CANTOR FITZGERALD Internet & Media Sector 1 Youssef H. SqualiGlobal Head of Internet & Media Equity July 15, 2013 Who Wins/Who Loses from the Rise of Programmatic Buying?

CANTOR FITZGERALD 2 The View from Wall Street Mission: Identify investable trends early, and ride them hard Internet has turned many a business model on its head by: Eliminating one or more intermediary layers Doing it faster and cheaper Bringing more convenience

CANTOR FITZGERALD 3 The Big Picture around RTB The rapid adoption of RTB is … Transforming the way ads are bought and sold – NASDAQ as proxy Allowing/enhancing price discovery Bringing intelligence to every impression Enabling scale beyond what existed before In time, it will allow the sale of premium display, video and mobile But… several issues need to be resolved before RTB enters prime time

4 CANTOR FITZGERALD U.S. RTB Digital Display Ad Spending Forecast RTB by the Numbers: Roughly $3.5 billion revenue in 2013 Growing at 70+% Y/Y At a 5 year CAGR of ~34% ~20% of digital display advertising or, ~8% of total Internet advertising

5 CANTOR FITZGERALD U.S. RTB Digital Display Ad Spending Forecast In 5 years, RTB could account for 30-50% of total display ad spending

6 CANTOR FITZGERALD So Why Does Wall Street Care? The Cantor Internet Index (equal- weighted index of 60+ Internet cos) vs. the S&P 500. Over the last 5 years, the CII has dramatically outperformed the S&P 500. Source: FactSet and Cantor Fitzgerald research

CANTOR FITZGERALD So Why Does Wall Street Care? 7 RTB is Growing Significantly Faster than Overall Internet Advertising Source: IAB, eMarketer, and Cantor Fitzgerald research

8 CANTOR FITZGERALD The Digital Display & RTB Ecosystem Source: Rubicon and Cantor Fitzgerald research Youve got to simplify the story!

9 CANTOR FITZGERALD Consolidation is Inevitable Source: MergerStat, FactSet, and Cantor Fitzgerald research Consolidation around publishers, large integrated ad exchanges and advertisers likely. As larger players build their tech stacks, point solutions to be acquired or wither away. Google is currently in the lead with a full service stack, but Facebooks FBX is likely another big beneficiary. Select Ad Technology and Marketing Services M&A Activity - To Date

10 CANTOR FITZGERALD In Summary: 1. The trend toward automated direct buying is only in its infancy, but the shift has begun. 2. Automation, data and effectiveness that RTB brought to the auction market will be utilized for premium direct ad buys as well 3. Video and mobile are the next frontier 4. Consolidation will happen. Scale matters; point solutions will give way to integrated offerings.

CANTOR FITZGERALD Internet & Media Sector 11 Youssef H. SqualiGlobal Head of Internet & Media Equity July 15, 2013 Who Wins/Who Loses from the Rise of Programmatic Buying?