The document discusses several predictions from experts over the past decade about the growth of the mobile advertising market. It notes that while growth has been slow, mobile technology and user behaviors are rapidly changing in ways that could accelerate growth. New techniques like location-based and preference-based advertising may help boost user acceptance and engagement with mobile ads if they provide value. Carriers and advertisers stand to significantly benefit from a successful mobile advertising business.

1. MOBILE The Dawning of ADVERTISING DEEPSPACE mobile

2. Mobile ads will become a big business. DEEPSPACE mobile

3. Experts have predicted that over the next 5 years , mobile advertising will become a $2 billion business . JupiterResearch, 2008 DEEPSPACE mobile

4. Experts have predicted that over the next 5 years, mobile advertising will become a $2 billion business. JupiterResearch, 2008 Experts have predicted that over the next 5 years , mobile advertising will become a $2.3 billion business . LocalMobileSearch, a subsidiary of Opus Research DEEPSPACE mobile

5. Experts have predicted that over the next 5 years, mobile advertising will become a $2 billion business. JupiterResearch, 2008 Experts have predicted that over the next 5 years, mobile advertising will become $2.3 billion business. LocalMobileSearch, a subsidiary of Opus Research Experts have predicted that over the next 4 years , mobile advertising will become a $6 billion business . eMarketer DEEPSPACE mobile

6. Experts have predicted that over the next 5 years, mobile advertising will become a $2 billion business. JupiterResearch, 2008 Experts have predicted that over the next 5 years, mobile advertising will become $2.3 billion business. LocalMobileSearch, a subsidiary of Opus Research Experts have predicted that over the next 4 years, mobile advertising will become a $6 billion business. eMarketer Experts have predicted that over the next 5 years , mobile advertising will become a $6.5 billion business . Mobile Advertising: After the Growing Pains DEEPSPACE mobile

7. And everyone knows how accurate experts can be… DEEPSPACE mobile

8. And everyone knows how accurate experts can be… “ There is a world market for maybe five computers.” DEEPSPACE mobile

9. And everyone knows how accurate experts can be… “ There is a world market for maybe five computers.” Thomas Watson, chairman of IBM, 1943 DEEPSPACE mobile

10. And everyone knows how accurate experts can be… “ There is no reason anyone would want a computer in their home.” DEEPSPACE mobile

11. And everyone knows how accurate experts can be… “ There is no reason anyone would want a computer in their home.” Ken Olson, president, chairman, and founder of Digital Equipment Corp., 1977 DEEPSPACE mobile

12. And everyone knows how accurate experts can be… “ No one,” he declared, “will ever need more than 640K of RAM.” DEEPSPACE mobile

13. And everyone knows how accurate experts can be… “ No one,” he declared, “will ever need more than 640K of RAM.” Bill Gates, ~ 1982 DEEPSPACE mobile

14. And everyone knows how accurate experts can be… “ I predict the Internet will soon go spectacularly supernova, and in 1996 catastrophically collapse.” DEEPSPACE mobile

15. And everyone knows how accurate experts can be… “ I predict the Internet will soon go spectacularly supernova, and in 1996 catastrophically collapse.” Ethernet inventor and 3Com founder Bob Metcalfe, 1995 DEEPSPACE mobile

16. And everyone knows how accurate experts can be… “ Everything that can be invented has been invented.” DEEPSPACE mobile

17. And everyone knows how accurate experts can be… “ Everything that can be invented has been invented.” Charles H. Duell, Commissioner, U.S. Office of Patents, 1899 DEEPSPACE mobile

18. The mobile market is growing rapidly. Harris Interactive, 2008 40M Americans already browse on their phones. (but that’s less than 20% of users) 95M have internet access. DEEPSPACE mobile

19. But, mobile ad growth has been painfully slow. DEEPSPACE mobile

20. While some users have mobile web access, they don’t use it much. 6.4 sites per month vs. 100+ for fixed internet. Harris Interactive, 2008 DEEPSPACE mobile

21. And, users perceive mobile ads to be an intrusion Little or no perceived value. Perception that the user is paying for the ads. DEEPSPACE mobile

22. Few people claim to be interested in mobile ads. DEEPSPACE mobile

23. On the other hand… DEEPSPACE mobile

24. And, other studies show users are interested in mobile ads. 56% of teens. 37% of adults. Harris Interactive, 2008 DEEPSPACE mobile

25. But… they want to be compensated for viewing ads. DEEPSPACE mobile

26. But they want to be compensated for viewing ads. Teens want cash and freebies: Cash (80%) Downloads (61%) Music (57% ) Minutes (53%) Harris Interactive, 2008 DEEPSPACE mobile

27. But they want to be compensated for viewing ads. Adults want freebies and coupons: Free minutes (49%) Coupons (37%) Free entertainment (37%) Harris Interactive, 2008 DEEPSPACE mobile

28. The question for you is when to enter the fray, and how DEEPSPACE mobile

29. What will determine winners and losers? What role will the carriers play? Will the political environment play a role? DEEPSPACE mobile

30. How does our company invest intelligently? Should we lead or fast-follow? How do we offset the death of the mass market? How do we protect our brand? 18% of marketers are already experimenting. JupiterResearch, 2008 DEEPSPACE mobile

31. What are the keys to success in mobile advertising? DEEPSPACE mobile

32. Mobile ad growth has been painfully slow.. But why? DEEPSPACE mobile

33. Carriers are not risk-takers. Dependent upon recurring revenue Few are willing to risk being first • Churn is their biggest enemy DEEPSPACE mobile

34. Advertisers see little value. Most ads today are text/SMS Screens are typically small and resolution is poor Download speeds have been slow Video resolution has been poor • Little impact • But 69% of adults and 64% of teens claim to prefer text ads • Only 47% of teens and 35% of adults want images in ads • Acceptance of video ads dropped 10% this year Harris Interactive, 2008 DEEPSPACE mobile

35. Still, growth in the past 12 months has been 104%. From a small base, too. AdMob DEEPSPACE mobile

36. But, most users still do not have the right equipment. DEEPSPACE mobile

37. The growth is likely to accelerate, and technology is an ally. DEEPSPACE mobile

38. Mobile phones are improving. Screen quality Video capability Location capability • Matching people & places DEEPSPACE mobile

39. It began with the iPhone, but is rapidly expanding. DEEPSPACE mobile

40. The iPhone serves as a good case study. DEEPSPACE mobile

41. >30% of iPhone users compared to 4.6% of all users watched TV or videos – DEEPSPACE mobile

42. 50% visited social networking sites compared to approx. 4% of all users Almost DEEPSPACE mobile

43. 30% visited YouTube vs. 1% of all users Of those… DEEPSPACE mobile

44. 59-85% of iPhone users search the web vs. 6.1% of all users DEEPSPACE mobile

45. 74% listened to music vs. 6.7% of all users DEEPSPACE mobile

46. All of this was on a slow cellular network. DEEPSPACE mobile

47. That is shifting. DEEPSPACE mobile

48. Networks are improving. HSDPA/ HSUPA CDMA Rev-A WiFi WiMax LTE DEEPSPACE mobile

49. What began with the iPhone, is rapidly expanding. Samsung Instinct Blackberry 9000 Treo 800 OpenMoko Neo LG Voyager DEEPSPACE mobile

50. Carriers know a lot about their customers’ habits. DEEPSPACE mobile

51. New techniques are available. Interstitial advertising DEEPSPACE mobile

52. And there is $$$ to be made. Social networks/internet sites Ad agencies Ad placement companies Carriers Advertisers DEEPSPACE mobile

53. Carriers must differentiate or die. DEEPSPACE mobile

54. Majors are consolidating. Sprint / Nextel Verizon / Alltel AT&T / Cingular It’s still questionable whether all can survive. • Sprint & T-Mobile are most vulnerable DEEPSPACE mobile

55. MVNOs are consolidating or disappearing as fast as they appear. Helio is saved by Virgin Mobile Amp’d & Movida disappear DEEPSPACE mobile

56. Price has always been a primary differentiator. Few admit it. Verizon - The network Sprint - Sprint speed AT&T - Coverage (more bars in more places) DEEPSPACE mobile

57. Price has always been a primary differentiator. But everyone subsidizes phones. DEEPSPACE mobile

58. Price has always been a primary differentiator. A huge part of the spending is price-based ads. DEEPSPACE mobile

59. Price has always been a primary differentiator. Mobile ads may allow price differentiation. Likely the first reason for carriers to get excited. DEEPSPACE mobile

60. It’s happening in Europe. Blyk targets only the 16 to 24-year-old market. Profiled based on lifestyles and interests. DEEPSPACE mobile

61. It’s happening in Europe. Free voice and data. 43 voice minutes and 217 texts a month per month. Provided customers accept ads. DEEPSPACE mobile

62. It’s happening in Europe. Blyk claims 29% click-through. Down from the 43% they claimed last November. DEEPSPACE mobile

63. It’s happening in Europe. Over 100,000 customers in the first 7 months. DEEPSPACE mobile

64. Blyk claims to be cost-effective. Are people buying or just clicking? Source: E-consultancy, September 2007, trade estimates , February 2008. DEEPSPACE mobile Medium Avg. Response Rate (%) Cost/Response ($) Online Advertising 0.5 3.00 E-mail 2.5 4.00 Direct Mail 2.0 25.00 SMS Push 4.5 4.45 Blyk 29.0 1.06

65. Social trends will also drive mobile advertising. DEEPSPACE mobile

66. People want to be connected. Facebook, MySpace, and about a dozen copycats every month. All are testing mobility. DEEPSPACE mobile

67. Social trends will drive devices that are optimized for mobile advertisers. Driving more feature-rich phones • Picture phones • Video capability • Full keyboards and simplified text entry • Voice input DEEPSPACE mobile

68. Likely to drive some location-based service. DEEPSPACE mobile

69. All of this is likely to take 2-3 years to mature. DEEPSPACE mobile

70. Why will people want mobile advertising? DEEPSPACE mobile

71. May reduce the cost of phones / service. DEEPSPACE mobile

72. Location-aware Preference-aware Real-time comparison capability Advantage vs. any other media Or, if they believe it provides real value… and it can. • E.g., buying a big-screen TV DEEPSPACE mobile

73. How will people want mobile advertising? DEEPSPACE mobile

74. SMS/Text Still Picture Video Appearance DEEPSPACE mobile

75. Search-driven Location-based Method DEEPSPACE mobile

76. Interstitial vs. featured DEEPSPACE mobile

77. Mobile apps can be mobile advertising. DEEPSPACE mobile

78. Free sites may drive brand awareness. But users need a relevant reason to view the site, and space is at a premium. • Straight ads are unlikely to be effective DEEPSPACE mobile

79. Mobile apps can drive revenue. Used correctly, they can also drive your brand. But beware of backlash if the site is not perceived to be worthwhile. DEEPSPACE mobile

80. Privacy may be a “ black swan.” DEEPSPACE mobile

81. Privacy may be a “ black swan, or the elephant in the room.” DEEPSPACE mobile

82. Is privacy a real consumer issue? DEEPSPACE mobile

83. Is privacy a real consumer issue? How many passwords do you have? DEEPSPACE mobile

84. Is privacy a real consumer issue? How many passwords do you have? How many of those sites have written privacy policies? How many of them have you read? DEEPSPACE mobile

85. Or a political issue? DEEPSPACE mobile

86. The black swan is now surfacing, and will extend the debate into the political arena. • On August 1, 2008, the FCC sent a letter to cable companies. • Demanding information on use of customer profiles to tailor advertising. • Recipients included Comcast, Cox, AOL, AT&T, Yahoo!, Microsoft and 27 others. DEEPSPACE mobile

87. May delay broad adoption, but is unlikely to stop it. • Opt in/opt out But onerous restrictions could be imposed. The black swan is now surfacing, and will extend the debate into the political arena. DEEPSPACE mobile

88. Why begin spending today… … if the market will not really develop for several years? DEEPSPACE mobile

89. Why begin spending today? Define the key success factors before your competitors do • Make mistakes early • Radio to TV analogy Build a case for your ROI DEEPSPACE mobile

90. Can you test successfully? DEEPSPACE mobile

91. Can you test successfully? Testing has been challenging in the mobile market The market has moved quickly, and with seismic force • Bundled pricing • Free handsets • RF technology rollouts – 2G/ 3G Find the right partners to begin testing DEEPSPACE mobile

92. Mobile advertising IS likely to allow for testing Mobile advertising is less likely to move at the speed of technology • Social trends are slower than technology trends • Bad news for mobile ad networks and agencies • Good news for advertisers who start early DEEPSPACE mobile

93. Recommendations DEEPSPACE mobile

94. RECOMMENDATIONS Make mistakes now! DEEPSPACE mobile

95. RECOMMENDATIONS Recognize the risks. DEEPSPACE mobile

96. RECOMMENDATIONS Develop an ROI model. DEEPSPACE mobile

97. RECOMMENDATIONS Understand the keys to success in mobile advertising. DEEPSPACE mobile

98. RECOMMENDATIONS Look for opportunities to differentiate with partners. DEEPSPACE mobile

99. ? Questions DEEPSPACE mobile