^{MIZUHO SECURITIES USA INC.  |  US EQUITY RESEARCH}

We attended the LiveRamp RampUp! 2016 conference in San Francisco. The conference had ~1,800 attendees including Facebook, Google, Adobe, Pubmatic, Turn, Yahoo, Tivo, Rakuten, Citigroup, Macy’s, and others. Key themes were the ownership of customer data, driving more mobile ad spend and the power of native programmatic ads, and more. We highlight the key takeaways and our opinions.

1. Facebook is getting more aggressive in bridging offline to online attribution through P.O.S. systems. Facebook’s Head of Measurement Product Marketing, Scott Shapiro, noted that Point of Sale data is a key focus for his team in 2016 - Facebook wants to help drive better attribution between ads on Facebook driving actual offline and online sales. We think Facebook is in a unique position to do this, given that Facebook dominates mobile time spent and enables rich targeting. With products such as Custom Audiences, Facebook can tie users to actual purchases. More importantly, this indicates to us that Facebook is getting more aggressive on direct response advertising, which has traditionally been Google’s moat.

2. Marketers are seeing solid results with native advertising. Native ads are ad formats that follow the natural form/function of the media unit of the site – these ads often include promoted units such as promoted videos, promoted stories, promoted tweets, etc. Companies like Rakuten are seeing solid results with native ads, and 80% of Rakuten’s native ad spend now goes to Facebook. YouTube seems to be the dominant native video ad medium, but advertisers are experiencing good traction with Facebook, Instagram, and Twitter video ads.

3. Focus on closing the mobile gap. Pubmatic noted that for the past four quarters, mobile CPMs have exceeded desktop CPMs. Mobile data is becoming increasingly important, and companies that can use their first party data with third party data (like LiveRamp) can create unique profiles of consumers outside of Google or Facebook activity. For example, Facebook is now "conversing" with users, asking them if they would like to check into a specific location. This "pulling” activity on mobile devices helps draw out important location data that can then use to triangulate online to offline attribution.

4. Amazon - the powerful marketer. Traditional retailers noted that they are investing in and building out their data / analytic teams to figure out how to best re-market to existing customers, and use third party data to try and find new customers that mimic existing ones. Retailers continue to feel threatened by Amazon’s flywheels with Prime, customer data, and continued share gains as offline retail shifts to online retail.

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