Monetizing Social Media

Bling Bling: Marketing and Monetizing Through Social Applications August 2008

Common Perceptions of Social Media

“ You can’t make material money through social media”

“ You can’t effectively promote yourself on social media”

Social Media Ad Network Social Gaming Provider

Leading ad network for social media (FB, MySpace)

9B+ impressions per month

90M monthly unique visitors global

Largest social application provider on the web (FB, MySpace, Hi5, Bebo, Orkut)

1.5B+ PVs per month

60M+ monthly unique visitors global

Leading social games (pets, autos, poke)

700M PVs per month

What is RockYou? Our mission is to engage the world with social applications RockYou has massive reach and scale, 6x larger than its next largest competitor, and the opportunity for growth is only beginning. Social Applications

A Dominant Facebook Presence and Growing Super Wall 38M 18.6 M Hug Me 22M 4.0M Likeness 20M 5.2M Pieces of Flair 13M 4.3M Birthday Cards 7M 3.3M Horoscopes 7M 0.3M Likeness Unrated 5M 1.0M Speed Racing 5M 1.2M PetrolHead 4M 0.3M Total Facebook Users Application Monthly Active Users RockYou has over a dozen applications with over 1 million users – below are some of the largest:

Social Media Introduction

Examples of Social Media

Multimedia

Photo-sharing: Flickr

Video-sharing: YouTube

Audio-sharing: imeem

Entertainment

Virtual Worlds: Second Life

Online Gaming: World of Warcraft

News/Opinion

Social news: Digg, Reddit

Reviews: Yelp, epinions

Communication

Microblogs: Twitter, Pownce

Events: Evite

Social Networking Services: Facebook, LinkedIn, MySpace

Who Are The Major Players? More To Come…

Social Networking Websites:

MySpace

Facebook

Hi5

Orkut

Bebo

Friendster

LinkedIn

Le Distribution Géographique

How Much Has The Market Been Tapped? Explosive growth… … But still a long way to go

What Are Social Networks Used For?

Monetization Opportunities with Social Applications

Online Advertising Growing Source : eMarketer CAGR: 22% Global Online Media Advertising ($Bn) Global Social Networking Advertising ($MM) CAGR: 65% Social Advertising Growing 3x Faster

Context is the key to social media monetization Virality / Hyper-targeting Contextual targeting High context Low virality Search is not viral Lower context High virality Low context from photo browsing High context High virality Apps add context to social networks. Social apps are viral Social Applications

Monetizing Social Media

Application Cross-promotion

CPI (Cost per Installation), CPC = $0.30-$0.50

Select Customers:

Agency-sourced Branded Advertising

CPM (Cost per Impression) = $2.00 - $10.00

Type of Ads Using CPM: Branded Ads, Takeovers, App Integration

Select Customers:

Direct Response and Lead Generation

CPA (Cost per Action)

Type of Ads Using CPA: Mobile Offering, Education, Finance

Select Customers:

Virtual Goods, Micro-transactions & Subscription

Application Cross-Promotion

Publishers place ad units to standard formats. Advertisers pay on a CPI, CPC or CPM (cost per install) basis. New FB profile helps on IAB standards.

646x60 => 728x90 300x250

Application Cross-Promotion

3 rd party ad networks on Facebook, MySpace serve as the foundation of both promotion and revenue generation for most social applications

RockYou

Socialmedia

Lookery

Revenue from ad networks ranges from $0.10 - $1.50 eCPM

RockYou’s app pages range from $0.40 to $1.50 eCPM

Largest individual publishers on RockYou network generate $20K to $100K a month

Actively optimizing ad network ad inventory can multiply revenue

RockYou.com eCPM increased from $0.20 to $0.85 in 3 months

Services like Rubicon Project and Pubmatic can automate ad network inventory optimization

Pubmatic generating $0.50 eCPMs for one RockYou app

Agency-Sourced Branded Advertising

Direct selling is required - limiting scope of potential advertising partners

Facebook, MySpace, Linkedin

RockYou, Slide, Zynga, SGN

Many other developers work with ad rep companies to help source agency relationships

Alloy Media & Marketing

Clearspring

Appsavvy

Agencies are looking for new, materially impactful experiences for their clients (same as the regular web)

Application takeovers

Niche demographic reach or custom content

Performance

Productize the offerings of your application/site

Agency-sourced campaigns range from $30K to $150K spend

International brand marketing can be significant

Internal resources are needed to support agency work

Ad operations & reporting

Lead Generation, Direct Response

Lead generation, DR and performance marketing currently makes up a significant volume of advertising on social media

Leverage affiliate network providers at first (best offers w/ best payouts)

Affinity Labs

MyOfferPal

Neverblue Ads

Vet opportunities based on demographic mix of the application/site – increased context

Successful lead gen/direct response campaigns on social media include:

Mobile offers (SendMe, Thumbplay)

Dating (True, eHarmony, Match, SinglesNet)

Education (UPheonix)

Given unlimited funding for lead gen, effective way to fill remnant inventory at higher CPMs

Be prepared to process multiple lead gen offers to maximize performance – 10s to 100s

Lead generation campaigns may burn through quickly; active management and tracking is required

Virtual Currency

Fastest growing segment of social media monetization

New services allow transactions for youth demographic (13-21)

Virtual currency monetization providers are key

OfferPal Media (alternative payments)

SuperRewards (alternative payments)

SpareChange (microtransactions)

Echovox, Mobillcash (mobile)

For a high volume app (1M uniques+ a month), revenue generated ranges from $100K - $1M per month

10M users Mobsters 8M users Own Your Friends! 8M users Mafia Wars 3M users SuperPets 3M users Texas Holdem 2M users Heroes Top MySpace Game Apps (after 2-3 months live)

Successful Marketing on Social Media: Social Applications

Why? Potential for Social Apps is Exploding Wikipedia.org Alexa Global Traffic Rankings 1 2 3 4 5 6 7 8 9 10 2005 (U.K.) 2008 1 2 3 4 5 6 7 8 9 10

Source: eBay Investor Presentation, RockYou

eBay starts Q2 98, PayPal starts Q1’00, Yahoo! starts Q1’95, AOL starts Q1’92, Facebook starts Q4’04, and RockYou Starts Q4’05

Facebook data represents active users, which was disclosed on 12/05 and 12/06. Undisclosed active user data is extrapolated by applying an average active user penetration to global Unique Visitors (per comScore Media Metrix)

(2) Registered Users (MM) Viral Marketing and Engagement is key to success

Key Takeaways for Initial Viral Growth

New User focus

Simplicity

Novelty

Universal Applicability

Building Viral Engagement User

3. Indirect friends => focus on messaging

Focus on messaging to invite/notification receivers to drive CTRs and more efficient/effective invitations/notifications

Deliver increasing AND simply understood value to app w/ every friend invited (Zombies)

1. New users => build clean flows

New users absolutely key to viral engagement (vs returning user)

Focus on linear, one-action flows to maximize activation for new users

Forget registration

2. Direct friends => deliver clear value

prop

Provide clear value proposition to new user for inviting friend network (Likeness)

Ensure invitation is inherent to the new user flow to maximize viral value of user (Superlatives vs Superlatives)

4. Interested parties => allow universal use

Enable simple tools (comments, ratings, answers) that allow interaction w/o requiring full engagement w/ application (My Questions)

Direct Friends Indirect Friends Interested Parties

Marketing Opportunities with Social Applications

Successful marketing for social media should include social applications:

Application content integration

Integrating brand or product as part of user experience

Example: Likeness quiz, virtual gifts, greeting cards, virtual actions, etc

Sponsorships or branding of applications

App takeover or skinning w/ possible promotion

Example: Skin application w/ sweepstakes or contest

Custom social application building & distribution

Build a social app for advertiser and/or distribute it through social network specific ad networks

Example: Build, viral tune, launch, and seed an app recruiting users from RockYou’s leading ad network jumpstarting viral spread of app

Rich Media

Application Integration: Custom Advertiser Quiz Custom size pop-up w/ additional info appears upon mouse rollover on relevant quiz choice 646x90 banner clicks through to advertiser’s website Text link clicks through to advertiser’s website

Application Integration: Custom Advertiser Quiz Advertiser’s quiz promoted on Available Quizzes section throughout duration of campaign (100% SOV) Advertiser’s quiz featured and cycled through Brand New Quiz placement throughout duration of campaign

Application Integration: Viral Impact & Spread News Feed Mini-News Feed on Profile pages Profile box Notifications Email Message An advertiser’s custom Likeness quiz virally spreads through the a social network platform’s communication channels.

Application Integration: Sweeney Todd 0.01% CTR for banner alone 65x better 0.65% CTR with integration

Application Integration – SuperWall Card Featured two custom-designed greeting cards on SuperWall for StepBrothers Results:

8M impressions on application pages

6M cards sent

Immeasurable viral impressions through association of content to friend and his/her network

Card appears in user’s profile Greeting cards in top placement, pre-selected, and expansion upon roll-over

Application Sponsorship

Applications can be skinned or branded with prominent placement for an advertiser with additional opportunities for sweepstakes, contests, streaming video units, and other custom programs.

Resident Evil: Extinction sponsored the popular Zombies app for 3 weeks leading up to the theatrical release and users could enter the sweepstakes to win a weekend trip to Vegas by ‘biting’ their friends.

Application Sponsorship 100 x goal 10K expected 1M achieved

Application Integration & Application Takeovers Social Networks (1) Web (1) Average RockYou Ads Click-Through Rate Best RockYou Ad Campaigns (1) Business Week (2/7/2008)

Application Development and Promotion

F rictionless: simple, less is more

A udience: on Facebook for their friends

C ommunication: integrate into the viral channels

E ngagement: hook users to return regularly

B usiness model: design with monetization in mind

O bjective: establish goals and success metrics

O bvious: make each page’s purpose clear

K eep working: develop, test, repeat

Some rules of thumb from Context Optional.

Over two months since launch, over 250K users have sent over 2M branded pokes generating tens of millions of branded impressions.

3 rd party ad networks on Facebook can radically accelerate Facebook application adoption

RockYou

SocialMedia

Lookery

From RockYou’s experience, advertisers can generate between 1000 – 20,000 installs/users a day

Cost ranges from $0.10 - $0.30 CPC and $0.15 - $0.60 CPI

Viral tuning is key to taking advantage of paid campaigns

2x to 10x impact

Behavioral and interest based ad targeting forthcoming

Application Development and Promotion Acuvue adjusted viral flow of Wink application and promoted the application on RockYou network— 200 installs grew to 150K users within a month . 646x60 Ad

Stylefeeder is the largest fashion/shopping Application on Facebook with over 1MM installs

StyleFeeder able to convert double digit percentage of Facebook users into StyleFeeder.com users

Based on high conversion, Stylefeeder drives app installs from RockYou to StyleFeeder app

Application Development and Promotion Stylefeeder.com is successfully driving website traffic through marketing of a social application mirroring site functionality