A new digital advertising model might

SAVE

premium content on the web

0.0

50.0

100.0

150.0

200.0

250.0

2012 2013 2014 2015 2016 2017 2018

Bill

ion

s o

f D

olla

rs

TV Spend Digital Spend Print Spend Other Spend

The US advertising market is huge

Source: eMarketer

Advertising on all of those mediums is sold based on

impressions or actions

Why?

It’s really easy to measure

There are 2 impressions in this view*

*AOL sells this rich media ad as one unit and gives the advertiser 100% share of voice at a premium price.

Since it’s easy to measure, it’s easy to price

Number of impressions Total cost x 1000 CPM =

Ad agencies and media companies are used to pricing this way

New York Times Pages 3 – 5, June 11, 1974

8 impressions 1 impression 5 impressions

But there is a huge

PROBLEM

with this model on the web…

What?

5 trillion impressions

In 2013, there were 5 TRILLION impressions served!

$17.6 billion x 1000 $3.52 eCPM = 1

2

1.  eMarketer estimate of display ad revenue in the US 2.  comScore estimate of US impressions served in 2013

$3.52 eCPM CANNOT

support the traditional media business model

0

500

1,000

1,500

2,000

2,500

3,000

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008

Ne

w Y

ork

Tim

es

Ad

Re

ven

ue

(Mill

ion

s o

f D

olla

rs)

To

tal N

ew

spa

pe

r In

du

stry

Ad

Re

ven

ue

(Bill

ion

s o

f D

olla

rs)

Total Newspaper Industry Ad Revenue NYTimes Ad Revenue

Newspaper ad revenue drop-off has been dramatic

-

1,000

2,000

3,000

4,000

5,000

6,000

Ad

Re

ven

ue

(Mill

ion

s o

f D

olla

rs)

NYT Ad Revenue McClatchy Ad Revenue Graham Holdings Ad Revenue Gannett Ad Revenue

No large paper has been spared

-

500

1,000

1,500

2,000

2,500

3,000

195

3

195

4

195

5

195

6

195

7 19

58

19

59

19

60

19

61

196

2

196

3

196

4

196

5

196

6

196

7 19

68

19

69

19

70

1971

19

72

1973

19

74

1975

19

76

1977

19

78

1979

19

80

19

81

198

2

198

3

198

4

198

5

198

6

198

7 19

88

19

89

19

90

19

91

199

2

199

3

199

4

199

5

199

6

199

7 19

98

19

99

2

00

0

20

01

20

02

2

00

3

20

04

2

00

5

20

06

2

00

7 2

00

8

20

09

2

010

2

011

2

012

2

013

Re

ven

ue

(Mill

ion

s o

f D

olla

rs)

Ad Revenue Circulation Revenue

For the first time since 1953, the New York Times subscription revenue is greater than its advertising revenue

THE SUPPLY

of impressions is unsustainable

Before the internet impressions were constrained and

SCARCE

CIRCULATION

PAPER

PRINTING

constrained the supply of impressions

Now, an advertiser can buy any audience

CHEAPLY and AUTOMATICALLY via

programmatic buying technology

WE’RE IN TROUBLE IF SOMETHING DOESN’T

CHANGE!

“our print and digital products face increasing competition for audience and advertising from…digital advertising networks and exchanges, real-

time bidding and other programmatic buying channels and other new forms of media.”

Advertisers are

LOSING

too

Why?

When was the last time

YOU

looked at a digital ad?

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

Inte

ract

ion

Ra

te P

erc

en

tag

e

The average interaction rate with a display ad is 2.94% 1

1.  This is the percentage of ads served on the Double Click network that a viewer interacted with

A lot of money is spent on digital ads that DO NOT work

2012 2013 2014E

Display $14.8 $17.6 $20.6

Search $17.3 $19.6 $21.6

$- $5.0

$10.0 $15.0

$20.0 $25.0 $30.0 $35.0 $40.0 $45.0

US

D (B

illio

ns)

US Digital Advertising Spend

Source: eMarketer

What’s going to

SAVE

premium content?

A NEW ADVERTISING

MODEL

TIME

is the only

SCARCE

asset on the web

In 2014, Americans had a shorter attention span than GOLDFISH 1

1.  Nancy Kane, Harvard Business School

Technology has improved – we can measure EVERYTHING

Rising content engagement increases the percentage of ads seen

Pe

rce

nt

of

Ad

s S

ee

n

Engaged Time on Page Source: Chartbeat

As an audience spend MORE TIME reading content with an ad in view, ad RECALL INCREASES

The best content

DEMANDS

our attention, and advertisers will pay for it

Rather than being forced to play tricks, media companies can focus on grabbing

OUR ATTENTION

User experience benefits

Focus on great, attention grabbing content

No need for annoying slideshows

One ad that scrolls with content

1

2

3

4

Eliminate pagination

The Media Ratings Council APPROVED and 2 publishers are now selling time-based ads

Soon, all premium digital ads will be sold based on

ATTENTION

THE WINNERS

Premium publishers 1

The display ad 3

2 Advertisers

THE LOSERS

Digital ad trading desks 1

Programmatic buyers 3

2 Real-Time Bidders

Long-tail publishers 4