Ann: EN1 Exceeds H1 2018 Forecast, page-14

The company reports concisely and clearly on Programattic, Non Programmatic and both Consolidated showing;

1. Revenue from External customers
2. Cost of Sales
3. Gross Profit

Obviously Cost of Sales is largely the upfront online media Costs

Principal activities

engage:BDR is an internet-based marketplace platform and associated technology solution provider. engage:BDR’s proprietary technology is used to optimise the sale of advertising inventory from digital publishers (websites and apps) to advertisers and their agents (brands, agencies and advertising platforms). The ability to optimise the inventory from digital publishers to advertisers and their agents allows engage:BDR to play an active role in managing the ad exchange platform.
engage:BDR allows digital publishers to monetise their available advertising space by making the inventory available to multiple advertisers, as well as providing various related technologies designed to help publishers create additional incremental revenue streams. engage:BDR’s ad exchange platform also allows publishers to sell space for video advertising on webpages that do not have video content.

engage:BDR Limited Director’s Report
31 December 2017

The Group provides the following review of its operations for the 2017 financial year and its recent progress since listing on ASX. engage:BDR generates revenue from four principal activities (which under two revenue streams – programmatic and non-programmatic):

Non-programmatic display advertising sales
The Group’s Non-programmatic display advertising sales business is tag-based, traditionally sold and managed banner advertising campaigns run for direct advertisers. This was the Group’s first product, initially launched in 2009 and remained a significant revenue contributor in 2017. The Group anticipates that this part of the Group’s business will continue to decline as advertising buyers continue to migrate their business to more efficient and cost effective programmatic buying. engage:BDR is expecting to be able to deliver significantly increased trading margins as a consequence of moving to a near totally automated programmatic operation during 2018.

Programmatic display advertising sales
The Group’s programmatic display advertising sales business includes selling banner advertising inventory through the Group’s digital auctioning technology to platforms and marketplaces. The Group developed this product to replace the traditional Non-Programmatic display advertising channel. Many of the Group’s Non-programmatic buyers are still bidding on the Group’s inventory through server-to-server connections. The adoption of programmatic display advertising has proved extremely successful in 2017 and opened additional revenue opportunities from many of the Company’s existing clients, largely because programmatic buying and selling of advertising is much more efficient and significantly more cost effective to operate, thus increasing the Group’s overall operating and gross profit margins.

Non-programmatic video advertising sales
The Group’s Non-Programmatic video advertising sales business includes selling video inventory through tag-based technology to direct advertisers, platforms and marketplaces. The Group has spent the last two years developing its own proprietary video ad serving technologies and further expanding this part of the business by enabling both buying and selling of video in addition to its display business. The Group has significantly increased revenue per customer by integrating the video channel with the display buyers and sellers and opening business on the display ad side to customers that were originally integrating into the video business. The Company anticipates that the programmatic video business will eclipse this and all other ad formats over the next three to five years and accordingly has dedicated significant financial resources to this part of the business in 2017 to encourage this shift.

Programmatic video advertising sales
The Group’s Programmatic video advertising sales business grew significantly during the year as the Group continued to progress the development and launch of its programmatic and video advertising platforms. Significant achievements in the reporting period included considerable expansion of programmatic display and video partnerships and integrations and the launch of its true programmatic, real-time bidding buy-side and sell-side marketplace for video. The Group achieved a #9 US comScore video ranking of all video advertising companies measured in the U.S.A in 2017.
The Group’s recently developed proprietary programmatic technology significantly increases the Group’s operating margins by reducing payroll and associated sales commissions. With the rapid adoption of programmatic buying, brands, agencies and digital media buyers have moved their budgets to auction-based buying, in contrast to buying from sales people, individual RFP (request for proposal) and insertion orders. This behavioural change has made the marketplace much more efficient, significantly reducing the staff overhead required to sell advertising in the traditional way.
Advertising buyers, through the Group’s programmatic platform, are essentially bidding for advertising inventory in real time in dynamic auctions, which occur in milliseconds while the relevant web page is loading. This new engage:BDR format has created significant barriers to entry for new companies looking to enter the digital advertising arena. Companies must realistically own and develop their own proprietary technology to be able to participate in the rapidly developing programmatic advertising ecosystem as licensing third party technologies is cost-prohibitive. engage:BDR has developed its own real-time auctioning and bidding technologies which provide it with a significant competitive advantage. engage:BDR has established thousands of direct publisher relationships which is a key differentiator and competitive advantage for the Group in an ecosystem which is experiencing inventory quality issues, brokers and middlemen.

All information is available here;
https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvSTYO6g67wRiZpfkIke92GA==


(i) Rendering of services

The Group is an internet-based marketplace platform and associated technology solution provider. The Group’s proprietary technology is used to facilitate the sale of advertising inventory from digital publishers (websites and apps) to advertisers and their agents (brands, agencies and advertising platforms). The Group allows digital publishers to monetise their available advertising space by making the inventory available to multiple advertisers, as well as providing various technologies designed to help publishers create incremental streams of revenue. An example of this technology would be the Group’s OutStream advertising unit, which allows publishers to sell space for video advertising on webpages that do not have video content.

Revenue is recognised on an accruals basis as and when the service has been provided to the customer. Revenue from the rendering of services can be recognized by reference to the stage of completion (and in the case of the programmatic ad exchange revenue is recognised with the ad is served) if the final outcome can be reliably estimated. This would be the case if:
(a) The amount of revenue can be measured reliably.
(b) It is probable that economic benefits associated with the transaction will flow to the seller.
(c) The stage of completion can be measured reliably.
(d) The costs incurred and the cost to complete can be measured reliably.

In recording revenue, the Group evaluates whether they are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). The Group reports the sales of advertising revenues for advertising inventory on a gross basis, that is, the amounts billed to our customers are recorded as revenues, and amounts paid to suppliers are recorded as cost of sales. Where we are the principal, the Group controls the advertising inventory before it is transferred to its customers. Control is evidenced by the Group’s sole ability to monetise the advertising inventory before it is transferred to its customers, and is further supported by the Group being primarily responsible to its customers and having a level of discretion in establishing pricing.