SampleCon 2013 Exchange Dynamics

Exchange Dynamics Who is Walton?

• Co-Founder, Investor and Board Member.

• Colloquially, known as a “quant” on Wall Street.

• A practitioner of derivative pricing and high frequency trading.

• He’s traded more than half a trillion dollars of commodities.

• Including enough crude oil to run North America for over half a year.

Exchange Dynamics How supply meets demand

Exchange Dynamics How supply meets demand

Exchange Dynamics How supply meets demand

Exchange Dynamics How supply meets demand

Exchange Dynamics Impact on liquidity

Exchange Dynamics Impact on liquidity

Exchange Dynamics Impact on liquidity

Exchange Dynamics Impact on liquidity

Exchange Dynamics Transformative impact

A

E

C B

D X

E

C B

D A ● Transactions ● Netting ● Credit risk

Exchange:

Record of Transactions

• Set transaction rules

• Set consequences

• Maintain method of recording transactions

Exchange Dynamics Exchange and clearing recap

Clearing:

Record of Fulfillment

• Rules for delivery, payment & reconciliation of disputes

• Netting: Centralized payment • Centralize credit risk

Exchange Dynamics Effects of commoditization

SampleCon 2013 Online Advertising

Proprietary and Confidential

Medium Options

Network Television ABC, CBS, NBC, FOX

Cable Television ESPN, TNT, TBS, MTV

Radio Clear Channel, Cumulus, Pilot, Local

Magazine Time, Conde Nast, Hearst, Meredith

Newspaper Gannett, NYT, WSJ, Local

Proprietary and Confidential

• Annual Up-Front Agreements • Audiences at Scale Achieved with Major Media Firms • Significant Barriers of Entry for New Players • Defined or Costly Limits for Placement Opportunities

• Television & Radio have limited minutes per day • Print happens page limits

• Ad Sizes are defined and simple • Broadcast 30 & 60 second spots • Print – full page, half page, some smaller units

Proprietary and Confidential

• A New Medium Emerges • Incumbent Media Giants Copy Offline to Online • A New Wave of Options Emerge

• Yahoo • AOL • Google • Facebook

• And Millions of Other Options

Proprietary and Confidential

• Audiences of Scale Are Possible, however; • It’s Unmanageable to Match Supply & Demand • Even Major Publishers Can’t Sell Every Available Unit • Lower Barriers of Entry Lead to Glut of Supply • Price Compression Resulted

Proprietary and Confidential

• A Media Buyer Uses a DSP to Place Ads • Major Publishers Still Sell Direct “Guaranteed

Impressions” with Large Buyers at Higher CPM’s • Major Publishers Make Unsold Inventory Available on

Exchanges as “Non Guaranteed” Impressions • Smaller Publishers Sell More “Non Guaranteed” than

Guaranteed • When a Page is Loaded, the Guaranteed Direct

Impressions are Served and; • All other Ad Units are Filled Through Exchanges • Often the Same Ad Serving Technology Handles Both

Proprietary and Confidential

• Media Buyer Uses a DSP to Place Ads • Publishers Use SSP to Sell and Serve Ads • Major Publishers Still Sell Direct “Guaranteed

Impressions” with Large Buyers at Higher CPM’s • Major Publishers Make Unsold Inventory Available on

Exchanges as “Non Guaranteed” Impressions • Smaller Publishers Sell More “Non Guaranteed” than

Guaranteed • When a Page is Loaded, the Guaranteed Direct

Impressions are Served and; • All other Ad Units are Filled Through Exchanges • Often the Same Ad Serving Technology Handles Both

Proprietary and Confidential

64 62 62 58

36 38 38 42

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70

Q1 Q2 Q3 Q4

Channel Mix 2011

UNRESERVED RESERVED