The Future Of MobileOctober 27, 2009

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Contents

• Mobile Developments • Past• Present• Future

• Top Mobile Phones

• Mobile Marketing / Advertising

• Implications / Innovations For Advertisers

• Appendix• General Background• Past TMK Work

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The Lead Up To Mobile

Why the oft-predicted mobile boom didn’t happen until now• Brands that focus on branding found the lack of a rich, attractive experience

a negative• Programs were difficult to execute • The experiences that could be generated weren’t user friendly• Gaining access to sizeable opt-in audiences presented challenges

Topline developments that led us to where mobile is today• Smartphones, especially the iPhone, are changing the dynamics of mobile

use and in turn how to use mobile to market and advertise• Brands are seeing the advantage in having unparalleled access to the

consumer throughout the day, including during purchasing decisions, when the mobile web is frequently used to research reviews and prices

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PAST

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Timeline Of Key Events

Source: Wikipedia, AdAge

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0G To 4G In Less Than 50 Years

Source: Compilation of various sources

0G (pre-cellular

technology) 1G 2G 2.5G 3G 4G

Dates early 70s late 70s - 1980s 1990s 2000s estimated 2012-2015

Analog vs. Digital Analog Digital Digital Digital Digital

TechnologyCellular "hand off"

Faster phone to network signals

Greater network capacity Even higher network capacity

Introduced data services Global roaming

Phones Mounted in cars/trucks First cellular phones Small hand held devices Expensive phones

Suitcase models Shoulder phones

Car phones

Services Voice Voice Text Messaging (SMS) E-mail Video Calls Streamed multi-media

Simple web browsing Broadband Internet Video Chat

MMS Mobile TV

HDTV

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PRESENT

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Wireless GrowthIn less than 15 years wireless has exploded. Having a mobile phone is now the rule, no one looks twice at you if you don’t have a landline, and text messaging volume blew past voice minutes years ago

FACT

From 2006 to 2008:• Sales of standard phones are down -10%• Sales of smartphones are up +15%

Source: Mintel/CEA: Mobile Phones-US-September 2008

Source: CTIA, April 2009, eMarketer, May 2009

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Mobile Activities

While texting and picture taking are the most common activities and functions that have existed the longest on mobile phones, e-mail, internet access, and playing music are not uncommon among A18-29 (demo is closest break to W18-34 in the study)

Source: Pew Internet & American Life Project, April 2009

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Mobile Consumers

Source: IDC Press Release, December 2008, Nielsen MarketSight.,Mobile Media Marketplace USA, April 2009.

• Total Wireless subscribers grew +4% from 2008 to 2009, while wireless penetration is up +2%• In the United States 17.5% of all mobile owners are using the Web (up more than +25% in the past year)

• Roughly 48 million people in total

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Accessing The Web Wirelessly

With the mobile evolution’s rapid growth, Pew Internet & American Life Project reports 85% of people with Web enabled mobile phones access the web regularly, surprisingly more than they do on any other vehicle

Source: Pew Internet & American Life Project, April 2009

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Reasons Why Mobile Wireless Helps(Among those with cell phones or wireless-enabled laptops saying"very important")

18-29 30-49 50-64 65+I can stay in touch easily with other people 57% 52% 48% 37%I have easy access to information online 60% 51% 39% 20%I can share or post content online 25% 18% 12% 9%

Why Wireless On Mobile Device Is Important

A18-29 find their wireless devices to be most important for accessing information and

staying in touch with people; however, with social media expanding rapidly, we expect

continued growth in users finding it a need to express themselves by sharing content and

posting online regularly

Source: Pew Internet & American Life Project, April 2009

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Impact Of Mobile Use On Older Technology

They love their cell phone so much they would find it easier to give up television or the internet than their phone

FACTIn a Pew Internet study 77% of experts and 81% of all respondents “mostly agreed” that in the year 2020 “The Mobile phone is the primary connection tool for most people in the world.”

Source: Pew Internet & American Life Project. Future of the Internet III.

Source: Pew Internet & American Life Project, December 2007

18-29 30-49 50-64 65+New Technology: Cell phone 62% 52% 43% 37%

Internet 51% 46% 40% 34%Old Technology: Television 33% 40% 48% 58%

Landline telephone 25% 34% 43% 60%Constant: Email 37% 39% 35% 33%

Those who said it would be very hard to give up . . .(among those who use technology)

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FUTURE

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Source: CTIA, eMarketer, May 2009

With mobile usage now pervasive, eMarketer forecasts that the subscriber population is approaching its saturation point. They forecast penetration will near 100% by 2013, reflected in a modest 2.7% annual growth rate in the number of subscribers between 2008 and 2013.

Mobile Use Will Continue To Grow

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Consumer Experience Is Improving

Consumers are looking for surfing experiences similar to those they’ve come to expect on their desktop and laptop computers

• Devices are increasingly configured to ease the experience• Larger screens, easier methods for choosing & clicking

• Better mobile browsers vs. the on-deck applications (Firefox, Skyfire, etc…)• As traffic grows sites are being optimized for mobile users

• From search sites to apparel stores marketers are launching mobile commerce programs

• Brands are adjusting business models / using mobile as an opportunity to grow

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TOP MOBILE PHONES

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U.S. Mobile MarketApple has quickly reached the top of the marketplace and continues to grow

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iPhone

- 30+ million iPhones and iPod Touch products sold worldwide to-date

- 71,991 iPhone Apps currently available in the App Store

- Number of apps submitted for Apple approval:

8,096 (2009 Monthly average), 156 (Daily average)

- Average App Price: $2.78 - Top App Categories (in order): Games,

Entertainment, Books, Travel, and Education- Top Paid Apps: Tap Tap Revenge 3,

RedLaser, Skee-Baall, Fling!, Police Radio

- Top Free Apps: Photoshop, Kingdoms Live, Fling (free), Hangman, Line Up

Source: 148apps.biz/ September 2009

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BlackBerry

- 50+ million Blackberry and Blackberry products sold worldwide

- Over 21 million blackberry subscribers

worldwide - Number 1 provider for corporations - Top Apps

- Top Paid Apps: BigTinCan, Buzz Me Pro, The Flashlight, Bejeweled, Monopoly

- Top Free Apps: Messenger, App World, Facebook, Dictionary & Thesaurus, Pandora

Source: Blackberry website, www.na.blackberry.com

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Palm

- Top products on the market are Palm Treo, Pre and Centro

- Centro has sold 2+ million units worldwide

- Specialized versions of Facebook & Google Maps with the My Location feature now available

- Top Selling Apps:- Treo Voice Dialing, Bejeweled 2,

Chess Quantum, SPB Mobile Shell (Windows)

Source: palm website, www.palm.com/us/products

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Google Android (Droid)- Google’s unique mobile platform, Android, was

released in November 2007

- Google’s first Android phone launched on G1 (Fall 2008) selling approximately 1.5 million phones in worldwide

- Google made numerous improvement to the

platform and released the Android 1.5 in April 2009

- Verizon’s Droid is being teased now and is expected to hit as early as October 31, 2009

- Top apps (all paid)- Advanced Task Manager, Snap Photo Pro,

MyBackup Pro, Power Manage, Bluex, Open Home

- Top games: Robo Defense, Nesold, Snesold

Source: Androidandme.com, AdMob Mobile Metrics, July, 2009

Touted benefits v. iPhone • Android 2.0 Operating System • QWERTY Keyboard • Multi-tasking • Night shots • Open development • More customizable • Widgets • Interchangeable battery

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MOBILE MARKETING/ADVERTISING

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Ad Formats

Click to Landing Page Click to Call

Click for Video Click to Opt-In

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Ad Formats cont.

Click to Survey Click to Buy

Click to WallpaperiPhone Maps

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IMPLICATIONS FOR ADVERTISERS

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Key Implications

eMarketer forecasts mobile subscriber penetration to reach 97% by 2013

• Consumer experience is on the rise as new innovation drives mobile usage

• As more technologically advanced phones emerge, it’s logical that they will begin to replace more than just standard phones (laptops, TV, etc…)• Easy for young people to consolidate communications into one device

• Mobile isn’t going away so start to embrace it

In light of the above advertisers that haven’t should begin to experiment in the mobile space (while others are) to test and optimize based on learnings – be ready for 2013.

Following are some recent innovations that offer advertisers innovative opportunities…

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FoursquareWhat It Is: •Location service-based social network game where users "check-in” when they are at well known city establishments

• Most common check in locations: bars, restaurants, apparel stores, etc.• Once registered with a specific location, the system tallies each time the user visits that

location

•Facilitates instant meet-ups, where you can friend other users and foursquare will tell you where they are and what they are doing•Businesses are using the “checking-in” process to find their most dedicated consumers (“Mayors” and award them with special offers, free items, etc...

How Advertisers Can Use This To Their Advantage:•Reciprocal partnership with foursquare to encourage users to check into participating stores / consumers to use foursquare•Award the consumer who has checked-in most for a given time period (called a “Mayor” by the service), with free product

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Mobile Gift Card Idea

How Advertisers Can Use This To Their Advantage:•Users can send gift cards from phone (requires separate area of advertiser’s gift card section of website)•Advertiser will know who received mobile gift cards and can send them offers / reminders•Can be the preferred brand of the truly last minute shopper

Go to website / mobile site and enter amount, credit card number and

phone number into specified fields

Text is sent to recipient letting them know that they have just received a mobile gift card from person and for

how much

Recipient goes to store, makes purchase and enters the unique code

into the POS system

Printed receipt shows remaining balance

You have received a gift card for $50

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Augmented Reality

What It Is: • New technology which uses the the mobile device’s GPS, camera and digital compass to overlay real-time data onto live video•The feature is compatible with the iPhone 3GS, which contains the necessary digital compass for properly assessing the device's orientation•Yelp, the business / restaurant review site, was the first to utilize AR with an “easter egg” called Monocle that allows users to view business ratings overlaid on a video stream from their iPhone's camera

How Advertisers Can Use This To Their Advantage:•Establish itself with the latest technology to lead to interaction with brand

• Point at any location / street sign and it points to nearest store

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APPENDIX

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GENERAL BACKGROUND

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What Is Mobile Advertising?

Mobile advertising provides the means to reach consumers as they access the Web to read news, check the weather, learn about products, play games, access social networking sites, get directions, listen to music, and watch video. The rapid growth of this activity provides marketers with a valuable new advertising medium.

Mobile Advertising Examples:• SMS/MMS • WAP display banner ad• Mobile search ad• Pre-roll audio and video ads• In-game/In-application ads

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U.S. Mobile Campaign Quick Statistics

• Mobile campaigns are proving to be more and more successful • Impressions are on the rise on user friendly phones• Users prefer image ads which go hand in hand with brand’s identity• Users are exposed to ads 3 times per day, allowing for a clutter free environment

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Market Changing Campaigns/Formats

President Obama notified 2.9 million supporters that he had chosen Joe Biden as his running mate via SMS messaging. Participants were also able to receive campaign updates and advance notice about local Obama events and appearances

“Whack ‘em All”, an iPhone game app, is one example of a Performance advertiser that has leveraged mobile advertising. “Whack ‘em All” placed advertising on the mobile Web and inside other iPhone apps. In this example, consumers were shown “Whack ‘em All” ads while playing the Tap Tap Revenge game app. “Whack ‘em All” ads linked directly to Apple’s App Store, where consumers could download the app.

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iPhone / BlackBerry Commerce AppWhat It Is: •M-commerce allows users to purchase straight from their mobile devices•Downloadable items such as ringtones and games have been sold directly from service providers on M-commerce sites for a long time•More recently, with the growing popularity of smartphones which have rich, detailed Web browsers and easy-to-use keyboards, mobile web customers are using their mobile wireless devices to purchase physical items such as apparel, food, school supplies, etc.

Companies best suited for an e-commerce application: Convenience-based Predictable availability

Do not require lengthy and in-depth decision making (appeal to impulsive buying behavior)