Pub matic audience_selling_part_1

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 [email protected].

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 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


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


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


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.


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


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



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


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



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


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


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


++

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


Audience attributes




X

X

X

X

X


Audience attributes




X

X

31


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)


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


eCP

M In

dex

PubMatic (with RTB)


eCP

M In

dex

PubMatic (with RTB)


eCP

M In

dex

PubMatic (with 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


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


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


Brand & Pricing Protection

Malware Detector:

• Protects against the threat of malware

• Automatically scans for malware across thousands of ad tags


Global Ad Speed Monitor:

• Monitors global ad-tags for performance and latency

• Suspends ad networks if latency crosses pre-determined thresholds


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


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


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


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


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


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 [email protected]

Demand Partners interested in working with PubMatic should contact [email protected]

54

2011

ADVERTISER

WE TAKE SIDES

PUBLISHER

Empowering Publishers

Contact Us:

Phone: (646) 706-7171

Publishers contact: [email protected]

Ad Networks contact: [email protected]

For General Information: [email protected]

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

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