Native Advertising OverviewQ2 2016

Three key takeaways from this report

Native is not ‘display 2.0’ — it’s a novel format with unique advantages and challenges

- Native ad units conform to a site’s look and feel, often yielding better user engagement; in a recent Sharethrough/IPG study, consumers viewed native ads 52% more frequently than banner ads

- However, the creative process, pricing model, success metrics, and user experience with native advertising programs challenge traditional display advertising execution patterns

- According to IHS, native will account for 63% of all mobile advertising spend by 2020

- Facebook has reported that 83% of impressions on its mobile-only Audience Network are in the native format & that native ads perform 6x better than traditional banner ads

- According to Business Insider, advertisers will spend $5.7B on programmatic native by 2018 — but large buying platforms have been slow to integrate native into their offerings

- We expect the omnichannel demand-side platforms to accelerate integrations with native vendors in the back half of 2016

Native works best in mobile environments, where banner CTRs are near zero

The rise of ‘programmatic native’ is being limited by sluggish adoption on the buy side

Agenda

Native advertising overview & market size

The rise of programmatic native

Key native advertising vendors

Appendix

What is native advertising?

4

Native advertising is a form of paid media where the ad experience follows the natural form & function of the user experience in which it is placed.

Source: Sharethrough

Advertisers have reported better performance with native ad formats relative to display

5

-

Engagement

- - -

Brand Lift Consumption Purchase Intent

ROI for app installs & conversions

2x

Native ad units conform to the design and feel of the sites on

which they are shown, preserving the user experience while

producing click-through rates similar to that of editorial content.

Brand lift is an increase in interaction with a company as a

result of an advertising campaign, and is used to pinpoint positive

shifts in customer awareness and brand perception.

Increase in depth of visit & time spent

3x

Marketers writing native ad copy need to tell stories in the same way

that an article would. The only difference is that in this case,

they’re telling the story of their brand.

Source: StackAdapt, IPG & Sharethrough

3.2sTime spent viewing native ad

Lift in purchase intent18%

Increase in brand affinity vs. display advertising

9%

By providing complementary content to an audience on a relevant site, and providing

context for the purchase, the chances of the ad being more

successful are higher.

Native ad formats shine on mobile devices, where traditional display advertising is ineffective

6 Source: Sharethrough

The rise of native advertising can be largely attributed to the dramatic shift in consumer attention away from desktop PCs to mobile devices & content feeds

1

2

3

Listeningto Radio

WatchingTelevision

2.92.3

1.61.5

0.4

Daily Consumer Media Consumption, US

Hour

s Sp

ent p

er D

ay

Newspapers/Magazines

Online via Desktop

Using MobileDevice

We spend nearly 3 hours per day on our

mobile devices

- Facebook reported that native inventory on its Audience Network fetches 6x higher CPMs compared to banner ads

- Native ad units can adapt to the many novel user interfaces introduced on mobile devices, improving overall ad performance

Mobile Native Ads Outperform Traditional Banners

As a result, native is expected to represent nearly two-thirds of mobile ad spend by 2020

7

25%

50%

75%

100%

2012 2013 2014 2015 2016 2017 2018 2019 2020

37%39%40%43%47%48%54%68%

86%

63%62%60%57%53%52%46%32%

14%

Native Mobile Ad Spend Non-Native Mobile Ad Spend

Native Share of Total Global Mobile Display Advertising

Source: IHS

Shar

e of

Spe

nd (%

)

Many publishers are embracing native as a means of driving digital revenue

8 Source: Digiday, Adweek

-

“With 60-plus percent of our digital revenue tied to sponsor content, it is important that we have similar capabilities to publish and promote

natively in the format.”

Kimberly Lau, VP and Digital GM

-

Vice has always been more successful when it's done native advertising and interesting custom partnerships with

brands, and then you extend that idea to this TV network also. […] Viceland is hoping to have native ads as half its

ad inventory within the year.”

Guy Slattery, Viceland GM

-

“Already, most of BuzzFeed’s revenue is derived from BuzzFeed Creative, the company’s 75-person unit dedicated to creating for brands

custom video and list-style advertising content that looks similar to its own

editorial content.”

Jonah Peretti, Founder & CEO

Media companies like Buzzfeed were purpose-built to monetize using native ad formats, and many publishers are following suit

Several models for delivering native advertising have emerged to serve all publisher types

9

Lots of traffic consolidated to

few sites

Limited traffic distributed across

many sites

Native in-feed ad units have become popular across social networks, and many adtech vendors have emerged to help publishers integrate similar ad formats on their properties

Social ad platforms Large publishers or social networks that have developed automated advertising tools for buying native ad placements

1

Sponsored content placements Premium publishers with dedicated “branded content” teams that work with advertisers to develop unique native content

2Intermediated native platforms Technology platforms that can be integrated onto publisher sites that allow advertisers to programmatically purchase native placements

3

Native ad spend on intermediated (3rd party) ad platforms is expected to reach $5.7B by 2018

10

$5

$10

$15

$20

$25

2013 2014 2015 2016 2017 2018

$5.7$3.9

$2.7

$1.9

$1.3

$1.0

$3.4$3.7

$2.0

$1.3$1.0

$0.8

$11.9$10.7$9.2$7.5

$5.6$2.9

Social Ad Platforms Sponsored Content Intermediated Native Platforms

Native Advertising Spend by Type (US Desktop & Mobile)

Source: Business Insider Intelligence estimates, Internet Advertising Bureau

Ad S

pend

(Billi

ons

USD)

$21B Native Ad Spend by 2018

- Low cost ad placements typically on long-tail sites

- Demand sources are often “spammy” in nature (i.e. malware, weight loss supplements, or passing traffic to ad-heavy sites)

- CPMs: $0.50-$1

- Advertising that is intended to drive a conversion event, typically an install, registration or transaction

- Demand sources are often app developers or e-commerce sites

- CPMs: $1-$4

- Content created by an advertiser that is designed to educate consumers or build awareness

- The content is typically hosted by the advertiser and promoted across relevant publishers

- CPMs: $8-$12

- Content created by the publisher or their in-house team tasked with developing content brands

- The content is typically hosted on the publisher’s site and mimics the look-and-feel of a traditional article

- CPMs: $20-$40

Many advertisers have embraced native, although CPMs & success metrics vary widely

11

High CPMsLow CPMs

Content Marketing Branded ContentDirect ResponseTraffic Arbitrage

Much of the early buyers of native inventory have been direct response advertisers focused on driving a specific action, like sign-ups or app installs

Source: Thomvest Research

The Spectrum of Native Advertising Demand Sources

Agenda

Native advertising overview & market size

The rise of programmatic native

Key native advertising vendors

Appendix

What is ‘programmatic native’?

13

Programmatic native is the automated buying and selling of native ads across a range of platforms, devices & advertiser solutions, relying on an open specification to enable real-time bidding between multiple parties.

Source: IAB

Bid Response

Icon

Image

Headline 1

Description

ActionLink

Bid Request

Publisher

User Information

Context

Placement Type

Required Assets

Real-time bidding

1, User opens app & impression sent to native exchange

2. The bid requestis sent to buyerson the exchange

4. Assets from the winning bid are

assembled

3. Buyers submit bid responses that include

native ad assets

\

How Programmatic Native Works

Programmatic native ad spend is expected to grow rapidly relative to display advertising

14

$5

$10

$15

2013 2014 2015 2016 2017 2018

$5.7$3.9

$2.7$1.9

$1.3$1.0

$6.4$6.5$6.1$5.8$5.3$5.2

Programmatic Display Spend Programmatic Native Spend

Programmatic Native vs. Display Advertising Spend (US Desktop & Mobile)

Source: Business Insider Intelligence estimates, Internet Advertising Bureau

Ad S

pend

(Billi

ons

USD)

Native is projected to grow at a 42% CAGR

Programmatic native will allow for buying and selling at scale

These factors enable ‘Programmatic Native’

1 Open, widely adopted, open standards for buying and selling native inventory

2 Broad availability of native ad formats that conform to these standards

3 Native inventory available to advertisers on the buying platforms they use today (i.e. omnichannel DSPs)

Key contributors to native advertising’s long-term sustainability include:

The OpenRTB spec provides standards for communication between ad buyers & sellers

Source: Nexage, DataXu, IAB, Thomvest Research16

- The OpenRTB protocol provides open standards for the communication between buyers and sellers of ad inventory

- Standards including the bidding protocol, information taxonomies, synchronization, and regulation

- The IAB governs the OpenRTB specs and organizes updates with the help of contributing ad tech companies

Standardizing RTB Ad Buying

The OpenRTB Ecosystem

Data Management Platform Data Broker

Ad Network Working for a buyer

Advertiser Ad Server

Ad Network Working for a

publisher

PublisherAd Server

Agency Trading Desk or In-House

Team

PublisherDSP OpenRTB Client

SSP OpenRTB Server

Sell-SideBuy-Side

Open Standards1

The OpenRTB 2.3 spec set the groundwork for programmatic native

17

Overview

- Support for native ad units was introduced in the OpenRTB 2.3 spec - The Native 1.0 spec defined what goes in the native object introduced in OpenRTB 2.3 - Rather than image references for banners and video references for pre-roll, the native

object includes the actual metadata for the ad, including: Headline, Description, Thumbnail & Brand Name

Key Benefits

- A single framework: The Native 1.0 spec created a generic framework by which a supply source (SSP/exchange) can request the specific items needed as part of the ad.

- Native ad assets: A demand source (DSP/bidder) is then required to respond with assets that match the specifications of the supply source so that the native ad unit can be assembled.

Concerns

- More specifications needed: Native 1.0 does not specify what assets should look like, meaning each supply source is free to define their own standards for image, aspect ratio, headline length, brand name length, etc.

- Unclear definitions: When applied to the native 1.0 spec, the classifications of the original playbook created confusion on the DSP side in terms of classifying inventory due to the unclear context and layout concepts and some overlapping definitions.

- Limited scalability: Due to the lack of standard classifications, inventory is often still being purchased by named supply source, hampering scalability.

March 2015: OpenRTB 2.3 & Native 1.0

-

“The RTB 2.3 enables huge swaths of native

inventory to be biddable and programmatically

enabled.”

Steve Katelman, EVP of Global Strategic Partnerships

Open Standards1

OpenRTB technology automatically assembles each component into a native ad

18

Components of a native ad unit

Image

Thumbnail

Description

Brand NameRating

Call to Action

Open Standards1

The OpenRTB 2.4 spec will further enable scalability within the native ecosystem

19

Overview

- The Native 1.1 spec was released by the IAB for public comment in early 2016 - The spec introduces new classifications of native inventory, including: - Context: What type of content surrounds the ad unit? There are three primary

classifications: content feeds, social feeds and product feeds. Each primary classification has sub-classifications.

- Placement Type: What is the design of the ad unit being purchased? This list aligns similarly to the original playbook but in a streamlined fashion: in-feed, on an article page, outside of core content, or recommendation widget.

Key Benefits

- Classifications: These new classifications should enable native to scale more broadly as DSPs can represent inventory by context and placement type, rather than needing to separately represent each supply source.

- Scalability: Through better asset standardization and classification, advertisers will have more confidence to scale buys across multiple sources while maintaining control over what they buy.

Concerns

- Conforming to new standards: Given the free range of early native standards, many native platforms will need to dedicate resources to adapting to the new standards established in the Native 1.1 spec.

-

“The Native 1.1 extension both addresses asset standardization and

classifies the context and layout of where the native

ad will placed, which allows for greater confidence of

a buyer to scale buys across multiple sources

while maintaining control over what they buy.”

Curt Larson, VP of Product Management

January 2016: OpenRTB 2.4 & Native 1.1

Open Standards1

OpenRTB 2.4 will provide clarification around how native ad units should be assembled

20

How Images Are Handled In OpenRTB 2.4How Text Elements Are Handled In OpenRTB 2.4

Source: Sharethrough

Open Standards1

The IAB has identified six main ad formats that are categorized as native

21

The formats were introduced in the “IAB Native Advertising Playbook”, which serves as a consistent framework for the discussion surrounding native advertising

- In-feed ads have numerous variations in their execution – from story forms where the content is written by or in partnership with the publisher, to promotional ads which links off of the site to branded content.

- The primary metric is brand awareness.

1. In-Feed Units

- Search ads can be found above organic search results. They look exactly like the surrounding results and has been sold with a guaranteed placement so the advertiser knows exactly what context surrounds it.

- Its primary conversion metric is direct response, such as purchase.

2. Paid Search Units

- Recommendation widgets are a form of native advertising where an ad or paid content link is delivered via a 'widget'.

- These units typically do not mimic the appearance of the editorial content feed, links off of the site, and are measured on brand engagement.

3. Recommendation Widgets

Native AdFormats2

22

- In-Ad (IAB Standard) is an ad in a standard IAB container that contains contextually relevant content within the ad, links to an offsite page, and has been sold with a guaranteed placement.

- This ad format is measured on brand metrics (interaction, brand lift).

4. In-Ad with Native Elements

- Promoted listings are designed to fit seamlessly into the browsing experience, are presented to look identical to the products/services offered on a given site, & are typically bought directly via the publisher.

- This ad format is measured on direct response metrics.

5. Promoted Listings

- Custom/can’t be contained can take many forms, but in all instances are custom to a specific site.

- Examples include platform-specific ads (i.e. Promoted Tweets or Sponsored Stories) or custom playlists.

6. Custom / “Can’t Be Contained”

The formats were introduced in the “IAB Native Advertising Playbook”, which serves as a consistent framework for the discussion surrounding native advertising

The IAB has identified six main ad formats that are categorized as nativeNative AdFormats2

The IAB also defined six core criteria for evaluating native advertising units

23

The framework is designed to be used by marketers when considering native advertising options, in order to ensure that a unit will meet the brand’s objectives

1 Form

2 Function

3 Integration

4 Targeting

5 Measurement

6 Disclosure

How does the ad fit with the overall page design? Is it in the viewer’s activity stream or not in-stream?

Does the ad deliver the same type of experience, e.g., a video on a video page or story among stories, or is it different?

How well do the ad unit’s behaviors match those of the surrounding content?

Is the ad placement guaranteed on a specific page, section, or site, or will it be delivered across a network of sites? What type of targeting is available?

What metrics are typically used to judge success? Top of funnel (views, shares, etc.) or bottom (sale, download, etc.)?

Is the disclosure clear and prominent?

In-Stream Out of Stream

Brand Engagement

Matches Function

Mirrors Page Content Behavior

Narrowly Targeting Placement

Direct Response

Doesn’t Match Function

Introduces New Behaviors

Broadly Targeted Placement

Native AdFormats2

Many vendors have adopted new ad serving techniques, known as “server-side stitching”

24

Standard Ad ServingModern Native Ad Serving

AD

CMS

Content

Ad Server

Ad

A 3rd party call is made to the publisher’s ad server in order to fetch an ad

Site content is loaded

AD

Content & Ad

The ad server is integrated into the CMS, which renders the ad content in the same way it does editorial content

Ad ServerCMS

Ad

- Bypasses ad blockers, which are growing in popularity across both desktop & mobile

- Faster ad load times compared to traditional ad serving methods - More seamless user experience

Key Benefits

Native AdFormats2

Server-side sticking improves performance and renders native ads in a format that mimics the look and feel of publisher sites

Multichannel demand-side platforms have been slow to integrate native supply

25

In order to bring more brand dollars into the native ecosystem, native adtech vendors must integrate into existing buying platforms, which are typically multichannel DSPs

BuyingPlatforms3

Brand programmaticmedia budgets

Spend across display, mobile, social, video, etc.

- Native integrations require more development time than typical display integrations, which impacts their priority among DSPs

- Adoption of OpenRTB 2.3 standards was slower than expected (due in part to limitations described in prior slides)

- Limited interest from brand advertisers relative to other digital advertising formats (especially video)

- There is a lack of scale of on the supply side relative to other formats

- The assets required to assemble native ads are often unique to the format; brands and agencies have yet to adapt

Primary Limitations to DSP Adoption

Much of a brand’s programmatic media spend flows through

multichannel DSPs

However, some DSPs have signaled a willingness to ramp up native integrations in 2016

26

We expect the large DSPs to accelerate integrations into the native ecosystem; brand spend into native will follow

-

“Native is one of our top priorities, particularly as

dynamic creative takes off, and we are investing heavily in growing the

capability”

Eric Picard, VP of Omnichannel Media

-

Once buyers can plan and test native ads alongside banner ads through the big digital exchanges, “native will be a part of every campaign. […] The future

DSP has video, native, mobile, cinemagraphs, and the DSP will

decision accordingly”

Ari Lewine, Co-Founder

-

"Programmatic advertising is about delivering an organic, personal ad

experience, and native is a natural outgrowth of that

capability”

Tim Sims, VP of Inventory Partnerships

BuyingPlatforms3

Agenda

Native advertising overview & market size

The rise of programmatic native

Key native advertising vendors

Appendix

The programmatic native ad stack

28

Demand Side Platforms

Agency Trading Desks

Advertisers

Ad Networks Ad Exchanges

Supply Side Platforms

Publishers

Buy Side

Sell Side

Many early pure-play native vendors built out full-stack solutions in order to jump-start the native marketplace — we may begin to see some specialization as larger buy-side vendors embrace native

Omnichannel DSPs (DataXu, MediaMath, Turn, etc.) were slow to

embrace native, but have begun more actively integrating with native vendors

Most pure-play native vendors have focused on integrating with publishers and developing supply-side capabilities

Competitive positioning of pure-play native advertising vendors

29

Low CPMs High CPMs

Supp

ly fo

cuse

dD

eman

d fo

cuse

d

There are few buy-side vendors focused on top-of-funnel brand advertising; we expect the omnichannel DSPs to play a role in bringing large brands into programmatic native

Competitive positioning of pure-play native advertising vendors

30

Low CPMs High CPMs

Supp

ly fo

cuse

dD

eman

d fo

cuse

d

Vendors focused on buy-side

Long-tail native supply platforms

Building out both sides of native marketplace

SSPs focused on premium publishers

Premium native marketplaces

There are few buy-side vendors focused on top-of-funnel brand advertising; we expect the omnichannel DSPs to play a role in bringing large brands into programmatic native

All of the “big four” have a native ad offering, both on their properties and across 3rd party sites

31

Native inventory on owned properties

(first-party)

Native inventory across partner sites

(third-party)

- Google’s primary revenue stream is its sponsored search results, which are considered a form of native advertising

- Yahoo! rolled out native inventory across its properties in 2013

- The company reported that mobile native ads see a 2.6X higher CTR than other Yahoo mobile display ads

- Most of the company’s ad units are in the native format, including its News Feed ads

- 80% of Facebook’s advertising revenue comes from mobile; the company reported $4.5B in mobile ad revenue in Q4 2015

- Twitter’s primary ad format is its native in-stream ad, known as a Promoted Tweet

- 86% of the company’s ad revenue comes from mobile, which represented $641M in ad revenue in Q4 2015

- The company also offers native inventory across 3rd party mobile apps via its Gemini Exchange

- In Q4 2015, Yahoo! reported 350 billion native ad requests for third-party mobile app inventory on Gemini, accounting for more than 50% of total Gemini impressions

- Additionally, the company offers native ads on 3rd party apps through its Audience Network; the network reached a $1B run rate in Q4 2015

- 83% of impressions on the Audience Network are in the native format

- Through its acquisition of MoPub, the company also offers native inventory across 3rd party apps

- In June 2015, MoPub reported that native ad inventory across its 3rd party apps had increased by 8x from the previous year

- In late 2015, Google announced that it was exposing native ads in mobile apps to buyers on its exchange

- Primary buyers of native inventory on the exchange today are performance focused (i.e. driving app installs)

- In 2016, Google is expected to expose additional native ad formats on its exchange, including desktop and mobile web, which may bring more brand dollars to the format

32

Facebook is making a strong push into native on third-party apps with its Audience Network

-

“Facebook's Audience Network has been an

incredible force in driving ad revenue for LOVOO. With

native ads that fit well with the look and feel of our app and

accurate people-based targeting, we've seen CPMs

up to 120% higher than other ad networks. Over half of our ad revenue can be attributed

to the Audience Network.”

Eric Jangor, Head of Corporate Affairs & BD

- In March 2016, Facebook announced integration of FAN with common mediation platforms like Fyber, Mopub & Opera

Scale

Focus

Recent Developments

- Facebook bills its Audience Network (FAN) as the largest native ad network on mobile; in Q4 2015, Facebook announced that FAN had reached a $1 billion annual run rate

- Although multiple ad units are available, Facebook has reported that 83% of ad units on FAN are in the native format

- FAN is currently mobile app focused, but the company is expected to launch on mobile web in 2016 (FAN for mobile web is currently in beta)

- Advertisers can buy inventory across the Audience Network using the same tools and workflow as they would on Facebook properties; most advertisers are performance-focused, including app developers focused on driving installs

The challenge for native ad startups will be competing with Facebook on third-party sites

33 Source: IHS

Facebook’s Audience Network, along with similar offerings from other large competitors, may make it difficult for independent native advertising companies to compete for access to publishers inventory

Forecasted Mobile App Advertising Spend in 2018 (Global)

Adve

rtisin

g Sp

end

(in B

illion

s)

$25B

$50B

$75B

$1.6B$4.7B

$28.9B$33.6B

$62.9B

Total Mobile Display Ad Spend

Mobile NativeAd Spend

More than half of mobile spend will be in

the native format

First-Party Native

Ad Spend

Third-Party Native

Ad Spend

Most of the spend will be on platforms like Facebook & Twitter

The remaining native ad spend will be on

publisher sites that are monetized by third parties, like FAN

We project about $1.6B available to

independent native ad vendors

Ad Spend FunneledThrough Independent

Native Ad Vendors

The four largest mobile advertising companies together account for nearly 60% of total revenue

34

25%

50%

75%

100%

2014 2015 2016 2017

33%34%32%27%

2%3%3%3%4%4%4%4%

20%19%19%19%

32%32%33%36% GoogleFacebookTwitterYahoo!Apple (iAd)PandoraYPYelpLinkedInAmazonMillenial MediaOther

U.S. Mobile Ad Revenue Share, by Company

GOOG & FB account for >50% of mobile ad revenue

Source: eMarketer, September 2015

Much of this advertising revenue comes from these companies’ native ad formats

Agenda

Native advertising overview & market size

The rise of programmatic native

Key native advertising vendors

Appendix

TripleLift

36

Company Profile‣ Founded: 2012 ‣ Headquarters: New York, NY ‣ Employees: 100 ‣ Total Funding: $16.5M ‣ Latest Financing: $10.5M Series B, July 2015

Company Updates‣ January 2016 — Joins Integral Ad Science

Certified Viewability Partner Program ‣ November 2015 — Announces expansion into

EMEA and office opening in London ‣ December 2014 — Announces deal with The

Atlantic to power publisher’s native ad offerings ‣ July 2014 — Announces partnership with

BazaarVoice to power native advertising on e-commerce sites

Positioning

Key Features

TripleLift is the only native programmatic platform with true RTB capabilities for buying and selling native advertising, seamlessly transforming visual content into native ads.

Image-Optimizing Technology Computer vision allows for automated reassembly of ad content (image, text, video) to adapt to look and feel across multiple publishers

RTB-Enabled Ad Exchange Allows advertisers buying media programmatically to leverage their existing buying platforms to access premium, in-feed native ads.

Full-Stack Native Offering Offers capabilities for both advertisers and publishers, as well as integrations with major demand-side platforms

Notable Customers- 1,500+ publishers, including: - Conde Nast - The Atlantic - Hearst Newspapers

Target Customer Groups- Large web publishers - F2000 consumer advertisers

Nativo

37

Company Profile‣ Founded: 2010 ‣ Headquarters: Long Beach, CA ‣ Employees: 31 ‣ Total Funding: $32M ‣ Latest Financing: $20M Series B, June 2015

Company Updates‣ November 2015 — Announces additional native

ad formats, including native video, slideshow & collections

‣ August 2015 — Announces partnership with IDG Communications, Native@Scale

‣ April 2015 — Adds optimization technology to ad platform, including real-time A/B testing

‣ June 2013 — VivaKi, Publicis Groupe's ad tech solutions agency, announces a strategic partnership with Nativo

Positioning

Key Features

Nativo operates a branded content network that serves ads within publisher editorial streams, matched to the look and feel of each publication.

Premium Native Marketplace Nativo focuses on top-of-funnel brand campaigns on premium sites

Advertiser Landing Pages Unique landing pages on publisher sites for advertising content that resembles native editorial content

Ad Optimization Capabilities The company applies A/B testing, geotargeting, frequency capping and other features to further optimize the content across screens

Notable Customers- 400+ publishers, including: - Entrepreneur - Maxim - Reader's Digest - Kiplinger

Target Customer Groups- Large web publishers - F2000 consumer advertisers

Sharethrough

38

Company Profile‣ Founded: 2008 ‣ Headquarters: San Francisco, CA ‣ Employees: 172 ‣ Total Funding: $38M ‣ Latest Financing: $10M Series D, Sep. 2014

Company Updates‣ March 2016 — Trade Desks announces

integration with Sharethrough SSP ‣ October 2015 — Announces native video ads

that silent autoplay on publisher sites ‣ May 2015 — Sharethrough and Nudge Analytics

announce partnership to measure audience attention on sponsored content

‣ February 2015 — Announces $80M+ annual run rate

Positioning

Key Features

All-in-one native advertising software for publishers, app developers and advertisers.

Sharethrough for Publishers Supply-side platform that allows publishers to manage and execute full-stack native advertising campaigns

Sharethrough Ad Manager Advertisers can turn any brand content into unique native ad experiences. Includes content optimization suite and reporting dashboard

Sharethrough Exchange Native advertising exchange with over 3 billion monthly impressions across 270 million global uniques

Notable Customers- Real Simple - Forbes - USA Today Sports - People Magazine - Time, Inc.

Target Customer Groups- Large web publishers - F2000 consumer advertisers (46 of the top 50

AdAge Megabrands use SAM)

AdsNative

39

Company Profile‣ Founded: 2012 ‣ Headquarters: San Francisco, CA ‣ Employees: 28 ‣ Total Funding: $10.5M ‣ Latest Financing: $8.5M Series A, Sep. 2015

Company Updates‣ September 2015 — Launches enterprise native

ad-server with ‘server-side stitching’ capabilities ‣ May 2015 — AdsNative named “2015 TiE50 Top

Start-UP” ‣ April 2015 — Partners with Zemanta to expand

programmatic native advertising exchange ‣ November 2014 — Launches native advertising

mediation platform

Positioning

Key Features

End-to-end native ads management solution for publishers. Manage all of direct and indirect revenue with one integration.

AdsNative Enterprise A platform that integrates an open and flexible ad serving technology within the framework of a publisher’s existing CMS

Demand Manager Supply-side platform for native that includes yield optimization & tag management capabilities

Marketplace Native advertising exchange that runs across AdsNative’s network of 1000+ publishers

Notable Customers- 100s of publishers, including: - Reuters - Disqus - Cracked.com - Politico

Target Customer Groups- Large web publishers - Mobile app developers with feed-based content

In-app advertising represents more than three-fourths of total ad spend on mobile

40

$10

$20

$30

$40

2013 2014 2015 2016 2017 2018 2019 2020

$7.8

$7.4

$6.4

$5.1

$3.9

$2.8

$1.7$1.0

$27.1$23.8

$20.1$16.0

$12.1$8.5

$4.7$2.1

Mobile in-app ad spend Mobile web ad spend

Mobile Ad Spend by Type (In-App vs. Mobile Web) — North America

Source: IHS

Ad S

pend

(Billi

ons

USD)

-

By 2020, 78% of mobile ad spend in North America will

be in-app

The majority of in-app advertising will be in the native format

41

$10

$20

$30

$40

2013 2014 2015 2016 2017 2018 2019 2020

$3.4$2.8

$2.3

$1.8

$1.2

$1.0

$0.7$0.6

$23.8$21.0

$17.8$14.2

$10.9$7.5

$4.0$1.5

In-app native ad spend In-app display ad spend

In-App Ad Spend by Format (Native vs. Display) — North America

Source: IHS

Ad S

pend

(Billi

ons

USD)

-

By 2020, 88% of in-app advertising in North America will

be native

In-app native will primarily be driven by direct (first-party) ad spend

42

$10

$20

$30

2014 2015 2016 2017 2018 2019 2020

$3.9$2.9

$2.2

$1.5

$0.9

$0.4

$0.1

$19.8$18.1$15.6

$12.7$10.0

$7.1$3.9

In-app first-party native ad spend In-app third-party native ad spend

Source: IHS

First party native advertising is advertising that is operated and served within the company’s proprietary app (e.g. a Facebook news feed ad or a promoted Tweet).

Third party native advertising is operated and served by a third party onto a publisher’s or app developer’s inventory (e.g. an in-stream NY Times ad served by a native ad vendor).

In-App Native Ad Spend by Type (First-Party vs. Third Party) — North America

Ad S

pend

(Billi

ons

USD)

Users have yet to acclimate to the native format, often mistaking it for publisher content

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- When asked if they recalled seeing the brand’s content on the publisher page, a majority of consumers said they noticed the brand’s content

Q: Did you notice the recipe content for Sargento? Q: Did you know that the recipe content for Sargento was a paid advertisement?

- However, despite clear disclosure language in the ad unit, more than half of those that noticed the brand content did not recognize that the content as a paid advertisement

No 29%

Yes 71%

No 62%

Yes 38%

A recent study of native ad campaigns highlighted both its performance and consumer confusion around ads versus content

Source: TripleLift, “The State of Native Advertising Disclosure"

Thank you!

For questions or comments, please contact:

Don Butler don@thomvest.com

Nima Wedlake nima@thomvest.com

Mark Prior mark@thomvest.com Thomvest Ventures

203 Redwood Shores Parkway, Suite 680 Redwood City, CA 94065

thomvest.com

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