Mobile has fundamentally changed how people interact with the Internet and influenced media companies and advertisers to shift their business models to leverage the mobile-first approaches of Google, Facebook and Twitter. The proliferation of mobile advertising and commerce will continue in 2014, but will it come at the expense of desktop search engine marketing? Join CRT Capital Analyst Neil Doshi in a look at a proprietary survey of 1,700 Twitter users. He will share recent insights gleaned from the survey that can help brands capture the attention of Twitter's mostly mobile users. PRESENTER Neil Doshi, Managing Director and Senior Equity, CRT

1. Search Insider Summit 2013
Addressing the Mobile Opportunity
December 11, 2013
Neil A. Doshi
Managing Director, Internet Research
415.762.4880 | ndoshi@crtllc.com
@neildoshi
Robert J. Coolbrith
Vice President, Internet Research
415.762.4890 | rcoolbrith@crtllc.com
For important disclosures, please see slide 52.

2. Agenda

Overview

CRT’s Online Advertising Forecasts

Twitter – Product Overview

CRT’s Proprietary Twitter User Survey
Page 2

3. Internet Access Before 2007…
PC/Mac
Page 3
3

4. Internet Access in 2010…
Smartphone
Page 4
4

5. Internet Access Today…
Smartphone
Page 5
5

6. Growth In Smartphones
► 1 out of 7 people in the world will have a Smartphone by the end of this year
► We expect Smartphones to grow around 47% this year and 35% next year
► Android will have dominant share for the forseeable future
► We expect Android share of new units to grow from 49% in 2011 to 81% in 2014
► iOS share should come down, from 19% in 2011 to 14% in 2014
Source: IDC, CRT Capital Group LLC estimates
Page 6
6

7. Growth In Tablets
► We expect tablets to grow 50% in 2013 this year to 177M units world wide
► Apple should still have the leading market share at 45%, but Android is gaining
► By 2014, we expect Android to have ~55% market share in tablets
Source: CRT Capital Group LLC estimates, IDC
Page 7
7

8. Ad Spend Allocation vs. Time Spend Across Platform
► Time Spent and Ad Spend are similarly allocated across TV and Radio
► Ad Spend on Print is greater than Time Spent on Print
► We believe Print will continue to be a source of Ad Funds for mobile
50%
45%
46%
43%
40%
35%
30%
23%
25%
20%
22%
16%
15%
10%
16%
15%
10%
7%
3%
5%
0%
TV
Print
Internet
Time Spent
Source: eMarketer, IAB, comScore, CRT Capital – across 2012 and 2013
Radio
Mobile
Ad Spend
Page 8

9. Agenda

Overview

CRT’s Online Advertising Forecasts

Twitter – Product Overview

CRT’s Proprietary Twitter User Survey
Page 9
9

10. Online Advertising Outlook
► CRT U.S. Online Advertising Forecast  12% CAGR to $57B in 2016E
► We’re Bullish on Mobile Advertising and Select Segments of Display Advertising
($M)
Total U.S Ad Revenue
YoY Cha nge
2011A
$31,736
22%
2012A
$36,596
15%
2013E
$41,647
14%
2014E
$46,708
12%
2015E
$51,925
11%
2016E
$57,023
10%
Search
$14,757
$16,944
YoY Cha nge
26%
15%
% of Tota l
47%
46%
Classifieds
$2,571
$2,379
YoY Cha nge
-1%
-7%
% of Tota l
8%
7%
Lead Generation
$1,555
$1,725
YoY Cha nge
19%
11%
% of Tota l
5%
5%
Mobile
$1,587
$3,403
YoY Cha nge
148%
114%
% of Tota l
5%
9%
Email
$222
$156
YoY Cha nge
58%
-30%
% of Tota l
1%
0%
Display Related Ads
$11,044
$11,988
YoY Cha nge
9%
Source: IAB, PricewaterhouseCoopers and CRT Capital Group15%
LLC estimates
% of Tota l
35%
33%
Banner Ads
$6,823
$7,722
YoY Cha nge
14%
13%
% of Tota l
22%
21%
Rich Media
$1,301
$1,116
$19,259
14%
46%
$2,022
-15%
5%
$1,852
7%
4%
$5,586
64%
13%
$109
-30%
0%
$12,819
7%
31%
$8,511
10%
20%
$837
$21,185
10%
45%
$1,719
-15%
4%
$1,963
6%
4%
$8,100
45%
17%
$76
-30%
0%
$13,665
7%
29%
$9,192
8%
20%
$603
$22,879
8%
44%
$1,461
-15%
3%
$2,061
5%
4%
$10,935
35%
21%
$54
-30%
0%
$14,535
6%
28%
$9,743
6%
19%
$422
$24,481
7%
43%
$1,242
-15%
2%
$2,144
4%
4%
$13,669
25%
24%
$37
-30%
0%
$15,450
6%
27%
$10,230
5%
18%
$325
CAGR
2012-2016
12%
10%
42%
7%
Page 10
10

11. ($M)
Total U.S Ad Revenue
YoY Cha nge
2011A
$31,736
22%
2012A
$36,596
15%
2013E
$41,647
14%
2014E
$46,708
12%
2015E
$51,925
11%
2016E
$57,023
10%
CAGR
2012-2016
12%
Search
$14,757
$16,944
$19,259
$21,185
$22,879
$24,481
10%
YoY Cha nge
26%
15%
14%
10%
8%
7%
% of Tota l
47%
46%
46%
45%
44%
43%
Classifieds
$2,571
$2,379
$2,022
$1,719
$1,461
$1,242
YoY
-1%
-7%
-15%
-15%
DisplayCha nge
Ad Market: We’re Focused On Select Pockets -15%
Of Growth -15%Video, Native, Programmatic

% of Tota l
8%
7%
5%
4%
3%
2%
Lead Generation
$1,555 Picking Up Steam, Still Favorable Supply/Demand Dynamics
$1,725
$1,852
$1,963
$2,061
$2,144
► Online Video  Cord Cutting
YoY Cha nge
19%
11%
7%
6%
5%
4%
% of Tota l  FB NewsFeed and other “Native” Ad Products Demonstrating Extraordinary Advertiser ROI
5%
5%
4%
4%
4%
4%
► Native
Mobile
$1,587
$3,403
$5,586
$8,100
$10,935
$13,669
42%
YoY Cha nge
148%Headwinds For Web 1.0 Media45%
114%
64%
35%
25%
► Programmatic  Continued
(e.g., YHOO, AOL);
% of Tota l
5%
9%
13%
17%
21%
24%
Some Web 2.0 Publishers (e.g,. FB) & Some Ad Tech Intermediaries (e.g., GOOG) Likely to Benefit
Email
$222
$156
$109
$76
$54
$37
CAGR
YoY Cha nge
58%
-30%
-30%
-30%
-30%
-30%
($M)of Tota l
2011A
2012A
2013E
2014E
2015E
2016E
2012-2016
%
1%
0%
0%
0%
0%
0%
Total U.S Ad Revenue
$31,736
$36,596
$41,647
$46,708
$51,925
$57,023
12%
Display Related Ads
$11,044
$11,988
$12,819
$13,665
$14,535
$15,450
7%
YoY Cha nge
22%
15%
14%
12%
11%
10%
15%
9%
7%
7%
6%
6%
% of Tota l
35%
33%
31%
29%
28%
27%
Search
$14,757
$16,944
$19,259
$21,185
$22,879
$24,481
10%
Banner Ads
$6,823
$7,722
$8,511
$9,192
$9,743
$10,230
YoY Cha nge
26%
15%
14%
10%
8%
7%
YoY Change
14%
13%
10%
8%
6%
5%
% of Tota l
47%
46%
46%
45%
44%
43%
% of Tota l
22%
21%
20%
20%
19%
18%
Classifieds
$2,571
$2,379
$2,022
$1,719
$1,461
$1,242
Rich Media
$1,301
$1,116
$837
$603
$422
$325
YoY Cha nge
-1%
-7%
-15%
-15%
-15%
-15%
YoY Change
-17%
-14%
-25%
-28%
-30%
-23%
% of Tota l
8%
7%
5%
4%
3%
2%
% of Tota l
4%
3%
2%
1%
1%
1%
Lead Generation
$1,555
$1,725
$1,852
$1,963
$2,061
$2,144
Sponsorships
$1,111
$845
$589
$412
$289
$202
YoY Cha nge
19%
11%
7%
6%
5%
4%
YoY Change
42%
-24%
-30%
-30%
-30%
-30%
% of Tota l
5%
5%
4%
4%
4%
4%
% of Tota l
4%
2%
1%
1%
1%
0%
Mobile
$1,587
$3,403
$5,586
$8,100
$10,935
$13,669
42%
Digital Video
$1,809
$2,306
$2,882
$3,459
$4,081
$4,693
19%
YoY Cha nge
148%
114%
64%
45%
35%
25%
YoY Change
39%
27%
25%
20%
18%
15%
% of Tota l
5%
9%
13%
17%
21%
24%
% of Tota l
6%
6%
7%
7%
8%
8%
Email
$222
$156
$109
$76
$54
$37
Source: IAB, PricewaterhouseCoopers and CRT Capital Group LLC estimates
YoY Cha nge
58%
-30%
-30%
-30%
-30%
-30%
% of Tota l
1%
0%
0%
0%
0%
0%
Display Related Ads
$11,044
$11,988
$12,819
$13,665
$14,535
$15,450
7%
Page 11
YoY Cha nge
15%
9%
7%
7%
6%
6%
Online Advertising Outlook
►
11

12. Online Advertising Outlook
► CRT U.S. Mobile Advertising Forecast  42% CAGR to $13.7B in revenue in 2016E
► Expect Strong Growth Across Mobile Search, Display and Video/Other
► Strong Audience Growth Dynamics
► Monetization Improving Over Time
($M)
U.S. Mobile Ad Revenue
YoY Change
CAGR
2012-2016
42%
2011A
$1,587
148%
2012A
$3,403
114%
2013E
$5,586
64%
2014E
$8,100
45%
2015E
$10,935
35%
2016E
$13,669
25%
Mobile Search
YoY Cha nge
% of Tota l
$603
169%
38%
$1,429
137%
42%
$2,402
68%
43%
$3,564
48%
44%
$4,921
38%
45%
$6,288
28%
46%
45%
Mobile Display
YoY Cha nge
% of Tota l
$873
127%
55%
$1,532
75%
45%
$2,402
57%
43%
$3,321
38%
41%
$4,265
28%
39%
$5,057
19%
37%
35%
Mobile Video & Other
YoY Cha nge
% of Tota l
$111
247%
7%
$442
298%
13%
$782
77%
14%
$1,215
55%
15%
$1,750
44%
16%
$2,324
33%
17%
51%
Source: IAB, PricewaterhouseCoopers and CRT Capital Group LLC estimates
Page 12
12

13. Mobile Search - Google
► We expect Google to generate $8.7B in Mobile revenue this year
► Mobile Search could approach $4.7B, up 44% YoY.
► Mobile Display could approach $1.8B, up 36% YoY. Interestingly, 40% of YouTube video views are
now coming from mobile devices.
► Enhanced campaigns should help drive CPC pricing parity with desktop over time, thus acting as an
accelerator for growth in Google’s Mobile revenue
► In terms of search query share, we believe that Google has ~90%+ mobile query share
$16.0
$14.0
$2.6
$12.0
$2.4
$10.0
$8.0
$1.8
$6.0
$1.4
$4.0
$2.0
$0.0
$3.6
$2.2
$2.1
$1.4
$0.3
$0.2
$0.7
2010A
$0.7
$0.7
$1.6
$3.3
2011A
2012A
Google Mobile - Search
Source: CRT Capital Group LLC
$3.2
$2.7
$4.7
2013E
Google Mobile - Play
$5.8
2014E
$6.9
2015E
$7.9
2016E
Google Mobile - Display
Page 13
13

14. Mobile Social - Facebook
► We expect FB to generate $3B in Mobile Ad revenue this year, as we show in the chart below
► In 2011, FB had $0 in Mobile Ad revenue vs. Google which had $2.3B
► Growth has come from FB increasing ad loads throughout 2012 and 2013
► Q2 and Q3 saw strong demand from DR advertisers as FB improved its tools and analytics
► Advertisers may need to focus on quality as FB limits growth of ad load going forward
Source: CRT Capital Group LLC
Page 14
14

15. Mobile Social - Twitter
► We expect Twitter to generate $580M in revenue this year, or about $430M in Mobile Revenue
► As of Q3, Mobile Revenue was 73% of total ad revenue
► We believe it is still early days for Twitter in terms of monetization
► Twitter could bridge the gap between real-time, TV, and communications – we believe that this could
be a big opportunity for advertisers
$1,600M
$1,436
$1,400M
$1,200M
$1,013
$1,000M
$800M
$579
$600M
$400M
$200M
$M
$269
$7
2010A
$78
2011A
2012A
2013E
2014E
2015E
Worldwide Advertising Services Revenue
Source: CRT Capital Group, LLC
Page 15
15

16. Agenda

Overview

CRT’s Online Advertising Forecasts

Twitter Overview

CRT’s Proprietary Twitter User Survey
Page 16
16

17. Social+Mobile Can Be A Powerful Marketing Tool
Facebook
Twitter
1.19B monthly active users
232M monthly active users
73% on mobile
75%+ on mobile
Connect with your friends
Connect with your interests
Direct
Response
Campaigns
Brand
Campaigns
Reach
Engagement
Conversion
Likes / Follows
Source: CRT Capital Group
Page 17
17

18. Twitter Ads – Promoted Products
Promoted
Account
Promoted
Trend
Promoted
Tweet
Source: Twitter, CRT Capital Group
Page 18
18

19. Promoted Tweets
► Advertisers can “promote” selected Tweets within their
Twitter account , similar to Page Post Ads on Facebook
► Promoted Tweets are an effective way to:
Increase the exposure of a brand’s Tweets
Serve unique messaging to specific audiences to drive
engagement
► Pricing based on Cost per Engagement (CPE)
Engagements represent clicks, retweets, favorites,
etc.
Over 90% of engagements are generally clicks
Source: Twitter, CRT Capital Group
Page 19
19

20. Lead Gen Cards
► Allows users to easily express interest in your offer
► Can expand Tweet and view offer within the Timeline
with the user’s information pre-filled
► Captures email for marketing follow up
Source: Twitter, CRT Capital Group
Page 20
20

21. Promoted Accounts
► Generate new Followers for your Twitter account
► Target users via pre-defined categories (e.g.
parents)
► Pricing based on Cost per Follower (CPF)
Source: Twitter, CRT Capital Group
Page 21
21

22. Promoted Trends
► Drive brand awareness at scale
► Target U.S. or global
► 10th “Trend” listed at the top of the daily trends list
► Flat fee for a 24-hour period
Source: Twitter, CRT Capital Group
Page 22
22

23. Twitter Amplify
► Nexus between television and Twitter
► Real-time, dual-screen sponsorships and in-Tweet
video clips (e.g. instant replays from advertisers
like the NBA during games)
► Advertisers include: A&E, MLB, Discovery, PGA,
Vevo
Source: Twitter, CRT Capital Group
Page 23
232323

24. Twitter Tailored Audiences
► Twitter’s take on Facebook’s Custom Audiences
► Allows cookie matching (Facebook introduced a similar feature in October)
► Data partners include Adara, AdRoll, BlueKai, Chango, DataXu, Dstillery, Lotame, Quantcast, ValueClick,
and [x+1]
► Beta customer results:
► HubSpot saw 45% lift in engagement rates
► Krossover saw 74% decrease in cost per customer acquisition
► New Relic saw 195% lift in conversion rates
Source: Twitter, CRT Capital Group
Page 24
24

25. Agenda

Overview

CRT’s Online Advertising Forecasts

Twitter Overview

CRT’s Proprietary Twitter User Survey
Page 25
25

26. CRT’s Twitter Survey
► CRT conducted a proprietary survey in conjunction with Survey Monkey for to learn about the service
from a Consumer’s perspective
► We reached out to over 7,000 Internet users, and 1,676 people indicated that they use Twitter
► Survey was conducted from October 17th to October 22nd 2013
► We wanted to test the following
► What do Twitter users do on Twitter?
► How engaged are they with the service?
► What do users think about Ads on Twitter?
► Are people really watching TV and Tweeting?
► What could Twitter do to improve the service?
Page 26
26

27. Twitter Survey – Frequency of Usage
► 35% of Twitter users are heavy users
► 65% of users are “casual” or “casual+” users
How often do you use Twitter?
Slightly often
41%
Moderately often
24%
Quite often
Extremely often
20%
15%
Source: CRT Capital Group, LLC, n= 1,676
Page 27
27

28. Twitter Survey – Frequency of Usage
► 28% of users go to Twitter few times a week
► 26% of users go to Twitter several times a day
During the last month, how many times have
used Twitter?
Few times a week
28%
Several times a day
26%
Once during the last month
None
15%
0%
Source: CRT Capital Group, LLC, n= 1,676
Page 28
28

29. Twitter Survey – Frequency of Usage
► Over 80% of Twitter users are using the service the same or more than last year
► 48% are using Twitter more than they did last year, which indicates to us that people are finding value in
the service and are not getting tired of it
In the past month, have you used Twitter…
…More than last year
48%
…About the same
…Less than last year
35%
18%
Source: CRT Capital Group, LLC, n= 1,676
Page 29
29

30. Twitter Survey – Frequency of Usage
► ~93% said they plan to use Twitter the same or more over the next year
Over the next twelve months, do you think your
Twitter usage will…
…Stay about the same
63%
…Go up moderately
24%
…Go up significantly
6%
…God down moderately
6%
…Go down significantly
2%
Source: CRT Capital Group, LLC, n= 1,676
Page 30
30

31. Twitter Survey – Use Case
► 33% of Twitter users consume information only, and never tweet. Twitter Voyers!
► But that doesn’t hide the fact that a majority (63%) do actually tweet
How often do you tweet?
Almost never
33%
Once a month
17%
Once a week
14%
More than once a week
13%
More than once a day
More than once a month
Once a day
10%
7%
6%
Source: CRT Capital Group, LLC, n= 1,676
Page 31
31

32. Twitter Survey – Use Case
► 41% of users access Twitter to get real-time information
► Only 4% follow brands or products – something that marketers will need to contend with
What do you use Twitter most for?
Reading/consuming news and
information
41%
Broadcasting messages, thoughts, or
opinions
20%
Following celebrities and/or athletes
19%
Connecting with friends and colleagues
Following brands and/or products
16%
4%
Source: CRT Capital Group, LLC, n= 1,676
Page 32
32

33. Twitter Survey – Use Case
► The Shocker #1! 36% of Twitter users don’t really know how to use Twitter! This is an issue, and we
believe that Twitter could easily address this with more education, a quick tutorial when signing up, and
helping you narrow your interests
► Twitter also needs to do a better job of helping users search for specific tweets from the firehose/…
What do you dislike most about Twitter ?
I'm not really sure how to use Twitter
36%
Hard to find tweets from my followers
31%
Therea re too many ads
140 Characters is too little to make my
point
23%
10%
Source: CRT Capital Group, LLC, n= 1,676
Page 33
33

34. Twitter Survey – Use Case
► Sharing/viewing content and following celebs seem to be the most popular activities on Twitter
What do you like best about Twitter ?
47%
42%
32%
29%
28%
28%
18%
15%
14%
12%
9%
5%
5%
3%
2%
Share content Follow
Share
Have a
Share
Support Use hashtags Share photos Share good Make new Share videos Track stocks Join or host a Create a poll Share music
(blogs,
Celebrities information conversation content/info causes and to start a new
deals,
friends
Tweet
for input
articles, etc)
about local
from a live
charities topic, event,
coupons, etc
events
event
etc
Source: CRT Capital Group, LLC, n= 1,676
Page 34
34

35. Twitter Survey – Use Case
► The most popular action on Twitter is Tweeting and Re-Tweeting
► Surprisingly, people are sharing pics and videos on the site as well
In the past month, while using Twitter, have you…
70%
61%
33%
32%
19%
12%
8%
Tweeted
Re-Tweeted
Shared pictures
Shared an article
or video clip
Logged into
another site w/
Twitter account
Shared a file
4%
Shared music
2%
Exchanged a
business card
Other
Source: CRT Capital Group, LLC, n= 1,676
Page 35
35

36. Twitter Survey – Use Case
► Followers are not necessarily friends
► Most users sers have less than 50 followers and follow less than 50 people!
► Average Facebook user has over 200 friends
How many Twitter followers do you have?
Less than 50
59%
51-200
27%
201-500
Greater than 500
9%
5%
How many people do you follow on Twitter?
Less than 50
44%
51-200
35%
201-500
Greater than 500
14%
7%
Source: CRT Capital Group, LLC, n= 1,676
Page 36
36

37. Twitter Survey – Competition
► FB and Instagram top the charts
► More people use Google+ than Snapchat!
What other social media sites do you use
regularly?
Facebook
89%
Instagram
34%
Google+
24%
Snapchat
16%
Tumblr
16%
Other
10%
Source: CRT Capital Group, LLC, n= 1,676
Page 37
37

38. Twitter Survey – Competition
► 60% use Twitter less than other social sites
► 40% use Twitter same or more
► Twitter is more for snacking on info than keeping up with friends/family
How much do you use Twitter vs. the other
social sites?
I use Twitter a lot less
38%
I use Twitter moderately less
22%
I use Twitter about the same
I use Twitter a lot more
I use Twitter a moderatly more
21%
11%
8%
Source: CRT Capital Group, LLC, n= 1,676
Page 38
38

39. Twitter Survey – Advertising
► 87% of users find ads on Twitter to be better quality than ads on FB…
How are the quality of ads on Twitter compared
to the ads on Facebook?
About the same
63%
Somewhat better
Significantly better
Somewhat worse
Significantly worse
15%
9%
7%
6%
Source: CRT Capital Group, LLC, n= 1,676
Page 39
39

40. Twitter Survey – Advertising
► …But people are still not engaging with ads
Have you clicked on a Twitter Ad?
No
Yes
86%
14%
Source: CRT Capital Group, LLC, n= 1,676
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41. Twitter Survey – Advertising
► Of those who clicked on an ad, 52% like relevant links
► Brands ads and promos are not too popular right now
What types of ads do you engage with on
Twitter?
Useful links in the tweet that take me to
their site
Companies/brands that tweet me about
deals, promos, etc.
52%
14%
Source: CRT Capital Group, LLC, n= 228
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42. Twitter Survey – Advertising
► 84% of users find ads on Twitter to be engaging and interesting!
How interesting/relevant are the ads you see on
Twitter?
Somewhat interesting/relevant
69%
Not very interesting/relevant
16%
Very interesting/relevant
15%
Source: CRT Capital Group, LLC, n= 228
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43. Twitter Survey – Advertising
► 87% of users would be open to seeing more ad load on Twitter!!!
► This is the first time we’ve ever seen this type of response
► Indicates to us that the ad load on Twitter is very light right now, and Twitter could step up
monetization on this front
If Twitter could improve the relevancy of the
ads, would you be open to having Twitter show
you more ads?
Yes but with reservations
46%
Yes
No
41%
13%
Source: CRT Capital Group, LLC, n= 1,676
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44. Twitter Survey – Twitter & TV
► 51% of Twitter users access the service while watching TV, but 49% don’t
How often do you use Twitter while
watching TV?
Almost never
49%
Once in a while
29%
Often
A lot of the tiime
15%
7%
Source: CRT Capital Group, LLC, n= 1,676
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45. Twitter Survey – Twitter & TV
► Amplify is still in early stages
Have you seen an ad on Twitter while watching TV?
No
46%
I don't remember
37%
Yes, buy un-related to the ads played during
the show
Yes, and related to the ads played while
watching the show
10%
7%
Source: CRT Capital Group, LLC, n= 1,676
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46. Key Takeaways
► Twitter is still in its early stages with regards to rolling out advertising products
► Twitter needs to do a better job of educating users and marketers about the benefits of the service, and
how to take advantage of the real-time interest graph
► Most Twitter users are using Twitter the same or more than last year
► Over 85% of Twitter users said they plan to use Twitter the same or more over the next year
► People find the ads on Twitter to be relevant and interesting, but most people haven’t clicked on an ad
► 87% of users would be ok with Twitter showing more ads if those ads were relevant and interesting
► 51% of users access Twitter while watching TV, but most of them haven’t seen an ad on Twitter while
watching TV
► We believe that marketers and agencies put Twitter in the experimental budget bucket; Once tools,
analytics, and APIs improve, we could see more budget moving to Twitter
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47. Questions?
Neil A. Doshi
Managing Director, Internet Research
415.762.4880 | ndoshi@crtllc.com
@neildoshi
Robert J. Coolbrith
Vice President, Internet Research
415.762.4890 | rcoolbrith@crtllc.com
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48. Page 48
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