Rock You Web 2.0 Expo

Slide 1: Bling Bling: Marketing and Monetizing Through Social Applications April 2008

Slide 2: Common Perceptions of Social Media “You can’t make material money through social media” “You can’t effectively promote yourself on social media” 2

Slide 3: Who is RockYou? Our mission is to engage the world with social applications Most popular applications/widgets across Facebook, hi5, Bebo, Orkut and MySpace 100M Over 700K RockYou apps installed daily 16M and over 100 million apps live across social networks 700k Over 16 million registered users Over 70 million monthly unique visitors 70M across RockYou network Over 800M pageviews a month on RockYou apps and 2 billion pageviews per 2.0B month across our ad network 3

Slide 4: Most Million User Applications across Social Networks 4

Slide 5: Successful Marketing on Social Media: Social Applications

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

Slide 7: Viral Marketing is key to success 50 Registered Users (MM) 40 30 20 10 (2) 0 1 3 5 7 9 11 13 15 17 19 21 23 (1) Months Source: eBay Investor Presentation, RockYou (2) 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 (3) 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) 7

Slide 8: Key Takeaways for Viral Growth  New User focus  Simplicity  Novelty  Universal Applicability 8

Slide 9: Building Viral Engagement 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) User • Ensure invitation is first/second step of new user flow to maximize viral value of user (Superlatives vs Superlatives) Direct Friends 3. Indirect friends => focus on messaging Indirect Friends • Focus on messaging to invite/notification receivers to drive more friends invites • Deliver increasing AND simply understood value to app w/ every friend invited (Zombies) Interested Parties 4. Interested parties => allow universal use • Enable simple tools (comments, ratings, answers) that allow interaction w/o requiring full engagement w/ application (My Questions) 9

Slide 10: Marketing Opportunities with Social Applications Successful marketing for social media should focus on social applications: 2. Application content integration – Integrating brand or product as part of user experience – Example: Likeness quiz, virtual gifts, greeting cards, virtual actions, etc 3. Sponsorships or branding of applications – App takeover or skinning w/ possible promotion – Example: Skin application w/ sweepstakes or contest 4. 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 5. Rich Media 10

Slide 11: Application Integration: Custom Advertiser Quiz 646x90 banner clicks through to advertiser’s website Text link clicks through to advertiser’s website Custom size pop-up w/ additional info appears upon mouse rollover on relevant quiz choice 11

Slide 12: Application Integration: Custom Advertiser Quiz Advertiser’s quiz featured and cycled through Brand New Quiz placement throughout duration of campaign Advertiser’s quiz promoted on Available Quizzes section throughout duration of campaign (100% SOV) 12

Slide 13: Application Integration: Viral Impact & Spread Profile box An advertiser’s custom Likeness quiz virally spreads through the a social network platform’s communication channels. News Feed Mini-News Feed on Profile pages Email Message Notifications 13

Slide 14: Application Integration: Sweeney Todd 65x better 0.01% CTR for banner alone 0.65% CTR with integration 14

Slide 15: 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. 15

Slide 16: Application Sponsorship 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. 100x goal 1M achieved 10K expected Contest Registrations 16

Slide 17: Application Integration & Application Takeovers Click-Through Rate 30% 0.28% 0.20% 0.13% 0.004% Social Networks (1) Web (1) Average Best RockYou RockYou Ads Ad Campaigns (1) Business Week (2/7/2008) 17

Slide 18: Application Development and Promotion Some rules of thumb from Context Optional.  Frictionless: simple, less is more  Audience: on Facebook for their friends  Communication: integrate into the viral channels  Engagement: hook users to return regularly  Business model: design with monetization in mind  Objective: establish goals and success metrics  Obvious: make each page’s purpose clear  Keep working: develop, test, repeat 18

Slide 19: Application Development and Promotion Over two months since launch, over 250K users have sent over 2M branded pokes generating tens of millions of branded impressions. 19

Slide 20: Application Development and Promotion  3rd 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 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 20

Slide 21: 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 21

Slide 22: Application Development and Promotion Stylefeeder.com is successfully driving website traffic through marketing of a social application mirroring site functionality  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 22

Slide 23: Application Development and Promotion  Consider potential throughput of the ad network  Quality of ads => Requires constant tuning to maintain high CTR  Ad copy => Make it actionable and personally identifiable  Viral tuning => Work with a team that knows viral engagement/growth  Successful applications require ongoing investment 23

Slide 24: Rich Media on Social Applications 2x interaction rate, 2x activity rate 24

Slide 25: Monetization Opportunity

Slide 26: Online Advertising Growing Social Advertising Growing 3x Faster Global Online Media Advertising Global Social Networking Advertising ($Bn) ($MM) $3,559 $61 $52 $2,883 % 22 GR: % CA $45 65 R: G $2,145 $36 CA $27 $1,225 $480 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Source: eMarketer 26

Slide 27: Context is the key to social application monetization High context High virality Apps add context to social networks. Social apps are viral Social Applications Low context High virality Low context from High context photo browsing Low virality Search is not viral Contextual Virality / targeting Hyper-targeting 27

Slide 28: Monetizing Social Media  Application Cross-promotion – CPI (Cost per Installation) = $0.30-$0.50 – Selected Customers:  Agency-sourced Branded Advertising – CPM (Cost per Impression) = $2.00 - $10.00 – Type of Ads Using CPM: Branded Ads, Takeovers, App Integration – Selected Customers:  Direct Response and Lead Generation – CPA (Cost per Action) – Type of Ads Using CPA: Mobile Offering, Education, Finance – Selected Customers:  Virtual Goods, Micro-transactions & Subscription 28

Slide 29: Application Cross-Promotion Publishers place ad units to standard formats. Advertisers pay on a CPI, CPC or CPM (cost per install) basis. 646x60 300x250 29

Slide 30: Application Cross-Promotion  3rd party ad networks on Facebook serve as the foundation of 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 $60K 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 30

Slide 31: Agency-Sourced Branded Advertising 31

Slide 32: Agency-Sourced Branded Advertising  Direct selling is required - 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 – UK/Europe – Canada – South America  Internal resources are needed to support agency work – Ad operations – Reporting 32

Slide 33: Lead Generation and Direct Response  Leverage affiliate network providers at first (best offers w/ best payouts) – Affinity Labs – MyOfferPal – Neverblue Ads – Commission Junction  Vet opportunities based on demographic mix of the application/site  Successful lead gen/direct response campaigns on social media include: – Mobile offers (SendMe) – Dating (True, Match, SinglesNet) – Education (UPheonix)  Given unlimited funding for lead gen, effective way to fill remnant inventory at higher CPMs  Actively research performance via discussion boards and directories  Be prepared to process multiple lead gen offers to maximize performance  Lead generation campaigns may burn through quickly; active management and tracking is required 33

Slide 34: Questions Questions? 34

Slide 35: You rock! Engage the world.