Programmatic Advertising in New Zealand May 2016

Contents 1. Programmatic Advertising – Deep Dive, New Zealand, 2016 ...... 3 2. Programmatic Types ...... 4 3. Programmatic Motivations ...... 5 4. Programmatic Issues ...... 5 5. Programmatic Technology Stack Overview ...... 6 6. Table - A Sampling of stakeholders in the New Zealand online programmatic ecosystem ...... 7 7. References ...... 8 8. About IABNZ ...... 9

1. Programmatic Advertising – Deep Dive, New Zealand, 2016

The aim of programmatic advertising is to connect buyers and sellers via automated means, to create efficiencies that benefit all parties involved. The IAB recognises that programmatic will play an increasing role in our future ecosystem. Our goal is to promote education around how programmatic can connect the buy side and the sell side across a range of buying models, how it requires transparency (around fees, eCPMs for example), the skills and resources involved and the need for both sides to work together with a clear process around making the programmatic connections function technically and efficiently for all parties. As with any technology, solid integration, strategy, processes and education are needed for optimal usage.

Word from the editors: The goal of this paper is to condense the most important factors when it comes to understanding programmatic. The factors that are least likely to change over time, condensed into a single paper that can be returned to time and time again. The issues are relevant in New Zealand and globally as of 2016.

2. Programmatic Types

Type of Other Terms Used Benefits to Deal Type Pricing Participation Inventory in Market Advertisers

Programmatic Used for long range Guaranteed planning where target Automated Reserved Fixed One to One Programmatic Premium inventory is limited Guaranteed Programmatic Direct and spend needs to Programmatic Reserved be secured.

Used if the buyer can secure a price discount on target inventory without needing to commit to Preferred Deals Unreserved a set spend. Gives the Unreserved Fixed One to One Private Access buyer the ability to Fixed Rate First Right of Refusal choose and reject impressions to increase ROI by leveraging user data in the purchasing decision. Less competition than open market and publishers have the incentive & power to put exclusive, high Private Marketplace value inventory into Invitation Private Auction this ‘ walled garden‘. Unreserved Auction One to Few Only Auction Closed Auction Gives the b uyer the Private Access ability to choose and reject impressions to increase ROI by leveraging user data in the bidding and pricing decision. Pick up great prices on sometimes expensive inventory should Publishers expose this inventory Real-time Bidding (RTB) Open in a non-blind buy. Unreserved Auction One to Many Open Exchange Gives the buyer the Auction Open Marketplace ability to choose and reject impressions to increase ROI by leveraging user data in the bidding and pricing decision Table Source 1

3. Programmatic Motivations

Advertisers:

 More efficiently target consumers across digital media to reach KPI’s  Efficiently value & transact digital media  Expand yield from targeted inventory

Publishers:

 Improve operational efficiency  Add value to their audience by overlaying data  Optimise yield from all inventory

4. Programmatic Issues

- Transparency over fees: Despite programmatic media’s focus on efficiency, where technology fees aren’t broken out from CPMs buyers and sellers end up evaluating inventory value and ROI based on limited information. E.g. a buyer thinks they are purchasing inventory at a $10 CPM when they may be getting inventory a publisher values at a $4 to $6 CPM plus undisclosed fees bundled into the CPM.

IMPORTANT UPDATE ON THIS ISSUE - MARCH, 2016 The IAB team in New York has released a Programmatic Fee Transparency Calculator that factors in 11 of the most common technology service layers involved in programmatic trading. This off the back of a study in July of 2015 that reveals that the technology layers are taking 55% of the fee’s vs 45% for publishers (see reference 2) Calculator available at http://www.iab.com/guidelines/iab-programmatic-fee-transparency-calculator/

- Single aggregate bids (hides useful info from the market): For price efficiency many buyer representatives such as DSPs conduct internal pre-auctions and then submit a single bid to represent all of their clients. Among the consequences is losing the ability to match buyer intent and pricing goals with high value auction inventory, significantly lower bid density, market liquidity and efficiency.

- Data complexity across devices: most tools used to facilitate programmatic buying in the desktop environment are dependent on digital cookies as the centrepiece of the audience identification and segmentation effort. Within the confines of most mobile browsers and app environments though, cookies are functionally irrelevant for advertising purposes. While no dominant solution has yet emerged for “cookie-less” audience engagement across devices, various approaches are emerging.

- Sales Team role: Most publishers have existing direct sales forces in place, many of whom are worried about becoming obsolete to automated processes. For a publisher there is no single way to build programmatic capability. It depends on the type of publisher, existing capabilities, current organizational structures and many more factors. Some patterns are starting to emerge and the role of sales people is likely to evolve to become increasingly

focused on growing and maintaining relationships with buyers and move away from a transactional media sales role.

See reference 3 for more on these issues

5. Programmatic Technology Stack Overview

TV’S DEVICE APPSAPPs

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6. Table - A Sampling of stakeholders in the New Zealand online programmatic ecosystem

Publisher Bauer Media Group, Facebook Fairfax Media, Google, YouTube, Maori TV, MediaWorks, Metservice, MSN NZ, NZME, Healthy Life Media, Pandora Internet Radio, Grown Ups, SEEK.co.nz, Sun Media Ltd, Sky Television, Yellow Pages, The Radio Network, Vodafone, TVNZ, Yahoo!New Zealand, Trade Me (not shown but also relevant are all international publishers where New Zealand eyeballs are monetized) Sales House/ Ad Network AdHub Ltd, Google Adsense, 3Di, AD2ONE, eGENTIC, Exponential Interactive, MADE Media, Mobile Embrace, TPN (The Performance Network), The Radio Bureau, Associated Media Representatives, VeNA (Video Entertainment Network Asia), Mi9 Publisher Ad Server Atlas, Google DFP, MediaMind, Pointroll, SAS SSP AOL, AppNexus, FreeWheel, Google ADX, LiveRail (Facebook acquisition), Mobile Embrace, OpenX, Pubmatic, Rubicon-Project, sitescout (acquired adBrite), SpotXchange , Tremor Video, Yume Data Providers & Platforms Acxiom, Bluekai, Datalogix, eXelate, Great Sites, Lotame, Mobile Embrace, Navegg, TargusInfo, Oracle Marketing Cloud, TargusInfo, Quantcast Ad Exchanges AOL (Adap.tv), Google ADX, openX, rightmedia (Yahoo company) DSP Adap.tv (now AOL owned), appnexus, Brandscreen, DigiLowCost, Rubicon-Project (coming soon), TheTradeDesk, TubeMogul, videology Trading Desk (buy side) Acquire Online, Accordant Media, Amnet, Accuen, Cadreon, Dentsu Aegis Network, Vivaki, Xaxis Buyer ad server AOL (adap.tv), Google DCM, TubeMogul Media Agency Blackfoot New Zealand, DigiLowCost, OMD, Carat, Amnet, FCB, First Digital, GSL Promotus, Haines New Zealand Limited, Ikon, JWT, Lassoo Media & PR, Method Studios Ltd, MBM, Neo@Ogilvy NZMBM, MEC, Mediacom, MediaR, R.O. EYESearch Republic, Simpatico Advertising, Starcom, Spark PHD, Swaytech Ltd, Tracta Ltd, Trigger Marketing & Publicity, WorkMedia, Y&R, Zenith Optimedia Advertiser Accor Hotels, Acquire Online, ANZ, ASB, AUT University, Bayleys Real Estate, Briscoe Group Ltd, BurgerFuel, Coca-Cola Amatil, Countdown, Dunlop Flooring, EMI MUSIC, EziBuy, Foodstuffs New Zealand, Foodstuffs, Wellington Cooperative Ltd, FMG, Haines New Zealand Limited, Harvey Norman Stores NZ, Methven, Mighty Ape, Millennium Hotels and Resorts, Mitre 10, Noel Leeming Group, NZ Lotteries, NZ Racing Board, Philips Lighting, Positively Wellington Tourism, R&R Sport, Random House, Royal NZ Foundation of the Blind, Samsung Electronics New Zealand, Sovereign Subaru of NZ, Suncorp NZ, Sustainable Coastlines, St John, Sylvia Park Shopping Centre, The Warehouse Group Limited, Tourism Australia, Tourism New Zealand, Trustpower, TOWER, Unitec, University of Waikato Management School

In reality there are over a 100,000+ advertisers buying NZ eyeballs and environments programmatically. The above are thanked for their support of the IAB NZ.

Please note the list above is a representative snapshot as of the publication date. It is not comprehensive and is subject to change as industry mergers and acquisitions happen.

7. References

1) Programmatic Types - http://www.iab.com/wp- content/uploads/2015/06/IAB_Digital_Simplified_Programmatic_Sept_2013.pdf

2) Programmatic trading fee breakdown http://www.iab.com/wp-content/uploads/2016/03/Programmatic- Value-Layers-March-2016-FINALv2.pdf

3) Programmatic issues http://www.iab.com/wp- content/uploads/2015/06/IABDigitalSimplifiedProgrammaticAdvertisingTransparency.pdf

8. About IABNZ

Purpose:

IABNZ empowers NZ’s media and marketing industries to thrive in the digital economy, promoting growth and best practice for advertisers, agencies and media owners.

Our purpose supports: Traditional Media Players, Pure Play Digital Media Owners, Agencies and Advertisers – by supporting and collaborating in areas of: transitioning to digital, education & training, standards & guidelines, research, best practice, revenue growth.

Standards & Guidelines Council

Chair: Toni Knowles VeNA Vice Chair: Peter Henning Mediaworks Jeremy Hansen TVNZ Judit Maireder Ybrand Lucy Malcolmson Mi9 Jono Zhang Fairfax Zane Furtado Acquire Online Mark Banbrook Bauer Media

For more information visit www.iab.org.nz