F2 Fconcise

Mobile advertising done right!

Scale, interactivity, reach, targeting…all in one solution

Key issues!

Massive inventory generation

Interactivity Model

Advertising sales issues

Operator Business Model

Ease of integration, CRM data, Opt-in

Agenda

Vision of ad supported services

WAP, banners, push

Current Frog2Frog technology platform (intro)

Ad supported services

Interactivity model

Possible Services

Criteria for selection & success

Business Case

Introduction

Mobile Advertising – the Players

End-user wants

To reduce cost of normal services

Youth segments in particular

Minimal intrusion, acceptable use model

Advertisers want

interactive advertising channel with REACH

Real time feedback

Easy demographic targeting

Easy ad creation

Operators want

To increase revenues

To “Rule” mobile advertising

Acquisition of new customers (at least for a while)‏

Reduce churn

Reduce decline in SMS revenues on overall market

End-user Operator Advertiser €€€€€ Ad supported mobile services has to provide value for ALL the relevant players. We build services to do that.

A. Mobile advertising – WAP

Some popular sites include

CBS Sport

Claimed as one of top 10 mobile sites in the USA

~80 million page views in 2008

Various ad partners

Flirtomatic

110 million page views per month in Sept 2007 is one of the most popular in the UK

Ads from Admob

Remember, Yahoo had 144 million page views per day in September 1998

Mobile internet may become big, but operators should expect the same role as fixed telco, i.e. mainly flat-rate paid access providers.

B. Mobile advertising – Push SMS?

Vodafone 2020

Push SMS with ads

“ Free” for the user

Targeted at youth.

Push SMS is being tried in various ways. It is intrusive and will prove ineffective for advertisers in the long term.

Blyk

217 Free SMS per month, 43 mins free call

Receive up to 6 ads per day.

Vodafone CZ has launched ad-supported SMS Launched to the press and public on Sept 18 th , 2007, the Vodafone CZ service uses the Frog2Frog Java handset client and back-end server platform (customized to match VF requirements) to provide the service*. Customers can send up to 300 SMS per day for free. It´s a media property with user-generated-content…it´s mobile Web 2.0… See http://www.milujteje.cz/ * - Many areas of information are client confidential. Sub numbers and usage were published by Vodafone in March 2008. With 60 thousand users by March 08, in a population of only 10 million, it’s proportionally 4-5 times more successful than Blyk!!

Why advertise around SMS and voice? Interactive mobile ads presented while people are already using the services they actually use can create a mobile advertising platform with real scale. Market Growth This is the overall market potential of mobile advertising Frog2Frog’s interactive ads appear while users compose SMS and as they dial for a voice call Most effort is going here..............? Source: Chetansharma.com ( http://www.chetansharma.com/sellphones.htm )

SMS for free (while you see interactive ads – J2ME) ‏ The user sees ads only while sending an SMS, so intrusion is minimal. In-line interactivity is designed for mobile, so no waiting or spinning globes. * - Voice app also available Easy, intuitive process, with T9 spelling, phonebook integration, etc. Main menu – 1 st ad SMS entry. T9 & phonebook all work Ad, including image, text,.. … including in-line interactivity SMS is sent Return to main menu. New ad. BMW – The Driving Machine

SMS for free – USSD Works on 100% of GSM phones SMS to 2222 « Hi Julie, I do not wanna attend tonight, Mike » SEND Please enter the number you wish «Hi Julie, I do not wanna attend .. » should be sent to. Number: 07023_ Send MCDonalds has a fresh MCPeanut waiting for you at Miriams square 200. 1. I want a 50% discount voucher sent by SMS 2. I am not into MCDonalds today 3 SEND «Hi Julie, I do not ..« was sent to 0702349504 22-09-2008 19:33 Received 22-09-2008 19:37 Balance 7SMS The user sends his SMS to a shortcode. Once the SMS is received, server starts a USSD session Ads have the following restrictions: - No pictures, limited to app 160 letters per screen Delivery Reports can be pushed via USSD at any time Maximum reach is possible with USSD, which is available on ALL GSM phones since about 1995. Interactive ads for 100% of the user base!

A Click & Send advertising experience that works on EVERY handset.

Not based on intrusive push SMS/MMS nor slow ad interactivity

* - Voice app also available

Please call me – USSD Works on 100% of GSM phones USSD #123* CALL Please enter the number you wish to call you back. Number: 07023_ Send MCDonalds has a fresh MCPeanut waiting for you at Miriams square 200. 1. I want a 50% discount voucher sent by SMS 2. I am not into MCDonalds today 3 Continue Add up to 20 characters of a personal message. <Hi…I’m stuck in Munich..”> Balance 7SMS The user starts with a standard USSD code. The server starts a USSD session The ad is seen, as before. The user MAY be allowed to add a few characters of his own. A please call me service is also easy. The sender could be allowed to add a few characters to personalise the message. Recipient ALSO gets an ad.

Please call me with interactive advertising!

* - J2ME can also be easily done for “Please call me”

For advertising effectiveness, converting ad to transaction* is vital Frog2Frog interactivity allows advertisers to conduct every kind of ad campaign, from pure branding to transactional campaigns. * - Or information

Advertisers can use options to conduct market surveys, to allow users select which voucher they want, to send vouchers and links, to enter competitions, etc.

The ad replies can be sent to the advertiser on an individual or mass level, e.g. by SMS or by bulk email on whatever interval the advertiser wants.

Gather contact details for leads Have users opt in to receiving more information Allow users select which product they prefer Send vouchers to users only on request

For advertising effectiveness, converting ad to transaction* is vital A key issue is having an interactivity model that is quick, that does NOT force users to look at blank screens or spinning globes. Users want instant response. * - Or information Have users opt in to receiving more information Allow users select which product they prefer Send vouchers to users only on request

For advertising effectiveness, good end-user experience is vital Click-to-hyperlink , in particular, is the wrong model for most in application advertising – especially for common mobile activities like sending an SMS. recommended Supported* * - depending on specification implemented Easiest, most flexible. Callback, SMSback, text input, vouchers, etc.,etc.,etc Transaction on a controlled platform Immediate feedback, no delay. No problems! “ In-line” interactivity Need to have people to answer the phone. Transaction “disappears” Who pays for the call??? Will I end up on hold? Click to call OK Transaction “disappears” Pretty good model. Click to SMS Low CTR, expense of maintaining destination Transaction “disappears” Spinning globe Wait A PITA Click to hyperlink For advertiser For operator For user

For advertising effectiveness Frog2Frog ad creation in 15 mins!

Live demo of back end is available.

The Frog2Frog back end is controlled from an easy to use web-interface.

For advertising effectiveness – Choice Frog2Frog platform – ad types

Benefits for advertisers

Choice

Flexibility

Ease

Speed

An online ad tool lets advertisers design and kick off highly targeted advertising campaigns within about 15 minutes! You can try it. Just email info@frog2frog.com F2F Campaigns can be adapted while the campaign is running – few other advertising channels offer any corrections past the launch date. 3. Discount 4. Entrance Ticket 1. Classic Ad, with Map 2. Mail back 5. Contest 6. Multiple Choice

Our view on mobile advertising

WAP banners will be a minor feature for operators

Push SMS advertising is an annoying, unmeasurable, unscaleable business

Injection SMS in service messages may work ok

Ad supported service is:

Better for operator (SMS, voice, etc)

A better business model, a system the operator can control

Large inventory creation

Better for advertiser – at least with our interactivity model

Interactivity straight away

Better reach

Regular, targeted access to youth users.

Clear value for end-user, opt-in every time…

Less intrusive, provides value

Better interactivity model

Better privacy protection

Ad supported services allow interactivity, reach, and user opt-in is achieved every time they use the service.

Possible operator services

Initial suggestions for possible services

J2ME & USSD “Limited SMS Gratis”

Offer to selected segments

Limited to (for example) 10 free SMS per day…can be marketed as “Up to 300” free SMS per month!

To be discussed how Opt-ins, MVNOs, etc, are handled

“ Please call me”, J2ME & USSD

Offer to everybody

“ Operator zahlt” voice service (inspired by “Peter Zahlt”)

Offer to selected segments

e.g. free calls on evenings, weekends, on-net and fixed only, limited time…

Our technology platform can support varied services. These are a few possibilities. You know what your market needs better than we do.

Aspects of existing and some possible services NP = not published Please Call Me (Vodacom) Blyk Vodafone SMS Gratis Please Call Me SMS Gratis Operator Zahlt Advertising Criteria Reach ✔✔✔ ✔ ✔✔ ✔✔✔ ✔✔ ✔✔ Price per Ad ✔ ✔ ✔ ✔ NP ✔ ✔ ✔✔ ✔ ✔✔ ✔ Interactivity ✔ ✔ ✔ ✔ ✔✔ ✔✔✔ ✔✔✔ ✔✔✔ Targeting ✔ ✔✔✔ ✔✔✔ ✔ ✔ ✔✔✔ ✔✔✔ Operator Criteria Revenue boost per user ✔✔ ✔ NP ✔ ✔✔✔ ✔✔ Acquisition N/A ✔✔✔ NP N/A ✔✔✔ ✔✔ Churn Reduction ✔✔ N/A NP ✔ ✔✔ ✔ Revenue Protection N/A N/A NP ✔ ✔✔ N/A

Channel Ad Capacity (normalized to DE population, Ads/month) Population Reach /%) ‏ Vodafone CZ SMSGratis Blyk UK (April 08) „ XXXZahlt“ XXX Total XXX PleaseCallMe XXX FreeSMS Note, Vodafone CZ is the smallest operator in CZ

Frequency (Ads /day) ‏ Reach Daily limit Sender population Receiver population 10 6 8 2 4 “ Please Call me” has great reach, with many potential receivers. Reach can be increased on “SMS Gratis” by injecting ads into the free space left in the messages, if desirable. Reach – senders and receivers

Business Model (Free SMS service) Main effects - overview

1. Each F2F user is more profitable than they were before

Stimulation effect of free offer >> increased usage

Advertising income (+ discount SMS price) > original income

Reduce churn

2. Acquire additional users through “FREE SMS” or discount offer

An unlimited free offer is far more compelling in the market than the typical conditional free offer made today

Clear offer, unmatchable by competition unless they also do ad-supported offer

Can be optimized for acquisition through choice of offer, distribution

3. Maintain profitability of “normal” (non Frog) users

SMS prices are declining rapidly in many markets. The F2F service slows the revenue decrease in the overall market

Split market into “classic” and “ad-supported”

Total User Base

1 F2F user impact – stimulation (50% discount case) F2F users generate higher revenue AND higher income on ad-supported SMS than on regular offers. 100% free offers are most frequently considered “ Normal” SMS user revenue F2F user revenue 100 SMS x 7c per SMS NET monthly revenue € 7 * - illustrative prices, 7 cents per sms, 3.5c per sms on F2F service, ad price = 20 CPM, 75% booking ratio Outbound SMS plus Ad revenue 3.5c*100+(20CPM*2,3*100*0.75) ‏ Increased SMS Interconnect Net revenue € 10-11 Stimulated Inbound SMS Substitution of Outbound voice Stimulated Inbound voice Stimulation of outbound SMS 3.5c*50 +20CPM*2,3*50*0.75

2 Acquisition Impact - clarity Free service is more compelling than complex offers. From “What?” to “WOW!” PLUS, our ad-supported free SMS generates more revenue!

Product A

x SMS free after 16hrs

y SMS to 3 friends

Product B

z SMS on-net

q SMS after €20 recharge

Product C

All the latest & coolest offers, and free SMS

24 hrs per day

all networks

FREE

Simple, easy, free!

Product C will be more successful in acquisition and retention AND can generate more revenue!!

3 SMS Price decline SMS prices are falling in many markets, with operators throwing revenues away. Why not get paid for Free SMS instead AND slow or stop overall declines? Base in Belgium Base offers unlimited SMS with their new “Mania” pre-paid offer, as long as the user recharges more than €15 per month. This is on-top of voice credit purchased with the €15 payment. Halebopp in Sweden Offers up to 3000 SMS per month for free with their new offer as long as the card is recharged. SMS are ~5cents after the 3000 SMS. Offer comes on top of call credit.

3 SMS Price & Revenue sustained by ad financed SMS 20c 10c Interconnect 2004 2005 2006 2007 2008 2009 2010 2011 Price/SMS The bulk of SMS traffic and revenue continues on the red line, the SMS “Classic” Product. Presence of the green, discounted ad-supported service allows better ability to maintain prices on “Classic” products. By reversing or stopping price decline and introducing a revenue stimulating ad-supported offer, operators can see a double benefit. Ad income can increase over time as LB-ads, local ads, increased targeting, etc., impact impression prices. Most expensive offer Average billed /SMS Cheapest offer Average ad income

3 Advertising financed SMS saves SMS revenues The impact of revenue protection from a dual “ad supported” and “classic” strategy could be €1-€2 per month across the whole relevant base. ~9c Starting SMS Price (2008) ‏ 100% SMS price discount on F2F offer 20 Ad price (CPM) ‏ 200,00% F2F stimulation (traffic increase) ‏ 7,0% SMS price decrease per year in ad-supported/classic scenario 12,0% SMS usage increase /yr, both classic and F2F 13,0% Price decrease SMS /yr, base case Inputs

J2ME Service Implementation Overview SMS Gateway User Database Frog2Frog Servers (internally or externally hosted) ‏ SMS (example service) ‏ F2F J2ME 1.0 and 2.0 SMS client, or SMS by WAP

Operator needs to;-

Provide SMS gateway interface

Whitelist user base

Exclude GPRS traffic from billing

Create billing code

Define Roaming and exceptions

A few weeks operational support

GPRS & WAP gateways VPN VPN IP redirect Integration for the basic J2ME SMS offer is quite simple, using interfaces that are in regular use for other services. Browsing to download. (e.g. Vodafone live PML page) ‏ SMS delivery SMS Sending and ad interface traffic User data interchange Operator network SMSC