interface
• Automatically scans every ad tag in real-time
• Checks both the click-through URL and redirected landing page URL for every ad
• Blocks ads that violate the blocklist from being shown to the user
Live Creative Monitor:
• Allows publisher ad operations teams to view creative as they appear on the publisher’s site
• Allows ad operations teams to view creative from around the globe
• Alerts PubMatic service team for immediate action where necessary
Creative Violations Report:
• Allows publishers to view a summary of the ad violations that PubMatic has proactively detected and
block from the publisher’s site
Ad Inspector Browser Plug-In:
• Gathers information on all text, image, and video ads on the publisher’s site
• Allows publishers’ ad operations teams to mouse-over any ad and instantly determine which ad network
or DSP served the ad and at what price
• Alerts PubMatic service team for immediate action where necessary with the ability to easily screenshot
and email debugging information
41
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Brand & Pricing Protection
Malware Detector:
• Protects against the threat of malware
• Automatically scans for malware across thousands of ad tags
• Alerts PubMatic service team for immediate action where necessary
Global Ad Speed Monitor:
• Monitors global ad-tags for performance and latency
• Suspends ad networks if latency crosses pre-determined thresholds
• Alerts PubMatic service team for immediate action where necessary
Dynamic Pricing Floors:
In the coming months, Dynamic Pricing Floors for publishers will be one of the most signifi cant
milestones to date in the evolution of RTB. With Dynamic Pricing Floors, publishers will have the
opportunity to get closer than ever to capturing the fair media value of each ad impression.
While RTB acquired inventory generally does demand a higher price than non-RTB inventory, the
companies that represent advertisers and specialize in RTB are continually evaluating and refi ning their
bidding strategies in order to reach their audience at a price that maximizes their ROI. Publishers should
have the ability to evaluate and refi ne their selling price dynamically, by adjusting fl oors at the ad tag,
user, and advertiser level, which will enable them to set the highest bid levels possible while maintaining
optimal fi ll rate.
42
2011
Protection Against Data Leakage
Publishers work hard to create premium audiences, so why should any 3rd party be able to identify and
use it without giving the publishers what they deserve?
PubMatic estimates that data leakage costs publishers $1B per year. Data leakage occurs when 3rd
parties capture a publisher’s audience data and then use that data to target users outside of the site from
which the data was taken, without an appropriate economic interchange. That leads to direct revenue
loss for the publisher. This is a problem that has grown considerably in the past two years along with the
increasing advertiser demand for audience-based advertising.
The practice of dropping pixels is a core component of the data-driven advertising ecosystem that we are
a part of, and many publishers have fi nancially benefi ted from the practice – especially because publishers
have, until very recently, lacked the ability to monetize their audience as well as 3rd parties. In the majority
of cases, the publisher receives revenue – either directly or indirectly - from the 3rd party pixel droppers,
but publishers should have extra protection to ensure they know who is dropping pixels on their site, how
often, and what the revenue return is.
Data Firewall 2.0: Audience Data Transparency Technology with Expert Guidance for a Better
Understanding
PubMatic’s Data Firewall is the only technology that helps publishers protect against data leakage by
providing them with transparency and fi nancial insight into third party pixeling. Data Firewall 2.0 gives
publishers deeper insight into who is dropping pixels on a global level, so they can take action to prevent
unfavorable pixeling.
1. White Lists for Pixel Droppers
Not all pixel dropping is for collecting audience data. Publishers understand that pixels are dropped for a
multitude of reasons including frequency capping, ad delivery confi rmation, content verifi cation, and more.
Publishers need to be able to mark known and legitimate pixel droppers as safe or white-listed.
2. Protection for International Audience Data
Pixel droppers are not restricted to any specifi c geo location. PubMatic understands this and has
expanded its pixel scanning service across the globe. With additional geo locations, the publisher is better
protected against pixels dropped on their international visitors.
3. Expansive Pixel Droppers Database
PubMatic continues to provide publishers a comprehensive understanding of pixel droppers, how they
function, and how publishers can best prevent data leakage. With this release, Data Firewall can now track
more than 300 unique pixel droppers.
43
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Transparency Leads to Action
Audience data collection is complex and Data Firewall demystifi es the pixel dropping process. As a result of
the information the publishers receive from Data Firewall, they not only see who is dropping pixels, but they
also understand the revenue contribution from the pixel droppers. Empowered with the right information,
publishers can take action and take back control of their audience data.
Actionable steps include:
Adding Preferred Partners to the White List
Most of the 3rd party companies that drop pixels are excellent partners for publishers. For those
companies, publishers can add them to the white list to fi lter pixel dropping reports for non-white listed pixel
droppers.
Renegotiating Contracts with Current Partners
For publishers that have direct relationships with ad networks or DSPs that are dropping pixels, the
publisher has a new level of transparency to identify excessive pixel dropping or pixel dropping that is
not providing commensurate fi nancial return. As a result, publishers can renegotiate terms with these ad
networks or DSPs.
Adjust Pricing For Directly Sold Audience Campaigns
Insights learned from knowing more about the publisher’s audience allows publishers to better understand
the value of their audience. This information can provide guidance to publishers for pricing direct sold
audience campaigns.
The following chart represents a PubMatic publisher that has been using Data Firewall since October 2010,
and took action based on their learnings.
Publisher Transparency Understanding Action
Top 10 Internet
Retailer
This leading Internet retailer
used PubMatic’s Data Firewall
to create transparency into
which ad networks, ad
exchanges, and DSPs were
dropping 3rd party pixels
onto the publisher’s web site
and how frequently they were
being dropped
PubMatic’s services team
advised the publisher in
identifying excessive and
unwarranted pixeling in order
to help the publisher ensure the
security of its audience data and
optimal user experience
Armed with data, the
publisher renegotiated
contractual terms with
select ad networks to
remove unwanted pixels
and reduce the pixel
frequency to match the
revenue that each ad
network provided
44
2011
RTB Campaign Flow for
the Indirect Sales Channel
[Detailed View]
WEBMOBILEVIDEO
PUBLISHER
1. Page request and ad call
request goes to PubMatic
4. Dynamic fl oor pricing is
activated - only demand
partners bidding above
fl oor price minimum
proceed into competition
5. Publisher brand
controls activated
+ Blocklist Manager
+ Ad Speed Assurance
+ Malware Detector
7. Winning demand partner
serves ad to publisher
45
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
DEMAND PARTNERSWITH ADVERTISER
CAMPAIGNS IN WAITING +
AUDIENCE DATA
2. PubMatic sends
ad request to RTB
demand partner pool
3. Demand partners
return bids in real-time
6. Notifi cation sent
to highest paying
demand partner
meeting pricing
and brand control
requirements
46
2011
The Two Channel Audience Selling
Strategy
47
Until very recently, publishers generally have not leveraged 3rd party audience data to
increase the value of their ad space for direct sales. The reasons publishers have not
taken advantage of 3rd party data include not understanding the value of the data and
the process and technology challenges of using 3rd party data. Demand-Side Platforms
(DSPs) have exploded in popularity and scale specifi cally because of their ability to utilize
3rd party audience data effi ciently and effectively. Through the indirect sales channel,
DSPs and advanced ad networks are becoming a key component of the publisher’s
overall ad revenue strategy.
Today, publishers do have the ability to sell media layered with 3rd party data, and with
audience-based campaigns in high demand from advertisers, publishers need a two-
channel audience selling strategy. Each sales channel has its own benefi ts, so publishers
should understand those benefi ts and use that insight to create a holistic selling strategy.
Publishers can take advantage of RTB for audience-based advertising as demand for
RTB campaigns from advertisers levering the indirect sales channel continues to grow.
According to Google, half of all non-guaranteed ad inventory will be purchased via RTB
in 2015, and because of the large inventory scale that the indirect channel provides for
advertisers and the proven success of RTB campaigns, the number of advertisers that
leverage the indirect sales channel for RTB will increase for many years to come.
In 2011, publishers have more choices for selling audience based campaigns, including
through the direct sales channel. Leveraging SSPs, publishers can now set up private
marketplaces, which will enable them to sell RTB campaigns directly to agency trading
desks and advertisers - all with greater control over those RTB campaigns. Through
SSPs, publishers can also have easy access to 3rd party audience data that they can
apply to their media and sell directly.
As the opportunities for publishers to sell true audience-based advertising increase and
improve, publishers should have a strategy for balancing the two sales channels that will
allow them to take advantage of the benefi ts that both sales channels deliver.
48
The Two Channel Audience
Selling Balance [Illustrative]
Indirect
Direct
Direct
Indirect
Direct sold campaigns are at sold at much higher CPMs than campaigns sold by intermediaries
because of their guaranteed placement and have no ad networks or DSPs take a percentage of
the revenue.
While direct sold campaigns command higher CPMs, the practice of publishers selling direct
audience campaigns with 3rd party anonymous data is relatively new. Additionally, most publishers
do not have specifi c audiences on their own site at large enough scale to satisfy advertiser demand
for highly targeted audience campaigns.
AD PRICE PER IMPRESSION FOR PUBLISHERS
OVERALL REVENUE CONTRIBUTION FOR PUBLISHERS
2011
Audience-Based
Campaigns
with 3rd Party
Anonymous Data
Audience-Based
Campaigns
with 3rd Party
Anonymous Data
49
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
The Two Channel Audience
Selling Balance [Illustrative]
Direct
DirectIndirect
Indirect
Direct sold campaigns will always fetch higher CPMs than ones sold through the indirect sales channel
because of their guaranteed placement and no ad networks or DSPs taking a percentage of the revenue.
RTB will be the preferred method to acquire publisher audience specifi c inventory. RTB campaigns will be
routinely sold by the publisher's direct sales force. Additionally, audience extension will allow publishers to
sell RTB campaigns directly for campaigns that run on their site and other sites giving advertisers the scale
they need for highly targeted campaigns.
These factors will increase the overall revenue contribution from audience-based campaigns signifi cantly.
AD REVENUE PER IMPRESSION FOR PUBLISHERS
OVERALL REVENUE CONTRIBUTION FOR PUBLISHERS
2015
Audience-Based
Campaigns
with 3rd Party
Anonymous Data
Audience-Based
Campaigns
with 3rd Party
Anonymous Data
50
2011
Publisher Ad Revenue From
Audience-Based Campaigns
2011$2.2B*
Direct Indirect
2015$5.2B*
Direct Indirect
Ad Spend by Year
Publisher Ad Revenue Ratio From Audience By Sales Channel [Illustrative]
Example scenarios based on published growth numbers of:
• Non-Guaranteed ad revenue & RTB
• Audience targeting demand
• Revenue opportunity & scale for direct audience selling
*eMarketing and Jordan Edmiston Group
51
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
Conclusion
For the fi rst time in a decade, online advertising is on the brink of becoming a seller’s market. RTB and
programmatic ad buying is improving effi ciency for advertisers and publishers alike. More importantly, sell
side technology is fi nally catching up to the sophistication of the demand side, allowing publishers to take
advantage of new selling opportunities and grow their business. As opportunities for publishers increase
and improve, publishers will need to rethink their sales strategy.
Specifi cally, as demand for audience-based advertising continues to grow at a rapid rate, publishers must
develop a holistic sales strategy that includes the use of audience data for both the direct and indirect
sales channels. By utilizing a combination of anonymous contextual, demographic, and behavioral data,
publishers can achieve several key objectives:
• Level the playing fi eld with advertiser intermediaries to achieve fair market value for their inventory and
signifi cantly increase their revenue
• Attract a broader array of advertisers that can be sold to via both the direct and indirect sales channels
• Protect the user’s privacy and deliver more relevant and interesting advertisements at the same time
It’s clear that expertise in audience selling will be a critical part of the publisher revenue strategy in the near
future. Publishers must adopt newly created technology to protect their brands from unwarranted risk and
take advantage of the new opportunities that lay ahead.
52
2011
Publisher Education Resources
Ad Revenue Reports
Part of the Annual Ad Revenue Premium Publisher Conference
AD REVENUE 2009 REPORTAD REVENUE 2010 REPORT
Other technology white papers
OCTOBER 8TH, NEW YORK CITY
presented by
Ad Revenue ReportA Supplemental Guide to the 2nd Annual
Premium Publisher Conference
53
AUDIENCE SELLING FOR PUBLISHERS Part 1: RTB & The Indirect Sales Channel
MORE REVENUE
BETTEREXPERIENCE
MORE CONTROL
About PubMatic
One Holistic Selling Platform to Protect Publishers
and Increase Online and Mobile Ad Sales
The PubMatic Sell
Side Platform for
Premium Publishers
More Revenue
• RTB for Direct &
Indirect Sales
• Dynamic Pricing Floors
• Audience Data
on Demand for
Direct Sales
More Control
• Publisher Controlled
RTB Campaigns
• Creative Control Suite
• Data Leakage
Prevention
& Education
Better Experience
• High-Touch Expert
Guidance
• Trusted Demand
Partners
• True Innovation &
Thought Leadership
Some of the most respected online publishers have chosen to work with PubMatic,
including the Huffi ngton Post, McGraw Hill, eBay, United Online, TV Guide, MSNBC,
Scribd, and the majority of the ComScore Top 10.
Contact Us
Publishers interested in working with PubMatic should contact Sales@PubMatic.com
Demand Partners interested in working with PubMatic should contact Demand@PubMatic.com
54
2011
ADVERTISER
WE TAKE SIDES
PUBLISHER
Empowering Publishers
Contact Us:
Phone: (646) 706-7171
Publishers contact: sales@PubMatic.com
Ad Networks contact: adnetworks@PubMatic.com
For General Information: info@PubMatic.com
www.PubMatic.com
London Paris Amsterdam Pune Hamburg
California Offi ce:
444 High St.Fourth FloorPalo Alto, CA 94301
New York Offi ce:
100 Vandam St.Third FloorNew York, NY 10013