Adslot : Trading Update – July 2017

ASX Announcement

Monday 31st July 2017

• Improved cadence of new market Symphony deployments now progressing to larger markets
• Commitments from Symphony agency clients to phased activation of Automated Guaranteed
• Improved engagement from some of the world's largest agencies and advertisers as transparency issues in programmatic take centre stage
• Company holds firm on previous outlook of more significant revenue from Trading Fees in 2H CY17

To date, new market activation activity of Symphony for GroupM has consciously focused on small- to medium-sized markets, with two new markets activated in Europe (Austria and Turkey) and one in Asia (Taiwan) in FY17. In recent months the cadence of new market deployments has improved, and the cohesion of the GroupM-Adslot teams along with it. As a direct result, the deployment of three additional markets has commenced, including medium to large markets scheduled for deployment in 1H of FY18 and beyond.

Future deployments into larger markets will positively impact the following:

1. Revenue growth - Licence Fee revenue is driven by both the number and size of markets.

2. Greater access to new demand to generate Trading Fees - Trading Fees are expected to emerge and exceed Licence Fees as the integration of Symphony and Automated Guaranteed continues to improve and agencies look to automate all aspects of media trading in the future.

3. Incumbency - increases the user base of media planners and buyers reliant on the Symphony platform.
4. Global Footprint - expands Adslot's customer footprint and with it the Company's ability offer regional and global coverage to other multi-national agency groups. The Company has fielded inbound interest in Symphony from other multinational agency groups, in the EMEA region in particular.

While Trading Fees remain nascent and unpredictable, this is not reflective of the broader market opportunity nor the Company's confidence it will capture more meaningful Trading Fees over the second half of CY17 and beyond.

A more detailed analysis of the market dynamics to which Adslot has been exposed, and more recent positive changes to market dynamics is described in 'Appendix - Market Analysis', at the back of this Trading Update.

The Company is pursuing adoption of its Automated Guaranteed trading technology under two scenarios:

1. Selling to media buyers/agencies that are using Symphony

2. Selling to media buyers/agencies that are not using Symphony

   Selling to media buyers/agencies that are using Symphony

   The Company has focused sales efforts in Europe and APAC on media buyers/agencies that are already using the Symphony platform to plan and buy online display advertising. This scenario benefits from the incumbency Symphony affords and an established relationship. The sales process itself is characterised by enterprise sale dynamics where the agency typically views the adoption of Adslot's trading technology as an innovation that encompasses the full breadth of their relevant media buying activity.

   As a result, adoption usually requires support from various stakeholders across the agency organisation, including executive management, digital leads, operational leads and finance.

   The Company can confirm it has secured commitments from two significant agencies, one in Europe, and one in APAC, to undertake a phased activation of its Automated Guaranteed technology.

   The phased activation approach is different for each of the two agencies; one will be driven by activating one advertiser account at a time, the other by activating relevant groups of relevant publishers across multiple advertiser accounts.

   In both cases agencies will use the integrated Symphony-Adslot interface.

   Selling to media buyers/agencies that are not using Symphony

   In US and UK markets, sales efforts have been largely focused on driving adoption of the stand-alone Adslot Media interface (which is not integrated with Symphony, but also offers additional features that are still being integrated into Symphony).

   The sales process of Adslot Media is less characteristic of an enterprise sale, and so while securing general support from across the agency is still important it is usually less onerous. Equally, there is less commitment in advance from the agency to formally project manage the migration of ad spend into Adslot Media.

   In recent months, the fast-growing programmatic segment of the online display media market has undergone heightened scrutiny from advertisers for its lack of transparency and accountability (for further details see 'Appendix - Market Analysis' at the back of this Trading Update). As Adslot technology is fully transparent and accountable in a way programmatic is not, scrutiny from advertisers has directly benefited Adslot in three ways:

3. agencies are more motivated to engage with Adslot;

4. agencies are more motivated to engage with Adslot on behalf of their larger clients (who are also leading the call for transparency and accountability); and

5. advertisers themselves are registering interest in Adslot technology with the Company directly.

As a result, larger opportunities with media agencies and advertisers have materialised in recent weeks in the US market in particular, and are also developing more rapidly than has been the case historically.

The Company's additional investment in US sales leadership (refer ASX release 'US Market Update' on 5 April 2017), and sales and marketing generally has also assisted in identifying and developing these more significant opportunities.

Further progress signing premium publishers

Concurrent to sales activity focused on media buyers, the Company continues to sign premium publishers to its Automated Guaranteed platform. Significant publisher sign ups in recent months include Trip Advisor, The Weather Channel, Motely Fool and Thomson Reuters.

Adslot is well positioned

The Company's confidence of its future growth in Trading Fees specifically, is also underpinned by the following:

• Adslot's Automated Guaranteed platform remains the leading technology of its kind globally;

• Recent major feature releases, including enhanced audience targeting, are resonating strongly with agencies and advertisers of all profiles;

• Advertisers pushing for greater transparency is translating to a renewed focus on buying higher quality inventory, which is Adslot's core proposition;

• The Operating Plan outlined in the Use of Funds disclosed as part of the Company's capital raising in October 2016, has been executed successfully, within budget and on time - the stated objective of which was to bring greater velocity to the Company's innovation cycle. In the seven

months since the capital raising was concluded, Adslot's R&D team has doubled, and output has increased fourfold. This allows the Company to assign more R&D resources as required in support of revenue opportunities.

A full financial update on FY17 will be provided in the Company's full-year audited accounts to be released by end of August 2017.