Mobile Advertising Mar 10

MOBILE ADVERTISING

STRATEGY CONSULTING AND EXECUTION

FEB 2010

BIG MOVEMENTS OVER THE LAST FEW MONTHS…

• Both Google and Apple showed strong interest in “in-Application” advertising where ads are running within a connected application using the standard MMA size banner format. Google’s Android team needed to find a way to attract developers to their ecosystem and Apple’s iSlate tablet team are rumored to have really pressed for the Quattro acquisition also because of the need to get developers on board

• Other OEMs like Nokia, BlackBerry, Sony Ericsson are contemplating a move in mobile advertising as it has become a recognized and viable business model for distributing content and applications over the mobile medium.

• Some operators jumped into the game early. Vodafone and Telefonica invested in Amobee and are deploying its platform in 38 countries, Orange bought mobile ad-network and agency Unanimis. The GSMA has made mobile advertising one of its key areas for development starting with measurement but moving towards aggregation.

$750 Million – AdMob-AdMob Estimated Revenues in 09 - $70M

$265 Million – Quattro -Quattro Estimated Revenues in 09 - $30M

FROM REACH & FREQUENCY TO MAKING EACH “LOCAL” IMPRESSION COUNT

The advertising ecosystem has been focused on getting big brands with big budgets tospend on expensive media: for instance Television

The focus has been on getting the highest reach and frequency

New Media – Yahoo!, AOL, Google, Facebook and now Mobile is shifting the focus fromcounting the people you can reach to reaching the people that count… These arepeople who can act on an impression. Google has also broken the “time dimension” ofadvertising by placing an ad at the moment in time a user expresses an interest insomething. They have also figured out a way to monetize a users “intention” asopposed to monetize a users “attention”.

It is time that a new player figures out how to monetize and maximize the “space”dimension of advertising

MARKET SIZING – AS MANY FORECASTS AS THERE ARE

METHODS OF MEASURING AND DEFINING MOBILE ADVERTISING

1. Berg Insight estimates that the total value of global mobile advertising market was $1.014 B in 2008.

2. Ovum USA: $1.3bn in 2010 Accounts for text delivery advertising only

3. Yankee Group USA: $2B in 2010 Mobile advertisement only

4. Jupiter Research USA: $2.1bn in 2011

5. eMarketer USA: $4.7bn by 2011 WW: $11.3bn by 2011Mobile advertisement only

6. Shosteck Group WW: grow to $9.6bn by 2010 Mobile advertisement only

7. Informa Telecoms and Media WW: $11.5bn by 2011 Mobile advertisement only

8. Strategy Analytics USA: 17% of total online ad spending by 2010

9. ABI Research WW: $19bn by 2011 Mobile marketing and advertising combined

Mobile Advertising is a very different market to market with countries like Indonesia and South Africa showing strong growth in WAP banners and places like India and Eastern Europe still focused on text messaging. The US and now UK are more and more focused on in-App and rich media advertising due to the exploding Smartphone market.

GLOBAL MOBILE ADVERTISING SPENDING

Source: Chetan Sharma Consulting

The average size of campaigns is rising from $30,000-50,000 two years ago to $100,000-$150,000 in mid-2009 with many exceeding $1 million solely focused on mobile.

BLIND AD NETWORKS

Usually the largest in terms of publishers, advertisers and impressions.

Serve a high volume of advertising to an extensive base of mostly independentmobile publishers (mobile sites and applications)

Usually, advertisers can not choose specific mobile sites

Performance advertising, CPC in particular, is the norm. The CPC varies with supplyand demand, determined through a self-service auction system.

The cheapest option is run of network (RON) adverts (i.e. no targeting), which insome countries may start at US$0.01 CPC.

Some blind networks also offer brand advertising, on the CPM model - for marketersthat want exposure, maybe to create awareness of a new product.

Advertisers should expect a range of self-service tools that help them track andoptimize their campaign in real time.

Publishers receive a revenue share, perhaps 55-65 percent of what the advertiserpays.

Key players in the market: Admoda, AdMob, BuzzCity, InMobi

Source: mobiThinking

PREMIUM BLIND AD NETWORKS

Higher proportion of premium publishers (i.e. mobile sites of well-known brands, likenewspapers, broadcasters or operator portals), than blind networks, some onexclusive relationships.Attract more brand advertising, paid for on CPM modelCosts vary considerably – campaigns targeted at top-tier inventory can be as high asUS$20 CPM.A lot of advertising will still be blind or semi-blind (i.e. targeted at a channel), but fora premium price you may be able to buy a specific spot on a site of your choice.Performance advertising is also available – and sometimes search advertising (basedon key words) – paid for by CPC, for marketers who want an active response to ads.The cheapest option is run of network (RON) adverts (i.e. no targeting), which insome countries may start at US$0.05 - US$0.10 CPC.Advertisers should expect a mix of self-service and direct sales and support and awealth of targeting options.Publishers should expect to receive a majority share of advertising revenue –percentages are often negotiated on a case-by-case basis.Key players: Millennial Media, Jumptap, Madhouse, Quattro Wireless

Source: mobiThinking

PREMIUM AD NETWORKS

Premium networks focus on a limited number of prestige publishers – mobileoperators and big-brand, big-traffic sites, perhaps newspapers or broadcasters.

The vast majority of campaigns are brand advertising, so the predominant (maybeonly) pricing model is CPM model.

Under CPM, costs vary considerably, ranging from US$5-US$75.

Some may also offer performance advertising for marketers who want an activeresponse to their ads paid for by CPC; but expect to pay considerably more than on ablind network as CPC can range from US$0.05-US$0.50.

Premium networks attract big brand advertisers who are prepared to pay premiumprices to secure the prime locations on top-tier mobile destinations

Advertisers should expect more direct sales and support, than self-service and awealth of targeting options.

Publishers should expect to receive a majority share of advertising revenue, perhaps50–70 percent. Deals are usually negotiated on a case-by-case basis.

Key players: Microsoft, YOC, Advertising.com/AOL, Nokia Interactive Advertising,Pudding Media

Source: mobiThinking

MobientoStartechMobileraTechnomartKickmobileOut there mediaMD FactoryMo2oMobext

RingRingAdmodaAdshandyMojivaBuzzcityQuattroMoVoxxAppertaSmaato

AdMobVeltiYOC4th ScreenEnpocket/NokiaMicrosoft/ScreentonicDadaMADSAdlink Media

MOBILE AD-NETWORKS (ACTIVE IN THE UK)

10

BangoNew York and Cambridge, UK

ProductsSite analysis: unique visitors, visits, page views, avg time on site etc. Filter by page, operator, country, device Campaign analysis: Goal comparison Works with Google, Yahoo, Microsoft, AdMob, Decktrade APIs for data integration

MobilyticsPart of Mobile Visions, Inc., Princeton, NJ

ProductsSite analysis: unique visitors, visits, page views, avg time on site etc. Filter by page, operator, country, device Campaign analysis: Goal comparison, revenue tracking APIs for data integration

AmethonSydney, Melbourne and New York

Products:Site analysis: unique visitors, visits, page views, avg time on site etc. Filter by page, operator, country, device

Customers:Go2Media, BlueCentral Hosting Solutions, Gambit Group, News Digital Media, Mobango

FlurrySan Francisco

• Cutting edge analytics, deployment and monetisation tools• Real-time usage data• Across all handset types• Free service to developers with VAS• Seed round from DFJ, Borealis Ventures, Draper Richards

Pinch MediaNY

• Seed round from Union Square and First Round Capital• iPhone focused• Analytics and development tools focused on developers and publishers• Advertising solutions• Advertising effectiveness

MediaLetsNY and SFO

• Raised $4m Series A in May ’09 (Foundry, DFJ Gotham)• iPhone focused• Analytics platforms focused on apps developers, ad agencies• Work to cleverly integrate advertising into apps

MobclixSan Francisco, CA

• iPhone applications and services to iPhone developers• Operates a real-time analytics and media advertising platform. Provides mobile based advertising campaigns creation, management, and deployment services. • Offers application sentiment and trends information

SPECIALIST MOBILE ANALYTICS COMPANIES

Mobile Banner Ads instances by Sector (Jan 08 UK)

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Internet Retail (Mobile Content)

Broadcasting & Cable TV

Publishing

Automobile Manufacturers

Internet Software & Services

Movies & Entertainment

Specialized Consumer Services

Computer Hardware

Food Retail

Home Furnishings

Percentage of ads served

MOBILE BANNER ADS INSTANCES BY SECTOR

Source: TGI M:Metrics 2008 – Base: All GB adults (aged 15+)

167

152

137

137

136

126

119

110

107

105

98

94

93

91

89

88

87

77

72

56

0 20 40 60 80 100 120 140 160 180

Jaguar/Daimler

Audi

Land Rover/Range Rover

Fiat

Mitsubishi

Mercedes Benz

Citroen

BMW

Vauxhall

Peugeot

Ford

Hyundai

Renault

Honda

Toyota

Volkswagen

Volvo

Nissan

Suzuki

Skoda

UK: MOBILE MEDIA INDEX FOR CAR BRANDS

- MOBILE MEDIA SUITS THE HIGH END

MOBILE MEDIA AUDIENCE RECEPTIVE TO ADVERTISING

“I’m tempted to buy products I’ve seen advertised”

25

30

35

Mob

ile m

edia

Mag

azin

es

Cin

ema

Inte

rnet

New

spap

ers

Rad

io TV

Out

door

% o

f m

ed

ia c

on

su

me

rs w

ho

ag

ree

Source: TGI M:Metrics 2008 – Base: All GB adults (aged 15+)

WHY ARE OPERATORS GETTING IN THE ADVERTISING GAME

• Some have very large “media” audiences in their own right. Many of the largest operators in Europe and in the UK are also media companies or are tightly coupled to media companies.

• Several have already been generating advertising revenues from their on-line ISP, portal and IPTV businesses: Orange (Wanadoo), Vodafone Germany (ARCOR), Telefonica (Terra and Imagenio)

• Since they own the customer they are the only ones who can provide truly “ad-funded” business models. They can zero rate traffic associated to an ad being delivered on a phone.

• Operators have visibility across all mobile media consumption: video, games, music, messaging, browsing, searching, etc. Ultimately, advertisers will be able to build a relationship with mobile consumers and take them on “customer journeys”.

• Operators are the only ones who can “frequency cap” across multiple inventory types which is of importance to brands and advertisers.

• Operators have more information about their subscribers (age, gender, location, type of billing plan, etc), and can also use this to create relevancy.

• Operators (in the short term) have access to new inventory formats that Google, Microsoft and Yahoo! won't. One example of this is peer to peer SMS ad insertion.

Here are some exampled of operator driven mobile advertising initiatives:

€ 20

€ 10

€ 1

€50

Premium

Medium

Remnant

CURRENT OPERATOR CENTRIC APPROACH - A HOLISTIC

APPROACH TO MEDIA SALES

Over 25 mobile ad-networks

IN-GAME ADVERTISING (CASHED)

BANNERS IN VIDEO PORTAL

IN SMS CLIENTApplication main menu Message

composition

Message

sending

Interstitial ad

Options on the

ad

More Info on the adInterstitial adBack to inbox

MOBILE VIDEO AD FORMATS

Buffering… …10 – 30 secs video

ad…

…40 – 90 secs video… …10 – 30 secs video ad

10 to 30 second Ad (Video or animated GIF)

during buffering…

Video Content Requested 10 to 30 second Ad

(Video or animated GIF)

at the end…

ON DEVICE PORTAL

TRADITIONAL HYPER-LOCAL/LOCAL ADVERTISING MEDIA SEGMENTS

More than 60 percent of small and medium businesses advertise locally in the Yellow Pages and

on their company websites, while 40 percent use direct mail. 1/4 of local ad spend is on

Yellow Pages or Local Listings:

• Yellowpages / local business directories

• Newspaper classified

• Magazine advertising

• Outdoor advertising

Name Location Description $ Revenue Q3'08 $ Revenue Q3'09

R. H. Donnelley US yellow pages 648 million 534 million

Marchex US local search advertising

company

37,152 22,172

Yell Group Plc UK Operates directory

businesses in UK, Spain, US

and LATAM

1,023 million 982 million

Idearc Inc. US 735 million 611 million

Seat Pagine Gialle Italy largest in Italy and second

larget directory publisher

in UK

397 million 345 million

Local Insight Regatta

Holdings

US Yellow pages and online

search

135 million 144 million

Mobile advertising strategic evaluation

Value chain analysis

Market sizing, trends and new areas of focus

• Behavioral and contextual targeting

• New ad formats: Apps (connected vs. cashed)

• Post click analysis and ad effectiveness

• Proximity and hyper local advertising

Project management:

• Inventory management

• Ad sales channel management

• Sales forecasting, trafficking and reporting

Ad-Network selection and inventory yield optimization

Mobile advertising technology vendor selection / audit

Media sales partner selection

EXICON – MOBILE ADVERTISING STRATEGY & EXECUTION

Patrick Parodi

[email protected]

Follow me @paparodi

THANK YOU