ONLINE ADVERTISING:ONLINE ADVERTISING:

TIME TO RENEW THE FAITHTIME TO RENEW THE FAITH

Tim Cadogan, CEO OpenXTim Cadogan, CEO OpenX

April 1, 2009April 1, 2009

Confidential & Proprietary - Not to be shared without written permission of OpenX Technologies, Inc.

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If you believe what you read…If you believe what you read…

….the sky is falling!

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But advertising But advertising hashas come through for us in the past! come through for us in the past!

….and will do so again!!

Web 1.0Web 1.0 Web 2.0Web 2.0 Web 3.0?Web 3.0?

Pre-2000

Classic DisplayClassic Display

Paid Search

Post-2000

Classic Display

Paid Search

2003-2004

Classic Display

Paid SearchPaid Search

AdSense

Ad Networks

2005-2008

Classic Display

Paid SearchPaid Search

AdSense

Ad Networks

Ad Exchanges

Video

Mobile

Realizing Full Realizing Full Economic Value Economic Value of 2.0 Audiencesof 2.0 Audiences

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Massive value asymmetry today…Massive value asymmetry today…

Consumer ActivityConsumer Activity Economic ValueEconomic Value

$55.1B Globally in 2009$55.1B Globally in 2009

Source: JP Morgan (11/2008)

Globally in 2009Globally in 2009

All Else

All Else

Search

Search

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Why the gap?Why the gap?

And, Advertisers struggle to reach their target customers. . .

Explosion of SupplyExplosion of Supply(70% growth in impressions (70% growth in impressions

over last 5 yrs.)over last 5 yrs.)(1)(1)

Fragmentation of Fragmentation of SupplySupply

(300%+ growth in websites (300%+ growth in websites over last 5 yrs.)over last 5 yrs.)(2)(2)

Ambiguous or Ambiguous or invisible consumer invisible consumer

intent intent

Brand Association Brand Association ConcernsConcerns Business Business

Model/Value Chain Model/Value Chain ComplexityComplexity

Source: (1)JP Morgan (11/2008)(2)Net Craft (2/2009)

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Solution #1…People, not just placesSolution #1…People, not just places

Audience value increasingly importantAudience value increasingly important

Web-wide audience measurementWeb-wide audience measurement

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Solution #2…Understand people’s interests and intentSolution #2…Understand people’s interests and intent

Basic Data (Demo, Geo, etc.)Basic Data (Demo, Geo, etc.)

Rich Data (Behavior, Transaction, etc.)Rich Data (Behavior, Transaction, etc.)

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Solution #3…Audience Pooling business modelsSolution #3…Audience Pooling business models

BID $5.25

AutosKite

Boarding

HomeLoan

LocalAutos

Travel

Cameras

LocalAutosHome

Loan

Bicycles

Bicycles

Travel

Cameras

BID $9.50 BID $1.70 BID $0.80Markets/ExchangesMarkets/Exchanges Ad NetworksAd Networks

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Solution #4…Deliver more relevant adsSolution #4…Deliver more relevant ads

TargetedTargeted

PersonalizedPersonalized

CustomizableCustomizable

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Solution #5…Better balanced advertising within user experienceSolution #5…Better balanced advertising within user experience

SearchSearchNon-Commercial SearchNon-Commercial Search

Commercial SearchCommercial Search

Display (current form)Display (current form) Dynamic page structureDynamic page structure

Dynamic ad/edit ratioDynamic ad/edit ratio

““Total page” user experienceTotal page” user experience

DisplayDisplayAd Network #2

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Solution #6…Allow for mass advertiser participationSolution #6…Allow for mass advertiser participation

DisplayDisplayAd Network #1

DisplayDisplayAd Network #3

DisplayDisplayPortal #2

DisplayDisplayPortal #1

DisplayDisplayPortal #3DisplayDisplay

Ad Network #4

DisplayDisplayAd Network #5

DisplayDisplayAd Network #6

People, not just Places

Interests & Intent – beyond Context & Action

“Audience Pooling” Business Models

Ad Relevance

Balanced Usability

Mass-market Advertiser Participation

In summary…what is neededIn summary…what is needed

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Keep the faith!!!Keep the faith!!!

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"We are continually faced with a "We are continually faced with a series of great opportunities brilliantly series of great opportunities brilliantly disguised as insoluble problems."disguised as insoluble problems."

-- John W. Gardner-- John W. Gardner

2010-2011 => Look for a 2010-2011 => Look for a RenaissanceRenaissance in in

online advertising: online advertising:

→ QualityQuality

→ DiversityDiversity

→ ValueValue

Thank You For Your TimeThank You For Your Time