s04 Ads Double Click

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© 2007 DoubleClick Inc. All Rights Reserved.

Online Advertising 101:

An Introduction to the Industry

Heath RowResearch Manager

DoubleClick Inc.

Jan. 31, 2008



My email address

[email protected]





What you w ill learn

• About DoubleClick

• What is third-party ad serving?

• A brief history of online marketing

• Market breakdown

• Kinds of media

• How online ads perform

• Major trends




AboutDoubleClick




DoubleClick at a glance

• Global third-party ad management platform

• Headquartered in New York

• 17 offices and development hubs

• 14 data centers worldwide

• More than 1,300 employees

• Billions of digital ads every day


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One integrated platform

• Media planning and buying

• Ad serving

• Paid and natural search

• Rich media and video

• Mobile



DoubleClick’s mission

• Deliver your ads anywhere, worry free

• Make your sales, operations, and financeprocesses more efficient

• Give you tools and data to make smarterdecisions

• Grow your revenues from advertisers



DoubleClick research

• Rick E. Bruner, Director of Researchand Industry Relations

– 212 381-5521

– [email protected]

• Heath Row , Research Manager

– 212 381-5139


• Jai Singh, Research Manager

– 212 381-5138


• Ashley Watson, Research Analyst

– 212-381-5515


http://www.doubleclick.com/knowledge

mailto:[email protected]












Core research department projects

• Original thought leadership reports

• Custom campaign benchmark reports• Ad serving trend reports

• On-site and Web-based training sessions• Research product strategy



What isthird-party ad serving?



Billing & ReconciliationPre-Order Order Management

The media value chain

Sell Side

Buy Side

InvoicingOptimizationReportingAd DeliveryTraffickingInventory

ManagementProposal

Generation

InvoicingReportingAd DeliveryTraffickingCreative

Generation

MediaPlanning& Buying

Optimization



How online ads might be delivered

Device

Application

Creative/

Format



Billing & Reconciliation

IntegratedPlatform

Pre-Order

IntegratedPlatform

Order Management

IntegratedPlatform

How DoubleClick serves the value chain

Sell Side

Buy Side

Invoicing

DART for PublishersSales

Manager

DART

Adapt

Sales

Manager

DoubleClick Rich Media

OptimizationReportingAd DeliveryTraffickingInventory

ManagementProposal

Generation

InvoicingOptimizationReportingAd DeliveryTraffickingCreative

Generation

MediaPlanning

& Buying

MediaVisorDoubleClickRich Media

DART for Advertisers & DART Search MediaVisor

DoubleClick Rich Media



A brief historyof online marketing



Online advertising, in general

Online advertising refers

to any advertisingdelivered through mediaconnected to the Internet.



The birth of online advertising

• The first spam email was sent in 1978 when a DECemployee announced a new computer by invitingeveryone with an ARPANET address on the west coast

to a reception. (They were chastised for breaking theARPANET appropriate use policy, and a notice wassent out reminding others of the rule.)

• Computerized Bulletin Board System, the first BBS,launched in 1978.

• The first commercial online services, CompuServe andthe Source, were founded in 1979.



The first online (service) ads

The IBM and Sears-run dial-up online service Prodigy ran banner ad-like ads as early as the mid- to late-’80s.



The birth of online advertising, continued

• NCSA Mosaic released in 1993, leading to therise of the graphic, commercial Web.

• Netscape Mozilla becomes the firstcommercial Web browser in 1994.

• October 25, 1994: The first banner ad runs

on HotWired.• The IAB’s Ad Sizes Task Force releases the

first real ad standards in 2003.

• March 13, 2006: Rocketboom runs whatmight have been the first video ad.



1994: A banner year

Source: AT&T’s “You Will” campaign, ran on HotWired in October 1994. It was among the first Web ads.



1996: Web advertising gets interactive

Source: HP’s Shockwave “Pong” banner, the first rich media ad (you could play Pong in the banner). It was made bythe San Francisco-based agency RedSky Interactive in 1996.

http://www.whitesands.org/portfolio/bnrs/demos/pong.html



The big picture: five-year forecast for devices and access

Source: The State Of Consumers And Technology: Benchmark 2007




Online video is here, podcasting is not

Source: DoubleClick Touchpoints IV, July 2006; N=6,121

%

o f r e s p o n d e n t

s

Please indicate how often you use or do the following



Marketbreakdown




• Forms of online advertising

– Display: Banners/graphic

– Rich media: Enhanced display (special effects such as video, expands,floats)

– Search: Text (keyword-based)• Online campaign types

– Branding (awareness and message reinforcement)

– Direct response (ROI/acquisition-focused)

• Online media tactics

– ROS (run-of-site rotation)

– SOV (share of voice)

– Special sponsorships, partnerships, co-branded advertorials

– Roadblocks, surround sessions

– Frequency capping (limiting exposure)

– Targeting

• Content, geo, demo, day-parting, psychographic, behavioral

– Optimization (right ad, right person, right time)

Basic terminology

Proprietary & Confidential – DoubleClick, Inc 2007




• Transactional elements and currencies– RFI, RFP, IO (request for info/proposal, insertion order)

– Impression: one exposure to one user of a display or text ad

– CPM (cost per thousand impressions)

– CPC/CPA (cost per click of acquisition/conversion)

– Flat rate (special sponsorships such as fixed placements)

• Workflow terms– Planning, buying, proposal generation (campaign determination)

– Forecasting (inventory availability)

– Creative generation (advertising units)

– Trafficking (the flighting of ad units)

– Delivery and reporting (campaign flight monitoring and results)

– Post-click and post-impression (view-through) conversion tracking

Additional terminology





Digital Ecosystem…

The basic landscape


Buyers

Sellers

Portals/Engines

Publishers/Content Sites

Ad Networks

Exchanges

DoubleClick

Unified Suite

Communities and SocialNetworks

Agencies:

• account, media & creative

Marketers:

• Advertisers all shapes & sizes



EmpoweringOriginalsDesignTemplateUS20051117.pot©

Total advertising spending in the United States, 2002–2010 (in $M)

Source: eMarketer * = actual

Comparative Estimates: Total advertising spending grow th in theUnited States, 2002 – 2010 (% growth)




Growth

2005 2006 2007 2008 2009 2010 2011 ('06-'11)

Forecast, total offline advertising spend by segment,2005 To 2011

Source: JupiterResearch Internet Advertising Model, 7/06 (US only)

OFF-LINE ADVERTISING MARKET

Spending

Off-line Advertising by Segment (bn)

Broadcast TV $41.6 $44.2 $44.1 $47.7 $46.8 $49.1 $48.5 1.9

Cable TV $20.8 $24.1 $27.3 $30.9 $34.6 $38.5 $42.5 12.0 Radio $20.0 $20.7 $21.6 $22.7 $23.9 $25.2 $26.5 5.1

Newspapers $47.3 $48.1 $49.0 $49.9 $50.9 $51.9 $52.9 1.9

Magazines $12.8 $13.4 $14.1 $14.8 $15.5 $16.3 $17.2 5.1

Yellow Pages $14.2 $14.4 $14.6 $14.8 $15.0 $15.3 $15.6 1.6

Direct Mail $54.9 $59.6 $64.8 $70.5 $76.7 $83.5 $90.8 8.8

Other $51.3 $54.6 $58.0 $61.5 $65.0 $68.6 $72.1 5.7

Total Off-line Ad Spending $262.9 $279.2 $293.5 $312.8 $328.4 $348.3 $366.2 5.6

Year-over-year growth 4.3% 6.2% 5.1% 6.6% 5.0% 6.1% 5.1%

Total without Direct Mail $208.1 $219.5 $228.6 $242.3 $251.7 $264.9 $275.3 4.6

Year-over-year growth 4.1% 5.5% 4.2% 6.0% 3.9% 5.2% 4.0%



EmpoweringOriginalsDesignTemplateUS20051117.pot©

Source: eMarketer

Total advertising spending worldw ide (by media & region),2004-2008




The estimates for US total and online ad spend 2007




Kindsof media




Display advertising

Display advertising refers to webadvertising displaying the message

using graphic information. Includesimage, rich media, floating,transitional.




Paid search advertising

Paid search advertising refers to paid text links appearing

on the search results of a search engine or search page.




Text and contextual advertising

Text or contextual advertising refers to text links appearingon a Web page, traditionally using contextual targeting torelate the ad to the content.




In-stream video advertising

In-stream advertising refers to advertising displayed duringa video or audio content stream.




Mobile advertising

Mobile advertising refers toadvertising displayed in a mobiledevice. It includes: Display and

graphic, video, text, and SMS.




Email advertising

Email advertising refers to advertisingdisplayed in an email environment. Itincludes: Display, text, opt in.

Email display and text advertising is becoming less popular as some email

readers do not support images and cookies.




Gartner’s hype cycle for media industry publishing

Source: Hype Cycle for Media Industry Publishing, 2007, Gartner




How onlineads perform




Overall industry average campaign performances

• Click-Through Rate (CTR): 0.14%[CTR = Clicks ÷ Impressions]

• Interaction Rate (IR): 11.1%[IR = Unduplicated mouseovers (i.e., mouse over is counted once perimpression served) ÷ Interactive Impressions (DoubleClick Rich Mediaonly)]

• Video Completion Rate (VCR): 46%[VCR = Video Completions ÷ Total Video Plays (DoubleClick Rich Media,video format, only)]

Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to June 2007

Click-through rates have held fairly constant over the past




Click-through rates have held fairly constant over the pastyear

Click-Through Rate Over Time

Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to May 2007




Interaction rates have also held steady in the past year

Interaction Rate Over Time

Source: DoubleClick ASTRA, U.S. DFA campaigns, DoubleClick Rich Media format ads,Jan 2006 to June 2007

Roughly half of in-page video ads play through to




Roughly half of in page video ads play through tocompletion

Video Completion Rate Over Time

Source: DoubleClick ASTRA, U.S. DFA campaigns, DoubleClick Rich Media video format ads,Jan 2006 to May 2007




Rich media drive higher click rates than Flash or image

Click-Through Rate by Ad Format


l h l h h f d d




Interaction rates slightly higher for video ads

Interaction and Video Completion Rates by Ad Format

Source: DoubleClick ASTRA, U.S. DFA campaigns, DoubleClick Rich Media format ads,Jan 2006 to May 2007

R b i l




Response rates vary by vertical sector

Various Performance Rates by Industry Sector


Bi i ll b tt f t b d i




Bigger is generally better for response rates by ad sizes

Various Performance Rates by Ad Size


K t k




Key takeaways

• Moderate decline in click rate has leveled off

• Rich media click rates outperform Flash and

image

• Bigger ads tend to perform better

Initial awareness: web sites, point of sale, and word of mouth




Initial awareness: web sites, point of sale, and word of mouthdominate

How did you first hear about the product you purchased?

(Choose one)

% o f

r e s p o n d e n t s


C id ti h d d ti i l t l




Consideration: search and advertising play greater role

How did you further learn about the product you purchased?

(Select all that apply)

% o

f r e s p o n d e n t s


Most influence: website, in-store and w ord of mouth lead key




, yinfluencers

Which of the following most influenced your decision to purchase this product? (Choose one)

% o

f r e s p o n d e n t s





Major trends

The top five




The top five

• Online ad industry growth

• Online video

• Behavioral targeting

• User-generated content

• Advertising exchanges

US online ad market has grown for eleven straight




g gquarters

Source: Internet Advertising Bureau / PricewaterhouseCoopers, Q2 2007 IAB Internet Ad Revenue Report, US Market

Search and display biggest parts of online ad pie




Search and display biggest parts of online ad pie


Retail financial services and auto biggest online ad sectors




Retail, financial services, and auto biggest online ad sectors


Internet ad spending projected to surpass radio,




magazines, and network TV

Social networks, mobile, and gaming still relatively




small share of ad spend

Search marketing, email, targeting, rich media work




best, say online advertisers

Source: MarketingSherpa, January 2007, survey of Ad:tech attendees

Best performing online ad strategies, according to online marketers

Other things I ’m follow ing




Other things I m follow ing

• Social media

• Widgets

• Digital out of home• Video on demand, IPTV, and interactive TV

• Viral advertising




Next steps



DoubleClick research agenda 2008



63imedia v. 6© 2007 DoubleClick Inc. All Rights Reserved.

• Ad Serving Trend Report

• Best Practices for Rich Media

• Best Practices for Online Ad Effectiveness 2.0

• Best Practices for Publishers to Maximize Yield

• Best Practices for Conversions and ROI

• Quantifying View Through

• Search + Display Ad Synergy

• Frequency on Conversion, Engagement, Brand

• Correlation of Brand and Response

• Client Surveys: Publisher/Advertiser 2008 Successes, Challenges,and Priorities

• Touchpoints V

DoubleClick research agenda 2008

What do you want to know?




What do you want to know?

Thank you



Thank you

doubleclick.com/knowledge



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s04 Ads Double Click