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© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.

Methodology

Most comprehensive and accurate report of its kind in the industry

Report based on analysis of 250 billion visits to over 3,000 websites (Jan. 2014 to March 2017) 3.0 billion video ad impressions from India, Japan, Australia and South Korea 100 billion responses to paid searches ADI Summit Survey 2017:

Email survey with 1,000 consumers over the age of 18 in each of the following countries: Australia, India and South Korea; conducted Feb 1-17

Digital Marketing email survey in Australia, India and South Korea (Feb 1-17, 100 per country) of those with influence over the purchase of digital advertising.

Data from different Adobe solutions:

Based on analysis of aggregated and anonymous data

Adobe Analytics

Adobe Media Optimizer

Adobe Analytics Cloud

Adobe Advertising Cloud

Adobe Marketing Cloud


Key Insights

1 Digital advertising costs continue to rise, and search costs have increased 2x faster than inflation in the past two years.

2 Competition for consumer attention and new site visitors will increase as topline growth starts to slow and time on site decreases.

3 The digital disconnect persists. Marketers rate themselves better than consumers do for delivering relevant and interesting ads. Consumers desire personalization, but delivery and privacy issues exist.

4 Advertisers are still not organized to deliver on consumer’s advertising expectations and lag behind US counterparts in terms of automatic/programmatic spend.

5 Without growing markets, pressure mounts on brands to protect their loyal consumer base and to steal from the competition.


EMBRACING THE OPTIONS

Slowing Growth Means Competition Will Heat Up on the Smartphone Battlefield

As the internet saturates abroad, competition for traffic will become necessary

Total visits to APAC websites increased 36% over the past 36 months, but the trend is slowing down –quickly

Smartphone is the primary device for connecting to brands

Smartphone visits increased +145% since 2014, while visits from desktops and tablets eroded (-9% and -5%, respectively)

This trend pushed total mobile share of traffic to 54% in Q1 2017

4


EXPENSE OF ADVERTISING

Search Costs Outpace Inflation by 2x

Cost per click continues to exceed inflation

Inflation in APAC: 6.3% since 2013

Search CPCs rose sharply in 2014 and then retreated to current rates: desktop 11%, mobile 16% (relative to Q4 2013)

Advertising costs began to outpace inflation with the advent of the digital era

The cost of reaching consumers on traditional TV began outpacing inflation in the late 1990’s when technology started changing our lives

5


A SHIFT FROM THE TRADITIONAL

Search Remains a Tried-and-True Channel for Acquiring Site Traffic

6

Search traffic continues to grow faster than spend in Asia-Pacific, unlike the trends in the US Advertisers have increased spend on search by +6%

over the past two years Site visits driven by search have increased by +30%

indicating more bang for the buck The US may be a harbinger of things to come - it

costs more money to get less traffic in the US’s saturated market

As traffic moves to smartphones, consumers spend less time on web sites Indian consumers changed their patterns the most,

spending 47 (-12%) fewer seconds on site Hong Kong and Japan saw decreases in time spent

similar to those in the US HK: -19 seconds (– 5% YoY) Japan: -17 seconds (-4% YoY) US: -18% seconds (-6% YoY)


DIGITAL VIDEO AD OPPORTUNITY

Marketers Continue to Deploy Mobile Video Ads As Costs Increase

7

Mobile video ad campaigns cost 36% more than last year; desktop CPMs are down 13%

Q4 2016 showed equal growth in the delivery of mobile and desktop-formatted ads (+7% YoY)

There’s the risk of losing attention as mobile video ad completion is 24% lower than on a desktop (55% vs. 68%, respectively)

Asia-Pacific consumers are pickier than their US counterparts, completing 4% fewer videos on mobile, and 9% fewer on desktop

Some factors are involved that advertisers need to consider:

Skippable and auto-play preferences

Better targeting and fewer impressions delivered relative to the audience


FIRST IMPRESSIONS

Advertisements Must Pique Interest During Critical First Few Seconds

8

Opening seconds are critical for capturing attention

• 22% of viewers move on after a mobile video ad has played for five seconds

• The US figure (19%) is slightly lower

Consumers might be missing the point of the advertisement

• Just over half (55%) of 30 second mobile ads are viewed to the end

• The “call to action” is completely missed if placed at the end of an ad – this raises the effective cost of mobile video ads


CONSUMERS CONTROL THE DRIVER’S SEAT

New Customer Traffic Coming From Emerging Channels More and More

9

Generations recognize interesting and relevant ads in different environments

Younger generations equate social media to the source of new information (41%)

Older generations are most likely to notice relevant ads when browsing for information (47%)

Social continues to grow, up 33% in Travel and 31% in Retail

Traffic generated from social networks is only the tip of the iceberg given its strength in branding


THE DIGITAL DISCONNECT

Advertisers Often Think They Are Doing Better But Consumers Don’t Agree

10

Consumers’ opinion: there’s room for improvement Less than half of the consumers think

advertisers are doing better than 2 years ago at delivering relevant ads

In Australia and India, advertisers disagree with consumers on advertising performance Marketers believe they are doing a better

job than consumers do Australia: 51% to 38% India: 63% to 48% South Korea: 48% to 50%

Similar gap in the US Over half (58%) of advertisers believe they’re

doing better at serving valuable ads; only 38% of consumers agree


THE DIGITAL DISCONNECT

Personalization Gap: Desire – Delivery = Opportunity

11

Over half of consumers prefer personalization

Nearly 2 out of 3 (65%) of the 18-34 prefer ads based on their interests/preferences

Even the oldest segment favors personalization over not doing it

The gap between “not good enough” and “want it” suggests room for improvement

The gap is large enough among both age groups to warrant experimentation, particularly among 18-34

Desire is there. Delivery is mixed.

A third of the younger group doesn’t believe personalization is done well enough

Older consumers are more likely to be against any personalization, though 1 in 5 (22%) think advertisers can improve

Opportunity exists.


Less than half of consumers are comfortable with exchanging personal data for customized experiences

1.2x higher among younger consumers (47%) than older consumers (38%)

Belief that marketers respect privacy is even lower – just 1 in 3 (33%) agree with the statement

1.1x higher among younger consumers (35%) than older consumers (31%)

12

DATA SHARING

Privacy Issues Present a Road Block to Personalization

© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. 13

I see your product…so what?

Consumers are most likely attracted by ads that focus on product benefits

Consumers say that personalized, funnier ads would also improve their experience

PERSONALIZATION

Consumers Seek Practical, Personal Ads

Leverage where consumers expect good advertising

57% say Facebook is the social media site doing the best job of showing them interesting and relevant ads


HISTORICALLY SILOED

Fragmented Organizations and Technology Limit Advertising Progress

14

41%work with 3 or more

creative agencies (US 42%)

36%work with 3 or more media

planning platforms (US 40%)

35%work with 3 or more media buying platforms (US 41%)

36%work with 3 or more data

management platforms (US 37%)


analytics platforms (US 44%)


attribution platforms (US 38%)

(Source: ADI International Summit Survey 2017)


Advertising still a manual process in APAC

Fewer than 1 in 5 APAC advertisers (19%) spends more then 51% of their budget programmatically. In the US it is 1 in 3.

There’s an opportunity to learn from early adopters and effectively grow their programmatic ad presence across channels

Put money where there is growth

Smartphone investments need to improve; 75% of APAC marketers think they underinvested in smartphone advertising

AUTOMATED MARKETING

APAC Lags Behind US In Programmatic Ad Spend


Return on ad spend (ROAS) tops list of marketer concerns

ROAS is the most cited concern when it comes to media buying in APAC, with over 50% saying it’s an area in which they face the biggest challenge

Brand marketers are more concerned than their supply-side counterparts

Regarding ROAS, brand marketers across all surveyed APAC countries are the most concerned

GETTING YOUR MONEY’S WORTH

Marketers Need To Know The Value of Their Investments


THE LONG TERM DECISION

Make Sure to Protect the Base and Get to Conversion

17

Customers tend to stick with their favorite sites, and they return often

8 out of 10 customers are likely return In the US, only 7 out of 10 are likely to return

Visitor drop off is harder to tackle Only 1 out of 4 visitors (non-customers) will

come back if they didn’t buy/order an item US non-customers are more likely to return, with 3 out of

10 choosing to do so

Marketers should ensure targeting attracts the right customer and that the experience creates the desire to return


Appendix

18


Glossary

19

1. Click Through Rate (CTR): Clicks divided by impressions

2. CPM: Cost per thousand impressions

3. CPC: Cost per click

4. Completion Rate: Ads completed (100%) divided by impressions

5. Growth: Percent change from base period

6. Customer: Visitor who has made one or more purchases in Retail or bookings in Travel

7. Non-Customer: Visitor who has not made a purchase or booking

8. Frequency: How often someone visits a website

9. Web Traffic or Visits: Visits occurring to a website via any mobile device; exclusive of app traffic

© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. 20(Source: ADI International Summit Survey 2017)

Marketer: For the following ad channels, what portion of your total advertising budget is allocated towards automated (programmatic) channels? (Percent answering 51% or more)

Traditional TV

Connected TV

Desktop Video

Mobile Video

Out-of-home Search Display Social

US 35% 35% 37% 40% 31% 39% 38% 41%

Australia 9% 10% 11% 17% 12% 14% 12% 20%

India 25% 29% 26% 31% 23% 31% 38% 38%

South Korea 3% 6% 11% 14% 8% 20% 19% 25%

APPENDIX

Data Tables


Marketer: Compared to two years ago, how would you rate your ability to effectively reach consumers with ads they find valuable or compelling? (Data table shows percent that rate themselves as “better than 2 years ago”)

21

BrandAdvertising agency /

Technology provider / Publisher

Australia 55% 31%

India 74% 55%

South Korea 59% 39%

US 59% 56%

APPENDIX

Data Tables



APPENDIX

Data Tables

22

Australia India South Korea US

Brand

Advertising agency / Technology

provider / Publisher

Brand



Brand



Brand



Media quality (brand safety, ad fraud,

viewability)36% 35% 61% 46% 57% 35% 50% 49%

Integrated data and media buying solution 45% 29% 50% 45% 45% 33% 40% 51%

Accurately measuring return on ad spend

(ROAS)66% 52% 54% 45% 57% 40% 46% 39%

Economic transparency 41% 32% 30% 57% 52% 47% 44% 51%

Data leakage 39% 39% 61% 27% 34% 40% 31% 34%

Data ownership 18% 16% 26% 32% 16% 26% 31% 30%

Media independence 9% 19% 9% 9% 5% 7% 7% 5%

Marketer: Three biggest challenges in media buying



Marketer: In terms of 2016 media spend - where marketers think they underinvested in 2016


Brand

Advertising agency /


Brand



Brand



Brand



Desktop advertising 19% 28% 61% 70% 45% 45% 64% 61%

Smartphone advertising 78% 62% 92% 88% 62% 67% 83% 80%

Tablet advertising 67% 48% 67% 68% 36% 33% 58% 71%

Linear TV 53% 45% 44% 68% 36% 27% 56% 52%

Other 0% 0% 0% 0% 2% 0% 3% 0%

APPENDIX

Data Tables




18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

Ads focused on product benefits 17% 18% 36% 49% 40% 43% 22% 26%

Ads focused on price 17% 14% 18% 9% 16% 13% 17% 9%

Ads that speak to my values 18% 13% 25% 21% 12% 20% 15% 13%

Ads that make me laugh 38% 40% 20% 18% 24% 18% 37% 35%

None of the above 11% 14% 0% 2% 7% 5% 9% 17%

Consumer: What types of ads are most likely to attract your attention?

Consumer: When do you tend to see the most interesting, relevant online ads today? Australia India South Korea US

18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

While using social media (website or

mobile app)43% 22% 45% 34% 36% 22% 50% 20%

While web browsingfor information

28% 50% 31% 39% 35% 50% 30% 55%

APPENDIX

Data Tables




18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

If they were shown to me less frequently

27% 29% 22% 22% 14% 12% 29% 40%

If they were better personalized to me

21% 10% 36% 29% 32% 28% 22% 11%

If they spoke more to my values

16% 17% 24% 29% 16% 21% 16% 12%

If they were funnier 28% 26% 17% 16% 33% 32% 24% 20%

None of the above 9% 18% 0% 4% 5% 7% 9% 17%

Consumer: Which of the following would most improve the ads you see online?

Consumer: I agree that marketers today are usually respectful of my digital privacy (Net Agree)


18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

Net Agree 25% 18% 63% 54% 17% 22% 29% 12%

APPENDIX

Data Tables



Consumer: For brands I use regularly, I am comfortable with them using my personal data to customize website content, emails, and advertising (Net Agree)

Consumer: Compared to two years ago, I agree that advertisers are better at showing me ads I find valuable or compelling (Net Agree)


18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

Net Agree 39% 22% 69% 59% 32% 33% 42% 24%

APPENDIX

Data Tables


18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

Net Agree 40% 37% 46% 50% 50% 51% 43% 36%



Consumer: I prefer to see ads that are personalized based on my interests, shopping habits, and preferences

Consumer: Consumers’ attitude towards the personalized ads they receive


18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

Net Agree 53% 36% 80% 73% 63% 53% 57% 41%

Net Disagree 19% 32% 12% 10% 14% 16% 19% 32%


18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+

I don’t think ads should be personalized 23% 47% 7% 19% 10% 22% 17% 39%

Ads are not personalized well

enough32% 14% 42% 31% 23% 21% 31% 18%

APPENDIX

Data Tables



US Sources of Website Traffic

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