1. The
Future
Of
Digital
Henry
Blodget
CEO
&
EIC,
Business
Insider

2. The
medium
is
now
~20
years
old.

3. So,
how
are
we
doing?

4. 2+
billion
people
online
Global)Internet)Popula4on)
2,500"
2,000"
1,500"
(millions))
1,000"
500"
0"
1990" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011"
Source:(Interna-onal(Communica-on(Union,(Google(

5. 2/3
of
the
world
left
to
go
Global&Internet&Popula*on&
7,000"
6,000"
5,000"
4,000"
(millions)&
3,000" Global&Popula*on&
2,000"
1,000"
Internet&Popula*on&
0"
1990" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011"
Source:(Interna-onal(Communica-on(Union,(Google(

6. However…

7. Most
of
the
money
is
already
online
Distribu(on+Of+Global+Income,+2000++
Bo#om%70%
percent%
18%%
Top%30%percent%
82%%
Source:(UN(Human(Development(Report,(Trends(In(Global(Income(Distribu=on(

8. So
the
market’s
more
mature
than
you
think.

9. Meanwhile,
something
profound
happened
last
year…

10. PC
growth
stalled
Global#PC#Shipments#By#Manufacturer#
100,000"
iPad"released"
90,000"
80,000"
70,000"
Other#
60,000"
50,000"
Apple#
40,000" Acer#
30,000" Dell#
20,000" Lenovo#
10,000" HP#
0"
1Q08" 2Q08" 3Q08" 4Q08" 1Q09" 2Q09" 3Q09" 4Q09" 1Q10" 2Q10" 3Q10" 4Q10" 1Q11" 2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12"
Source:(Gartner,(IDC(

11. Smartphone
sales
blew
past
PC
sales
Global)Internet)Device)Sales)
)1,000,000,000))
)900,000,000))
)800,000,000))
Tablets)
)700,000,000))
)600,000,000))
Units) )500,000,000))
Smartphones)
)400,000,000))
)300,000,000))
)200,000,000))
)100,000,000)) Personal)Computers)
)3))))
2000) 2001) 2002) 2003) 2004) 2005) 2006) 2007) 2008) 2009) 2010) 2011)
Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(filings,(BI(Intelligence(es5mates(

12. Tablets
are
now
driving
all
the
growth
in
PC
market
Global$Computer$Shipments$
140,000"
120,000"
100,000" Tablets$
(thousands)$
80,000"
60,000"
40,000" PCs$
20,000"
0"
1Q08"2Q08"3Q08"4Q08"1Q09"2Q09"3Q09"4Q09"1Q10"2Q10"3Q10"4Q10"1Q11"2Q11"3Q11"4Q11"1Q12"2Q12"3Q12"
Source:(Gartner,(IDC,(Strategy(Analy5cs(company(releases(

13. So
the
future
is
mobile
G>20&Internet&Access&
3,000&
2,500&
2,000&
Consumer&
Mobile&
Broadband&
1,500&
Connec:ons&
(milions)&
1,000&
Mobile&
500&
Fixed& Fixed&
Fixed&
0&
2005& 2010& 2015&
Source:(Boston(Consul/ng(Group,(Mary(Meeker,(Kleiner(Perkins,(Morgan(Stanley(Research,(Berg(Insight(

14. Where
are
we
in
the
mobile
revolution?

15. Globally,
we’re
still
early…
Global&Smartphone&vs.&Mobile&Phone&Users,&2012E&
7,000# 6B#
Mobile#
Phone#Users#
6,000#
5,000#
Global&Users&(millions)&
4,000#
3,000#
2,000# 1B#
Smartphone#
Users#
1,000#
0#
Smartphone# Mobile#Phone#
Source:#Strategy#AnalyCcs,#InternaConal#TelecommunicaCons#Union#
Note:#Some#users#own#more#than#one#device#

16. But
growth
slows
after
50%
penetration

17. U.S.
and
other
markets
are
past
halfway
point
U.S.'Smartphone'Penetra6on'
80%#
70%#
Feature'Phones'
60%#
55%'
50%'
50%#
45%'
40%#
Smartphones''
30%#
20%#
10%#
0%#
Oct/10# Nov/10#Dec/10# Jan/11# Feb/11#Mar/11#Apr/11#May/11#Jun/11# Jul/11# Aug/11#Sep/11# Oct/11# Nov/11#Dec/11# Jan/12# Feb/12#Mar/12#Apr/12#May/12#Jun/12#
Source:(Nielsen(

18. US
smartphone
growth
starting
to
slow
U.S.%Smartphone%Market:%Year9Over9Year%Net%Adds%
40"
35"
30"
25"
Users%
Added% 20"
(millions)%
15"
10"
5"
0"
Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3"
2008" 2008" 2008" 2008" 2009" 2009" 2009" 2009" 2010" 2010" 2010" 2010" 2011" 2011" 2011" 2011" 2012" 2012" 2013"
Source:(comScore,(Nielsen(

19. Most
future
US
smartphone
buyers
will
be
older
and
poorer
Smartphone#Penetra=on#By#Age#And#Income#(U.S.)#
90%#
80%$
80%# 77%$
74%$ 75%$
69%$ 70%$
70%#
65%$ 65%$ 65%$
63%$
60%$
60%# 58%$
56%$
53%$ 52%$
50%$ 51%$
50%# 48%$
43%$ 44%$
41%$ 42%$
40%# 38%$
31%$ 32%$
30%$
30%# 27%$
23%$ 24%$
21%$
20%# 18%$
16%$ 17%$ 16%$ 15%$ 16%$
10%#
0%#
Ages#18#1#24# Ages#25#1#34# Ages#35#1#44# Ages#45#1#54# Ages#55#1#64# Ages#65+#
<15k# 15k#1#35k# 35k#1#50k# 50k#1#75k# 75k#1#100k# 100k+#
Source:
Nielsen

20. So
the
focus
is
on
markets
like
China,
which
now
accounts
for
~25%
of
smartphone
sales.
Global%Smartphone%Shipments%
!180,000!!
!160,000!!
!140,000!!
!120,000!!
(thousands)%
!100,000!!
!80,000!!
Rest%Of%The%World%
!60,000!!
!40,000!!
!20,000!! China%
!"!!!!
1Q11! 2Q11! 3Q11! 4Q11! 1Q12! 2Q12!
Source:(Gartner,(IDC,(Strategy(Analy5cs,(Canalys,(BII(es5mates(

21. China
is
already
twice
the
size
of
US
market
Chinese'Internet'Users'
600"
Total'
500"
Mobile'
400"
Broadband'
(millions)'
300"
200"
100"
0"
June"06" Dec"06" June"07" Dec"07" June"08" Dec"08" June"09" Dec"09" June"10" Dec"10" June"11" Dec"11" June"12"
Source:(China(Internet(Network(Informa5on(Center(

22. MEDIA

23. Remember
when
they
said
no
one
would
ever
pay
for
content?

24. Digital
content
revenues
are
exploding
Digital'Content'Revenue,'2005<2011'
$14,000,000#
Glenn'Beck'TV'
$12,000,000#
TheStreet.com'
WSJ'Digital'
NY'Times'Digital'
$10,000,000#
LinkedIn'
Hulu'
SpoDfy'
Dropbox'
$8,000,000#
Total'' Zynga'
Digital'
Content' Kindle
Revenue' $6,000,000#
(thousands)'
Ne)lix'
$4,000,000#
$2,000,000#
iTunes'
$0#
2005# 2006# 2007# 2008# 2009# 2010# 2011#
Source:(BI(Intelligence,(company(filings(

25. Digital
Advertising
still
growing
rapidly
U.S.)Digital)Adver6sing)
$35#
$30#
$25#
(billions))
$20#
$15#
$10#
$5#
$0#
1995# 1996# 1997# 1998# 1999# 2000# 2001# 2002# 2003# 2004# 2005# 2006# 2007# 2008# 2009# 2010# 2011#
Source:(IAB(

26. At
largest
U.S.
tech
and
media
companies,
nearly
40%
of
ad
revenue
is
digital
Online$vs.$Offline$Adver*sing$(U.S.),$2006<2011$
$80,000#
$70,000#
$60,000# 38%#
23%# share#
share#
$50,000# Online
U.S.$
$40,000#
Adver*sing$
Revenue$
(millions)$ $30,000#
62%#
77%#
share#
share#
$20,000# Offline
$10,000#
$0#
2006# 2007# 2008# 2009# 2010# 2011#
Source:#Company#filings#and#BI#Intelligence#esFmates.#Companies#include:#Google,#Yahoo,#AOL,#MicrosoN,#Facebook,#Time#Warner,#Disney,#Viacom,#CBS,#News##
Corp,#New#York#Times,#GanneX,#McClatchy,#Time#Inc,#Entercom,#CBS#Radio,#Clear#Channel,#Citadel,#Cum#

27. TV
still
biggest.
Online
close
behind.
Print
getting
smashed.
U.S.$Adver*sing,$2006:2011$
$80,000$
$70,000$ 4%$
7%$
Outdoor$
6%$
$60,000$ Radio$ 9%$
11%$
$50,000$ Print$ 14%$
20%$
U.S.$
All$Other$Online$
Adver*sing$ $40,000$ 23%$
Revenue$ 13%$
(millions)$ $30,000$
10%$ Google
$20,000$
41%$
Television$ 42%$
$10,000$
$0$
2006$ 2007$ 2008$ 2009$ 2010$ 2011$
Source:$Represents$annual$U.S.$adverAsing$revenue$for$20$large$media$companies$based$on$company$filings$and$our$own$esAmates$

28. Digital
has
already
“disrupted”
one
media
sector…

29. As
news
consumption
moved
online…
News%Media%Audience%and%Revenue%Growth,%201092011%%%
25%$
23%$
20%$
17%$
15%$
10%$ 9%$
5%$
5%$
1%$ 1%$ 1%$ 1%$
0%$
&1%$
&5%$ &4%$ &4%$
&6%$
&7%$
&7%$
&10%$
Online$$ Network$TV$ Local$TV$ Audio$ Cable$TV$ Magazines$ Newspaper$
Audience$Growth$ Revenue$Growth$
Source:(Nielsen(Media(Research,(the(Audit(Bureau(of(Circula9on(and(Arbitron,(SNL(Kagan,(eMarketer,(Veronis(Suhler(Stevenson,(Radio(Adver9sing(Bureau,(Publishers(
Informa9on(Bureau,(Na9onal(News(Associa9on,(BIA/Kelsey(

30. Newspaper
ad
revenue
collapsed

31. Google
now
generates
as
much
U.S.
ad
revenue
as
newspapers
and
magazines
(all
of
them)
Google$Generates$More$U.S.$Ad$Revenue$Than$Newspapers$
$50,000##
$45,000##
$40,000##
$35,000##
$30,000##
U.S.$Ad$
Revenue$ $25,000##
(millions)$
$20,000##
$15,000##
$10,000##
$5,000##
$0##
2004# 2005# 2006# 2007# 2008# 2009# 2010# 2011# 1H2012#
Google#(U.S.)# U.S.#Magazines## U.S.#Newspapers##
Source:(Google,(NAA,(PIB(

32. (Some)
paywall
subscriptions
are
growing,
but…
New+York+Times+Digital+Subscribers+
600"
500"
400"
(thousands)+
300"
200"
100"
0"
2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12"
Source:(company(releases(
Note:(does(not((include(print(subcribers(with(digital(access(

33. “Digital
dimes”
don’t
offset
lost
print
dollars
Newspaper(Ad(Revenue((Print(vs.(Online)(
!$60,000!!
!$50,000!!
!$40,000!!
In!Millions!
!$30,000!!
!$20,000!!
!$10,000!!
!$#!!!!
2003! 2004! 2005! 2006! 2007! 2008! 2009! 2010! 2011!
Source:(Newspaper(Associa0on(Of(America( Print! Online!

34. Of
course,
print
news
is
old
news…

35. Now
the
question
is…

36. Is
TV
next?
Nielsen'Prime+me'Household'Ra+ngs'
6.2$
6.1$
6.0$
5.9$
5.8$
5.7$
5.6$
5.5$
5.4$
5.3$
2007-2008$ 2008-2009$ 2009-2010$ 2010-2011$ 2011-2012$
Big$4$U.S.$TV$Networks$Average$

37. For
now,
TV
ad
spending
still
growing
TV&Ad&Spend,&200772011&
$74$
$72$
$70$
$68$
Total&TV&
Ad&Spend& $66$
(billions)&
$64$
$62$
$60$
$58$
2007$ 2008$ 2009$ 2010$ 2011$
Source:(Nielsen(

38. But
behavior
is
changing
U.S."Prime2me"TV"Viewing"
(%"of"18949"TV"set"users"during"899"PM"hour,"mul2ple"responses"permiBed)"
6%$ 6%$ 7%$
8%$
17%$ 16%$
%"of"TV"set"users"
26%$
82%$ 83%$
64%$
2004$ 2008$ 2012$
Live$TV$ Recorded$TV$ Video$game$ Streaming$video$
Source:(GfK(

39. Pay
TV
subscriptions
are
now
trending
down
Pay&TV&Subscriber&Net&Addi3ons&
1000$
800$
600$
400$
TelCo&
200$
Satellite&
Subscriber&
Net&Addi3ons& 0$
(thousands)& Total&
!200$
!400$
Cable&
!600$
!800$
!1000$
1Q09$ 2Q09$ 3Q09$ 4Q09$ 1Q10$ 2Q10$ 3Q10$ 4Q10$ 1Q11$ 2Q11$ 3Q11$ 4Q11$ 1Q12$ 2Q12$ 3Q12$
Source:
Bernstein
Research

40. ‘Over-­‐the-­‐top’
video
is
real
and
growing
fast.
Digital'Video'Revenue,'2006?2011'
$5,000#
Hulu'
$4,000#
YouTube'
$3,000#
Total'
Digital'
Revenues'
(millions)'
$2,000#
$1,000#
Ne#lix'
$0#
2006# 2007# 2008# 2009# 2010# 2011#
Source:#Company#filings#and#BI#Intelligence#esDmates#

41. Live
events
are
increasingly
being
viewed
over
the
Internet
Growth'Of'Total'Live'Video'Viewing'Time'Via'Connected'TV'
Devices'And'Gaming'Consoles'(Q3'2012)'
300%#
250%#
200%#
150%#
100%#
50%#
0%#
2(Jul# 9(Jul# 16(Jul# 23(Jul# 30(Jul# 6(Aug# 13(Aug# 20(Aug# 27(Aug# 3(Sep# 10(Sep# 17(Sep# 24(Sep#
Source:(Ooyala(

42. Digital
video
advertising
is
on
the
rise
Online)Video)Ad)Revenue)(U.S.))
$2,500#
$2,000#
$1,500#
(millions))
$1,000#
$500#
$0#
2006# 2007# 2008# 2009# 2010# 2011#
Source:(Interac-ve(Adver-sing(Bureau,(eMarketer,(comScore,(BI(Intelligence(es-mates(

43. But
as
with
print,
digital
=
less
money
than
TV
Ad#Loads,#TV#vs.#Digital#
(%#share#of#programming)#
1.5%&
100%&
7.9%&
90%& 24.8%&
80%&
70%&
60%&
50%& 98.5%&
92.1%&
40%& 75.2%&
30%&
20%&
10%&
0%&
TV& Online&video& Streaming&TV&online&
Content& Ads&
Source:(comScore,(June(2012(

44. What
does
history
teach
us?

45. As
habits
change…

46. The
money
follows.

47. By
the
way,
“old
media”
isn’t
the
only
media
being
disrupted...

48. Americans
now
spend
more
time
on
social
networks
than
portals
Average'Time'Spent:'Portals'vs.'Social'Networks'(U.S.)'
30'
Social'Networks'
25'
20'
Portals'
Average'Minutes'
15'
Per'Usage'Day'
10'
5'
0'
Nov62010' Dec62010' Jan62011' Feb62011' Mar62011' Apr62011' May62011' Jun62011' Jul62011' Aug62011' Sep62011' Oct62011' Nov62011' Dec62011'
Source:(comScore(

49. 1/7th
of
the
world’s
population
now
use
Facebook
Facebook(Ac+ve(Users(
1,100(
1,000(
900(
800(
700(
Ac+ve( 600(
Users( Monthly(Ac+ve(Users(
(millions)( 500(
400(
300(
200(
Daily(Ac+ve(Users(
100(
0(
1Q09( 2Q09( 3Q09( 4Q09( 1Q10( 2Q10( 3Q10( 4Q10( 1Q11( 2Q11( 3Q11( 4Q11( 1Q12( 2Q12( 3Q12(

50. Time
spent
on
Yahoo,
et
al,
continues
to
decline
Yahoo%Time%Spent%%%vs.%Total%Internet%(U.S.)%
16%#
14%#
12%#
10%#
8%#
6%#
4%#
2%#
0%#
1Q07#2Q07#3Q07#04Q7#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Source:(comScore,(Ci-(Investment(Research(And(Analysis(

51. Now,
in
online
ads,
it’s
Google,
Facebook,
and
“other”…
Google

52. Facebook
has
blown
past
AOL,
Microsoft,
and
Yahoo
U.S&Digital&Adver:sing&
$9,000#
$8,000# 15%&
$7,000# 4%&
7%&
$6,000# 8%&
Other& 11%&
Digital& $5,000#
Adver:sing& AOL&
Revenue& Facebook&
(millions)& $4,000# Yahoo&
6%&
13%&
$3,000# Microso0&
30%& 55%&
$2,000#
11%&
Google&
$1,000#
40%&
$0#
2Q06#3Q06#4Q06#1Q07#2Q07#3Q07#4Q07# 1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Source:(company(filings(BII(es5mates(

53. YouTube,
Hulu,
Glam,
Twitter,
Demand,
et
al.,
also
taking
portal
share…
US(Digital(Adver=sing:(New(Growth(Companies(
$1,800#
Glam(Media(
$1,600#
Federated(Media(
Twi6er(
$1,400#
$1,200#
Demand(Media(
Digital( $1,000#
Adver=sing(
Hulu(
Revenue(
(millions)( $800#
WebMD(
$600#
$400#
YouTube(
$200# Facebook(
$0#
2Q06#3Q06#4Q06#1Q07#2Q07#3Q07#4Q07#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Source:(company(filings(BII(es5mates(

54. “Display”
ad
growth
is
flattening
U.S.&Display&Adver9sing&
$3,000#
$2,500#
Microso3&
$2,000#
AOL&
Display&
Adver9sing&
$1,500#
Revenue& Yahoo&
(millions)&
$1,000# Other&
$500#
Google&
$0#
2Q06#3Q06#4Q06#1Q07#2Q07#3Q07#4Q07#1Q08#2Q08#3Q08#4Q08#1Q09#2Q09#3Q09#4Q09#1Q10#2Q10#3Q10#4Q10#1Q11#2Q11#3Q11#4Q11#1Q12#
Source:(company(filings,(BII(es6mates(

55. Real-­‐time
bidding
is
automating
what’s
left
RTB$As$%$Of$Digital$Display$Ad$Spending$
30%#
25%#
20%#
15%#
10%#
5%#
0%#
2010# 2011# 2012# 2013# 2014# 2015# 2016#
Source:(eMarketer(

56. So,
will
Facebook
ever
be
bigger
than
Google?

57. Unlikely.

58. Google
is
like
advertising
at
a
store.

59. Facebook
is
like
advertising
at
a
party.

60. Social
referrals
to
commerce
sites
are
tiny
Drivers&of&ELCommerce&Traffic&
90.0%&
80.0%&
70.0%&
60.0%&
Facebook referrals up 92% year-over-
Percentage&
50.0%&
year…
Of&Traffic&&
40.0%& 80.6%&
30.0%&
20.0%&
10.0%&
9.7%& 7.5%& 1.7%& 0.5%& 0.02%&
0.0%&
Google& Yahoo& Bing& AOL& Facebook& TwiBer&
Source:(RIchRelevance(

61. And
speaking
of
advertising
at
stores...

62. E-­‐tailers
are
now
building
ad
businesses
U.S.$Retailers:$Total$Display$Ad$Impressions$$
30,000"
25,000"
20,000"
15,000"
(MM)"
10,000"
5,000"
0"
Q3"2011" Q4"2011" Q1"2012" Q2"2012" Q3"2012"
""""Other" """"Target"Corpora8on" """"Best"Buy"Sites" """"WalBMart" """"Amazon"
Source:(comScore(

63. Amazon
ad
revenue
is
already
$1+
billion
a
year…

64. And
as
eCommerce
continues
to
take
share…
U.S.&Retail&Sales&
$5,000,000#
E.Commerce&
$4,500,000#
$4,000,000#
$3,500,000#
$3,000,000#
(millions)&
$2,500,000#
$2,000,000#
Offline&Retail&Sales&
$1,500,000#
$1,000,000#
$500,000#
$0#
1995# 1996# 1997# 1998# 1999# 2000# 2001# 2002# 2003# 2004# 2005# 2006# 2007# 2008# 2009# 2010# 2011#
Source:(Federal(Reserve(Economic(Data66St.(Louis(Fed,(BI(Intelligence(es=mates(

65. New
brands
are
blending
marketing
and
commerce
Social'Commerce'Revenues'
$3,500'
Fab'
$3,000'
ShoeDazzle'
One'King's'Lane'
$2,500'
Ideeli'
Zulily'
$2,000'
Total'
Beyond'The'Rack'
Revenue'
(millions)' HauteLook'
$1,500'
Rue'La'La'
LivingSocial'
$1,000'
$500'
Gilt'Groupe'
Groupon'
$0'
2008' 2009' 2010' 2011'
Source:(Company(Filings,(BII(Es8mates(

66. MOBILE

67. So,
what
do
people
do
on
mobile?

68. Well,
first,
they
do
pretty
much
everything
they
do
online…

69. They
play
games
and
social-­‐network…
Daily&Smartphone&App&Consump4on,&Minutes&Per&Category&
7#
7# 10#
10# 12#
11#
24#
15#
25# 24#
Q1#2011# Q1#2012#
Games# Social#Networking# News# Entertainment# Other#
Source:(Flurry(Analy/cs(

70. They
listen
to
music...
75%#
70%#
55%#
%#of#Traffic#from#Mobile#
Pandora#
50%#
Twi6er#
33%#
Facebook#
25%#
5%#
1%#
0%#
2008# 2009# 2010# 2011#
Source:#Mary#Meeker,#Kleiner#Perkins,#companies#

71. They
consume
content…
Top&Mobile&Categories&By&Growth&In&Audience,&Dec.&2010&vs.&Dec.&2011&(U.S.)&
35,000%
30,000%
25,000%
Total& 20,000%
74%%
Mobile&
Audience&
(thousands)& 15,000% 72%%
94%%
77%% 70%%
80%%
74%%
10,000%
69%%
134%%
5,000% 82%%
0%
Health% Online%Retail% Men's% Electronic% Gaming% Job%Lis:ngs% General% Classifieds% Auc:on%Sites% Family%
Informa:on% Magazine% Payment% Informa:on% Reference% Entertainment%
Content%
DecS10% DecS11%
Source:(comScore(MobieLens,(3(mon.(avg.(ending(Dec82011(vs.(Dec82010(

72. They
look
at
pictures
and
video.
U.S.$Video$Engagement,$Monthly$Minutes$Per$Ac;ve$User$
472#
425#
378#
324#
276#
231#
152#
110#
93#
63#
Mar#2011# June#2011# Sept#2011# Dec#2011# Mar#2012#
Google#Internet#Sites# iOS#&#Android#Photo#&#Video#Apps#
Source:(Flurry(Analy/cs,(comScore(Video(Matrix(

73. They
use
their
devices
while
they
watch
TV
Percentage)Of)Smartphone)Users)Who)Use)Their)Phones)
While)Watching)TV)
90%#
80%#
70%#
60%#
50%#
40%#
30%#
20%#
10%#
0%#
Monthly# Mul5ple#Times#A#Week# Daily##
Source:(Nielsen(Cross/Pla2orm(Report(Q2,(2012(

74. They
shop…
Ecommerce#Website#Traffic#By#Device#
100%#
Tablet#
90%# Smartphone#
80%#
70%#
60%#
50%# PC#
40%#
30%#
20%#
10%#
0%#
Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Monetate(

75. They
use
smartphones
to
make
buying
decisions
in
stores.
U.S.$Smartphone$Owners$Ac3vity$In$Retail$Stores$
24.0%&
22.3%&
20.4%& 20.2%&
19.7%&
18.8%&
16.2%&
14.6%&
14.1%&
13.1%&
12.3%&
11.1%& 10.9%&
10.0%&
8.3%&
7.2%&
6.3%&
5.2%&
Took&Picture&Of& Texted/Called& Scanned&A& Sent&Picture&Of& Found&Store& Compared& Found&Coupons& Research&Product&Checked&Product&
Product& Friends/Family& Product&Barcode& Products&To& LocaJon& Product&Prices& For&Deals& Features& Availability&
About&Product& Family/Friends&
Males& Females&

76. They
pay
for
stuff
PayPal#Mobile#Payments#Processed#
$5,000#
$4,000#
$3,000#
Total##
Payment#
Volume#
(millions)#
$2,000#
$1,000#
$0#
2008# 2009# 2010# 2011#

77. They
buy
content
Media&Content&Paid&For&On&A&Tablet,&Q4&2011&
70%#
60%#
50%#
40%#
30%#
20%#
10%#
0%#
Downloaded# Books# Movies# Magazines# TV#Shows# Streaming# Sports# News#
Music# Radio#
US# Italy# UK## Germany#
Source:(Nielsen(

78. And
they
do
stuff
they
DON’T
do
online…

79. Play
Angry
Birds,
et
al
Angry&Birds&Downloads&vs.&Nintendo&DS&Sales&
700,000"
600,000"
500,000"
400,000"
Total&
Downloads&
Or&Sales&
(thousands)&
300,000"
200,000"
100,000"
0"
Mar"10" Jun"10" Sept"10" Dec"10" Mar"11" Jun"11" Sept"11" Dec"11"
Note:&Includes&Nintendo&3DS&Sales&
Source:
New
reports,
company
releases,
BI
Intelligence
estimates

80. Take
and
share
pictures
Instagram&Es5mated&Users&
100,000"
90,000"
80,000"
70,000"
Total&&
60,000"
Users& 50,000"
(thousands)&
40,000"
30,000"
20,000"
10,000"
0"
3/2011" 4/2011" 5/2011" 6/2011" 7/2011" 8/2011" 9/2011" 10/2011"11/2011"12/2011" 1/2012" 2/2012" 3/2012" 4/2012" 5/2012" 7/2012" 7/2012" 8/2012" 9/2012"
Source:(news(reports,(company(releases,(BII(Es6mates(

81. BOTTOM
LINE:
Mobile
devices
=
More
Internet
usage
+
New
applications

82. In
fact,
mobile
has
made
digital
24/7
Share
Of
Device
Page
Traffic
Over
A
Day:
Source: comScore, Telefonica, Macquarie Capital (USA), December 2011

83. This
leads
to
another
big
question…

84. Mobile
usage
is
up
across
the
board
U.S.%Mobile%Content%Usage%
80%#
Sent%Text%Message%
70%#
Share%of%mobile%populaCon%that%has...%
60%#
Used%Downloaded%Apps%
50%#
Used%Browser%
Accessed%Social%Network%
40%#
%Or%Blog%
Played%games%
30%#
Listened%to%music%%
20%#
10%#
0%#
Feb# Apr# May# Jun# Jul# Aug# Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug# Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June# July# Aug# Sep#
10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12#
Source:(comScore(

85. People
are
consuming
a
huge
amount
of
content
through
mobile…
Media&Content&Accessed&Through&Mobile&Device&
59%$
57%$
53%$53%$
41%$
29%$ 29%$
27%$ 26%$ 27%$
25%$
23%$ 22%$
20%$
9%$ 10%$ 9%$
5%$
Books$ Movies$ TV$Shows$ Magazines$ News$ Social$ Downloaded$ Sports$ Streaming$
Networking$ Music$ Radio$
Tablet$ Smartphone$
Source:(Nielsen(Q4(2011(Mobile(Connected(Device(Report(

86. As
mobile
increases,
all
other
media
decreases
Share&Of&Consumer&Time&Spent&With&Major&Media&
45%$
44%$
43%$
42%$
26%$ 26%$
26%$
25%$
17%$
16%$
15%$
14%$
12%$
9%$ 9%$
8%$ 8%$
7%$ 7%$ 7%$
6%$ 6%$
5%$
4%$
TV$ Online$ Radio$ Mobile$ Print$ Other$
2009$ 2010$ 2011$ 2012$
Source:(eMarketer,(October(2012(

87. So
mobile
advertising
will
be
huge,
right?

88. Hmmm…

89. The
“bullish”
mobile-­‐ad
story
is
the
huge
gap
between
time-­‐spent
and
ad
spending.
2011$U.S.$Ad$Spending$vs.$Consumer$Time$Spent$By$Media$
42%$ 43%$
25%$ 26%$
22%$
15%$
11%$ 10%$
7%$
1%$
TV$ Print$ Web$ Radio$ Mobile$
Ad$Spend$Per$Media$ Time$Spent$Per$Media$
Source:
Mary
Meeker
(KPCB),
eMarketer,
IAB

90. But
maybe
there’s
a
good
reason
for
that
gap…

91.
The
screen
is
really
small.

92. Mobile
monetization
still
behind
the
desktop
ARPU,&Desktop&vs.&Mobile&&
$58.95&
$25.00&
$17.61&
$6.62& $5.00&
$3.87&
Pandora& Zynga& Tencent&
Mobile& Desktop&
Source:(Pandora,(Zynga,(Tencent(

93. Mobile
CPMs
are
much
lower
Effec%ve'CPM,'Desktop'vs.'Mobile'
$3.50&
$0.75&
Desktop&Internet& Mobile&Internet&
Source:(comScore,(Vivaki,(Mobclix(Exchange(

94. Most
“mobile”
ads
are
mainly
web
search
+
display
ads
viewed
on
mobile
2011$Global$Mobile$Ad$Spend$By$Category$
Messaging'
10%'
Display'
28%'
Search'
62%'
Source:((IAB(

95. Google
completely
owns
mobile
search
Global&Mobile&Search&Market&Share&
100%#
Google&
90%#
80%#
70%#
60%#
50%#
40%#
30%#
20%#
10%# bing&
Yahoo!&
0%#
Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep#
08# 09# 09# 09# 09# 10# 10# 10# 10# 11# 11# 11# 11# 12# 12## 12#
Source:(Global(StatCounter(

96. So
Google
owns
mobile,
too
Mobile&Ad&Market&Share&
100%#
90%#
Other& Microso4&
80%#
Yahoo&
Apple&
70%# Pandora&
60%#
50%# Millennial&Media&
40%#
30%#
Google&
20%#
10%#
0%#
1Q09# 2Q09# 3Q09# 4Q09# 1Q10# 2Q10# 3Q10# 4Q10# 1Q11# 2Q11# 3Q11# 4Q11#
Source:(news(reports,(company(releases,(BII(es5mates(

97. Overall,
mobile
is
still
a
tiny
fraction
of
digital
ad
spending.
U.S.'Digital'Adver7sing'Revenues'
$35#
Mobile'
$30#
$25#
(billions)'
$20#
$15#
$10#
$5#
$0#
2007# 2008# 2009# 2010# 2011#
Source:((IAB,(BIA-Kelsey,(BII(es2mates(

98. And
it’s
growing
much
slower
than
TV
+
Internet
in
the
first
5
years
Compara've*U.S.*Adver'sing*Media*
Annual*$*Revenue*Growth*(First*5*Years)*
$5,000%
$4,621%
$4,500%
$4,000%
$3,698%
$3,500%
$3,000%
$2,500%
$2,162% $2,162%
$1,920%
$2,000%
$1,500%
$1,171%
$1,012%
$907%
$1,000% $806%
$500% $358% $392%
$267%
$80% $55% $160%
$0%
Year%1% Year%2% Year%3% Year%4% Year%5%
Broadcast%TV% Mobile% Internet%
Source:((IAB,(McCann1Erickson,(BIA1Kelsey,(BII(es9mates( Note:(Adjusted(for(infla9on(

99. But!

100. “Native”
mobile
ads
are
finally
beginning
to
appear…
• Ads
in
timelines
(Twitter
/
Facebook)
• Shareable
ads
• Location-­‐based
mobile
ads

101. Location-­‐based
mobile
ads
can
target
users
at
the
mall,
restaurants,
car
dealers
…
Monthly(Ad(Requests(Per(Mobile(User(By(Loca9on(
80"
70"
60"
50"
40"
30"
20"
10"
0"
l"
"
s"
l"
t"
"
"
"
"
"
"
ry
rs
ts
ts
rs
rs
rs
al
te
or
pu
an
an
le
le
le
le
ra
M
Ho
rp
am
ai
ai
ea
ai
Lib
ur
ur
Ai
et
et
et
r"D
ta
ta
"C
"R
"R
"R
es
es
ol
Ca
x
cs
ng
Bo
ho
"R
r"R
ni
hi
ice
g"
Sc
tro
he
ot
Bi
rv
Cl
Ot
ec
"S e
El
ck
i
Qu
Source:(JiWire,(Q3(2012(

102. Targeted
mobile
ads
have
higher
CPMs
CPMs%For%Selected%Mobile%Ad%Pla3orms%
xAd!local! !$3.50!!
LSN!Mobile!local!ads!! !$5.00!!
Adsmobi!video!ads! !$5.00!!
Flurry!video!ads! !$10.00!!
!$(!!!! !$2.00!! !$4.00!! !$6.00!! !$8.00!! !$10.00!! !$12.00!!
Source:(Ad(pla.orms,(BII(Research,(Greg(Sterling,(Opus(Research(

103. So,
yes,
mobile
ads
are
just
getting
started
U.S.&Mobile&Ad&Forecast&
$7,000#
$6,000#
Local&
$5,000#
Mobile&Ad& $4,000#
Revenue&
(millions)&
$3,000#
We
are
here
$2,000#
Media&
$1,000#
$0#
2009A# 2010A# 2011A# 2012E# 2013E# 2014E# 2015E# 2016E# 2017E#

104. APPS

105. App
Store
downloads
on
pace
to
hit
60
billion
by
mid-­‐2013
Apple%App%Store%Downloads%
65,000,000,000"
60,000,000,000"
55,000,000,000"
50,000,000,000"
45,000,000,000"
40,000,000,000"
35,000,000,000"
30,000,000,000"
25,000,000,000"
20,000,000,000"
15,000,000,000"
10,000,000,000"
5,000,000,000"
0"
1/1/11"
2/1/11"
3/1/11"
4/1/11"
5/1/11"
6/1/11"
7/1/11"
8/1/11"
9/1/11"
10/1/11"
11/1/11"
12/1/11"
10/1/12"
11/1/12"
12/1/12"
1/1/12"
2/1/12"
3/1/12"
4/1/12"
5/1/12"
6/1/12"
7/1/12"
8/1/12"
9/1/12"
1/1/13"
2/1/13"
3/1/13"
4/1/13"
5/1/13"
6/1/13"

106. Smartphone
users
spend
more
time
on
apps
than
web
Total'Time'Spent'Using'Mobile'Web'vs.'Apps'
140"
120"
100"
80"
Minutes'Spent'
Per'Month'
(Biillions')'
60" Apps'
40"
20"
Mobile'Web''
0"
Mar+11" Apr+11" May+11" Jun+11" Jul+11" Aug+11" Sep+11" Oct+11" Nov+11" Dec+11" Jan+12" Feb+12" Mar+12"
Source:(Nielsen(Smartphone(Analy5cs(

107. Mobile
app
revenue
is
growing
fast,
but
still
relatively
small.
Mobile)App)Revenue)
$4,000#
$3,500#
$3,000#
$2,500#
(millions))
$2,000#
$1,500#
$1,000#
$500#
$0#
2008# 2009# 2010# 2011#
Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(

108. Because
most
downloads
are
free
Mobile'App'Store'Downloads,'Free'vs.'Paid:'2011'
Total'Downloads'
Free$Downloads$
89%$
Source:(Garner,(September(2012(

109. “Freemium”
is
the
dominant
model

110. Games
are
the
biggest
money
makers

111. Mobile
has
become
a
platform
game.

112. Platform
markets
tend
to
standardize
around
one
or
two
platforms.

113. Right
now,
mobile
is
a
two-­‐horse
race.
Global'Mobile'Pla:orm'Market'Share'
100%#
90%#
80%# Other'
70%#
60%#
50%# Windows'
Blackberry'
40%#
Apple'
30%#
20%# Android'
10%#
0%#
Q1#2009# Q2#2009# Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Gartner,(IDC,(Strategy(Analy5cs,(BI(Intelligence(es5mates,(and(company(filings#

114. Android
has
the
largest
smartphone
platform
globally.
Smartphone'Market'Share'By'OS'(Global)'
100%#
Microso8'
90%# Other'
80%#
70%# Symbian'
60%#
Share'of'
Global'Unit' 50%# Blackberry'
Sales'
40%# Apple'
30%#
20%#
Android'
10%#
0%#
Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Gartner(

115. Partly
because
it
owns
China
Chinese'Smartphone'Market'Share'By'Pla9orm'
100%#
Other'
90%#
80%# Symbian'
Apple'
70%#
60%#
50%#
40%#
Android'
30%#
20%#
10%#
0%#
Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Analysys(Interna1onal(

116. And
it’s
the
same
two-­‐horse
story
in
tablets
Tablet%Market%Share%By%Pla8orm%
100%# Blackberry%
Nook%
90%#
80%# Kindle%
70%#
60%# Android%
50%#
40%#
30%#
iPad%
20%#
10%#
0%#
Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Es+mates(based(on(informa+on(from(IDC,(Strategy(Analy+cs,(and(company(filings#

117. But
a
big
mystery
has
arisen...

118. Where
are
all
these
Android
users?

119. Apple
is
dominating
app
revenue
Mobile%App%Revenue%By%Pla<orm%
$4,000#
$3,500#
Other%
$3,000#
Android%%
$2,500#
(millions)%
$2,000#
$1,500#
$1,000#
Apple%iOS%
$500#
$0#
2008# 2009# 2010# 2011#
Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(

120. And
most
commerce
and
web
traffic
is
from
Apple
Ecommerce%Website%Traffic%By%Mobile%Pla:orm%
100%# Other%
Android%Tablets%
90%#
Android%
80%#
70%#
60%#
iPhone%
50%#
40%#
30%#
iPad%
20%#
10%#
0%#
Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Monetate(

121. Do
Android
folks
actually
use
their
devices?

122. Mobile
profits
are
going
mainly
to
two
players.
Opera?ng%Profit%Share%By%Vendor%
80%%
70%%
Nokia%
Apple%
60%%
50%%
Samsung%
40%%
30%%
20%%
Sony%Ericcson%
10%%
RIM%
HTC%
LG%
0%%
Motorola%
!10%%
!20%%
2007% 2008% 2009% 2010% 2011% Q1%2012% Q2%2012% Q3%2012%
Source:(Company(releases,(Canaccord(Genuity(es6mates(

123. So,
what’s
the
future
of
media?

124. Digital?

125. Yes.

126. Mobile?

127. Yes.

128. Mobile
ONLY?

129. No.

130. Digital
is
now
a
4-­‐screen
world…

131. Maybe
5
screens
soon…

132. But
mobile
FIRST?

133. Only
if
you
have
a
totally
mobile-­‐centric
app...

134. ...Or
you
want
to
annoy
your
users
and
customers.

135. Thank
you
very
much.

136. Henry Blodget
Founder, CEO & Editor-in-Chief, Business
Insider
Marcelo Ballvé, Editorial Director
Alex Cocotas, Analyst
Josh Luger, Director of Subscription Products
Peter Lee, Intern
BI
Intelligence
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