P R O V I D I N G I N - D E P T H I N S I G H T , D A T A , A N D A N A L Y S I S O F E V E R Y T H I N G D I G I T A L

THE TOP 5 TRENDS IN DIGITAL MEDIA 2020BUS I N E S S I N S I DE R I N T E LL I G E N C E

1. Social media will become a primary productdiscovery channel for young people in the US — and

increasingly the way that they make purchases

More people discover products on social than do on retailer websites

Note: Survey was fielded online. Source: ViSenze, n=1,037 US internet users ages 18+, November 2019

10%

39%26%

25%

Digital advertisement

Third-party e-commerce website

Social media platforms

Retailer's website

Platforms On Which US Internet Users Discover Products

.Source (left): Yotpo, n=2,000 US internet users ages 14+ who do at least half of their fashion shopping online, August 2019Note: Survey was fielded online in July 2019, and 63% of respondents were femaleSource (right): ViSenze, 1,000 Gen Z and millennial consumers in the US and UK, August 2018

US Internet Users Whose Most Recent Fashion Purchase Was Inspired By Social Media Browsing

28%

38%

51%

55%

Baby boomers (55+)

Gen X (35-54)

Millennials (25-34)

Gen Z (14-24)

Product discovery via social is particularly common among young peopleQ: Where do you most often discover products?

(Select all that apply.)

8%

32%

41%

44%

51%

59%

9%

24%

47%

46%

57%

55%

An IoT device (e.g. smartspeaker)

Through anadvertisement

A retailer's physicallocation

Third-party e-commercewebsites (e.g. Amazon)

A retailer's website

Social media platforms(e.g. Instagram)

Millennial (24-37) Gen Z (18-23)

And influencers could further popularize the behavior among young people

Note: Survey was fielded online and conducted by Censuswide.Source: Wunderman Thompson Commerce, n=2,001 US respondents and 2,002 UK respondents ages 6-16, July 2019

Leading Influences On Purchase Among US And UK Children/Teens

2%

13%

1%

1%

1%

1%

4%

6%

21%

25%

28%

Other

Nothing/no one makes me want to buy things

Politicians

Journalists

In-store sales assistants

Business people

Athletes

Celebrities

Family members

Influencers/bloggers on Instagram, YouTube, Snapchat, etc.

Friends

In the last year, social platforms set their sights beyond product discovery, focusing instead on

driving in-app purchasing

In 2019, Instagram, Pinterest, and Snapchat became active in that space

Source: Company websites

Examples Of Commerce Features On Major Social Platforms

Checkout on Instagram — Mar. 2019Users can seamlessly purchase a product from a brand’s shopping post without leaving the app

Instagram Pinterest

Catalogs and Shopping Ads — Mar. 2019

Brands can upload their full catalog and automatically convert products into

shoppable Product Pins

Snapchat

Dynamic Ads — Oct. 2019Shoppable ads sync directly with

product catalogs on the app, dynamically update, and are targeted

to relevant users based on their interests and past engagement

And interest in purchasing via social goes up as age goes down

Note: Figures may not total 100% due to rounding.Source: ”The eMarketer Ecommerce Survey” conducted in August 2019 by Bizrate Insights

Interest In Purchasing Products Through Social Media Among US Internet Users

10%

7%

8%

14%

24%

17%

26%

30%

7%

5%

8%

8%

20%

19%

21%

20%

35%

49%

31%

24%

4%

3%

5%

3%

Total

55-65

35-54

18-34

Use it regularly Have used before, but don't use regularlyHave not used, but very interested Have not used, but somewhat interestedHave not used and not interested Don't know what this is

2. Connected-TV will be a core rather thanexperimental part of the advertising mix in 2020

— and with the new channel will come new challenges

Advertisers are increasing spend on CTV faster than on any other device

Note: Digital advertising that appears on CTV devices includes display ads that appear on home screens and in-stream video ads that appear on CTVs from platforms like Hulu, Roku, and YouTube; excludes network-sold inventory from traditional linear TV and addressable TV advertising.

Source: eMarketer estimates, July 2019 (left), October 2019 (right)

US CTV Ad Spend Projections, In Billions US Video Ad Spending YoY Growth, By Device

Note: Includes in-stream video ads such as those appearing before, during, or after digital video content in a video player and video overlays; includes social network instream video advertising in platforms such as Facebook Watch and Snapchat Shows; includes outstream video ads such as native, in-feed, in-article, in-banner and interstitial video ads

$3.37$5.04

$6.94

$8.88

$10.81$12.49

$14.12

2017 2018 2019 2020 2021 2022 2023

49.8%

37.9%

28.2%21.9%

16.7%29.5%

34.0%

24.6%18.8%

12.7%

-3.3% -6.0% -7.4% -7.7% -6.6%2018 2019 2020 2021 2022

CTVMobileDesktop

Advertisers are drawn to its promise of combining audience, contextual, and behavioral data on TV devices …

… and its growing reach compared with other channels

Note: Figures are based on data collected from the company’s video ad server, withthe growth of CTV coming at the expense of Desktop and Tablet devices.

Source: Extreme Reach Video Benchmarks Report, 2019

0%

10%

20%

30%

40%

50%

60%

CTV Desktop Mobile Tablet UnclassifiedQ1 18 Q2 18 Q3 18 Q4 18 Q1 19

Share Of Impressions For A Given Ad Campaign, By Device

But as investment grows, two challenges will rise to the forefront

Challenge 1: A fragmented CTV ecosystem creates measurement and

efficiency challenges

CTV inventory is split across many disparate device ecosystems

Source: eMarketer estimates, July 2019

106.4

86.2

68 64.6

31.6 27.4 24.6

Smart TV Roku Connectedgame console

Amazon Fire TV GoogleChromecast

Blu-ray player Apple TV

US Connected TV Users, In Millions

Note: Users are defined as individuals of any age who use the internet through a connected TV at least once per month. Connected TVs are TV sets connected to the internet through built-in internet capability or through another device such as a Blu-ray player, game console, set-top box (e.g., Apple TV, Google Chromecast, Roku), etc.

21%

22%

22%

24%

24%

26%

27%

33%

Lack of advertiser demand

Lack of incremental reach/overlap with traditional TV buys

Confusion about how audience-based TV advertisingworks/its benefits

Poor performance/ROI

Difficulty with data integration

Lack of large-scale audience

Inadequate metrics/campaign measurement

Cost/price

Note: Respondents could select their top three choices.Source: IAB, 2019

That makes campaign coordination difficult for marketers

Obstacles Preventing US Agency And Marketing Professionals From Using More OTT Ads

Challenge 2: Multi-person viewership will create new risks for advertisers

In the US, 94% of consumption on CTV devices is co-viewed, meaning multiple people are watching at

once — that’s an unproven setting for personalized ads

Source: IAB, 2019

CTV targeting capabilities could be constrained by its communal nature

Some vendors may be providing fraudulent information or data

lacking parental consent for CTV campaigns

Source: AdLedger, 2019

Faulty Data Supply Chain

Potential Issues With Targeted Advertising Via CTV

Embarrassment About Personalized Ad Content

Consumers could grow concerned that their personal interests will be displayed by targeted ads in a co-viewing

setting

Target infamously sent a personalized pregnancy

ad to the family of a teenage girl.

In July, 18% of ad requests for OTT

inventory were fraudulent.

Issue Description Example

3. Facebook will lose young users in the US even faster, and its new apps meant to win back young

people will flop

Facebook has a young user problem in the US

Source: eMarketer estimates, November 2019

US Facebook Users By Age Group, 2014-2019, In Millions

0

5

10

15

20

25

30

35

40

45

0-11 12-17 18-24 25-34 35-44 45-54 55-64 65+

2014 2015 2016 2017 2018 2019Note: Users are defined as internet users who access their Facebook account via any device at least once per month

And while Instagram is popular with young people, growth is at a crawl

Source: eMarketer estimates, November 2019

Instagram Year-Over-Year US User Growth, 2018-2023

0%

5%

10%

15%

20%

25%

2018 2019 2020 2021 2022 2023

0-11 12-17 18-24

Note: Users are defined as internet users who access their Instagram account via any device at least once per month.

Facebook recently launched two familiar-looking apps to reverse this trend

Facebook Lasso Threads from Instagram

TikTok Snapchat

• Short-form video app

• Music-based

• Trending hashtags and challenges

• Editing tools and effects

• Short-form video app

• Music-based

• Trending hashtags and challenges

• Editing tools and effects

• Private, ephemeral messaging app

• Camera-first

• AR lenses

• Private, ephemeral messaging app

• Camera-first

• AR lenses

The social giant’s efforts to replicate the success of these apps among young people will come up short

Snapchat is too beloved by teens

Source: Piper Sandler “Taking Stock With Teens” Survey, Fall 2019

US Teens’ Favorite Social Platforms, 2016-2019

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Fall 2016 Spring 2017 Fall 2017 Spring 2018 Fall 2018 Spring 2019 Fall 2019

Snapchat Instagram Twitter Facebook Pinterest

And TikTok is too popular to displace

Source: The Guardian, The New York Times, CBS News, 2019

We think Facebook will see young users in the US leave at an even faster rate in 2020

Source: Company filings

And that will likely sound alarms, given how critical the US is for Facebook

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

US & Canada Europe Asia-Pacific Rest of World

Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Facebook ARPU, By Region, 2018-2019

4. Publishers can no longer view advertising or subscriptions — alone or in combination — as

sufficient to survive

Facebook and Google — and now Amazon too — rule the US digital ad market

Note: Digital ad spending includes advertising that appears on desktop/laptop computers; mobile devices (phone, tablet, and other); across all formats on platforms. Facebook includes Instagram, and Google includes YouTube. Net ad revenue after companies pay traffic acquisition costs (TAC) to partner sites.Source: eMarketer, November 2019

60.7%

8.6%

30.6%Duopoly (Facebook &Google)Amazon

Other

US Digital Ad Spending Share Among Platforms, 2020

$0

$5

$10

$15

$20

$25

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E

Newspapers Magazines

And print advertising remains in decline

Note: Spend refers to print only advertising. Newspaper ad spend includes classifieds, national, and retail; magazine ad spend includes B2B, consumer, local, and Sunday. Source: eMarketer estimates, October 2019

Print Ad Spending, US, In Billions

As a result, publishers have sought refuge in subscriptions

Note: Figures don’t total to 100% due to rounding.Source: Reuters Institute for the Study of Journalism, n=189 respondents from 32 countries who hold senior positions in traditional or digital-native publishing companies and are responsible for aspects of digital or wider media strategy, December 2019

Most Important Revenue Streams for Publishing CompaniesQ: Thinking about your own company, which of the following statements do you agree with the most? Reader

revenue will be the most important revenue stream going forward / reader revenue and advertising will be equally important / advertising will be most important.

14%

35%

50%

Advertising only

Both reader revenue and advertising

Reader revenue (subscriptions)

But subscription models won’t work for all — just a handful of publishers

Note: Survey was conducted online with a 95% confidence level and margin of error of 3%. Source: Dynata, Business Insider, n=1,000 respondents, February 2019

15%6%6%

9%10%

11%11%

12%12%

14%26%

30%47%

OtherChicago Tribune

The AtlanticThe Guardian

Financial TimesLos Angeles Times

Business InsiderThe Economist

BloombergThe New Yorker

The Wall Street JournalThe Washington PostThe New York Times

Q: Which online publication(s) do you subscribe to?

Every other newspaper, magazine, and digital-native publisher in the country is fighting over this slice

Online Publications US Respondents Subscribe To

There are two nonexclusive routes publishers can take to complement increasingly scarce advertising and

subscription revenue: diversification and consolidation

Nontraditional revenue sources help to lessen reliance on ads and subs

Podcasts E-commerce

Tech/CMS licensing

Events

Selling TV to third-party platforms

Source: Variety, Bloomberg, The Information, Digiday, Business Insider

And publishers recognize the importance of other revenue streams

Note: Respondents completed a closed survey in December 2018. Source: Reuters Institute for the Study of Journalism, n=163 respondents from 29 countries who hold senior positions in traditional or digital-native publishing companies and were responsible for aspects of digital or wider media strategy, January 2019

12%

48%

31%

24%

11%

75%

81%

78%

0%

2%

2%

3%

7%

8%

27%

52%

Donations (organizations)

Events

E-commerce

Related businesses

Donations (consumer)

Native advertising

Display advertising

Subscription

Main revenue focus Important revenue focusHow Strategy Executives Prioritize Publisher Digital Revenue Streams

Meanwhile, M&A among digital publishers ramped up in the past year

March 2019

Bustle Digital Group (BDG) acquires The

Outline

Great Hill Partners buys Gizmodo Media Group and The

Onion from Univision — and rebrands the combined assets as

G/O Media

April 2019

BDG acquires pop culture and music publisher brand Nylon

June 2019

July 2019

BDG acquires science and entertainment site

Inverse

Vox Media acquires New York Media, including New York magazine and O&O

sites like The Cut and Vulture

September 2019

October 2019

Vice Media acquires Refinery29 for $400 million

Group Nine acquires PopSugar for $300 million

October 2019

Source: Company releases, media reports, 2020

May 2019

Dotdash acquires Brides from Condé Nast

And outside of M&A, most publishers think they should cooperate more

50%

67%

71%

Share journalistic resources and output

Sell advertising together

Share tech and back office functions

Q: News organizations have traditionally been competitive, but should that change? Do you agree that they should …?

Source: Reuters Institute for the Study of Journalism, n=192 respondents from 29 countries who held senior positions in traditional or digital-native publishing companies and were responsible for aspects of digital or wider media strategy, January 2019

Publisher Opinions On Collaborating With One Another

We don’t expect publishers to abandon subscriptions or ads, but they will invest in

alternative revenue streams and pounce on opportunities to collaborate or consolidate

5. The podcasting world will become a clear duopolyof Spotify and Apple by year end, with Spotify on

pace to unseat Apple in the coming years

Apple is the leading podcast platform, but Spotify is growing quickly

Source: Voxnest, 2019

Podcast Provider With The Largest Market Share, By Country, November 2019

Podcast Provider With The Largest Market Share, By Country, March 2019

Apple Spotify

Note: Spotify’s total podcast listeners were calculated as a percentage share of the total MAU base at the time Spotify released data on the share of total MAU consuming podcast content on the platform.Source: Company filings, 2020

In fact, for Q4 2019 Spotify reported strong growth in podcast listening

Global Spotify Podcast Listeners, Share of Total Spotify Users

Spotify Podcast Consumption Hours

200%Up

Year-over-Year

35 430%

10%20%30%40%50%60%70%80%90%

100%

Q3 2019 Q4 2019Total podcast listeners, in millions

February 2019

Spotify acquires Gimlet and Anchor

for $340 million

Spotify purchases Parcast for $56 million

March 2019

That’s likely because Spotify has doubled down on its podcasting efforts

Spotify signs exclusive deal with the Obamas’ production studio to create shows for its

platform

June 2019

May 2019

Spotify redesigns its app to push users

toward podcast shows

July 2019

Spotify launches its first themed episodic podcast series using

Parcast’s true crime library

Spotify allows users to integrate podcasts

into playlists

October 2019

November 2019

Spotify launches personalized podcast playlist “Your Daily

Podcast”

Spotify buys The Ringer for undisclosed sum

February 2020

Source: Company announcements

Particularly, it has improved exclusive content and discoverability —Apple’s weaknesses

Discoverability features

Apple Podcasts

Spotify

Indexing

Curated playlists

Recommendation algorithm

Most-Streamed Spotify Originals

1. The Joe Budden Podcast with Rory & Mal2. Gemischtes Hack3. Fest & Flauschig4. Serial Killers5. The Misfits Podcast

Simple web browser: universal accessibility

Exclusive Content

No exclusive content yet —reported in Jul. 2019 that Apple

was looking into originalsSearch based on

full transcripts

Source: Company announcements, Bloomberg

And as podcasting grows in global popularity, Spotify is better-positioned abroad than Apple

Note: Surveys were conducted by YouGov using an online questionnaire in January and February 2019. Samples in each country were assembled using nationally representative quotas for age, gender, region, and education. The data were also weighted to targets based on census/industry accepted data. Source: Reuters Institute for the Study of Journalism, n=about 2,000 in each country, 2019

Podcasting has appeal across many regions of the worldPercent Of Each Country’s Population That Has Listened To A Podcast In The Past Month

21%21%

23%

25%27%

29%

30%35%

35%37%

39%

53%

United Kingdom

Germany

JapanFrance

AustraliaCanada

Italy

United StatesSweden

Ireland

SpainSouth Korea

Android Makes Up Majority Of Global Mobile Market

Source: Global Stat Counter, November, 2019

And Spotify has more potential abroad because it’s available on Android

At best, Apple Podcasts can win this whole slice …

… while Spotify can compete for the whole pie

76%

23%

1%

AndroidiOSOther