The Changing Role of Data in Advertising: From Taming Chance to Unleashing Serendipity

1. BRUSSELS, 09 NOVEMBER 2015 Daniel Knapp, Senior Director Advertising Research daniel.knapp@ihs.com @_dknapp From the taming of chance to unleashing serendipity Introductory remarks on the changing role of data in advertising

2. Mortality, normal distribution & the taming of chance: ‘big data’ changes how we make sense of the world. Source: Wellcome Library, London. Bills of Mortality form August 15 - 22, 1665. High death rate from plague. 1665. Under CC BY.40

3. The holy grail: from averages to individuals, or replacing the marketing of sameness with the marketing of difference.

4. 59% ofonline advertising in Europe tobegeneratedthroughprogrammatictransactionmodelsby 2019

5. Ability to develop unique 1st party data and build massive consumer reach are competitive differentiators +43% +100% +84% ID with credit cards Monthly active users Cumulative Android activations

6. Value in advertising shifts from those who have content & audiences to those who own, manage, interpret data Ad spend flow in new digital ad ecosystem* 40% 20% 15% 15% *Illustrative only. Variances depending on deal negotiations, technology ownership. Refers to banner display advertising, assumes linear flow across all types of market participants listed. Data based on interviews with 43 ad tech companies, advertisers and publishers in Europe and the US (2014), and reviews of SEC filings by ad tech companies (e.g. Rubicon, Tremor, YuMe).

7. In a data & algorithms arms race, ad tech funding surges *Source: Crunchbase, company reports, GP Bullhound, IHS interviews & calculations. Excludes China. Excluding M&A.

8. Consumer spending patterns reveal access players’ incentives for entering the advertising market : legacy sector stagnation + data

9. Driven by M&A, a growing range of market participants taps into data-centric advertising technologies Agency Online technology platform Broadcaster Cable provider *Represents full,majority & minority stakes. ND is non-disclosed. List non-exhaustive, focus on broadcasters & their competitive set.

10. These deals are part of a broader imperative to build operating systems for the production, distribution, monetization of content & audiences *Acquisitions are listed with the year in which they were acquired

11. The contexts in which consumers leave data become integrated, and this integration goes far beyond cookies. Proxy Metrics Viewability OCR vCE Engagement Click-through-rate, Likes Reach GRP Holistic consumer understanding Purchase Metrics Correlated Buy-Through-Rate Causal Incremental Sales Lift ROI Descriptive Shopper Behaviour Purchase data (Auto, CPG, Retail, etc) Match data (Postal, Email, Cookie ID, Mobile ID, etc) Campaign data (Impressions, Creative Info, etc) Data pools

12. Emergent marketing technology builds bridges between offline customer & online data, helped by acquisitions. Software companies with CRM products enter the advertising value chain They are already making strategic acquisitions to cut across old data silos. Example Oracle. (CRM) (CRM) (CRM) (cloud-based customer service) (offline-online data conversion) (online advertising data management platform)

13. In Europe, publishers, advertising intermediaries and advertisers seek scale through data partnerships, yet alliances are mainly at national level

14. Data as the central node in the new advertising ecosystem Technology Consumers Global brand management, audience aggregation, transparency and privacy Global product development for apps and devices Global R&D and infrastructure DATA (individual, segment, region / nation, global) Audience measurement & insight Ad Tech & Mar Tech investment Global relationships with Agencies and Brands Global content commissions and licences Brand funded content partnerships Advertisers Content

15. Just two options for consumers - programm or be programmed? • “We need to program or we will be programmed.” (Rushkoff) • “We cannot just be users, consumers or prosumers. We have to break through the glass ceiling of the smooth interfaces and start programming.” (Lovink) • Is code literacy is the new reading revolution? (Hayles) 15

16. Several approaches to reconcile data and privacy beyond ad-blocking, opt-in/opt-out have emerged Start-up $10m Series-A funding. Creators and consumers to jointly decide how content is paid for. Make formerly implicit agreement explicit. Axciom initiative to let consumers access and review data stored about them (not all data, and not processed data). • Concept by Schönberger/Cukier (originated ‘right to be forgotten’ idea). • External algorithmist = allows individuals to present expulcatory evidence • Internal algorithmist = similar to ombudsman in organisation “Algorithmist” Legal design. Visualise complex legal texts, T&Cs, data processing policies and present them in easy to understand, actionable way to consumers. 16

17. daniel.knapp@ihs.com @_dknapp technology.ihs.com Thank you