Mobile Advertising Mar 10

MOBILE ADVERTISING STRATEGY CONSULTING AND EXECUTION FEB 2010

BIG MOVEMENTS OVER THE LAST FEW MONTHS… $750 Million – AdMob $265 Million – Quattro -AdMob Estimated Revenues in 09 - $70M -Quattro Estimated Revenues in 09 - $30M • Both Google and Apple showed strong interest in “in-Application” advertising where ads are running within a connected application using the standard MMA size banner format. Google’s Android team needed to find a way to attract developers to their ecosystem and Apple’s iSlate tablet team are rumored to have really pressed for the Quattro acquisition also because of the need to get developers on board • Other OEMs like Nokia, BlackBerry, Sony Ericsson are contemplating a move in mobile advertising as it has become a recognized and viable business model for distributing content and applications over the mobile medium. • Some operators jumped into the game early. Vodafone and Telefonica invested in Amobee and are deploying its platform in 38 countries, Orange bought mobile ad-network and agency Unanimis. The GSMA has made mobile advertising one of its key areas for development starting with measurement but moving towards aggregation.

FROM REACH & FREQUENCY TO MAKING EACH “LOCAL” IMPRESSION COUNT The advertising ecosystem has been focused on getting big brands with big budgets to spend on expensive media: for instance Television The focus has been on getting the highest reach and frequency New Media – Yahoo!, AOL, Google, Facebook and now Mobile is shifting the focus from counting the people you can reach to reaching the people that count… These are people who can act on an impression. Google has also broken the “time dimension” of advertising by placing an ad at the moment in time a user expresses an interest in something. They have also figured out a way to monetize a users “intention” as opposed to monetize a users “attention”. It is time that a new player figures out how to monetize and maximize the “space” dimension of advertising

MARKET SIZING – AS MANY FORECASTS AS THERE ARE METHODS OF MEASURING AND DEFINING MOBILE ADVERTISING 1. Berg Insight estimates that the total value of global mobile advertising market was $1.014 B in 2008. 2. Ovum USA: $1.3bn in 2010 Accounts for text delivery advertising only 3. Yankee Group USA: $2B in 2010 Mobile advertisement only 4. Jupiter Research USA: $2.1bn in 2011 5. eMarketer USA: $4.7bn by 2011 WW: $11.3bn by 2011Mobile advertisement only 6. Shosteck Group WW: grow to $9.6bn by 2010 Mobile advertisement only 7. Informa Telecoms and Media WW: $11.5bn by 2011 Mobile advertisement only 8. Strategy Analytics USA: 17% of total online ad spending by 2010 9. ABI Research WW: $19bn by 2011 Mobile marketing and advertising combined Mobile Advertising is a very different market to market with countries like Indonesia and South Africa showing strong growth in WAP banners and places like India and Eastern Europe still focused on text messaging. The US and now UK are more and more focused on in-App and rich media advertising due to the exploding Smartphone market.

GLOBAL MOBILE ADVERTISING SPENDING The average size of campaigns is rising from $30,000-50,000 two years ago to $100,000-$150,000 in mid-2009 with many exceeding $1 million solely focused on mobile. Source: Chetan Sharma Consulting

BLIND AD NETWORKS Usually the largest in terms of publishers, advertisers and impressions. Serve a high volume of advertising to an extensive base of mostly independent mobile publishers (mobile sites and applications) Usually, advertisers can not choose specific mobile sites Performance advertising, CPC in particular, is the norm. The CPC varies with supply and demand, determined through a self-service auction system. The cheapest option is run of network (RON) adverts (i.e. no targeting), which in some countries may start at US$0.01 CPC. Some blind networks also offer brand advertising, on the CPM model - for marketers that want exposure, maybe to create awareness of a new product. Advertisers should expect a range of self-service tools that help them track and optimize their campaign in real time. Publishers receive a revenue share, perhaps 55-65 percent of what the advertiser pays. Key players in the market: Admoda, AdMob, BuzzCity, InMobi Source: mobiThinking

PREMIUM BLIND AD NETWORKS Higher proportion of premium publishers (i.e. mobile sites of well-known brands, like newspapers, broadcasters or operator portals), than blind networks, some on exclusive relationships. Attract more brand advertising, paid for on CPM model Costs vary considerably – campaigns targeted at top-tier inventory can be as high as US$20 CPM. A lot of advertising will still be blind or semi-blind (i.e. targeted at a channel), but for a premium price you may be able to buy a specific spot on a site of your choice. Performance advertising is also available – and sometimes search advertising (based on key words) – paid for by CPC, for marketers who want an active response to ads. The cheapest option is run of network (RON) adverts (i.e. no targeting), which in some countries may start at US$0.05 - US$0.10 CPC. Advertisers should expect a mix of self-service and direct sales and support and a wealth of targeting options. Publishers should expect to receive a majority share of advertising revenue – percentages are often negotiated on a case-by-case basis. Key players: Millennial Media, Jumptap, Madhouse, Quattro Wireless Source: mobiThinking

PREMIUM AD NETWORKS Premium networks focus on a limited number of prestige publishers – mobile operators and big-brand, big-traffic sites, perhaps newspapers or broadcasters. The vast majority of campaigns are brand advertising, so the predominant (maybe only) pricing model is CPM model. Under CPM, costs vary considerably, ranging from US$5-US$75. Some may also offer performance advertising for marketers who want an active response to their ads paid for by CPC; but expect to pay considerably more than on a blind network as CPC can range from US$0.05-US$0.50. Premium networks attract big brand advertisers who are prepared to pay premium prices to secure the prime locations on top-tier mobile destinations Advertisers should expect more direct sales and support, than self-service and a wealth of targeting options. Publishers should expect to receive a majority share of advertising revenue, perhaps 50–70 percent. Deals are usually negotiated on a case-by-case basis. Key players: Microsoft, YOC, Advertising.com/AOL, Nokia Interactive Advertising, Pudding Media Source: mobiThinking

MOBILE AD-NETWORKS (ACTIVE IN THE UK) AdMob Mobiento RingRing Velti Startech Admoda YOC Mobilera Adshandy 4th Screen Technomart Mojiva Enpocket/Nokia Kickmobile Buzzcity Microsoft/Screentonic Out there media Quattro Dada MD Factory MoVoxx MADS Mo2o Apperta Adlink Media Mobext Smaato

SPECIALIST MOBILE ANALYTICS COMPANIES Bango Mobilytics Amethon New York and Cambridge, UK Part of Mobile Visions, Inc., Princeton, NJ Sydney, Melbourne and New York Products Products Products: Site analysis: unique visitors, visits, page views, avg Site analysis: unique visitors, visits, page views, avg Site analysis: unique visitors, visits, page views, avg time on site etc. Filter by page, operator, country, time on site etc. time on site etc. device Filter by page, operator, country, device Filter by page, operator, country, device Campaign analysis: Goal comparison Campaign analysis: Goal comparison, revenue Works with Google, Yahoo, Microsoft, AdMob, tracking Customers: Decktrade APIs for data integration Go2Media, BlueCentral Hosting Solutions, Gambit APIs for data integration Group, News Digital Media, Mobango Flurry Pinch Media MediaLets Mobclix San Francisco NY NY and SFO San Francisco, CA • Seed round from Union Square • Raised $4m Series A in May ’09 • iPhone applications and services to iPhone • Cutting edge analytics, and First Round Capital (Foundry, DFJ Gotham) developers deployment and monetisation tools • iPhone focused • iPhone focused • Operates a real-time analytics and media • Real-time usage data • Analytics and development tools • Analytics platforms focused on advertising platform. Provides mobile based • Across all handset types focused on developers and apps developers, ad agencies advertising campaigns creation, management, and • Free service to developers with publishers • Work to cleverly integrate deployment services. VAS • Advertising solutions advertising into apps • Offers application sentiment and trends • Seed round from DFJ, Borealis • Advertising effectiveness information Ventures, Draper Richards 10

MOBILE BANNER ADS INSTANCES BY SECTOR Mobile Banner Ads instances by Sector (Jan 08 UK) Home Furnishings Food Retail Computer Hardware Specialized Consumer Services Movies & Entertainment Internet Software & Services Automobile Manufacturers Publishing Broadcasting & Cable TV Internet Retail (Mobile Content) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Percentage of ads served

UK: MOBILE MEDIA INDEX FOR CAR BRANDS - MOBILE MEDIA SUITS THE HIGH END Skoda 56 Suzuki 72 Nissan 77 Volvo 87 Volkswagen 88 Toyota 89 Honda 91 Renault 93 Hyundai 94 Ford 98 Peugeot 105 Vauxhall 107 BMW 110 Citroen 119 Mercedes Benz 126 Mitsubishi 136 Fiat 137 Land Rover/Range Rover 137 Audi 152 Jaguar/Daimler 167 0 20 40 60 80 100 120 140 160 180 Source: TGI M:Metrics 2008 – Base: All GB adults (aged 15+)

MOBILE MEDIA AUDIENCE RECEPTIVE TO ADVERTISING % of media consumers who agree 35 “I’m tempted to buy products I’ve seen advertised” 30 25 TV ia es s a io et or er em ed ad rn do in ap te az m R in ut sp In C ag O ile ew M ob N M Source: TGI M:Metrics 2008 – Base: All GB adults (aged 15+)

WHY ARE OPERATORS GETTING IN THE ADVERTISING GAME • Some have very large “media” audiences in their own right. Many of the largest operators in Europe and in the UK are also media companies or are tightly coupled to media companies. • Several have already been generating advertising revenues from their on-line ISP, portal and IPTV businesses: Orange (Wanadoo), Vodafone Germany (ARCOR), Telefonica (Terra and Imagenio) • Since they own the customer they are the only ones who can provide truly “ad-funded” business models. They can zero rate traffic associated to an ad being delivered on a phone. • Operators have visibility across all mobile media consumption: video, games, music, messaging, browsing, searching, etc. Ultimately, advertisers will be able to build a relationship with mobile consumers and take them on “customer journeys”. • Operators are the only ones who can “frequency cap” across multiple inventory types which is of importance to brands and advertisers. • Operators have more information about their subscribers (age, gender, location, type of billing plan, etc), and can also use this to create relevancy. • Operators (in the short term) have access to new inventory formats that Google, Microsoft and Yahoo! won't. One example of this is peer to peer SMS ad insertion. Here are some exampled of operator driven mobile advertising initiatives:

CURRENT OPERATOR CENTRIC APPROACH - A HOLISTIC APPROACH TO MEDIA SALES €50 Premium € 20 Medium € 10 Remnant €1 Over 25 mobile ad-networks

IN-GAME ADVERTISING (CASHED)

BANNERS IN VIDEO PORTAL

IN SMS CLIENT Application main menu Message Message Interstitial ad composition sending Back to inbox Interstitial ad More Info on the ad Options on the ad

MOBILE VIDEO AD FORMATS 10 to 30 second Ad (Video or animated GIF) Video Content Requested 10 to 30 second Ad during buffering… (Video or animated GIF) at the end… Buffering… …10 – 30 secs video …40 – 90 secs video… …10 – 30 secs video ad ad…

ON DEVICE PORTAL

TRADITIONAL HYPER-LOCAL/LOCAL ADVERTISING MEDIA SEGMENTS More than 60 percent of small and medium businesses advertise locally in the Yellow Pages and on their company websites, while 40 percent use direct mail. 1/4 of local ad spend is on Yellow Pages or Local Listings: • Yellowpages / local business directories • Newspaper classified • Magazine advertising • Outdoor advertising Name Location Description $ Revenue Q3'08 $ Revenue Q3'09 R. H. Donnelley US yellow pages 648 million 534 million Marchex US local search advertising 37,152 22,172 company Yell Group Plc UK Operates directory 1,023 million 982 million businesses in UK, Spain, US and LATAM Idearc Inc. US 735 million 611 million Seat Pagine Gialle Italy largest in Italy and second 397 million 345 million larget directory publisher in UK Local Insight Regatta US Yellow pages and online 135 million 144 million Holdings search

EXICON – MOBILE ADVERTISING STRATEGY & EXECUTION Mobile advertising strategic evaluation Value chain analysis Market sizing, trends and new areas of focus • Behavioral and contextual targeting • New ad formats: Apps (connected vs. cashed) • Post click analysis and ad effectiveness • Proximity and hyper local advertising Project management: • Inventory management • Ad sales channel management • Sales forecasting, trafficking and reporting Ad-Network selection and inventory yield optimization Mobile advertising technology vendor selection / audit Media sales partner selection

THANK YOU Patrick Parodi patrick@exicon.mobi Follow me @paparodi

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Mobile Advertising Mar 10

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