This document discusses trends in mobile monetization from 2011. It notes that mobile usage is growing rapidly and will soon surpass web usage. While mobile users are highly engaged, monetization lags behind the web due to limitations of mobile advertising and payment systems. The document outlines strategies that mobile game companies are using successfully, such as in-app purchases and advertising. It predicts that monetization will improve as smartphone adoption increases, payment systems become more seamless, and new ad formats and locations-based capabilities develop. Mobile will become the primary way that users engage with brands and content.

1. Mobile Monetization
October 2011
Confidential –CONFIDENTIAL
© 2011 Not for Distribution 1

2. © 2011 CONFIDENTIAL 2

3. Strong Monetization
© 2011 CONFIDENTIAL 3

4. © 2011 CONFIDENTIAL 4

5. Mobile is 44% of DAU. What Percent of Revenue?
Android has 60% more DAU than iPhone. Signing Up Users 2:1 vs. iPhone
© 2011 CONFIDENTIAL 5

6. The myYearbook User is Addicted to Mobile
© 2011 CONFIDENTIAL 6

7. Majority of Activity Will Soon Be Mobile
• Mobile now accounts for over 47% of all logins, up from virtually 0 in the first
half of 2010. Over 60K installs per day across our network of apps.
© 2011 CONFIDENTIAL 7

8. Mobile Users Are Even More Engaged
• Android and iPhone users visit for shorter periods of time, but much more
often, resulting in more daily time spent per user than on the web – over 20
years’ worth of minutes on Android alone, every day!
© 2011 CONFIDENTIAL 8

9. Why Are They So Engaged?
• Cross-platform games facilitate social discovery anytime, anywhere
• Activity of the always-on mobile user helps drive engagement and
monetization on the web
© 2011 CONFIDENTIAL 9

10. Mobile as a New User Acquisition Stream
• 1 out of every 4 myYearbook registrations comes via mobile apps
– And mobile signups are significantly less likely to churn!
• In the end, about 1 out of every 3 newly engaged myYearbook
users found us via the App Store or Android Market
• We expect this proportion to continue growing as smartphone
and tablet penetration increases in our target demographic
© 2011 CONFIDENTIAL 10

11. The Catch
What’s a mobile user worth?
About 15% of a web user, in terms of monthly ARPU
WHY?
© 2011 CONFIDENTIAL 11

12. Mobile Display Ad Market Isn’t There Yet
Advertisers Are Spending Like It’s 1997
© 2011 CONFIDENTIAL 12

13. Plenty of Smart People Trying to Crack the Nut
© 2011 CONFIDENTIAL 13

14. So How Are Mobile Game Publishers Making Money?
• In-App Purchases, Paid Apps, Advertising
Up to $10.9 million last $9.4 million last quarter
quarter
$57 million last quarter
$5.6 million last quarter $16 million last quarter
Source: http://www.insidemobileapps.com/2011/08/08/quarterly-earnings-2q-1q-mobile-gaming/
© 2011 CONFIDENTIAL 14

15. Source: http://techcrunch.com/2011/10/18/mary-meekers-2011-presentation-on-internet-trends-slides
© 2011 CONFIDENTIAL 15

16. In-App Purchases Increasingly Outperforming Paid Apps
• More than 65% of iOS app revenue attributed to Freemium games
Source: http://blog.flurry.com/bid/65656/Free-to-play-Revenue-Overtakes-Premium-Revenue-in-the-App-Store
© 2011 CONFIDENTIAL 16

17. Over Half of Top Grossing iOS Games Are Freemium
Graphic showing games with in-app purchases
© 2011 CONFIDENTIAL 17

18. Taking Synchronous Multiplayer to Mobile
Synchronous Gaming Engine Acquired Games
3M+ installs
• Acquisition of Flock
Multiplayer Engine paves the
way for suite of synchronous 1.5M+ installs
multiplayer games on mobile
• Meet people in synchronous
games from anywhere! 600K+ installs
• Cross platform
500K+ installs
© 2011 CONFIDENTIAL 18

19. The Formula: One-Tap Purchase
• Virtually every iPhone user has a credit card on file with iTunes, enabling a
frictionless one-tap purchase flow
© 2011 CONFIDENTIAL 19

20. Android Can’t Compete (Yet)
• Comparatively onerous payment process on Android is clearly impacting
monetization rates vs. iPhone apps
© 2011 CONFIDENTIAL 20

21. Both Platforms Must Improve Internationally
• Both iOS and Android are overly reliant on a faulty expectation that everyone
has a credit card – need to support popular local payment methods, especially
in countries with much smaller advertising markets
Konbini
© 2011 CONFIDENTIAL 21

22. Mobile Offer Walls Help Drive Monetization
© 2011 CONFIDENTIAL 22

23. But the Pay-Per-Install Model is Unavailable on iOS
© 2011 CONFIDENTIAL 23

24. Incentivized Mobile Video Ads Poised for Growth
• Premium placements command
premium CPMs
• Avoids screen size constraints
• Guaranteed eyeballs
• Plugs into social app ecosystem:
• Facebook
• Twitter
• SMS
• Available on all platforms
© 2011 CONFIDENTIAL 24

25. myYearbook’s Social Theater Goes Mobile in 2012
© 2011 CONFIDENTIAL 25

26. Source: myYearbook Internal
© 2011 CONFIDENTIAL 26

27. Still a Huge Opportunity for “Traditional” Display Ads
• Only 3% of consumers are spending their money on in-app purchases
• Advertising can monetize the other 97%-- at a lower rate, but one that will
improve with time
© 2011 CONFIDENTIAL 27

28. Mobile Potential
Source: http://techcrunch.com/2011/10/18/mary-meekers-2011-presentation-on-internet-trends-slides
© 2011 CONFIDENTIAL 28

29. Translation: Be Mobile or Be Irrelevant
Source: Survey of 3,000 myYearbook users
© 2011 CONFIDENTIAL 29

30. Passive Watching of Television is Over
© 2011 CONFIDENTIAL 30

31. But Wait – Everyone Knows Mobile Ads Don’t Convert!
What’s the ROI of your mom?
Hard to measure doesn’t mean nonexistent.
Source: Gary Vaynerchuk
© 2011 CONFIDENTIAL 31

32. Advertisers Should Be Excited About Mobile
• More Reach
o Users are always on, always plugged in – now advertisers can reach them
more often than they ever could before
• More Context
o Mobile is a higher-quality touch point
o Target based on interests, social graph, location
o Point-of-sale capabilities developing
• More Expectations
o Increasingly, users expect their web experience to transition seamlessly
onto their mobile phones
o No patience for apps and brands that aren’t available everywhere
© 2011 CONFIDENTIAL 32

33. The Next 12 Months
• Smartphone penetration to increase
• We expect mobile monetization to improve on all fronts
• New platforms will emerge (e.g. Amazon Kindle Fire), forcing
publishers to make tough choices about where to invest
resources.
• New user acquisition? Potential for monetization?
• Apple and Google continue to improve their offerings around
payment, especially internationally
© 2011 CONFIDENTIAL 33

34. Smartphone Penetration to Increase
Source: myYearbook Internal
© 2011 CONFIDENTIAL 34

35. Android In-App Billing Will Get Easier
• Expect Google to encourage users to create a billing profile on activation of a
new phone or download of the first app
© 2011 CONFIDENTIAL 35

36. New Players Will Emerge That Solve Seamless Payments
on Mobile Devices
• Amazon is already working on an In-App billing SDK for mobile
• 1-Click shows they understand frictionless payments
• Ability to strike large deals with handset makers and market their own tablets
© 2011 CONFIDENTIAL 36

37. Handset Makers Will Partner with Billing Providers
• Expect handset makers, carriers, and
billing providers to work together to
improve the payment process
– Reduced friction
– More options for consumers
– Friendlier terms for publishers
© 2011 CONFIDENTIAL 37

38. Further Innovation Around Ad Units
In-Game Branding
Premium Expandable Ad Units
© 2011 CONFIDENTIAL 38

39. It Will All Come Together
• Smart phone proliferation continues
• Mobile advertising growth explodes
• Mobile payments become frictionless on all leading platforms
• Location promise is realized
• Marketers key in on social and location context to drive people to
point of sale
© 2011 CONFIDENTIAL 39

40. Any Questions?
@geoffcook
gcook@myyearbook.com
© 2011 CONFIDENTIAL
Confidential – Not for Distribution 40