chuck levine's mobile presentation

MOBILEThe Dawning of

DEEPSPACEmobile

ADVERTISING

Mobile ads will become a big business.

DEEPSPACEmobile

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

DEEPSPACEmobile

JupiterResearch, 2008

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

DEEPSPACEmobile

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


DEEPSPACEmobile

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


DEEPSPACEmobile

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

And everyone knows how accurate experts can be…

DEEPSPACEmobile

DEEPSPACEmobile


“There is a world market for maybefive computers.”

DEEPSPACEmobile


“There is a world market for maybefive computers.” Thomas Watson, chairman of IBM, 1943

DEEPSPACEmobile


“There is no reason anyone wouldwant a computer in their home.”

DEEPSPACEmobile


“There is no reason anyone wouldwant a computer in their home.”Ken Olson, president, chairman, and founder of Digital Equipment Corp., 1977

DEEPSPACEmobile


“No one,” he declared, “will everneed more than 640K of RAM.”

DEEPSPACEmobile


“No one,” he declared, “will everneed more than 640K of RAM.”Bill Gates, ~1982

DEEPSPACEmobile


“I predict the Internet will soon gospectacularly supernova, and in1996 catastrophically collapse.”

DEEPSPACEmobile


“I predict the Internet will soon gospectacularly supernova, and in1996 catastrophically collapse.”Ethernet inventor and 3Com founder Bob Metcalfe, 1995

DEEPSPACEmobile


“Everything that can be inventedhas been invented.”

DEEPSPACEmobile


“Everything that can be inventedhas been invented.”Charles H. Duell, Commissioner, U.S. Office of Patents, 1899

The mobile market is growing rapidly.

DEEPSPACEmobile

Harris Interactive, 2008

40M Americans already browse on their phones. (but that’s less than 20% of users)95M have internet access.

But, mobile ad growth has been painfully slow.

DEEPSPACEmobile

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

DEEPSPACEmobile


And, users perceive mobile ads to be an intrusion

DEEPSPACEmobile

Little or no perceived value.Perception that the user is paying for the ads.

Few people claim to be interested in mobile ads.

DEEPSPACEmobile

On the other hand…

DEEPSPACEmobile

And, other studies show users are interested in mobile ads.56% of teens.37% of adults.

DEEPSPACEmobile


But… they want to be compensated for viewing ads.

DEEPSPACEmobile

But they want to be compensated for viewing ads.Teens want cash and freebies:Cash (80%)Downloads (61%)Music (57% )Minutes (53%)

DEEPSPACEmobile


But they want to be compensated for viewing ads.Adults want freebies and coupons:Free minutes (49%)Coupons (37%)Free entertainment (37%)

DEEPSPACEmobile


The question foryou is when to enterthe fray, and how

DEEPSPACEmobile

What will determine winners and losers?What role will the carriers play?Will the political environment play a role?

DEEPSPACEmobile

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.

DEEPSPACEmobile

JupiterResearch, 2008

What are the keys to success in mobile advertising?

DEEPSPACEmobile

Mobile ad growth has been painfully slow.. But why?

DEEPSPACEmobile

Carriers are not risk-takers.Dependent upon recurring revenue

Few are willing to risk being first

DEEPSPACEmobile

• Churn is their biggest enemy

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

DEEPSPACEmobile

• 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


Still, growth in thepast 12 months hasbeen 104%.From a small base, too.

DEEPSPACEmobile

AdMob

But, most users stilldo not have theright equipment.

DEEPSPACEmobile

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

DEEPSPACEmobile

Mobile phones are improving.

DEEPSPACEmobile

Screen quality

Video capability

Location capability• Matching people & places

It began with the iPhone, but is rapidly expanding.

DEEPSPACEmobile

The iPhone serves as a good case study.

DEEPSPACEmobile

>30%of iPhone users

compared to 4.6% of all users

DEEPSPACEmobile

watched TV or videos –

50%visited social networking sites compared to approx. 4% of all users

DEEPSPACEmobile

Almost

30%visited YouTube vs. 1% of all users

DEEPSPACEmobile

Of those…

59-85%of iPhone userssearch the web vs. 6.1% of all users

DEEPSPACEmobile

74%listened to music vs. 6.7% of all users

DEEPSPACEmobile

All of this was on a slow cellular network.

DEEPSPACEmobile

That is shifting.

DEEPSPACEmobile

Networks are improving.

DEEPSPACEmobile

HSDPA/ HSUPA

CDMA Rev-A

WiFi

WiMax

LTE

What began with the iPhone, is rapidly expanding.

DEEPSPACEmobile

Samsung InstinctBlackberry 9000Treo 800OpenMoko NeoLG Voyager

Carriers know a lot about their customers’ habits.

DEEPSPACEmobile

New techniques are available.

DEEPSPACEmobile

Interstitial advertising

And there is $$$ to be made.

DEEPSPACEmobile

Social networks/internet sites

Ad agencies

Ad placement companies

Carriers

Advertisers

Carriers must differentiateor die.

DEEPSPACEmobile

Majors are consolidating.

DEEPSPACEmobile

Sprint / Nextel

Verizon / Alltel

AT&T / Cingular

It’s still questionable whether all can survive.

• Sprint & T-Mobile are most vulnerable

MVNOs are consolidatingor disappearing as fastas they appear.

DEEPSPACEmobile

Helio is saved by Virgin Mobile

Amp’d & Movida disappear

Price has always been aprimary differentiator.

DEEPSPACEmobile

Few admit it.Verizon - The network

Sprint - Sprint speed

AT&T - Coverage (more bars in more places)


DEEPSPACEmobile

But everyone subsidizes phones.


DEEPSPACEmobile

A huge part of the spending is price-based ads.


DEEPSPACEmobile

Mobile ads may allow price differentiation.Likely the first reason for carriers to get excited.

It’s happening in Europe.

DEEPSPACEmobile

Blyk targets only the 16 to 24-year-old market. Profiled based on lifestyles and interests.


DEEPSPACEmobile

Free voice and data. 43 voice minutes and 217 texts a month per month.

Provided customers accept ads.


DEEPSPACEmobile

Blyk claims 29% click-through.Down from the 43% they claimed last November.


DEEPSPACEmobile

Over 100,000 customers in the first 7 months.

Blyk claims to be cost-effective.

DEEPSPACEmobile

Are people buying or just clicking?

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

Source: E-consultancy, September 2007, trade estimates , February 2008.

Social trends will also drive mobile advertising.

DEEPSPACEmobile

People want to be connected.

DEEPSPACEmobile

Facebook, MySpace, and about a dozen copycats every month. All are testing mobility.

Social trends will drive devices that are optimizedfor mobile advertisers.

DEEPSPACEmobile

Driving more feature-rich phones

• Picture phones

• Video capability

• Full keyboards and simplified text entry

• Voice input

Likely to drive some location-based service.

DEEPSPACEmobile

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

DEEPSPACEmobile

Why will people want mobile advertising?

DEEPSPACEmobile

May reduce the costof phones / service.

DEEPSPACEmobile

Location-aware

Preference-aware

Real-time comparison capability

Advantage vs. any other media

Or, if they believe it providesreal value… and it can.

DEEPSPACEmobile

• E.g., buying a big-screen TV

How will people want mobile advertising?

DEEPSPACEmobile

SMS/Text

Still Picture

Video

Appearance

DEEPSPACEmobile

Search-driven

Location-based

Method

DEEPSPACEmobile

Interstitial vs. featured

DEEPSPACEmobile

Mobile apps can be mobile advertising.

DEEPSPACEmobile

Free sites may drive brand awareness.

DEEPSPACEmobile

But users need a relevant reason to view the site, and space is at a premium.

• Straight ads are unlikely to be effective

Mobile apps can drive revenue.

DEEPSPACEmobile

Used correctly, they can also drive your brand.

But beware of backlash if the site is not perceived to be worthwhile.

Privacy may be a “black swan.”

DEEPSPACEmobile

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

DEEPSPACEmobile

Is privacy a real consumer issue?

DEEPSPACEmobile


DEEPSPACEmobile

How many passwords do you have?


DEEPSPACEmobile

How many passwords do you have?How many of those sites have written privacy policies?How many of them have you read?

Or a political issue?

DEEPSPACEmobile

The black swan is now surfacing, and willextend the debate into the political arena.

DEEPSPACEmobile

• 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.

DEEPSPACEmobile

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 willextend the debate into the political arena.

Why begin spending today…

DEEPSPACEmobile

…if the market will not really develop for several years?

Why begin spending today?

DEEPSPACEmobile

Define the key success factors beforeyour competitors do

• Make mistakes early

• Radio to TV analogy

Build a case for your ROI

Can you testsuccessfully?

DEEPSPACEmobile

Can you test successfully?

DEEPSPACEmobile

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

Mobile advertising IS likely toallow for testing

DEEPSPACEmobile

Mobile advertising is less likely to move at thespeed of technology

• Social trends are slower than technology trends

• Bad news for mobile ad networks and agencies

• Good news for advertisers who start early

Recommendations

DEEPSPACEmobile

RECOMMENDATIONS

DEEPSPACEmobile

Make mistakes now!

RECOMMENDATIONS

DEEPSPACEmobile

Recognize the risks.

RECOMMENDATIONS

DEEPSPACEmobile

Develop an ROI model.

RECOMMENDATIONS

DEEPSPACEmobile

Understand the keysto success inmobile advertising.

RECOMMENDATIONS

DEEPSPACEmobile

Look for opportunitiesto differentiatewith partners.

?Questions

DEEPSPACEmobile

chuck levine's mobile presentation

Business