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EXPONENTIAL^® IDENTIFIES TOP ONLINE ADVERTISING TRENDS FOR 2008
Leading Online Ad Network Sees Shifts in Innovation, Technology, Creativity and Measurement

EMERYVILLE, CA – November 15, 2007 – Exponential^® Interactive, Inc., the technology-driven media services company that delivers innovative products and services to meet the demands of advertisers and publishers, today announced online advertising trends for 2008. The parent company of Tribal Fusion, one of the industry’s leading online ad networks, Exponential has identified top trends emerging from technology and business innovation, creativity and brand measurement. Trends to watch include: one-to-one marketing, online video advertising, new local advertising platforms, innovation in ad effectiveness measures, marketing opportunities from the semantic web, and virtual worlds.

Looking back, 2007 was a pivotal year in online advertising. There was major industry growth in terms of emerging companies and technological innovation, setting new standards for online advertising. Additionally, there were a significant number of mergers and acquisitions among the major players enabling them to build out more robust and comprehensive solutions. In the midst of all the creation and consolidation, many other tools and ideas transpired, including: the emergence of media search, the use of ad exchanges, the popularity of widgets and the massive proliferation and adoption of social networks.

"The year ahead brings great potential as online advertising continues to evolve and mature. We’ve come a long way since the early days of online advertising; even since we built Tribal Fusion in 2000,” said Dilip DaSilva, Exponential’s founder and CEO. “Focus on issues such as transparency and privacy will continue to be a consideration, yet industry credibility has now been achieved and advertisers are embracing all of the possibilities for online marketing."

Six key trends identified in this release are:

The Promise of 1-1 Marketing Realized
Marketers are using innovations in data combined with computing power to deliver personalized experiences to prospects and customers. Whether it is dynamically changing creative based on user attributes, or XML storefronts customized to past purchase behavior and user interests, marketers are now fully leveraging the most up-to-date data from their databases, and incorporating it directly into their advertising. These advances enable online advertisers to create highly customized and immersive marketing experiences. In a world where nearly everything can be anonymously known about a registered user on a large site, marketers are making full use of the data to deliver on the promise of 1-1 marketing.

Online Video Achieves Target-ability
While pre-roll video is a topic of near constant conversation among online marketers, almost nobody is talking about the complexity of executing a video buy at scale online. With no standards, and lots of different players and technology, video buys are still incredibly labor intensive, and often require site-by-site exercise. A chief frustration is also the inability to target video dynamically based on user attributes – basic functionality that we have with every other online format.

Content also presents its own challenges. Premium content is very expensive, and serious questions are emerging about the level of intrusiveness of running pre-roll. Professionally produced content affords a better value but is more difficult to find at scale. While user generated content (UGC) is inappropriate for most major brands, we’ll see more professionally-produced viral campaigns that capitalize on this genre.

Ultimately, brand advertisers are just clamoring for an affordable, brand-safe environment with the ability to target audiences with video. Overlay advertising will likely become the preferred solution when it comes to monetizing the large volume of user generated video content (the long tail), whereas pre-roll will continue to be tolerated in front of high-quality content.

New Local Advertising Platforms Will Emerge
2008 is the year when we finally see a viable, truly local solution for local advertisers. While most of the online directories appear to be focused on driving sales and gaining advertiser market share, the breakout leader in the online local space will be the company that provides the best user experience and repeat users. Ideally this will occur without consumers being bombarded with national ads when they are looking for a local sushi restaurant.

Also, "vertical local" will play a vital role. We have already seen this with Citysearch and Yelp, being very effective in the A&E space, while Yellowpages.com and Superpages tend to attract the users who are searching for more services. We believe this will become even more granular, or "hyper local," with legal, travel, and home services playing an important role as well.

Lastly, what Exponential has coined "local CPC (cost-per-click) display" will evolve to be a major factor in 2008. This means that users in Atlanta, on a national site, will now be shown display ads of local businesses in their area that are relevant to their interests, using data from the display network. These ads are actually a utility for users: they provide a more positive user experience for the user on premium national sites, potentially creating a greater CTR and also the opportunity for local businesses to advertise on sites that they could not have accessed in the past.

Beyond Clicks – Improvements in effectiveness measurement
With the proliferation of publisher sites and advertising models has come the challenge of measuring and tracking user activity. As more advertisers launch online branding campaigns, the metrics need to extend beyond clicks. Advertisers increasingly want more detailed feedback on the effectiveness of their online marketing efforts, both to justify spending on the web and to help guide their future media allocations.

The industry is moving from bombarding impressions to large aggregations of users, disregarding messaging impact and brand degradation, to utilizing a wide range of targeting capabilities and measuring the impact on attitude. We’ve moved to the emotional selling proposition where the emotional values – how someone felt about a brand becomes critically important in the buying process. With the shift of TV to online, the industry has no choice but to embrace this change and provide measurement and analysis.

We already see the need and value in combining multiple data sources like Share of Voice, brand effectiveness studies, and audience data to get a better picture of campaign activity and effectiveness. These insights enable online buying to shift from a transactional strategy to an ongoing source for influencing the customer in different stages of the purchase funnel.

Semantic Tools Attract Advertising Spend
Since the late 1990’s when Tim Berners-Lee envisioned the web transformed into computers acting as intelligent agents, marketers have posited the potential for using semantic analysis to create a more relevant experience for online users. While this technology has largely lived in the research arena, it has finally matured and is now making its way into mainstream applications. Tools like Twine, Yoono, del.icio.us and Stumbledupon.com are all deploying applications that “learn,” enabling users to structure and share the richness of their online experiences. Tools like these are a treasure trove of user data, and some smart marketers will undoubtedly figure out ways to leverage it.

Virtual Worlds Go Niche
2008 will see the increased popularity of Virtual Worlds, but it won’t be Second Life. Instead, users will increasingly shift towards specialty worlds more closely associated with their lifestyles or interests. For Marketers, this means an opportunity to create whole worlds around products, or to customize environments inside specialty virtual environments.

For example, Neopets (a site in the Tribal Fusion network http://www.neopets.com) lets users create virtual pets that inhabit the virtual world and buy them food, toys and other accessories using a virtual currency; advertisers can create branded environments and even brand accessories. Coke Studios (http://www.mycoke.com) is another example of an online community with millions of users creating customized music mixes that can be shared and rated by others.

DaSilva added, "These are a few of the key topics we think will be consistently discussed during the conferences and industry events in 2008. We look forward to engaging our industry peers and business partners in the discussion; and to the ways these shifts and innovations will impact the next phase of online advertising."

About Exponential^® Interactive, Inc.
Exponential^® is a technology-driven media services company that delivers innovative products and services offering various types of digital marketing to meet the demands of advertisers and publishers. Representing over 1,500 of the key vertical publishers on the Net today, and as the partner of choice for many of the world’s leading advertising agencies and advertisers for their online campaigns, the company offers a fully integrated suite of online advertising solutions, including brand and CPM advertising, performance marketing, lead generation, local search, online shopping portal and contextual solutions.

Exponential^® Interactive, Inc. is privately held and headquartered in Emeryville, CA and has offices throughout the United States and in London and India. For more information, please call 510.250.4018 or visit: http://www.exponential.com