Smaato White Paper Global Choices in Mobile Advertising January 2009

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  • 1.open mobile advertisingGlobal Choices in MobileAdvertisingInternational Monetization: Trends & Findings for International Mobile PublishersWHITE PAPER

2. Many mobile publishers are striving to build audiences with worldwidereach. Faced with several monetization options, many have found that theone-size-fits all approach does not work.Put simply, publishers choose between one of two options: either buildup their own internal full time ad operations team or work with mobileindustry partners who grasp the advertising ecosystem with all of its localnuances and global complexities to maximize advertising dollars.Smaato has been on my radar for the past few years and is a leadingsolution for publishers looking to monetize with mobile advertising.Matthus KrzykowskiMobile Coordinator VentureBeat & Co-Chair MobileBeat SummaryThis whitepaper is presented to show some options that mobilepublishers and developers have to monetize their audience:customers that have chosen to either download the app or browsethrough the content on a mobile website.A quick overview touches upon ad network performancemeasured in fill rate or response time and what that means for thechoices publisher have in order to maximize the Ad ARPU of theirinventory.As successful mobile publishers quickly become attractive to aninternational audience, global considerations as well as learningsfrom the current app store economy are touched upon.Please consider also reading the whitepaper on Mobile AdOptimization that was published in June 2009 and can be obtainedat www.smaato.com/whitepaper as a free download. 2010 Smaato Inc. White Paper on Global Choices in Mobile Advertising 3. Monetization Choices for Publisherswith a Worldwide AudienceThere are two broad categories of mobile publishers: developersof mobile applications and publishers of mobile websites. Mobileapplications can be monetized by charging per download orsubscription, incorporating up sell opportunities (e.g. for new levelsin a game through micropayments), or through mobile advertising.Mobile websites have fewer options than mobile applications sincecharging for content is difficult (e.g. newspapers are finding itdifficult to charge for digital subscriptions). Thus mobilewebsites are more likely to turn to advertising as its core monetizationstrategy (besides truly innovative virtual goods or personal adplacements, introduced by companies like Flirtomatic in the UK).Publishers who chose the mobile advertising route must makedecisions regarding selection of partners, technologies,regional approaches, targeting parameters as well as collectingdemographic data about individual users. This demographic datacan be used anonymously to improve targeting and ultimately theROI of the mobile inventory.The following are different types of mobile advertising partnerswith whom publishers can work with - they can choose one ormultiple partners in the list below. However managing relationshipswith these entities require varying degrees of internal staffing soin choosing partners, one of the fundamental questions publishersface is deciding where their core competencies lie do they focuson creating innovative mobile applications and/or mobile content,or do they want to dedicate a considerable amount of manpowergetting into the advertising and media space: 1. Brands / Marketers (Direct Sales Accounts) requires own direct ad sales team, acquiring ad server and ad operation staffing to run direct advertising. 2. Mobile Advertising Agencies - requires own direct ad sales team, technical integrations with agency ad servers, and ad operations staffing to run direct advertising. 3. Mobile Ad Networks (Marketplaces) requires technical team to integrate into different Mobile Ad Networks, as well as internal ad operation staff to approve campaigns and ensure optimization of traffic. 4. Mobile Advertising Optimizers/Aggregators least amount of effort since these entities provide access to multiple Mobile Ad Networks and in some cases Mobile Advertising Agencies and often provide ad servers or access to an ad ops team to serve for Directdirect ad campaigns should the Publisher publisher or Mobile Advertising Optimizer have direct relationships with Brands/Marketers/Mobile Advertising Agencies.The broader the global reach of the Publisherpublisher, the morechallenging the task of procuring and managing advertising fortheir audience in multiple countries. 2010 Smaato Inc. White Paper on Global Choices in Mobile Advertising 4. Ad Network Fill RatesMobile publishers invest time and effort in building cool appsand/or mobile websites with the goal of monetizing theiruser base. Should they choose mobile advertising, theiraudience reach is measured by the number of pageimpressions generated.In choosing mobile ad networks to fill this potential mobileinventory there are some considerations to be made. Fill rateis usually No. 1 after the overall pricing considerations: howhigh is the average eCPM in the USA? Are there options to Smaato Index Fill Rate of Mobile Ad Networks, December 2009the CPC model in Asia-Pacific? Should I employ my own salesstaff? Etc.Average fill rates provided by ad networks vary by country,time, publisher category, etc. Recent Smaato metrics data reveal that theaverage fill rate of ad networks worldwide vary between 26% to 77% as shownin the graph to the right.The fill rates provided by ad networks also vary by the category of thepublishers content (e.g. sports, entertainment, or mobile socialcommunities). Increasingly, performance based mobile ad campaigns are thedominant currency based on CPC (cost per click) models. As might be expected,the average click-through-rates (CTR) in mobile social communities are verylow compared to news sites. That being said, ad networks calculate with anexpected CTR of each category and request publisher inventory often based onthe requested category site or app.As a publisher, choosing an ad network partner purely on fill rate ismisleading.Looking at the expected effective Price (eCPM cost per mille/thousand page impressions) together with the fill rate is crucial. MobileAdvertising Optimizers provide a value added service of automatinganalytics and business rules to maximize both eCPM and fill rates by managingand optimizing ad inventory from multiple ad networks and some on a globalscale.Ad Network Response TimeAd network response time is another important factor formsec.maximizing real time ad optimization.Publishers obviously want to ensure that the userexperience of their mobile app or mobile website is notinterrupted or hampered by slow banner display loading timefrom ads being routed via ad networks, ad optimizers or inhouse ad servers for that matter.In an effort to maximize the average advertising revenue peruser, the likely scenario is that multiple sources of mobileadvertisements (ad networks, ad optimizers or in house ad)%are sequenced in a chain to maximize fill rates. If the chainincludes several ad networks that are sorted only by expected 2010 Source: Smaato Network Data Analysisprice, but the performance of the first ad source is impairedby slow response time, then the publisher risks an empty ad impressionaltogether.The graph on the right shows that the network with the highest fill rate (thirdfrom the right) also has the second longest response time. This introduces therisk of no ads being delivered because if the response time for the first in thechain is too long, there may not be enough time left for a second request to fulfillthe ad request. 2010 Smaato Inc. White Paper on Global Choices in Mobile Advertising 5. Mobile is Global Advertising is LocalMany successful mobile publishers or app developers quicklyfind that they are building an audience that spans the globe.For example, successful mobile social communities haveseen that in addition to a dominant position in their homemarket, that suddenly, they are receiving traffic from allacross the world.A significant amount of users will be grouped into three largeregional pockets: USA, Asia-Pacific and EMEA. Within EMEA,the UK and South Africa have the highest concentrations ofmobile users.Challenges for a global presence: 1. Publishers with a global audience face the challenge of providing technical support questions in various languages and thus face the following question: can additional global traffic add to the bottom line for its mobile advertising efforts, or can global audiences only be monetized through costly efforts or through third party mobile expertise? When calculating the ROI to extend mobile advertising efforts globally, Publishers must take into consideration that there are countries and regions with very low CPC campaigns (often the case in emerging markets) which require the same and possibly more attention to detail than monetizing in developed markets where there are higher CPM based ad revenue streams. 2. The ability to combine global reach along with an understanding of local markets is important for successful mobile advertising on a global scale. Identifying ad networks in each region and developing partnerships on an individual basis is a time consuming and costly task for publishers to take on themselves. Mobile Ad Optimizers who operate on a global scale can provide this value added service to mobile publishers who are looking for access to leading local ad networks in each region to maximize coverage.The mobile advertising ecosystem as a whole can only benefit fromservices that span the globe, but advertising budgets still remainentrenched deep in local markets.The Mobile App PhenomenonEveryday an increasing number of applications are flowing in to marketplaces run by handset providers. Apple has been the market leaderwith the launch of their app store which now boasts over 100,000 apps.The rise of mobile app marketplaces with an easy to accessecosystem and cohesive developer program has created newmonetization opportunities for mobile developers. Not so long ago,there were only a few sites such as Handango or Motricity who werethe primary players in the Smartphone market providing a marketplacefrom which apps could be downloaded from their online portals. 2010 Smaato Inc. White Paper on Global Choices in Mobile Advertising 6. Now, the primary market places of choice are those provided byhandset manufacturers such as the Android Market or Nokias OviStore, followed by newer players like GetJar and Mobango as theleading alternative sites for downloading apps.With the advent of the mobile app stores, discoverability hasbecome a big issue for developers: an app is a song as VodafonesDaniel Applequist pointed out. That being said, mobile developers arechallenged to develop either a one-hit wonder with a superperforming app; or better yet to build an audience for their brand witha loyal following for their entire catalogue of apps.In-application mobile advertising requires the flexibility to change and/or add new ad networks on the fly without resubmitting their apps, forexample to Apples approval process for their app store.Thus it is an advantage for mobile app developers to integrate an in-appad solution (mostly via a SDK) that provides the maximum number of adnetworks and ad revenue sources for any given region covered by theapp store selected.SOMA The Mobile Advertising CloudGiven all the choices facing a mobile publisher with a worldwideaudience, adding a Mobile Ad Optimizer to the mix makes a lot ofsense.Everyday we look afteroptimizing the revenue forIt may make sense for publishers focused on building an audiencelimited to a specific local region or those with a dedicated directour mobile publishers.ad sales team to build their own in house ad operations unit andengineering team dedicated to mobile ad serving. However forThe Mobile Advertisingpublishers publishers looking to monetize on a global scale, it is acostly and time consuming task to add multiple ad networks frommarket is as liquid as adifferent countries and to build an in house ad operations team tostock exchange.manage monetization in multiple countries.Think of the aggregation and optimization of mobile adPrices vary throughout thenetworks worldwide as a Mobile Advertising Cloud - one technical day, high price campaignsconnection and one agreement brings in multiple ad networks intoare available for a shortone ad stream. A service platform like this basically adds ad opsstaff to your team without the payroll, but with the benefit of added period of time and clickexperience working on this specific task day and night. through rates change withthe quality of the bannerDealing with the ever-changing liquidity in the landscape ofmobile advertising markets can be a daunting task. Experienced andand the audience of thefocused service platforms, such as SOMA by Smaato, provide apublisher. automated optimization engine and 24/7 staff local in the USA,Europe and Asia time zones.Harald NeidhardtCMO & Co-founder, Smaato 2010 Smaato Inc. White Paper on Global Choices in Mobile Advertising 7. Glocal is a term that has shaped the success of Smaato in the mobileadvertising space.It is the marriage of a complete global inventory plus crucial local marketadvertising to enrich the impact of any mobile marketing campaign.Bena Roberts, Founder & Editor GoMo News 2010 Smaato Inc. White Paper on Global Choices in Mobile Advertising Text: Harald Neidhardt | Design: Hugo Candeias 8. open mobile advertisingAbout SmaatoSmaato is a pioneering mobile advertising company that operates the mobile ad optimization platform calledSOMA (Smaato Open Mobile Advertising) and partners with mobile publishers, developers, ad networks andoperators.Smaatos SOMA mobile advertising platform aggregates more than 34 mobile ad networks worldwide andoptimizes mobile advertising revenues according to automated rules overseen by an experienced adoperations team. More than 2.000 publishers have signed up with Smaato as a partner to monetize theircontent in 215+ countries and Smaato is managing 3 billion ad requests per month.SOMAs unique feature is the aggregation of multiple leading ad networks globally to maximize mobileadvertising ARPU. SOMA can be easily integrated with ad networks, ad inventory owners (publishers, developersand operators) and 3rd party ad technology providers.Smaato is an active member of the Mobile Marketing Association, the dot.mobi Advisory Group and the GermanDigital Media Association BVDW. Smaato received a Top 100 Private Company Award by AlwaysOn Media (2009& 2007) and was an Andrew Seybold Choice Awards finalist at CTIA 2008 for best Newcomer, among otherawards.Smaato Inc. is based in Redwood Shores, California. The privately held company was founded in 2005 by anexperienced International management team. The European headquarters are in Hamburg, Germany and theAsia-Pacific presence of Smaato has been established in Singapore.3 Lagoon Drive, Suite 170Gerhofstrasse 2info@smaato.comRedwood Shores, CA 94065 20354 Hamburg...