Digital Trends: Opportunities and Challenges

Transcription

1 Digital Trends: Opportunities and Challenges Presentation to the Market Research Council KRISTINA SRUOGINIS May 12, 2017 Yale Club, New York, NY

2 IAB EMPOWERS THE MEDIA AND MARKETING INDUSTRIES TO THRIVE IN THE DIGITAL ECONOMY.

3 We Are Digital Media s Biggest Tent 650+ LEADING MEDIA COMPANIES RESPONSIBLE FOR SELLING 86% OF U.S. DIGITAL ADVERTISING 3

4 What IAB Does and How We Do It 4

5 Consumers Use Digital and Mobile Consumer Usage Translates into Digital Ad Revenue 5

6 The Proliferation and Adoption of Devices to Access the Internet Has Impacted the Media Landscape Devices Owned Among Adults % 90% 92% 87% 68% 83% 64% 66% Total Connected TV: % % 45% 46% 43% 35% 24% 23% Computer TV Smartphone Tablet DVR Smart TV Video streaming device N/A 6 Q1.0. Which of the following devices do you or your household personally own? Base: Adults 18+, 2017 n=802; 2015 n=651 IAB Research Using Maru/Matchbox s Springboard America Online Panel, Representative of General US Adult 18+ Online Population, March 2017

7 257 Million Americans Access the Internet Monthly on Computers or Mobile Devices The total audience accessing the internet via computer or mobile device is 257 million monthly visitors (or 80% of the US population of 320M). Monthly Unique Visitors (000), Dec 2015 Dec 2016 (of any site or app via computer or mobile device) Total Unduplicated Internet Audience Computer and Mobile 260, ,101 Total Unduplicated Internet Audience Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 7 Source: IAB Digital Usage Trend Report Full Year 2016 ComScore US Media Metrix MultiPlatform Dec to Dec. 2016, Total Unduplicated Internet Audience.

8 Time Spent Online Via Computer or Mobile Device Has Grown Users spend roughly 1.5 trillion minutes per month online Monthly Total Minutes (MM) Dec 2015 Dec 2016 (of any site, stream or app via computer or mobile device) % Change 12/15-12/16 Total Minutes (MM) 1,498,667 3% 1,448,481 Total Minutes (MM) 8 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Source: ComScore US Media Metrix MultiPlatform Dec to Dec Effective with January 2016 data, the comscore audience product suite (Media Metrix MP, Media Metrix, Video Metrix, Mobile Metrix) underwent methodology and processing enhancements affecting all markets and all audience products. IAB Digital Usage Trend Report Full Year 2016

9 Online Advertising Revenue Continues Its Incredible Growth Quarterly Online Ad Revenue Comparisons Q Q Record Revenue FY 2016 $72.5B 1996 $267M 9 Source: IAB Full Year and Q Internet Advertising Revenue Report

10 Full Year 2016 Year-Over-Year Full Year 2016 Digital Ad Revenue Has Grown by Double Digits from the Previous Year to $72.5 Billion $ Billions Digital Ad Revenue Growth (FY 2015 vs. FY 2016) $80 $70 $60 $ % $72.5 Total Media Ad Revenue Growth (FY 2015 vs. FY 2016) $50 $40 $30 $20 The Nielsen Company estimates total media revenues for FY 2016 increased by 1% from FY 15 to $121.1B* $10 $0 FY 2015 FY 2016 Source: IAB Full Year and Q Internet Advertising Revenue Report *The Nielsen Company, MonitorPlus (Standard Calendar, Total includes B2B, National Internet (Display only), FSI Coupons), Apr. 2017

11 Consumer Usage Trends What s Driving Growth? 11

12 Consumer Adoption of Digital 257 Million consumers accessed the internet in the month of December The vast majority visited sites or apps for activities ranging from entertainment to social media to shopping 100% % of Total Internet Population 100% 97% 97% 95% 92% 91% 91% 87% 87% 83% 79% 76% 50% 0% 12 Top Categories by Unique Visitors as a % of Total Online Pop. Monthly Total Unique Visitors/Viewers (000), Dec 2016 (to any site or app via computer or mobile device) Source: comscore US Media Metrix Multi-Platform, Dec 16, Total Unduplicated Internet Audience IAB Digital Usage Trend Report Full Year 2016

13 What s Driving Growth? Consumers Have Adopted Digital as a Way of Life Consumers shop online, date online, socialize online, hail cabs via apps and are entertained online Consumers Shop Online Socialize Online 88% Purchase Products Online Regularly or occasionally US Adults 18+ (Prosper Media Behavior Insights. 2017) 64% Download Apps Regularly or occasionally US Adults 18+ (Prosper Media Behavior Insights. 2017) Hail Cabs Over Mobile Apps Are Entertained Online Comparison Shop on Smartphones in Stores 56% Read Product Reviews In Store to Decide Between Products Regularly or occasionally US Adults 18+ (Prosper Media Behavior Insights. 2017) Date Online 13 Source: Prosper Insights 2017 Media Behaviors Insights

14 While These Activities Offer Opportunities, They Also Bring Challenges Consumers shop online, date online, socialize online, hail cabs via apps, are entertained online Consumers Shop Online Powered by: Data Challenge: Data Quality Hail Cabs Over Mobile Apps Powered by: Geolocation Data 88% Purchase Products Online Regularly or occasionally US Adults 18+ (Prosper Media Behavior Insights. 2017) Are Entertained Online Challenge: Location Data Quality Powered by: Data Challenge: Attribution 64% Download Apps Regularly or occasionally US Adults 18+ (Prosper Media Behavior Insights. 2017) Comparison Shop on Smartphones in Stores 56% Read Product Reviews In Store to Decide Between Products Regularly or occasionally US Adults 18+ Powered by: Beacons Challenge: Data Quality (Prosper Media Behavior Insights. 2017) Socialize Online Powered by: Data Challenge: Walled Gardens Date Online Powered by: Data Challenge: Data Quality 14 Source: Prosper Insights 2017 Media Behaviors Insights

15 The Data That Underpins Popular Online Activities Enables Opportunities: Shopping: Beacons allow for customized offers to consumers when in or near a store Geolocation allows advertisers to connect ads to consumers in-store visits Taxi Services: Location data enables Uber and other taxi services to function Challenges: Location data can be inaccurate Matching location data with users poses measurement challenges 15

16 Measurement and Data Challenges Are Top Priorities Which use cases do you expect will most occupy your time, attention and resources during 2017? 2017 Cross-channel measurement and attribution Programmatic media buying for established formats 48% 57% Cross-channel audience identification/matching 43% Cross-Channel Program Measurement, Audience Engagement Still Among Top Priorities for Coming Year Advertising content/experience optimization General audience analytics Programmatic media buying for emerging formats Predictive modeling and/or segmentation Yield optimization Online retargeting Online to offline (or offline to online) retargeting 23% 23% 33% 40% 40% 38% 38% Note: Multiple choice list provided; panelists were able to select up to 5 use cases; 84 panelists responded 16

17 Key Challenges + IAB Data & Ad Effectiveness Plans Challenges Key Proposed Initiatives IDENTITY Identity Standards Identity Validation Service DATA QUALITY Data Quality Guidelines/Standards Data Lexicon enhancements DATA EXPERTISE Data Maturity Model enhancements Training/Events CONSUMER (Experience, Privacy) LEAN, DEAL evolution Coalition for Better Ads rollout Identity Standards MEASUREMENT Industry metrics standards: audience, engagement, cross-media ATTRIBUTION Attribution Primer enhancements Multi-touch Attribution Guidance (done) AUTOMATION Clarifying programmatic Mobile programmatic monetization Header bidding guidance Training/Events DATA AD EFFECTIVENESS 17

18 What s Driving Growth? Consumer Adoption of Social Media 18

19 What s Driving Growth? Social Media is Now an Integral Part of Most Consumers Lives 9 out of 10 users access social media at least once a month 4 out of the top 10 mobile apps are social media apps Top 10 Mobile Apps 91% of Internet Population Access Social Media Monthly Unique users via any device via app or site (ComScore MMX Dec. 2016) Total Google Sites Facebook Top 10 Properties Accessed by Mobile App by Unique Visitors (000) Dec , , , M Unique Users Access Social Media Monthly Using any device via app or site (ComScore MMX Dec. 2016) Apple Inc. Amazon Sites Snapchat, Inc 84,937 81, , B Minutes Are Spent Monthly on Social Media Using any device via app or site (ComScore MMX Dec. 2016) PANDORA Yahoo Sites Weather PINTEREST 79,812 79,441 56,160 52,971 Twitter 45, Source: IAB Digital Usage Trend Report Full Year 2016, ComScore MMX Dec. 2016

20 $ Billions As a Result, Social Media Ad Revenue Continues to Climb Total Social Media Revenue (Mobile + Desktop) is up 50% to $16.3 Billion in FY st Half Year US Social Media Ad Revenue ($ Billions) Across Formats and Devices Full Year, Half Year and % YoY Growth 2nd Half Year $16.3 $9.3 $10.9 $7.0 $6.4 $2.9 $1.7 $1.2 Growth FY: 53% 1HY: 50% $4.5 $2.6 $1.9 Growth FY: 57% 1HY: 58% $4.1 $2.9 Growth FY: 55% 1HY: 51% $4.4 Growth FY: 50% 1HY: 57% $7.0 FY'12 FY '13 FY '14 FY '15 FY '16 Note: Full Year totals accurately reflect the sum of Half Year totals as rounded to two decimal places. 20 IAB Full Year 2016 and Q Internet Advertising Revenue Report

21 Native Advertising is Growing: Seamless Integration with Content Offers Higher Engagement By 2021, native display ad revenue (including banner, rich media, sponsorship, and video ads) in the U.S., is expected to make up 74% of total U.S. display ad revenue, up from a 56% share in A Nielsen case study illustrates that native video ads generate a higher brand lift than pre-roll video ads that carry the same creative message across five brand campaigns Types of in-feed native ads 26% 74% Source: IAB Deep Dive On In-feed Ad Units, July BI Intelligence, Comparing Resonance for Native and Pre-roll Video Ads with Real-time Metrics, Nielsen, 2013.

22 Native Advertising Opportunity: 42% of Original Digital Video Ad Spending in 2016 Was on Native Advertising Native Original Digital Video is expected to increase: Over half (56%) allocated more of their budget to native Share of Original Digital Video Ad Dollars Allocated to Native Advertising 58% 42% of ODV Ad Spend in 2016 was on Native Advertising 56% Increased Spend On Native Original Digital Video Ad Spend 22 Q164 What percent of the ad dollars you spent in 2016 on professionally produced original digital video programming/content was spent on native advertising? Base: Total Respondents

23 Streaming Audio is Growing in Importance 3 of the top 10 mobile apps by time spent online are exclusively streaming audio apps. Digital audio ad revenue has grown, largely due to mobile 864, , ,245 Top Mobile Apps by Minutes Spent (000) Dec Digital Audio Ad Revenue (Mobile + Desktop) FY 2016 % of Ad Revenue Derived from Mobile vs. Desktop $1.1B 89,645 41,871 36,055 22,329 22,246 15,167 12,901 11,621 Total Facebook Google PANDORA Spotify Apple GasBuddy Snapchat Soundcloud Netflix Verizon 81% 19% Total Audio Mobile Desktop 23 Source: IAB Digital Usage Trend Report Full Year 2016, IAB/PWC FY 2016 Internet Ad Revenue Report

24 Programmatic Opportunity and Challenge Programmatic Opportunity: Automation allows buying efficiently at scale Programmatic Challenge: - Absence of universally accepted definitions causes difficulty in measuring and quantifying the market - Nearly half of a programmatic ad buy goes to tech companies Opportunity: Challenge: Nearly Half To Ad Tech Companies 24 Source: IAB/PWC Programmatic Ad Revenue Study, emarketer.

25 What s Driving Growth? Consumer Adoption of Mobile 25

26 $ Billions Mobile Advertising Revenue Growth: Mobile Revenue is Over 10x Larger Than It Was 5 Years Ago US Mobile Ad Revenue ($ Billions) Full Year, Half Year and % YoY Growth 1st Half Year 2nd Half Year $36.6 $21.1 $3.4 $2.1 $1.2 Growth FY: 110% 1HY: 145% $7.1 $4.0 $3.0 Growth FY: 76% 1HY: 75% $12.4 $7.1 $5.3 Growth FY: 66% 1HY: 54% $20.7 $ $12.5 $8.2 Growth FY: 77% 1HY: 89% $15.5 FY'12 FY '13 FY '14 FY '15 FY'16 Note: Full Year totals accurately reflect the sum of Half Year totals as rounded to two decimal places. 26 IAB Full Year 2016 and Q Internet Advertising Revenue Report

27 Consumers are Spending More Time Online on Mobile Devices 195 Million Americans Used a Mobile Device Online in Dec US adults spent nearly 1 trillion minutes online with their mobile devices in Dec Total Minutes 950M Total Minutes: Digital and Mobile Audience Trend (Monthly Minutes Spent Online (MM), Dec Dec. 2016) (Mobile Includes Browser and Apps) Total Minutes 1.0B 160, ,541 17% 15% Total Tablet Minutes 83% 85% 156, ,654 Total Smartphone Minutes Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec Source: comscore US Media Metrix Multi-Platform, Dec 15 Dec 16, Total Internet Time Spent (MM) Effective with January 2016 data, the comscore audience product suite (Media Metrix MP, Media Metrix, Video Metrix, Mobile Metrix) underwent methodology and processing enhancements affecting all markets and all audience products. IAB Digital Usage Trend Report Full Year 2016

28 Most Consumers Use Both Desktop and Mobile to Access the Internet Those Who ONLY Use Computers to Access the Internet Skew Older Those Who ONLY Use Mobile to Access the Internet Skew Younger Desktop Only Users Total Unique Visitors Mobile Only Users 62% 21% 17% A55+ A35-54 A % 12% 78% Desktop Only Mobile Only Both Desktop and Mobile 28% 25% 46% Desktop Only Users Composition of Total Monthly Unique Visitors Who Only Use Desktop, Mobile ComScore MultiPlatform Dec Total Audience, Home and Work. Desktop. Mobile. 28 IAB Digital Usage Trend Report Full Year 2016 Mobile Only Users

29 But Time Spent Online is Shifting to Mobile, Especially to Smartphones While users continue to spend more time online overall (up 3%), most of that growth is driven by consumers on smartphones Time spent online on smartphones is up 10% Total Minutes 1.45B Total Minutes: Digital and Mobile Audience Trend (Monthly Minutes Spent Online (MM), Dec Dec. 2016) (Mobile Includes Browser and Apps) Total Minutes 1.48B Total Minutes 3% 11% 10% Total Tablet Minutes 54% 59% Tablet -3% Total Smartphone Minutes Smartphone 10% 35% Total Computer Minutes 31% Computer -8% Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec Source: comscore US Media Metrix Multi-Platform, Dec 15 Dec 16, Total Internet Time Spent (MM) Effective with January 2016 data, the comscore audience product suite (Media Metrix MP, Media Metrix, Video Metrix, Mobile Metrix) underwent methodology and processing enhancements affecting all markets and all audience products. IAB Digital Usage Trend Report Full Year 2016

30 Most Top Categories by Time Spent Online Are Accessed Primarily from Mobile Devices Top Categories by Time Spent on Any Device Monthly Minutes (000), Dec 2016 (to any site or app via computer or mobile device) 100% 69% 67% 81% 81% 86% 28% 64% 87% 58% 39% 69% % Mobile 50% % Computer 31% 33% 72% 36% 42% 61% 31% 0% 19% 19% 14% 13% 30 Source: comscore US Media Metrix Multi-Platform, Dec 16, Total Unduplicated Internet Audience, Total Minutes IAB Digital Usage Trend Report Full Year 2016

31 More Time is Spent on Mobile Apps Than on Mobile Web Most use both mobile apps and mobile web, however they spend more time on mobile apps. Total Mobile Minutes Online (000) Total Mobile Minutes on Browser vs. In App Total Browser Minutes Total App Minutes 182 Million Users Accessed Mobile Apps In Dec % 14% 170 Million Users Accessed Mobile Web In Dec Dec Source: comscore US Mobile Metrix, Dec 16, Total Minutes (000) Browsing, Applications Source: comscore US Media Metrix Multi-Platform, Dec 16, Total Monthly Unique Users Accessing Mobile App (MM) IAB Digital Usage Trend Report Full Year 2016

32 Mobile Video Opportunity: Vertical Video As users typically use mobile apps in vertical orientation on smartphones, vertical video grows in importance Half of marketers and advertisers surveyed purchased vertical video ads in 2016 Bought Vertical Video Ads in 2016 No 49% Yes 51% Q189 Have you bought ads in vertical video in 2016? Base: Total Respondents 32 Source: IAB 2017 Video Ad Spend Study

33 Mobile Video Challenge: Most Apps are Used in Fixed Vertical View but Some Interstitial Video Ads are Displayed Horizontally Anyway When Using Apps in Vertical Orientation, Many Users Don t Switch Video Orientation to Watch Horizontal Videos 33

34 Over Two-Thirds of All Internet Time is Spent on a Mobile Device The share of time spent online using a mobile device continues to grow, up from 65% a year ago. Dec Dec % of Total Internet Minutes Monthly Minutes Spent Online (MM), Dec 2015 vs. Dec 2016 (Mobile Browser and Apps) 35% Total Desktop Minutes 65% Total Mobile Minutes Total Mobile Minutes 9% YoY Growth in Mobile Minutes 31% Total Desktop Minutes 69% Total Mobile Minutes Total Computer Minutes 34 Source: IAB Digital Usage Trend Report Full Year 2016 ComScore US Media Metrix Multi-Platform, Dec 15 Dec 16, Total Internet Time Spent (MM)

35 Consumer Usage Shift to Mobile Devices Translates into Mobile Ad Revenue Mobile Advertising Has Grown to Account for Over Half of Digital Ad Revenue for Full Year 2016 $ Billions Mobile as a Percentage of Digital Ad Revenue Growth (FY 2015 vs. FY 2016) $80 $70 $60 $50 $ % $72.5 $40 $30 $20 $10 $0 $ % was Mobile 77% $ % is Mobile FY 2015 FY 2016 Source: IAB Full Year and Q Internet Advertising Revenue Report

36 Mobile Advertising Revenue is Catching Up to Consumer Usage But Still Has Room for Growth Mobile as a Percent of Digital Time Spent vs. Ad Revenue Media Time: 0:00 Ad Dollars: $ 31% 49% Desktop 69% 51% Mobile Time Spent Online on Mobile Devices ComScore US Media Metrix Multi-Platform, Dec 16, Total Internet Time Spent (MM) Mobile Ad Revenue Dec. 16 Full Year 2016 Source: IAB Digital Usage Trend Report Full Year 2016, IAB 2016 Full Year and Q Internet Advertising Revenue Report

37 What s Driving Growth? Consumer Adoption of Video 37

38 2016 Digital Video Ad Revenue: $9.1 Billion Digital Video Ad Revenue Growth Accelerates with Mobile Video US Desktop and Mobile Video Ad Revenue ($ Billions) Full Year and % YoY Growth FY Desktop Video FY Mobile Video $9.1B $4.2B $5.9B $1.7B 53% Growth Total Video 145% Growth $2.3B $2.8B $3.3B $4.2B $4.9B 19% 17% $1.0B $1.3B Growth $1.5B Growth $2.0B FY'12 FY '13 FY '14 FY'15 FY'16 30% Growth *Half Year totals accurately reflect the sum of half year totals as rounded to two decimal places. Prior to 2016, mobile video was included in mobile ad revenue 16% Growth IAB.com/AdRevenueReport Source: IAB Internet Advertising Revenue Reports, Conducted by PWC, Full Year

39 Original Digital Video: Typical Buyer Will Spend $4.4M in 2017 on Original Digital Video Advertising Buyers anticipate spending an average of $4.4 million on original digital video in 2017, up 80% from in 10 advertisers (88%) increased original digital video budgets as a result of attending the NewFronts Average Dollar Amount Spent on Original Digital Video 3 Year Trend (in millions) by Marketers and Advertisers $4.4 $2.4 $3.0 80% Increase % Change in Original Digital Video Dollar Spend Q143. Previously you said your company will spend [INSERT RANGE] on digital video/mobile video in We d like to get a bit more detail on that and prior year s spending. To the best of your knowledge, what exactly was that spending amount in 2015 and 2016? What do you anticipate spending in 2017? Q145 What portion of your total digital video advertising budget for [your company s/your client s] biggest most important product or service in the [INSERT ASSIGNED MARKET SECTOR] market was spent advertising on each type of content in 2015 and 2016? And what do you anticipate those shares will be in 2017? Base: Total Respondents Source: IAB 2017 Video Ad Spend Study

40 Digital Video Viewing is Now Mainstream: The Majority Stream Video Regularly 232 Million Users Stream Digital Video (ComScore, Dec. 2016) 42 Billion Videos Streamed (ComScore, Dec. 2016) 162 Trillion Minutes of Video Streamed (ComScore, Dec. 2016) 40 Source: ComScore VMX Desktop Dec. 2016, Total Internet. IAB Digital Usage Trend Report Full Year 2016

41 The Changing TV Experience: Connected TVs Are Now the Norm: More Consumers Own Connected TVs Than Don t Connected TV Device Ownership (including smart TVs and video streaming devices) 2015 Own a Connected TV or Device Don't Own 2017 Up 57% Connected TV 36% 43% Ownership Since % 57% Higher Connected TV ownership among 18-34s (70%). No major difference between pay TV subscribers (58%) and Cord Cutters/Nevers (54%) 41 Q1.0. Which of the following devices do you or your household personally own? Base: 2017 Adults 18+, n=802; 2015 total, n=651 IAB Research Using Maru/Matchbox s Springboard America Online Panel, Representative of General US Adult 18+ Online Population, March 2017

42 The Changing TV Experience: 22% of Connected TV Owners Use Their TV Primarily for Streaming Digital Video, Double That of 2015 Time Spent Watching Traditional Live TV vs. Streaming Digital Video Among Connected TV Owners 62% % 27% 27% 22% 11% Only / Mostly watching traditional live TV Half watching traditional live TV, half streaming digital video to the TV Only / Mostly streaming digital video to the TV 42 Q8.1A. Overall, about how much of your viewing time would you say is spent watching traditional live TV vs. streaming digital video to your TV set? My video viewing time is spent... Base: Those who own a Connected TV device, 2017 n=461, 2015 n=153 IAB Research Using Maru/Matchbox s Springboard America Online Panel, Representative of General US Adult 18+ Online Population, March 2017

43 Explosion of Video Content Poses Content Discovery Challenges and Ad Opportunities 66% agree I wish there was one place where I could find all the video I want % Who Say Ads Have Influence On What They Watch Among Viewers of Each 81% 82% 79% A lot A little 22% 30% 58% 53% 39% 40% 43 TV Shows Q12. Do ads for [INSERT VIDEO_TYPE] influence you to watch Base: Viewers of each video type IAB Research using MARU/Matchbox's Springboard America Online Panel Representative of General US Adult 18+ Online Population, March 2017 Subscription Service Original Shows Original Digital Videos Source: IAB 2017 Changing TV Experience IAB 2017 Video Content Discovery Study

44 Social Media Influences What Viewers Watch, Especially Original Digital Video Over half of Original Digital Video Viewers say social media has a strong influence on what they watch % Who say social media has a strong influence on what they watch Among Viewers of Each 45% 57% A lot 32% 20% 27% A little 13% 19% 25% 30% 44 TV Shows Q19. How much do you agree or disagree with the following statements about finding videos to watch? (Agree/Strongly Agree) Social media has a strong influence on what videos I watch Base: Viewers of each video type IAB Research using MARU/Matchbox's Springboard America Online Panel Representative of General US Adult 18+ Online Population, March 2017 Subscription Service Original Shows Original Digital Videos

45 New Ad Formats Offer Engaging Ad Experiences: Vertical Video, VR, AR, 360 Video, Live Video Vertical Video According to Snap, vertical video ads have up to nine times more completed views than horizontal video ads Live Video Major platforms like Facebook, Snapchat, and Twitter are making a big push into live video. Virtual Reality/Augmented Reality/360 Video The promise of immersive storytelling with Virtual Reality, Augmented Reality, and 360 video has led brand marketers to experiment with the formats Consumers have shown a high engagement and interactivity rate and time spent with the formats The VR install base is still small but growing. According to emarketer, VR users worldwide will grow from 6.5 million in 2016 to 24.4 million in

46 Video Opportunity: Buyers Show Interest in New Video Formats and Plan to Advertise in Them More Than 3 in 4 agree the 2016 NewFronts encouraged advertisers to plan VR / 360 degree advertising More than 3 in 4 intend to buy either virtual reality, 360 video or augmented reality advertising in the next 12 months Advertising Formats Intend to Buy Next 12 Months Method of Buying These Formats Virtual Reality 51% Other 1% 360 Video Augmented Reality 46% 39% Tie-in with something else 52% Individual deal 47% Intend to Purchase Augmented Reality Agency: 32% Marketer: 46% Purchase Individually TV Primary: 64% Digital Primary: 44% Tie-In with Something Else TV Primary: 36% 46 Source: 2017 IAB Video Ad Spend Study Digital Primary: 55% None of the above 23% Q185 In the next 12 months do you plan to buy advertising in any of the following formats? Base: Total Respondents Q186 How will you buy Augmented Reality, Virtual Reality, 360 Video advertising formats? Base: Total Respondents Who Intend to Buy Any Listed Formats

47 Video Challenge: Lack of Standardized Measurement Causes Market Inefficiency and Confusion In the 2016 IAB Video Ad Spend Study, measurement is cited as the biggest challenge to digital video buying among ad buyers Biggest obstacles to digital/mobile video advertising to ad buyers The variances in digital measurement results and lack of standards have created friction and inefficiencies in selling and buying digital video To name a few, digital video measurement challenges include varied definitions of a view, lack of agreement on viewability, and which engagement metrics matter EXAMPLE: What constitutes a digital video ad view? Currently in the marketplace, the definition varies from publisher to publisher some follow one second threshold, some follow three seconds; some are using the ad load, some are using the ad call; some have autoplay, some have userinitiated start. 47 Source: IAB Video Ad Spend Study, 2016.

48 8 in 10 Agree that an Independent Measurement Audit Influences their Decision to Work with a Media Brand % Who Agree that: Knowing that a media company has undergone an independent measurement audit (i.e. MRC accreditation) influences my decision to work with them Total 28% 53% 81% Agency 34% 50% 84% Marketer 23% 56% 79% Agree Completely Agree Somewhat Q142 How much do you agree with the following statement? Base: Total Respondents Source: 2017 IAB Video Ad Spend Study 48

49 Digital Ad Impact Ad Revenue is Growing Because Digital Works 49

50 Why the Growth in Digital Advertising? Because Digital Works: Digital Ads Influence Purchases Internet advertising, ads and social media are especially influential 22% 20% Please tell us which of the following media influences your ELECTRONICS/CLOTHING purchases (US Adults 18+) 25% Digital Purchase Influence on Electronics Digital Purchase Influence on Clothing 18% 16% 14% 13% 10% 12% 10% 9% 9% 14% 9% 9% 7% 7% 6% 5% 4% 50 IAB Online Holiday Shoppers and Digital Influence, Dec. 2016

51 Digital Is Impactful: Significant Lift Shown in Ad Awareness, Brand Familiarity and Consideration After Exposure to Desktop or Mobile Ads Desktop and mobile were a key component of the total campaign impact Delta (Exp.% - Ctrl%) 10% % 88% 92% 24% Lift 29% Launch of New Major Auto Brand Model 36% 22% Lift 50% 61% 44% 48% 23% Lift 24% 24% 20% 20% Percentage Point Change After Digital Ad Exposure Unaided Awareness Aided Awareness Aided Ad Awareness Brand Familiarity Brand Favorability Brand Consideration Seek Information Control Digital Exposed (Desktop, Mobile Web or Mobile In-App) 51 Indicates significant increase over control at 90% confidence Source: IAB Cross Media Ad Effectiveness Study, 2017.

52 Cross Media Advertising It s Not Just About Digital 52

53 But It s Not Just About Desktop Or Mobile Or Even Digital We Live In A Cross-media World Consumers use all media often simultaneously Devices Used While Watching Traditional TV Among pay TV customers with a 2 nd screen device 81% Use any device while watching TV 58% 46% 35% Smartphone Computer Tablet 29% say their activities on other devices are mostly/completely related to TV or commercials 53 Q4.0.1.Which of the following devices, if any, do you use simultaneously while watching traditional live TV programming on a TV screen? Q Which of the following devices, if any, do you use simultaneously while watching digital video streamed to a TV screen? Base: Those who own a computer/tablet/smartphone and have pay TV / Connected TV IAB Research Using Maru/Matchbox s Springboard America Online Panel, Representative of General US Adult 18+ Online Population, March 2017 Source: IAB 2017 Changing TV Experience

54 Cross Media Opportunity: Ads are More Influential When Shown Across Media Digital AND Traditional Advertising Combinations Improved Ad Impact of an Auto Campaign: Unaided Brand Awareness: Brand Familiarity: 211% Lift from Desktop + Mobile Web + TV (19 ppt) 19% Lift from Desktop + Print Ads (9 ppt) Brand Favorability: Brand Consideration: Seeking Info: 28% Lift from Desktop + Print Ads (11 ppt) 50% Lift from Desktop + Print Ads (8 ppt) 56% Lift from Desktop + Print Ads (9 ppt) ppt = percentage point lift from control 54 Indicates significant increase over control at 90% confidence Launch of New Model by Major Auto Brand Source: IAB Cross Media Ad Effectiveness Study, 2017.

55 Expanding Upon Digital Digital alone can be a healthy driver of campaign performance 24% growth in aided ad awareness and 23% growth in brand consideration when exposed to ads on desktop or mobile (auto brand) 11% increase in unaided brand awareness and 5% growth in brand favorability when exposed to ads on mobile (CPG brand) Digital, when combined with traditional media, drives campaign success 211% increase in unaided brand awareness when exposed on desktop, mobile & TV (auto brand) 50% growth of brand consideration when exposed on desktop & print (auto brand) Combined exposure to digital & TV accounted for 63% of the growth in brand association (CPG brand) 55 Source: IAB Cross Media Ad Effectiveness Study, 2017.

56 Marketers Are Increasing Spending in Cross Media Advertising Cross-Platform Spending Will Continue to Grow in 2017, Driven by Agencies Change in YOY Spending on Cross-Platform 2017 vs Total 59% 40% 1% 58% +58 Agency 67% 33% 0% 67% Marketer 53% 46% 1% 52% Increase Maintain Decrease Net Optimism (Increase Minus Decrease) Q180c. You said in 2017 you anticipate spending [FILL IN % FROM Q180a_3]% of your advertising budget on cross-platform buys. Thinking about dollars (as opposed to share of budget) you anticipate spending in 2017, would this be an increase, the same amount, or a decrease compared to dollars spent on cross-platform in 2016? Base: : Total Respondents Who Anticipate Spending More on Cross-Platform Buys 56 Source: IAB 2017 Video Ad Spend Study.

57 More Than One-Third of Advertisers 2017 Budget Will Be Spent on Cross Platform (TV + Digital Video) Buys Average Percent Share of Ad Budgets Spent on Cross-Platform 3 Year Trend = % Change in Share Spent on Cross Platform % Increase % Increase % Increase % 38% 38% 34% 35% 32% 33% 34% 31% Total Agency Marketer Q180a What share of your advertising budget was spent on cross-platform buys (TV and digital video from the same programmer/tv network) in 2015? In 2016? And what share do you anticipate spending in 2017? Base: Total Respondents 57 Source: IAB 2017 Video Ad Spend Study.

58 The Future Digital Trends on the Horizon: Connected Devices & IoT 58

59 62% of US Adults Own at Least One Connected Device Among those who don t, nearly all have heard of them and about two-thirds are interested in buying one Connected Device Ownership Among Total US Adults 18 and older Connected Device Awareness & Interest Among Total US Adults 18 and older who don t own a connected device IoT Connected Devices: 97% 62% Connected cars Wearables Fitness Trackers Smartwatches VR headsets Smart Glasses Connected/smart TVs Internet-Enabled Voice Command Home Control Systems Smart Appliances 65% M Own a connected device Heard of connected devices Interested in Purchasing a connected Device Text next to the numbers indicates that that group over indexes on that attribute. For ex., M = more likely among men, W = more likely among women, Asian = more likely among Asians, = more likely among year olds, = more likely among year olds, 55+ = more likely among 55 year olds and older 59 IAB The Internet of Things, Dec Q1. Which of the following have you heard of and do you personally own? Base: Total, n=1209. US Adults 18+ Q2. How interested are you in purchasing each of these devices? Base: Floating aware but don t own device.

60 Strong Growth of Connected Devices is Predicted 60

61 New Devices and Formats Offer Consumers More Ways to Be Connected Online IoT Opportunity: More ways for marketers to seamlessly connect with consumers IoT Challenge: Adoption of new devices and formats will continue to pose measurement challenges for the industry 61

62 Cross Device Challenges: Understanding Media Consumption Habits to Identify Marketable Moments We know consumers are using all types of media throughout the day. The challenge is to understand their individual media consumption habits across their devices The key is to understand Marketable Moments When is the best time to reach a consumer and on which device in order to influence the purchase of an advertiser s product. This 1 to 1 marketing will be enabled by new data inputs at scale but only if the foundations for measurement and data are set today. Accurate device graphs are just the beginning 62

63 Digital Trends: Opportunities and Challenges Market Research Council Presentation KRISTINA SRUOGINIS May 12, 2017 Yale Club, New York, NY Questions? IAB.com/ResearchHub