Nine Golden Opportunities for Marketers to Seize in 2018

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Change was the watchword and upheaval the new normal. As leading providers of omni-channel digital solutions

for performance marketers, we couldn’t be more excited about the year ahead; one that promises to sustain,

and even accelerate, this ascending pace of innovation. Within this fluid environment, AUDIENCEX continues to

adapt and evolve, becoming more relevant than ever, and collaborating with the most innovative partners in the

industry to generate unprecedented results for our customers.

In one of the most significant shifts of 2017, Sizmek, an ad-tech leader since 1999, acquired Rocket Fuel, a key

strategic partner with AUDIENCEX over the last two years. The integration of Sizmek and Rocket Fuel, under

Sizmek’s umbrella, represents what AdWeek calls a “formidable ad-tech force” that can more powerfully compete

with “the Google-Facebook duopoly.”

This newly combined entity represents an integration of proven industry leaders driving AI-empowered decisioning

across channels. Together they are turning high-value datasets into powerful, sustainable and scalable multi-

channel campaigns - a development that will provide fresh power and versatility to AUDIENCEX and our clients

moving forward.

We always seek to unlock the potential contained within every new trend, enabling us to deploy new tactical

advantages on behalf of our customers. Based upon a decade of success, we know that continued mastery of this

ever-changing landscape is about moving faster and getting smarter, not by degrees, but by exponents.

Looking ahead to 2018, we have identified nine trends that we believe bear significant opportunity for ambitious

marketers eager to drive ever greater success and leverage the full power of digital innovation.

“formidable ad-tech force” that can more powerfully compete with “the Google-Facebook duopoly.”

-AdWeek

2017 was a year of sustained transformationin the digital landscape.

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According to the latest estimates from eMarketer, programmatic advertising was a $33B business in 2017, and it’s

only getting bigger. In 2017, four out of five digital dollars were transacted programmatically, a rate that’s expected

to rise to 84% in 2018. .

Automated digital advertising is where the smart money is headed with a report in Digiday suggesting that the

fastest-growing channel for programmatic buys is mobile. Currently, nearly 80% of mobile ads are programmatic, a

proportion that is expected to increase to 85% in 2018.

Clearly it is only a matter of time before programmatic buys come to dominate the industry, reaching into new

channels both online and offline, from advanced TV to programmatic out-of-home and numerous others.

As a forward-thinking and versatile leader in the programmatic space, we are ideally positioned to help clients -

both agencies and brand direct - make the smartest and most impactful decisions available. In 2018, an effective

investment in programmatic will require specialized knowledge and tactics, several of which we will explore further.

Programmatic is still gaining momentum01

80%

4/5

$33B

of mobile ads wereprogrammatic

digital dollars were trans-acted programmatically

in programmaticbusiness in 20172017

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Dynamic Creative Optimization was memorably described by Martin Kihn as “the place where the customer journey

and the brand story intersect.”

The most advanced Dynamic Creative Optimization offerings, like the ones developed by our partners at Sizmek,

now enable literally thousands of ad permutations per second. This marks a quantum leap forward in the ability

of brands to personalize variations within their storytelling choices, and engage their potential customers in ways

that are vastly more unique and customizable than ever before.

The numbers support this. Dynamic Creative Optimization has been shown to deliver an average 60% lift in

campaign performance, and is especially powerful when deployed as part of a larger campaign framework.

While next-gen Dynamic Creative Optimization allows for a staggering array of creative and messaging

possibilities, it is best considered not as a magic bullet or a plug-and-play solution. Rather, it should be regarded

as an integrated component of a larger, multi-faceted strategy; one that embraces the power of multi-channel

campaigns and recognizes established principles like reach and segmentation.

After all, every brand story is different. Now there are potentially millions of individualized ways to bring those

stories to life.

Dynamic Creative Optimization enables new dimensions in brand storytelling

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60%lift in campaign

performance

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Programmatic Native is coming into its own03

At the end of 2017, less than half of digital native advertising is being delivered programmatically. We expect that

number to rise in 2018 as more marketers come to appreciate the immense power of programmatic native as an

integral part of a complete digital marketing plan. Business Insider predicts that native spending will reach $21B by

2018, and that remarkably native will drive 74% of overall ad revenue by 2021.

Some advertisers and publishers are finding success with true native solutions. In contrast to programmatic

ads, true native ads ensure that users remain on the publisher’s site. A recent study showed a 600% jump in

true native and native video spend over a three-year period, with marked increases in food, beverages, travel,

and several other verticals. This approach doubles down on the seamless content experience that is essential

to native success.

Similarly, programmatic native automatically adjusts creative assets to match the look and feel of web pages

across thousands of publishers, but drives consumers to the advertiser’s page. This combines the best of two

worlds, and itself has an important role to play. In the case of mobile ads for example, this is a tool that can

create more frictionless engagement experiences than those traditionally associated with mobile campaigns.

The New York Times, for example, found that leveraging programmatic native increased its mobile click

throughs by six times.

In-feed and in-stream native ads, along with other native integrations, allow for the transformational power of

programmatic native. Potential customers live more and more of their lives in digital spaces, and it is crucial for

brand and product messaging to assimilate and align with these experiences.

New technologies require ever more versatility from the marketer of tomorrow, but at their core, content

integrations like native are a means of returning to consistency and continuity. The digital marketing solutions

of the future lie not in steering the user through a linear and one dimensional purchase funnel, but rather in

unifying with a complex set of ongoing digital experiences unique to each consumer.

NATIVE SPENDING WILL REACH

$21 BILLIONBY 2018

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Data first, aggregated at scale04

Data rules everything around us. But the more data you have, the smarter you need to be about analyzing and

using it.

As the amount of available data continues to accumulate, true strength and wisdom lies in the power of

organization and cross-channel learnings. Too often, we increase volumes of data without laying the contextual

groundwork for knowing what to do with it. As an example, when we fail to recognize that correlation doesn’t

always equate with causation, unearthing meaning and significance within large data sets can be more complex

than it needs to be.

Integrating and making sense of data, across platforms and campaigns, play to our own strengths as well as those

of our partner Sizmek. Like us, Sizmek is a company committed to delivering ever better ways to aggregate and

unify cross-channel data gleaned from the entirety of the campaign ecosystem. In a recent interview, Sizmek CEO

Mark Grether stresses that data access and aggregation are essential to their company’s evolving strategy:

“From our perspective, it’s really important that we have a tremendous

amount of access to data. Because of our ad server we sit on top of the media

plan and therefore we see data in programmatic but also in non-programmatic

especially when it comes to campaign performance,” Grether says. “We’ll be the

decisioning layer, powered by AI, that sits on top of the DSPs and unifies the

decisioning across the different programmatic outlets.”

Mark Grether, CEO Sizmek

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An additional, and equally important aspect of our approach to data, is our ongoing work with multi-channel

attribution modeling. This is an area of innovation that is becoming exponentially complex due to ongoing changes

in channels, devices and marketing stacks. We recognize that to improve our approach to campaign optimization,

we must continuously evolve the precision with which we measure impact and performance.

Why? Because we believe that the true power of attribution is a relentless and ongoing process of parsing out

ambiguities to yield deeper and more actionable insights; a process we apply to each and every campaign that we

run. Another powerful example of this is Sizmek’s Search Connect tool, which ties together data from search and

display campaigns - two channels empowered with vast potential for cross-channel synergies.

There will always be a dynamic tension between actionable attribution and an ever-shifting set of data points. At

AUDIENCEX, we recognize this tension and it informs the dialog between our proprietary attribution modelling and

the seemingly infinite mutability of data signals we ingest. This establishes that our buys are optimized in the most

nuanced and impactful ways possible, and ensures unrivaled results.

Smarter, savvier, and more specializedapproaches are the new norm05

One interesting trend observed by eMarketer analysts is an increasing desire on the part of digital ad buyers for

control. Specifically, programmatic buys are shifting away from entirely open exchanges and toward layering in

private marketplaces and direct buying opportunities. In 2017, 74.5% of digital display dollars transacted privately,

for a total of $24.25B.

This is a function of the programmatic marketplace coming of age. When it was new and untested, clients wanted

an easy, low touch approach. Now that it has been embraced and the best practices have been established, smart

buyers want to engage more fully with the buying process.

The mark of a maturing market is that new players want - and need - the sort of hands-on control previously

associated with the so-called ‘inner circle of sages’. At AUDIENCEX, we strongly believe in open communication

with our customers and that diverse, omni-dimensional strategies are the strongest. Frequently we see that direct

buys work best when they dovetail with open-exchange programmatic buys as part of an overall strategy that

allow for a more multifaceted approach.

ProbabilisticDeterministic

Data Signalling

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As Sam Cox writes, “Programmatic has not replaced the need for direct negotiation between buyer and seller, but

as both a tool for discovery and trading, it has facilitated a more informed negotiation through transparency and

given buyers and sellers more options to meet their unique needs through the types and quantity of differentiated

products. That discovery and negotiation starts with the open exchange, which for all its manageable risks, is still

the best source of information, scale and driver of marketing outcomes available in the ecosystem today.”

AUDIENCEX offers a wide range of targeting options through our various data and technology partners. Not

only do we believe that data activation is an essential tool in a marketers toolkit, we are also huge proponents

of stringent quality control measures. And we ask all the pivotal questions - What are the source(s) of data

signalling? Is it proprietary? Is it probabilistic? Deterministic? When was it collected? Is it updated consistently? -

so that you don’t have to.

74.5%of digital display dollars

transacted privately

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Artificial Intelligence within DSP’s like Sizmek enable campaigns to learn and understand how consumers engage

with brands, allowing marketers to predict the right moments of influence to target them with relevant ads and

marketing content. In 2016, more than half of all video ads were bought using artificial intelligence. This year, that

portion will rise to 75%. Video has been slower than some channels to adapt to the algorithms that transformed ad

tech over the years, but even here the allure of AI is proving irresistible. AI and automation are becoming the new

normal across all addressable channels.

This harmonizes with a relentless shift toward predictive, AI-based digital advertising that has been in progress for

many years. According to a report from Forrester and Sizmek, marketers are committed to delivering consistent

brand experiences throughout the customer journey, and most agree that an emphasis on predictive helps

accomplish this.

Forrester analysts anticipate that in 2018 79% of marketers will increase their investment in AI. In addition, 86%

will prioritize personalization capabilities and 86% plan to optimize marketing decisions across the entirety of the

customer journey.

While 85% of marketers are placing a new emphasis on developing talent, many are also paying close attention to

forging the right partnerships. 77% say they are currently implementing AI-empowered technology platforms or

are on their way to doing so, but 67% are not yet confident that their own teams can properly implement AI fully

in-house.

Artificial Intelligence is real, and the world is moving toward automation06

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In 2017, Google was hit with controversy over problematic ad placement. In response to this and other brand

safety concerns, agency marketers got smarter and more deliberate about protecting the reputation and brand

integrity of the brands they represent. We’re proud to be at the forefront of this positive and necessary trend

toward greater brand safety.

Brand Moments, an AI-based tool from our partners at Sizmek, leverages IBM Watson discovery technology

embedded within a predictive marketing platform to drive better brand safety for marketers.

The industry is getting serious about protecting your brand07

Brian Krzanich at Intel writes, “As the pace of the digital revolution accelerates, businesses must make fast, critical

decisions based on the increasing amount, complexity and diversity of data. To manage this deluge, companies

need artificial intelligence (AI) strategies or they will be left behind.”

This is especially true in the adtech/martech ecosystem. AI technologies from predictive analytics to chatbots are

improving the efficacy of all business processes in a marketing context. There really is no time to waste - AI is being

rapidly adopted and is available right now - and AUDIENCEX can help you deploy a powerful AI strategy across all

of your media campaigns.

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This engine uses cognitive computing to identify keywords and brand sentiment signals in real time, determining

any brand safety risks as they arise. The results feed into Sizmek’s AI-enabled DSP so that buying decisions

become continuously smarter and better able to keep your brand free from any brand safety vulnerabilities.

According to a white paper from eMarketer, brands are experimenting with an array of approaches to

strengthening brand safety, including custom solutions that combine the efforts of technologies and humans, and

helping to ensure that there is an appropriate balance between quality and quantity.

Above all else, sustaining and growing this trust requires third-party measurement and verification. By building

cross-industry partnerships among advertisers, agencies, the greater publisher community and independent

third-party ad measurement companies, we’re working proactively to better insulate our customers from risks and

errors.

For a leading example of this, consider IAB’s groundbreaking ads.txt initiative, which allows publishers to publicly

share which companies they authorize to sell their digital inventory, therefore helping prevent the sale of

counterfeit and unauthorized impressions via programmatic transactions. In the further interest of transparency

and authenticity, Sizmek properties are also verified through the TAG Registry, yet another vitally important

innovation in the area of brand safety.

Above all, there is reason to be optimistic. Several industry pundits are cautiously predicting that Ad Fraud will be

a thing of the past in a matter of a few years.

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Digital has not killed the retail star. As any consumer who participated in Black Friday holiday shopping knows

well, big-box and speciality retailers still attract plenty of customers, including for events and promotions. To use a

metaphor for gaming: The new reality of retail is not entirely virtual, but it is augmented.

According to Sapient/Salesforce numbers, 58% of survey respondents, including the plugged-in “Gen Z”

demographic, still prefer brick-and-mortar stores over online shopping. However, for 60%, the shopping

experience begins digitally.

This speaks to the urgency, and opportunity, of integrating the traditional shopping experience with the rest of a

customer’s lived experiences, which in 2018 will be increasingly carried out within exclusively digital spaces.

Our work with Placed (a location-driven insights and mobile ad intelligence platform recently acquired by Snap,

Inc.) underscores this progression. Through this integration we found that certain messaging and creative

executions drive greater retail lift at specific times of day and on specific days of the week. Such granular insights

can powerfully impact the relationship between retail and online communications.

We believe that through processes like these we can better integrate the digital and physical environments and do

so more intricately and thoughtfully than ever before.

Retail will continue to become a more multi-platform experience08

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In December 2017, the FCC voted to end Title II protections for net neutrality and reclassify broadband internet

as an “information service,” as it was under the Clinton Administration, placing it within the regulatory purview

of the Federal Trade Commission. In the arena of digital communications this has been the biggest and most

controversial news story of 2017, and it has triggered a vigorous debate in the culture at large.

Without a doubt, this is an inflection moment for the industry - one that will drive disruption and unavoidable

change. To thrive and excel in a post-Net Neutrality digital sphere, we recommend working with seasoned experts

who can identify and apply new opportunities unlocked by this kind of transformational moment.

In an editorial for Advertising Age, Shelly Palmer suggests that the end of net neutrality may offer some

advantages to tenacious marketers:

Net Neutrality is likely a thing of the past09

“This regulatory shift would open up a wide-range of opportunities for agencies,

advertisers and marketers. This could be a perfect opportunity to pair programmatic

creative with programmatic media buying. There will be hundreds of different

rate plans targeted at specific cohorts. There will also be opportunities to create

new consumer and brand experiences that include ‘unlimited’ bandwidth or ‘free’

bandwidth offers.

“The restoration of this version of ‘internet freedom’ will change the media

distribution landscape dramatically. It will be the perfect place for new creative ad

units and offers. Think about how your brand can be positioned as a trusted, needed,

content companion. It’s an unintended consequence, but the FCC is about to give a lot

of smart marketers an opportunity to shine.”