2017 Advertising Megatrends

[Music] reporting everyone claims necro vessel I'm the VP for a mere former Vista some of you may have heard atma vista some of you may not so this is a short presentation in three sections on the trends in advertising spend the video Megatron and a few areas of focus for game publishers depending on time there may be an opportunity for some questions at the end say bit about my Vista with public company based in Guangzhou in China 13 offices around 350 million da you going through our mediation products we're doing around a million dollars a day in revenue in 2016 and like a lot of companies and add seconds growing rapidly and we work with direct transfer

so our main focus so the advertising landscape one of the things that happened in 2016 have surprised a lot of people is digital spend overtook TV and the reason why I think this is interesting to share with you is the full car put together in 2015 said this event would not happen until sometime in 2017 2018 so what can we take from that stats we know that money has been accelerating into digital why is that happening and I'm going to go through a few of those reasons why it's happening second up mobile will be larger than desktop we see a 2016 28 billion spent in mobile advertising by the time we get to 2018 two years from now it's going to be almost double at 50 billion eclipsing

desktop and if we look at the growth of desktop it's absolutely anemic 41 billion in 2016 adding three billion bytes when 20 it's like it's like even keeping up with inflation as if you reasons for that I mean Vista is based in a pack but we do have offices worldwide however there's three billion people in that region and a lot of people that region never came across desktop they've gone straight to mobile so in terms of that huge scale is coming into our space it's it's showing this real real uplift on the outs plan that's coming into mobile and in mobile it's video that's dominating in na there's been a lot of talks on video today but I think this is quite a contrasting slide because the display formats are kind of king and mobile for a while you know those banners and interstitials and I'm glad to see that died it's actually going to

decline by 2020 whereas mobile video is just rocketing for rocketing up 2016 it was roughly 4 x display and by the time to get to 2020 it's going to be around 17 x bigger than display so the future is definitely in video and as a unity have been talking today it's clear to see why you a video has such higher engagement it's better performance and what we see is stronger returns for both publishers and advertisers so really eat see why the spend is piling into video so we know it's for mobile and digital and video so I think it's a good opportunity to look at some of the video mega trends that are coming up first up we're going to see a proliferation of new video formats this year this is going to create huge challenges for advertisers who are going to be scrambling around to understand which

video formats are going to be best for their objectives think about the unique production requirements and creative challenges for all these platforms and formats you know in my opinion being to hear what you guys think virtual reality video ads will be for more effective for delivering immersive plan experiences so maybe not performance which is what the mobile gaming industry knows best virtual augmented video ads will be excellent for driving response in hyper local advertising so the world's going to get a lot more complex in video and it won't just be one type of format that's available so it's going to create huge challenges for the game publishers in the room too and you're going to New sdks new product new way to support it new way to integrate into your game for me mobile gaming is only recently understood and skilled rewarded video for performance boys and which in comparison is a very very simple mechanic when you compare it to some of these formats that are going to be coming out what else is going on in

video well the industry joints are dominating and I'm talking about slap facebook and youtube every day 23 billion video stream that consumed across these three platforms and it's it's no surprise to see that they're taking the line share of the revenue as well I mean the way that Facebook are growing is is quite scary for a company that's competing with Facebook I think it's likely that you know the investment they were seeing in things like Facebook live means that the the amount of audience and consumption of video and also the ad spend which threatens your revenue is going to be piling into these three businesses advertising spend always follows the audience yeah then you kid on the block snap completely dominating the 13 to 24 demographic I want to spend a bit of time talking

about this because this demographic today we know does not have a lot of disposable income they probably got student loans or worse pocket money so actually the appeal to advertisers to target them is quite small you would think but brands have always known that the youth of today will grow up to the be the big-spending demographic tomorrow and it's essential that the brand's influence the hearts and minds of this early demographic early on as we know snap will first out the block with proprietary hardware to record share and consume even more video on on the SAT platform with many manufacturers launching the Raynor a rvr and mr this space is going to get a lot more attention and offer the abduction and I think it may be interesting to look at why snap and other companies are creating propriety hodler it's to look brands and consumers into proprietary formats to deliver the perfect native fits and to do so within the primary app

experience so T things I think will happen with widespread consumer adoption of proprietary hardware formats consumers will spend more time creating content excitement and engagement on snap and two more consumers and engagement looks of platform equals more ad dollars for the platform so even though snap with first met with their ads article format you may have seen that what's that throwing up what's that Instagram is following suit launching their own version of that proprietary format so these guys Facebook's clapping and the Google they are going for it and I personally I feel the innovation in video tapping fast much faster outside mobile gaming I think it's really interesting to see some of the techniques that can be used to maximize revenues but actually i think has been a real lack of innovation in video in the last couple of years and i'm going to talk more about that later on so why

these guys focusing on propriety hardware to tighten the grip and monopoly they have on the advertising spend this is a full cost put out by snaps and you can see the phenomenal pace that they're creating their their ad business and i don't think anyone in this room will be surprised to see just how popular snap is going to be a likely IPO this year and one other thing that's interesting here is Facebook and Google aren't showing any sign of slowing up which means if snaps growing that money is coming from somewhere else so it's likely coming from other channels like display TV radio print or it's going to be coming from from your business I know that the mobile gaming space has had a keen eye on brand spent for quite some time I'm not sure that money if you come NT to mobile gaming let's take a look at perhaps competitors and what they're up to google has proprietary hardware on proprietary

software to sell proprietary formats to one on proprietary media crucially as you guys when a fitting your own ads directly on proprietary media is one hundred percent gross profit no agency rebates no revenue shares without networks equals a lot more money for Google for every user that they have full say I don't think anyone would disagree I think they've quite simply got the best and an ad tech platform in the world and they are completely dominant and search and search advertising however I also think that Google will need to do a much better job in brand orientated mobile formats as they need to deal with their number-one throat Facebook they also have proprietary hardware they attempted proprietary software but they do sell proprietary formats to run on their proprietary media they're also the runaway leader in mobile advertising and I think with Instagram and what slaps specifically that latter is a sleeping

giant in terms of revenue opportunities and I say that from my exposure within Vista you may have heard of WeChat built by ten cents it for me is probably the most powerful single media type in the whole of SE Asia Southeast Asia they've got 750 million tau multiple utility such as payments and dating and rapidly growing to service for 3 billion consumers in that region so from my perspective I would say the future for facebook looks very very promising as and when they work out the best way to to monetize what's up they could just copy what we shall have done and they have a phenomenal business so with all this proprietary and the inner joint and if she joins clearly doing it to develop a long-term strategic advantage over our market how's it been working out for them in twenty sixteen seventy seven billion dollars were spent on mobile advertising in the US of which seventy percent just

went to Facebook and Google fifty four billion dollars 1,000 plus add company's worth fighting it out fiercely contesting two remaining twenty three billion and if you do the simple sums you can see 23 billions by to our thousands does not leave a lot of money for the other ad businesses out there yeah and depending on your view of monopolies and julie's facebook and google are expected to increase their share of advertising spenders here which means they're going to be hoovering up even more spend into these businesses cool proprieties great but you need the billion da you first to kind of pull that strategy often that's the difficult bit isn't this getting up billion da you so with all that is going on video is going to be huge we've got new video formats and video hardware on the horizon and it's clear that Facebook Google and slap for in a three-way

contest for the line show of these are these mobile advertising dollars so what do I think the game publishers should be thinking about I think it's brand spent I know there's been a lot of talk about bringing more brands into mobile gaming and we can perhaps look at some of the reasons why this has not happened yet I mean there's a huge amount of odd fatigue in mobile gaming the same gamers getting the same game ads from the same game advertisers as as unity talked about previously the conversion rate was I think 2.4 for every 1000 views that numbers decreasing multiple months it's going down so the CPI is that inching higher and the users they're not responding to the ads in the same way that they used to and my personal view is rewarded video really growing the audience in gaming or is it really just recycling games gamers between gangs are we really going out there and bringing in new audience into our ecosystem or we

just literally working with what we've got I think if we look at the consumption in mobile gaming last year Florida report and yeah it's coming down so I think we need to bring in a new consumers but also new sources of revenue so essentially we need to look outwards as an industry and not not within for the future so if we're talking about brands I think we should discuss the potential for brand advertising placements personally I don't think that brands will be spending in rewarded video at a significant level and I know there are others in the industry that diesel that I feel that I can talk here with experience having built a brand a brand video business that was sold to air well and a lot of our traffic in the brand business came through social gaming and let me tell you the brands do not like social gaming they did not like it they went to the limit and cap how much inventory would be delivered within social gaming that

ain't like the incentivized nature of the placement so I'm sure there will be some limited brand spent coming in but it's never going to be big so we need to think about the kind of placements we should be focusing on the Facebook commissioned this report and it's actually quite intimately just google the the school you'll find it and as you'd expect from facebook they've talked about the rise of native and how it's going to squeeze non-native formats we actually fooled the same at mariska we love that those native placements and there's a few reasons for that well one they've been buying it on desktop for years and buying it in the bucket loads so the brand advertisers that have that money they used to spending it on desktop but they're looking for good opportunities in mobile at the zoo or that brand spinner native is getting sucked into Facebook and slap and you guys on a part of that we know that

integrating native with engages tricky how do we make it part of the game experience how does it impact the game design so I'm not sure it's the right format but we need to discuss and think about how we get on to this how we bring in native into mobile gaming because I think we need to be extended the audience enter gaming for brands outside of Facebook and fat because there's a whole demographic there that brands want to reach at scale that aren't getting reached on facebook and flat and Google and yeah the Facebook and slap the booksellers hunting down the market in agencies eat meeting major brands week in week out educating them on native so I think in the mobile game industry we should literally just ride the wave on it and we build our own made to that format to serve the brand's also remember guys with native it's it's a brand by they're paying you on a CPM that means the value is created from it

inside the game the user will not leave your up unlike rewarded video which requires the user to exit and in school maybe not there and then our analysis shows that a lovely install happen within the first hour which for me says they're leaving the game there and then the next area that you should be thinking about is private market places as you can see from the growth by clinging eighteen eighty-three percent of mobile clients funds will be flyer programmatic the strength cannot be able to you guys need to figure out a way to deal with us so the larger publishers in this room who can invest in a direct sales team having a private marketplace where you'll be able to connect your native brand inventory directly to advertisers will bring you in a lot of spend I think it's trend a little bit of maybe another 12 18 months nonetheless you guys should start making inquiries into companies that have this technology

to get a better understanding how you'll be able to fit this into your revenue strategies in the future I appreciate not everyone in the room will be experts on private marketplaces and programmatic in which case please come by them a bit sasan later today or tomorrow and we'll happily chat through it however for all of you the takeaway is brand spend will be programmatic spend so you need to get ready and finally the last area focus to know more about your audience specifically accurate data on the age and gender of your user Facebook slap and Google all have age gender but they also have interest behavior and social graph I don't know a mobile game out there today that can claim to know this much about their users for three years running CMOS stated that knowing more about audiences to increase the effectiveness of targeting and personalization is then

number one priority why is that aldi really don't want to pay to show an RA add to a young girl and a young girl certainly does not want to see an Audi ad but only would want to show an RA add to a 34 year old man and I suspect like me he'd probably quite like it the brand is about audience data for accurate targeting and personalization today if we look at the way video inventory is available within gaming it's a blind by its whatever is there we just serve it up and today because we stay focused on the performance aspect of all your video we can on a completely different tangents to a brand of thinking and we do not want to miss this opportunity in concert with programmatic and private market places which we covered in the previous slide the audience data will enrich the opportunity to significantly so when your inventory is available programmatically you might have it

through a private marketplace and you can enrich the request with additional user data but it's when the brand are going to come in and start spending money so to wrap digital mobile and video will be the three biggest areas of focus in 2017 and brands are following the audience to mobile only in mobile first environments how are you guys in mobile gaming planning to get some of that spins thank you [Applause] [Music] you