Hello, transparency.

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Dear Attendees,

Welcome to eMarketer Attention! 2015, where professionals from across the digital marketing and media ecosystem have gathered to talk about one of the most important issues facing them today: how to get, keep, measure and maximize attention from customers and prospects.

There’s no question that it’s more difficult than ever to cut through the clutter and get noticed—and that’s the case for content and ads alike. Media multitasking has helped propel US adults to consuming 12 hours of media each day in 2015, up from 11 hours, 8 minutes daily in 2011.

And just as technology has brought consumers more to pay attention to, it’s also brought more ways for them to avoid and block the things they don’t like—including ads.

We’ve put together an agenda to both inform and challenge you to think differently. We hope you enjoy a day packed with eMarketer stats and insights, engaging speakers and active discussions. We’ve also put together this collection of articles, key data and interviews that relate to and go beyond today’s talks to spur continued thought and dialog. Please keep in touch.

Best,

Geoff Ramsey

Co-Founder & Chief Innovation Officer eMarketer

PREMIER SPONSOR

VIP SPONSORS

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GROWTH OF TIME SPENT ON

MOBILE DEVICES SLOWS

GROWTH TO SLOW TO SINGLE-DIGIT PACE

STARTING IN 2016

Not surprisingly, Americans are spending an increasing share of their time on their mobile devices. But according to the latest eMarketer forecast, the channel’s growth rate is slowing considerably.

hrs:mins

Average Time Spent per Day with Major Media by US Adults, 2011-2017 Digital —Mobile (nonvoice) ——Radio ——Social networks ——Video ——Other —Desktop/laptop* ——Video ——Social networks ——Radio ——Other —Other connected devices TV** Radio** Print** —Newspapers —Magazines Other** Total 2011 3:34 0:46 0:16 0:04 0:03 0:23 2:30 0:12 0:21 0:12 1:45 0:18 4:34 1:34 0:46 0:28 0:19 0:39 11:08 2012 4:10 1:28 0:26 0:09 0:09 0:44 2:24 0:20 0:22 0:07 1:35 0:18 4:38 1:32 0:40 0:24 0:17 0:38 11:39 2013 4:48 2:15 0:32 0:18 0:17 1:08 2:16 0:22 0:17 0:06 1:31 0:17 4:31 1:30 0:35 0:20 0:15 0:31 11:55 2014 5:09 2:37 0:39 0:23 0:22 1:14 2:14 0:23 0:16 0:06 1:28 0:19 4:22 1:28 0:32 0:18 0:13 0:26 11:57 2015 5:29 2:54 0:44 0:27 0:26 1:17 2:12 0:24 0:15 0:06 1:27 0:23 4:11 1:27 0:30 0:17 0:13 0:24 12:00 2016 5:45 3:08 0:49 0:30 0:29 1:20 2:11 0:25 0:14 0:06 1:26 0:26 4:03 1:25 0:28 0:16 0:12 0:22 12:04 2017 5:56 3:18 0:52 0:32 0:32 1:22 2:10 0:25 0:13 0:06 1:25 0:28 3:58 1:24 0:27 0:15 0:11 0:21 12:05

Note: ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking; for example, 1 hour of

multitasking on desktop/laptop while watching TV is counted as 1 hour for TV and 1 hour for desktop/laptop; *includes all internet activities on desktop and laptop computers; **excludes digital

Source: eMarketer, Oct 2015

196818 www.eMarketer.com

Nonvoice time spent on tablets and mobile phones will grow just 11.3% in 2015 to 2 hours and 54 minutes. Since 2012, there has been a considerable slowdown in the growth rate of time spent on mobile devices, and eMarketer expects that slowdown to continue. In 2016, growth of time spent on mobile will fall into the single digits, with US adults spending an average of 3 hours and 8 minutes per day on mobile devices, excluding voice activities.

Much of the growth in time spent on mobile devices will come from people spending more time within apps. In 2015, US smartphone and tablet users will spend an average of 3 hours and 5 minutes a day using mobile apps, up from 2 hours 51 minutes in 2014. By 2016, mobile device users will spend 3 hours 15 minutes per day using apps. Time spent on mobile browser activities will hold steady at 51 minutes this year and next.

hrs:mins

Average Time Spent per Day with Mobile Internet Among US Smartphone and Tablet Users, In-App vs. Mobile Web, 2011-2017 2011 2012 2013 2014 2015 2016 2017 In-app 1:04 1:40 2:28 2:51 3:05 3:15 3:23 —Smartphone 0:35 0:56 1:24 1:35 1:43 1:49 1:52 —Tablet 0:29 0:44 1:04 1:16 1:22 1:27 1:31 Mobile web 0:29 0:38 0:50 0:51 0:51 0:51 0:52 —Tablet 0:15 0:19 0:24 0:25 0:26 0:27 0:27 —Smartphone 0:14 0:20 0:26 0:25 0:25 0:25 0:24

Note: ages 18+; time spent with each device includes all time spent with that device, regardless of multitasking; for example, 1 hour of multitasking on a smartphone while on a tablet is counted as 1 hour for smartphone and 1 hour for tablet

Despite the slowing growth rate, mobile is the only major medium eMarketer expects to grow this year and next with respect to time spent. eMarketer expects US adults will spend an average of 4 hours and 11 minutes watching traditional TV, down 4.1% from 4 hours 22 minutes in 2014. In 2016, time spent with TV will fall another 3.1%, to 4 hours and 3 minutes. Meanwhile, video consumption as a whole, across all channels, will hold roughly at current levels—suggesting consumers are swapping TV time for digital video time.

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CONSUMERS ARE IN A CRISIS

OF ATTENTION

Matthew B. Crawford

Author

“The World Beyond Your Head: On Becoming an Individual in an Age of Distraction”

Matthew B. Crawford’s book, “The World Beyond Your Head: On Becoming an Individual in an Age of Distraction,” documents the many ways that our attention gets chewed up and spit out on a daily basis. Naturally, that includes ads. Crawford is an advocate for people who want to “take back” their attention—and given the consumer interest in ad-blocking software and digital detox retreats, we thought his perspective would be especially relevant for eMarketer Attention! 2015. Tameka Kee of TJK Media spoke to Crawford for eMarketer in advance of his keynote to get some quick thoughts about attention and online advertising.

eMarketer: You’re an attention advocate. Does that mean

you stay up to date on advertising trends and technology?

Matthew B. Crawford: I stay up to date only in the

sense that I am subject to them, like everyone else. As a writer, I tend to be especially alert to the more aggressive forms of advertising in public spaces, because their presence indicates something about how we understand the idea of a “public.” It was once an idea that had a certain dignity to it, but it seems to have evaporated as our shared cognitive space gets colonized by private commercial interests.

eMarketer: What inspired you to write “The World

Beyond Your Head”?

“[W]e are living through a crisis of attention, and...

it is only superficially due to technology.”

Crawford: It was my sense that we are living through

a crisis of attention, and that it is only superficially due to technology. It becomes more comprehensible when understood as the culmination of a long cultural trajectory in which our experiences are increasingly manufactured for us. It’s an argument for reclaiming the real.

eMarketer: What do you think about the Internet of

Things and connected cars? Connected houses and appliances? What kind of impact will these developments have on consumer attention?

Crawford: As things get more complicated, and less

self-contained, it will be harder to be responsible for your own physical environment. So I suppose the effect will be to lead us even further into passivity and dependence—an expansion of the domain of life that we hand off to experts. Our attention will then be more free for amusements, which we will choose from an ever-expanding menu of options.

eMarketer: So what do you think about ad-blocking? Is

it inevitable?

Crawford: It sounds like the beginning of an unpleasant

arms race.

eMarketer: Are there any ads that you do like? Do you

think we can strike a balance as an industry between being intrusive and actually getting people information they want?

“[O]f course some ads are brilliant—consider

how the spirit of sports shines through in Nike and

Gatorade ads.”

Crawford: Yes—shampoo ads! I can’t get enough of

them. And of course some ads are brilliant—consider how the spirit of sports shines through in Nike and Gatorade ads. They feel like a tribute—to human beings, and their struggle for superiority. They’re so undemocratic! I mean that in the best way.

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NOW THAT WE GOT YOUR ATTENTION.

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SEVEN IN 10 US INTERNET USERS

WATCH OTT VIDEO

THE VAST MAJORITY ARE REGULAR

YOUTUBE VIEWERS

This year, 181.0 million people in the US will watch video via an app or website that provides streaming content over the internet and bypasses traditional distribution, according to eMarketer’s first-ever forecast of over-the-top (OTT) video viewership.

US Over-the-Top (OTT) Video Service Users, 2014-2019

OTT video service users (millions)

—% change —% of internet users —% of digital video viewers

2014 173.0 5.6% 68.4% 88.4% 2015 181.0 4.6% 69.7% 88.6% 2016 186.9 3.3% 70.4% 88.8% 2017 191.9 2.7% 70.9% 89.0% 2018 196.2 2.3% 71.5% 89.1% 2019 199.6 1.7% 72.1% 89.3%

Note: individuals of any age who watch video via any app or website that provides streaming video content over the internet and bypasses traditional distribution; examples include Hulu, Netflix and YouTube Source: eMarketer, Oct 2015

The forecast includes viewers of services like Hulu, Netflix and Youtube, and estimates that at this point, the population is already growing slowly. Nearly nine in 10 digital video viewers in the US already watch video content this way.

That’s largely because one provider of OTT video services is YouTube, which is already used by virtually all OTT video viewers. The YouTube audience will reach 170.7 million monthly video viewers this year, eMarketer estimates, or 94.3% of OTT video service users. Other services have lower penetration and much faster growth.

US Over-the-Top (OTT) Video Service Users, by Service Provider, 2014-2019

OTT video service users (millions)

YouTube Netflix Amazon Hulu

Total

OTT video service user growth (% change)

Netflix Hulu Amazon YouTube

Total

OTT video service user penetration (% of OTT video service users)

YouTube Netflix Amazon Hulu 2014 163.5 94.9 57.4 51.6 173.0 19.7% 23.7% 16.1% 5.4% 5.6% 94.5% 54.9% 33.2% 29.8% 2015 170.7 114.3 65.2 59.9 181.0 20.4% 16.2% 13.5% 4.4% 4.6% 94.3% 63.2% 36.0% 33.1% 2016 176.1 126.9 73.2 67.0 186.9 11.1% 11.8% 12.3% 3.2% 3.3% 94.3% 67.9% 39.2% 35.9% 2017 180.7 134.9 79.9 73.7 191.9 6.3% 9.9% 9.2% 2.6% 2.7% 94.2% 70.3% 41.6% 38.4% 2018 184.7 139.4 85.1 78.8 196.2 3.3% 7.0% 6.6% 2.2% 2.3% 94.1% 71.0% 43.4% 40.2% 2019 187.8 143.0 88.6 82.2 199.6 2.6% 4.3% 4.1% 1.6% 1.7% 94.1% 71.7% 44.4% 41.2%

Note: individuals of any age who watch video via any app or website that provides streaming video content over the internet and bypasses traditional distribution; examples include Hulu, Netflix and YouTube Source: eMarketer, Oct 2015

Netflix, for example, will grow its US audience by more than 20% this year to 114.3 million, or 63.2% of OTT viewers. Netflix will continue to penetrate the OTT video market, and will reach 71.7% of this audience by 2019. Hulu has a smaller audience, but it will overtake Netflix’s growth rate again next year, reaching 82.2 million people by 2019.

Amazon’s video streaming service is larger than Hulu’s and will reach 88.6 million OTT video viewers by the end of our forecast period.

OTT video viewing is not limited to consumers with a smart TV or other internet-connected TV setup, but can occur directly on PCs and other internet-connected devices. eMarketer estimates that the connected TV audience will reach 140.5 million this year, with the largest share of connected TV users still getting online via a game console (36.8%).

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MOBILE TV STREAMING MORE

LIKELY AT NIGHT

SMALLER—AND LARGER—SCREENS

PREVAIL FOR EVENING AND

LATE-NIGHT VIEWING

Digital video viewers stream their favorite TV shows to PCs and mobile devices all day—and all night. According to 2015 data on when accompanying pre-roll video ads were served, daypart plays a role in determining which devices they use. Mobile devices, including tablets, appear to be more congenial to late-night viewing.

% of total ads served on TubeMogul platform

US Digital Video Ad View Share on Streaming TV Sites, by Daypart and Device, April-June 2015

Tablet Mobile phone Computer

12am-3am 17% 16% 8% 3am-6am 5% 9% 4% 6am-9am 8% 12% 10% 9am-12pm 10% 12% 16% 12pm-3pm 10% 12% 16% 3pm-6pm 9% 10% 14% 6pm-9pm 13% 10% 16% 9pm-12am 28% 19% 17%

Note: represents activity on the TubeMogul platform, broader industry metrics may apply; pre-roll video ads only; numbers may not add up to 100% due to rounding

Source: TubeMogul as cited in company blog, Aug 27, 2015

According to TubeMogul data about activity on its platform from April through June 2015, among pre-roll ads supporting streaming TV being viewed on computers, just 12% were served overnight, from midnight until 6am. On mobile phones, the overnight share of pre-roll ads was more than twice as high, at 25%. Tablets saw a similarly strong 22% of streaming TV ads served between midnight and 6am.

Evening viewing was stronger on all mobile devices, but heaviest on tablets. More than two in five (41%) streaming TV pre-roll ads served to tablets were served between 6pm and midnight. That compared to 29% of ads served to mobile phones and 33% of ads served to computers.

A majority of TV streaming to computers occurred during the day, with 56% of ads served between 6am and 6pm. For mobile phones, the daytime share was 46%, and for tablets just 37%.

% of total ads served by FreeWheel

US Digital Video Ad View Share, by Daypart and Device, Q2 2015 OTT device 13% 23% 16% 31% 17% Desktop/laptop 11% 31% 20% 28% 10% Smartphone 11% 27% 20% 31% 11% Tablet 10% 23% 20% 37% 10%

6am-10am 10am-4pm 4pm-7pm 7pm-1am 1am-6am

Note: represents activity on FreeWheel's platform, broader industry metrics may vary

Source: FreeWheel, "Video Monetization Report: Q2 2015," Aug 26, 2015

Q2 2015 data from FreeWheel also found a stronger daytime share of digital video ad views for desktop and laptop computers, along with higher nighttime usage of smartphones and tablets. The FreeWheel data also included over-the-top (OTT) devices, which had the highest concentration of primetime and late-night viewing of any device—and among the lowest daytime viewership.

Results such as these are common, and mesh with what media consumers report about their device usage habits.

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(10)

HOW YOUR REPTILE BRAIN

RESPONDS TO MARKETING

Patrick Renvoise

Co-Founder & Chief Neuromarketing Officer

SalesBrain

As the co-founder of SalesBrain, a neuromarketing agency, Patrick Renvoise has spent years helping global companies like Boeing, BMW and even NASA sell more and do more, by understanding the science of attention. Tameka Kee of TJK Media spoke to Renvoise for eMarketer in advance of his keynote at eMarketer Attention! 2015.

eMarketer: What’s one of the most fascinating things

you’ve learned about the human brain and how we pay attention?

Patrick Renvoise: That it’s all about the reptilian brain!

Many years ago I read in a neuroscience book that the reptilian brain was the center of attention and that it played a key role in our perception and ultimate decisions. It then took me several years to understand the implications for sales and marketing, but one day I had a big “aha” moment. Since we all know that we need to sell to the decision-maker then we should be able to relate every sales and marketing activities to our reptilian brain.

eMarketer: What inspired you to go into this very specific

area that blends marketing and science?

Renvoise: For years I had been learning about sales

and marketing, mostly by trial and error! But realizing that neuroscientists had established strong scientific foundations on the working principles of the brain and especially of the reptilian brain I decided to create a bridge between the world of neuroscience and the world of marketing. So I worked on defining a scientific yet easy-to-understand model—the model is called NeuroMap—for the business executive who does not have a PhD in neuroscience.

eMarketer: As a neuromarketer by day, what product or

service really grabs your attention?

Renvoise: I am puzzled that companies such as Apple,

Starbucks or Domino’s Pizza are so successful. Are their products that much better than those of their

competitors? Do they really offer something unique and valuable that the consumer couldn’t get elsewhere? Is there something in their product that is superior from a feature/benefit standpoint?

“[I]t really grabs me that the success of these

companies is linked to the human brain reaction to

those decision drivers!”

Of course, the answer is no (although if you are a fan of one these companies your neocortex will be quick to justify your answer). So it’s all in their marketing. It’s all about their brand promise!

Many would agree that:

■ For Apple it’s “cool to use”

■ For Starbucks it’s “the third place,” a transitional

environment between home and the office, according to Howard Schultz, Starbucks CEO

■ For Domino’s it’s “You have 30 minutes,” a perfect cure

to a top pain of the home delivery pizza buyers which is the anxiety of not knowing when the pizza will arrive So it really grabs me that the success of these

companies is linked to the human brain reaction to those decision drivers!

eMarketer: What would you choose as the most

successful example of neuromarketing in recent history?

Renvoise: It’s not one particular project that has gotten

my attention—it’s the fact that neuromarketing is now used for many different applications such as package or web design, merchandising, movie trailer optimization, all the way to political campaigning. It’s the fact that neuromarketing is becoming ubiquitous!

eMarketer: How do you stay up-to-date on the latest

advertising trends and technology? Do you have a favorite publication?

Renvoise: There is a lot of noise and very little signal in

all these blogs and social media. Instead I prefer to read books or magazines where the authors have something valuable to communicate. My favorite magazine is Mind, and “Move Up,” the book I’m currently reading, talks about the role of the reptilian brain in shaping cultures that will move up...or down!

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NEARLY TWO IN THREE

MILLENNIALS BLOCK ADS

ADS ARE SOMETIMES RELEVANT, BUT

OFTEN STILL BLOCKED

Ad blocking has been around for a long time, but digital advertisers and publishers are seeing it as an increasing problem. Research suggests that a solid majority of internet users ages 18 to 34 are now blocking ads when they view digital content.

% of respondents

US Millennial Internet Users Who Use Ad Blockers, July 2015 Yes 63% No 33% Don't know 4% Note: n=748 ages 18-34

Source: Fractl and Moz, "Inbound vs. Outbound: Consumer Perspectives on Marketing Effectiveness," Sep 1, 2015

That’s what Moz and Fractl found in a July 2015 survey. Q2 2015 data from GlobalWebIndex put the share much lower on a worldwide basis. It found that 34% of those ages 16 to 24 and 31% of 25- to 35-year-old internet users blocked ads. Ad blocking was significantly more common among these ages groups than among older users. In February 2015, the Reuters Institute for the Study of Journalism at the University of Oxford found that 41% of US internet users used ad-blocking software on their desktop or laptop PCs, vs. 34% of internet users in the UK.

Data remains scarce, but the research suggests substantial numbers of internet users in the US are blocking ads—and millennials are even more likely to do so.

% of respondents

Relevance of Digital Ads According to US Millennial Internet Users, by Type/Tactic, July 2015

Ad retargeting

18.9% 34.3% 15.1% 13.9% 17.7%

Social media ads

17.3% 35.1% 18.1% 15.4% 14.1%

Paid search ads

13.4% 29.1% 22.6% 18.4% 16.6%

Display ads

9.9% 29.2% 25.3% 23.1% 12.6%

Sponsored story links

6.9% 28.5% 25.4% 23.4% 15.8% Very relevant Somewhat relevant Somewhat irrelevant Very irrelevant Don't know

Note: n=748 ages 18-34; among those who saw ads of each type/tactic in the past 30 days; numbers may not add up to 100% due to rounding Source: Fractl and Moz, "Inbound vs. Outbound: Consumer Perspectives on Marketing Effectiveness," Sep 1, 2015

Mobile/in-app ads

21.6% 25.3% 29.5% 17.1% 6.5%

Concerned advertisers would do well to note that millennials did not universally reject ads as irrelevant. A few digital ad types saw a majority of millennial internet users in the Fractl/Moz poll rating them at least somewhat relevant, including retargeted ads and social media ads. Millennials were also fairly warm to paid search ads, while mobile ads fared especially poorly.

But respondents also said ads were just not the best way to reach them. Free content was the most effective way they recommended for companies looking to attract their business, followed by discounts or free trial offers by mail, and appearing high in search results.

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WHAT ARE MILLENNIALS UP TO

WITH DIGITAL VIDEO?

MORE THAN NINE IN 10 WATCH DIGITAL

VIDEO MONTHLY

Millennials are the most active video viewers of any US age group. But understanding their video viewing habits can be difficult, thanks to the changing landscape for digital content viewing and shifting time spent with various screens.

millions and % of millennial internet users

US Millennial Digital Video Viewers and Penetration, 2013-2019 2013 73.5 90.7% 2014 75.6 92.2% 2015 77.0 92.5% 2016 78.0 92.4% 2017 78.8 92.2% 2018 79.5 91.9% 2019 79.9 92.0%

Millennial digital video viewers % of millennial internet users

Note: internet users born between 1981 and 2000 who watch digital video content via any device at least once per month

Source: eMarketer, Feb 2015; confirmed and republished, July 2015

eMarketer predicts there will be 77 million millennial digital video viewers in 2015, representing more than 92% of all US millennial internet users. Additional growth in new millennial digital video viewers is expected to remain mostly flat for the foreseeable future, given that video viewing is already near ubiquitous for this age group. eMarketer forecasts that the total audience will increase by 1 million or fewer viewers annually through 2019.

The video consumption habits of US millennials are more pronounced when compared with other age groups. In 2015, eMarketer expects 25- to 34-year-olds to make up the largest segment of digital video viewers of any age group, accounting for more than 18% of the 204.2 million digital video viewers in the US. Adults in the 18-to-34 age group, along with 12- to 17-year-olds (some of whom are millennials) have the highest levels of digital video viewer penetration among all age groups, reaching levels of more than 90%.

Much as marketers and experts try, there is no single unifying theme that explains the video habits of US millennials. Instead, there is a shifting landscape of video viewing options, fluid boundaries between traditional TV and digital video, and changes in the millennial mindset toward video content—all of which contribute to their screen time and content choices.

hrs:mins

Weekly Time Spent with Select Media Among US Consumers, by Age, Q4 2014

18-24 25-34 35-49 50-64 65+

Watching on traditional TV 18:33 24:52 32:24 42:31 50:00 Using the internet on a computer 4:45 5:51 7:13 5:37 3:07 Using a game console 4:09 2:56 1:06 0:22 0:07 Watching time-shifted TV 1:42 3:20 4:11 4:16 3:36 Watching video on internet 1:41 1:52 1:45 1:10 0:29 Using DVD/Blu-ray device 0:55 1:18 1:12 1:02 0:38 Watching video on a mobile phone 0:26 0:17 0:13 0:07

-Note: based on total users for each medium

Source: Nielsen, "The Total Audience Report: Q4 2014" as cited in Barclays Capital and Television Bureau of Advertising (TVB), "Local Broadcast TV Media Planning and Buying," April 8, 2015

For example, they still watch lots of TV—at least for now. According to Nielsen, US adults ages 18 to 24 watched more than 18.5 hours of traditional TV per week, while those in the 25-to-34 age group watched nearly 25 hours per week. While this is less time spent than older generations, it still made up the majority of millennials’ media time.

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(14)

AD AVOIDANCE ISN’T NEW—IT’S

JUST EVOLVING

Walt Horstman

President

AudienceXpress

Whether you think it’s a real problem or not, there’s no denying that ad blocking is a lightning rod in the industry right now. With potentially hundreds of millions of dollars at stake for media companies, advertisers and advertising platforms, figuring out how to combat and counter ad-blocking behavior is top of mind.

But avoiding ads isn’t a new behavior. Remember the fear surrounding the launch of TiVo and DVR? AudienceXpress President Walt Horstman does. With more than a decade of experience working with cable, video and digital TV, Horstman says this year’s ad-blocking frenzy has similar undertones to the fear of DVR 10 years ago. Tameka Kee of TJK Media spoke to Horstman for eMarketer in advance of the ad avoidance discussion at eMarketer Attention! 2015.

eMarketer: How would you define ad avoidance? Is it just

about ad blocking, or is there something greater afoot?

Walt Horstman: We should define it more broadly

than just ad-blocking, to include non-ad-supported

programming and content. By defining ad avoidance more broadly, we open up the discussion of the economics of media and what the various economic models are for providing high-quality content. And it’s the economics that are driving the fear.

“[T]echnology has been at work trying to block ads

for quite a while. Just look at the history of the DVR.”

eMarketer: In our current advertising landscape,

what do you believe is the most prevalent example of ad avoidance?

Horstman: While this topic is extremely timely right

now with the launch of the ad-blocker apps on mobile, technology has been at work trying to block ads for quite a while. Just look at the history of the DVR. When it was introduced, there was great concern over the health of TV advertising—the adoption of the DVR and how consumers use it didn’t bring about the catastrophe scenario that

some worried it would. What it did inspire, was a change in the currency for TV advertising so the economic model can adapt to new technological introductions.

The reaction of a number of publishers to the ad blocking apps on mobile has highlighted the economic issue as well. Many small publishers can’t sustain themselves without ad dollars and it’s healthy that this aspect is coming to the forefront of the discussion. The tech issues with how mobile ads get served and displayed do need to be resolved, but that is distinct from the economics of media.

eMarketer: Lots of research focuses on millennials, but

have you seen interesting patterns or trends in terms of avoiding ads from other demographics?

Horstman: Looking at TV or video specifically, we can

define the new [over-the-top] OTT services that are not ad-supported as ad avoidance, and these services appeal to a fairly broad demographic. But again, it does ultimately come down to economics—because high-quality

programming requires a great deal of investment.

“Today, marketers have a wealth of advanced data

sets, for example, that marry credit card spending

activity with TV viewership and packaged-goods

purchases with TV viewership.”

eMarketer: You’ve worked in “traditional” cable, and now

with programmatic TV. What’s the biggest change you’ve seen in terms of how advertisers are trying to capture consumer attention with video?

Horstman: Targeting on TV has become quite

sophisticated in the last few years. Traditionally, marketers could target on TV only through broad age and gender demographics. Today, marketers have a wealth of advanced data sets, for example, that marry credit card spending activity with TV viewership and packaged-goods purchases with TV viewership. With these advanced data, marketers can now find their desired audiences, often in unexpected places. For example, most people expect that active Sephora shoppers are likely to watch traditional female-skewing TV networks. In fact, CNBC and Bloomberg TV have very high composition of this audience. The advanced data sets are enabling marketers to capture consumer attention by placing the right ad in front of the right audience at the right time.

We also have the technology now at scale to execute TV campaigns using these advanced data sets.

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INTERNET USERS IN THE US

BLOCK ADS LESS THAN IN

WESTERN EUROPE

YOUNGER INTERNET USERS MORE LIKELY

TO BLOCK ADS WORLDWIDE

Ad blocking is a headache for just about all the players in the digital media ecosystem. The issue has risen to the forefront of many analysts’ mind due to iOS 9 making ad blocking available on many mobile devices for the first time, but US publishers and advertisers can perhaps take comfort: The country has among the lowest ad blocking rates in the world.

% of total visitors in each group

Desktop Ad Blocking Rates in Select Countries in North America and Western Europe, by Age, June 2015

18-24 25-34 35-44 45-54 55-64 65+ France 36.1% 28.3% 22.5% 28.1% 27.2% 23.1% Germany 34.8% 25.8% 23.1% 19.8% 20.9% 23.7% Canada 30.5% 19.4% 11.5% 16.7% 11.3% 9.7% Spain 22.6% 16.3% 9.9% 12.5% 12.6% 12.1% Netherlands 22.4% 15.1% 9.8% 12.7% 14.2% 10.9% UK 19.8% 13.2% 8.2% 7.7% 7.6% 6.6% US 16.2% 11.7% 6.9% 7.4% 7.0% 6.2%

Note: unique desktop site visitors who recorded an instance of ad blocker use; read as 36.1% of desktop site visitors in France who were ages 18-24 recorded an instance of ad blocker use

Source: comScore Inc. and Sourcepoint, "The State of Ad Blocking 2015," Sep 17, 2015

comScore and Sourcepoint found in June 2015 that desktop internet users in France were more likely to use ad blocking software than those in any other country studied, at 27%. Germany was No. 2 in ad blocking, at 24% of unique desktop site visitors, and Canada came in third at 16%. The US was at the bottom of the list, with just 9% of unique visitors blocking ads.

The low US rate of ad blocking held true across age groups, as well—as did most other rankings. In all countries studied, 18- to 24-year-olds were more likely to block ads than any other group. In the US, the proportion of ad blockers rose to 16.2% among this cohort, less than half the rate in France or Germany.

% of total page views

Mobile Ad Blocking Rates in Select Countries, July 2015 India 9.0% China 7.9% Germany 0.5% Spain 0.4% Canada 0.2% France 0.2% Netherlands 0.1% UK 0.1% US 0.1%

Note: includes smartphones and tablets

Source: comScore Inc. and Sourcepoint, "The State of Ad Blocking 2015," Sep 17, 2015

The US was also least likely among countries studied in July to block ads on mobile devices. A tiny 0.1% of total page views on smartphones and tablets in the US blocked ads. Mobile ad blocking rates were low in Western Europe as well. Mobile internet users in India and China were far more likely to block ads—though it was still rare. Q1 2015 research from GlobalWebIndex also found higher rates of ad blocking in Europe. Among internet users ages 16 to 64, 29% had blocked ads on their main PC over the past month. That compared with 27% in Asia-Pacific and 26% in North America.

In June 2015 research covering the EU-5, Adobe and PageFair found that Germany had the highest rates, at 25.3% of internet users, followed by the UK, at 21.1%. That research put France at the bottom of the pile, with a comparatively low 10.3% of internet users blocking ads. Like comScore and Sourcepoint, GlobalWebIndex found significant variation in ad blocking depending on the age of the internet user. In Q2, GlobalWebIndex also found that male internet users were 8 percentage points more likely than females to block ads.

While some patterns seem to hold true, like higher rates of ad blocking among younger users, differences in methodology make it difficult to determine which specific markets have higher or lower rates of ad blocking—though Europe does appear above average in this department.

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(17)

WEARABLES ADOPTION HEATS UP

YOUNGER ADULTS, WOMEN ARE

FASTEST ADOPTERS

This year, 39.5 million people in the US will use wearable devices at least monthly, according to eMarketer’s first-ever forecast for wearables usage.

US Adult Wearable Users, 2014-2019

Wearable users (millions)

—% change —% of internet users —% of population 2014 25.1 72.2% 12.2% 10.2% 2015 39.5 57.7% 18.7% 16.0% 2016 63.7 61.3% 29.5% 25.5% 2017 74.8 17.4% 33.9% 29.6% 2018 81.7 9.2% 36.5% 32.0% 2019 86.7 6.1% 38.3% 33.6%

Note: individuals ages 18+ who wear accessories or clothing at least once per month that is embedded with electronics, software or sensors with the ability to connect to the internet (via built-in connectivity or tethering) and exchange data with a manufacturer, operator or other connected devices Source: eMarketer, Oct 2015

In 2014, eMarketer estimates, around one in 10 US adults wore accessories or clothing embedded with electronics, software or sensors that could connect to the internet and send or receive data. That translated to 25.1 million people with smart watches, activity trackers, smart glasses, virtual reality headsets and more last year. Growth of 57.7% this year has brought the population to an estimated 39.5 million—a figure that will more than double by 2018.

Still, penetration is low: just 18.7% of adult internet users in the country will use wearable devices this year.

The bulk of wearables users are younger adults. eMarketer estimates that 16.8 million wearables users this year will be under 35, and another 8.6 million will be 35 to 44.

% of internet users

US Adult Wearable User Penetration, by Age, 2014-2019 2014 2015 2016 2017 2018 2019 18-24 11.8% 21.9% 35.5% 41.8% 44.9% 46.5% 25-34 19.1% 25.1% 40.0% 46.6% 49.9% 51.6% 35-44 16.8% 23.1% 37.4% 43.8% 47.0% 48.7% 45-54 12.0% 17.1% 25.9% 28.7% 31.0% 33.3% 55-64 7.0% 13.5% 20.8% 23.6% 25.7% 27.8% 65+ 3.0% 9.7% 15.1% 17.2% 19.0% 20.7% Total 12.2% 18.7% 29.5% 33.9% 36.5% 38.3%

Note: individuals who wear accessories or clothing at least once per month that is embedded with electronics, software or sensors with the ability to connect to the internet (via built-in connectivity or tethering) and exchange data with a manufacturer, operator or other connected devices

Penetration will remain highest among under-45s throughout our forecast period. In 2019, 25- to 34-year-olds will become the first group of internet users with majority wearables usage—and 35- to 44-year-olds won’t be far behind.

In terms of gender, wearables are bucking the usual trend of young males as early adopters. Last year, a majority of US wearables users were women, largely due to the strong appeal fitness trackers have for females. Men are increasing adoption levels and will pull even with women this year, but the parity will be temporary, we estimate.

(18)

HOW FANCY DO CONSUMERS

WANT THEIR WEARABLES?

FUNDAMENTALS AS WELL AS HEALTH

AND POINT-OF-SALE FEATURES ARE

MOST DESIRABLE

Wearable device awareness is high, but ownership—and purchase intent—remain low. Indeed, May 2015 polling by Altimeter Group found that just 7% of US internet users owned a wearable, and a March 2015 study by DigitasLBi put wearables penetration among internet users worldwide at 17%.

% of respondents

Most Desirable Wearable Device Features According to US Smartphone Owners, April 2015

Touchscreen 48%

GPS 46%

Waterproof 44%

Calorie tracker 42%

Pedometer 41%

Heart rate monitoring 41%

Blood pressure monitoring 39%

Mobile wallet (POS payments) 39%

Receive notifications from phone 38%

Alarm function 36%

Battery life—2 weeks 33%

Voice control 32%

Note: ages 18+; among those who have waved or tapped a mobile wallet at a cash register to pay for a purchase in the past 6 months

Source: Chadwick Martin Bailey, "The Future of the Mobile Wallet: Barriers and Opportunities for the Next Stage of the Mobile Payment Revolution," June 16, 2015

What could urge consumers to take the plunge? When April 2015 polling by Chadwick Martin Bailey (CMB)— which found that six in 10 US smartphone owners were familiar to some extent with wearables—asked about the most desirable features, respondents stuck with three categories: fundamentals, health and point-of-sale payments—in other words, nothing overly fancy.

Basic features including touchscreens, GPS and water resistance were desired most. Consumers have already shown interest in using wearables to track fitness and health, so it comes as little surprise that calorie trackers, pedometers, and heart rate and blood pressure monitors were highly in demand as well.

Nearly four in 10 smartphone owners wanted mobile wallets, too, though all respondents in the pool had used a mobile wallet on their phone in the past six months, so they’re likely more interested in this than the general public. May 2015 polling by Avangate found that 29.4% of US digital buyers were comfortable purchasing

products via wearable technology. On the flipside, 35.4% weren’t at all comfortable. And in April 2015 research by PowerReviews, 22% of US smartphone owners were interested in using touchless/one-click payments on wearables while shopping.

However, other research suggests consumers may not know what they want from wearables, so CMB’s results are just one example of in-demand features.

In research released in June 2015, International Data Corporation (IDC) estimated that wearable device shipments worldwide totaled 26.4 million in 2014 and forecast they would rise 173.3% this year to 72.1 million. IDC projected that in 2019, global wearables shipments would reach 155.7 million. Meanwhile, in May 2015 research, TECHnalysis Research estimated that wearable device shipments worldwide totaled 23 million last year and forecast this would hit 175 million in 2020.

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Krux clients include companies like Kellogg, Time Warner, Meredith, BBC, and Ticketmaster, with enterprises achieving a 10x return or higher on their investment.