The document discusses the growth of digital media and how consumption habits are shifting online and to mobile devices. Some key points: - 2 billion people are now online, but 2/3 of the global population is still not connected - Smartphone and tablet sales are growing rapidly while PC sales have stalled - Digital advertising and content revenues are significant and growing as consumption moves online - Social networks now see more time spent than traditional websites like portals - These trends have disrupted some media like newspapers, and television may be next as viewing goes online

1. The Future Of Digital
Henry Blodget
CEO & EIC, Business Insider

2. The medium is now ~20
years old.

3. So, how are we doing?

4. 2+ billion people online
0
500
1,000
1,500
2,000
2,500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(millions)
Global Internet Popula on
Source: Interna onal Communica on Union, Google

5. 2/3 of the world left to go
Global Popula on
Internet Popula on
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(millions)
Global Internet Popula on
Source: Interna onal Communica on Union, Google

6. However…

7. Most of the money is already online
Bo om 70
percent
18%
Top 30 percent
82%
Distribu on Of Global Income, 2000
Source: UN Human Development Report, Trends In Global Income Distribu on

8. So the market’s more
mature than you think.

9. Meanwhile, something
profound happened last
year…

10. PC growth stalled
HP
Lenovo
Dell
Acer
Apple
Other
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Global PC Shipments By Manufacturer
Source: Gartner, IDC
iPad released

11. Smartphone sales blew past PC sales
Personal Computers
Smartphones
Tablets
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Units
Global Internet Device Sales
Source: Gartner, IDC, Strategy Analy cs, company filings, BI Intelligence es mates

12. Tablets are now driving all the growth in PC market
PCs
Tablets
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
(thousands)
Global Computer Shipments
Source: Gartner, IDC, Strategy Analy cs company releases

13. So the future is mobile
Fixed Fixed
Fixed
Mobile
Mobile
0
500
1,000
1,500
2,000
2,500
3,000
2005 2010 2015
Consumer
Broadband
Connec ons
(milions)
G-20 Internet Access
Source: Boston Consul ng Group, Mary Meeker, Kleiner Perkins, Morgan Stanley Research, Berg Insight

14. Where are we in the
mobile revolution?

15. Globally, we’re still early…
1B
Smartphone
Users
6B
Mobile
Phone Users
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Smartphone Mobile Phone
GlobalUsers(millions)
Source: Strategy Analy cs, Interna onal Telecommunica ons Union
Note: Some users own more than one device
Global Smartphone vs. Mobile Phone Users, 2012E

16. But growth slows after 50% penetration

17. U.S. and other markets are past halfway point
Feature Phones
55%
Smartphones
50%
45%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12
U.S. Smartphone Penetra on
Source: Nielsen

18. US smartphone growth starting to slow
0
5
10
15
20
25
30
35
40
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2013
Users
Added
(millions)
U.S. Smartphone Market: Year-Over-Year Net Adds
Source: comScore, Nielsen

19. Most future US smartphone buyers will be
older and poorer
56%
43%
31%
18%
16% 16%
53%
58%
44%
32%
17%
15%
69%
65%
50%
30%
23%
16%
70%
65%
52%
41%
27%
21%
65%
74%
63%
51%
42%
24%
77%
80%
75%
60%
48%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Ages 18 - 24 Ages 25 - 34 Ages 35 - 44 Ages 45 - 54 Ages 55 - 64 Ages 65+
Smartphone Penetra on By Age And Income (U.S.)
<15k 15k - 35k 35k - 50k 50k - 75k 75k - 100k 100k+
Source: Nielsen

20. So the focus is on markets like China, which
now accounts for ~25% of smartphone sales.
Rest Of The World
China
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
(thousands)
Global Smartphone Shipments
Source: Gartner, IDC, Strategy Analy cs, Canalys, BII es mates

21. China is already twice the size of US market
Mobile
Broadband
Total
0
100
200
300
400
500
600
June 06 Dec 06 June 07 Dec 07 June 08 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 June 12
(millions)
Chinese Internet Users
Source: China Internet Network Informa on Center

22. MEDIA

23. Remember when they said no
one would ever pay for content?

24. Digital content revenues are exploding
iTunes
Ne lix
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
2005 2006 2007 2008 2009 2010 2011
Total
Digital
Content
Revenue
(thousands)
Source: BI Intelligence, company filings
Digital Content Revenue, 2005-2011
Zynga
Dropbox
Spo fy
Hulu
LinkedIn
NY Times Digital
WSJ Digital
TheStreet.com
Glenn Beck TV
Kindle

25. Digital Advertising still growing rapidly
$0
$5
$10
$15
$20
$25
$30
$35
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(billions)
U.S. Digital Adver sing
Source: IAB

26. At largest U.S. tech and media companies,
nearly 40% of ad revenue is digital
77%
share
62%
share
23%
share
38%
share
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2006 2007 2008 2009 2010 2011
U.S.
Adver sing
Revenue
(millions)
Source: Company filings and BI Intelligence es mates. Companies include: Google, Yahoo, AOL, Microso , Facebook, Time Warner, Disney, Viacom, CBS, News
Corp, New York Times, Ganne , McClatchy, Time Inc, Entercom, CBS Radio, Clear Channel, Citadel, Cum
Online vs. Offline Adver sing (U.S.), 2006-2011
Online
Offline

27. TV still biggest. Online close behind.
Print getting smashed.
41%
42%
10%
23%
13%
14%
20%
9%
11%
7%
6%
4%
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2006 2007 2008 2009 2010 2011
U.S.
Adver sing
Revenue
(millions)
Source: Represents annual U.S. adver sing revenue for 20 large media companies based on company filings and our own es mates
U.S. Adver sing, 2006-2011
All Other Online
Television
Print
Radio
Outdoor
Google

28. Digital has already “disrupted”
one media sector…

29. As news consumption moved online…
17%
5%
1% 1% 1%
-1%
-4%
23%
-4%
-7%
1%
9%
-6%
-7%
-10%
-5%
0%
5%
10%
15%
20%
25%
Online Network TV Local TV Audio Cable TV Magazines Newspaper
News Media Audience and Revenue Growth, 2010-2011
Audience Growth Revenue Growth
Source: Nielsen Media Research, the Audit Bureau of Circula on and Arbitron, SNL Kagan, eMarketer, Veronis Suhler Stevenson, Radio Adver sing Bureau, Publishers
Informa on Bureau, Na onal News Associa on, BIA/Kelsey

30. Newspaper ad revenue collapsed

31. Google now generates as much U.S. ad revenue as
newspapers and magazines (all of them)
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
2004 2005 2006 2007 2008 2009 2010 2011 1H2012
U.S. Ad
Revenue
(millions)
Source: Google, NAA, PIB
Google Generates More U.S. Ad Revenue Than Newspapers
Google (U.S.) U.S. Magazines U.S. Newspapers

32. (Some) paywall subscriptions are growing,
but…
0
100
200
300
400
500
600
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
(thousands)
Source: company releases
Note: does not include print subcribers with digital access
New York Times Digital Subscribers

33. “Digital dimes” don’t offset lost print dollars
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2003 2004 2005 2006 2007 2008 2009 2010 2011
InMillions
Source: Newspaper Associa on Of America
Newspaper Ad Revenue (Print vs. Online)
Print Online

34. Of course, print news is
old news…

35. Now the question is…

36. IsTV next?
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6.0
6.1
6.2
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Nielsen Prime me Household Ra ngs
Big 4 U.S. TV Networks Average

37. For now,TV ad spending still growing
$58
$60
$62
$64
$66
$68
$70
$72
$74
2007 2008 2009 2010 2011
Total TV
Ad Spend
(billions)
TV Ad Spend, 2007-2011
Source: Nielsen

38. But behavior is changing
82% 83%
64%
17% 16%
26%
6% 6%
8%
7%
2004 2008 2012
%ofTVsetusers
Source: GfK
U.S. Prime me TV Viewing
(% of 18-49 TV set users during 8-9 PM hour, mul ple responses permi ed)
Live TV Recorded TV Video game Streaming video

39. PayTV subscriptions are now trending down
Source: Bernstein Research
Cable
Satellite
TelCo
Total
-1000
-800
-600
-400
-200
0
200
400
600
800
1000
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Subscriber
Net Addi ons
(thousands)
Pay TV Subscriber Net Addi ons

40. ‘Over-the-top’ video is real and growing fast.
Ne lix
YouTube
Hulu
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2006 2007 2008 2009 2010 2011
Total
Digital
Revenues
(millions)
Source: Company filings and BI Intelligence es mates
Digital Video Revenue, 2006-2011

41. Live events are increasingly being viewed over
the Internet
0%
50%
100%
150%
200%
250%
300%
2-Jul 9-Jul 16-Jul 23-Jul 30-Jul 6-Aug 13-Aug 20-Aug 27-Aug 3-Sep 10-Sep 17-Sep 24-Sep
Source: Ooyala
Growth Of Total Live Video Viewing Time Via Connected TV
Devices And Gaming Consoles (Q3 2012)

42. Digital video advertising is on the rise
$0
$500
$1,000
$1,500
$2,000
$2,500
2006 2007 2008 2009 2010 2011
(millions)
Online Video Ad Revenue (U.S.)
Source: Interac ve Adver sing Bureau, eMarketer, comScore, BI Intelligence es mates

43. But as with print, digital = less money thanTV
75.2%
98.5%
92.1%
24.8%
1.5%
7.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
TV Online video Streaming TV online
Source: comScore, June 2012
Ad Loads, TV vs. Digital
(% share of programming)
Content Ads

44. What does history teach us?

45. As habits change…

46. The money follows.

47. By the way, “old media” isn’t
the only media being
disrupted...

48. Americans now spend more time on
social networks than portals
Social Networks
Portals
0
5
10
15
20
25
30
Nov-2010 Dec-2010 Jan-2011 Feb-2011 Mar-2011 Apr-2011 May-2011 Jun-2011 Jul-2011 Aug-2011 Sep-2011 Oct-2011 Nov-2011 Dec-2011
Average Minutes
Per Usage Day
Average Time Spent: Portals vs. Social Networks (U.S.)
Source: comScore

49. 1/7th of the world’s population now use Facebook
Monthly Ac ve Users
Daily Ac ve Users
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Ac ve
Users
(millions)
Facebook Ac ve Users

50. Time spent onYahoo, et al, continues to decline
0%
2%
4%
6%
8%
10%
12%
14%
16%
1Q07 2Q07 3Q07 04Q7 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Yahoo Time Spent % vs. Total Internet (U.S.)
Source: comScore, Ci Investment Research And Analysis

51. Now, in online ads, it’s Google, Facebook, and “other”…
Google

52. Facebook has blown past AOL,
Microsoft, andYahoo
Google
Facebook
Microso
Yahoo
AOL
Other
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Digital
Adver sing
Revenue
(millions)
U.S Digital Adver sing
Source: company filings BII es mates
40%
11%
30%
13%
6%
55%
11%
8%
7%
4%
15%

53. YouTube, Hulu, Glam,Twitter, Demand, et al.,
also taking portal share…
Facebook
YouTube
WebMD
Hulu
Demand Media
Twi er
Federated Media
Glam Media
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Digital
Adver sing
Revenue
(millions)
US Digital Adver sing: New Growth Companies
Source: company filings BII es mates

54. “Display” ad growth is flattening
Google
Other
Yahoo
AOL
Microso
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Display
Adver sing
Revenue
(millions)
U.S. Display Adver sing
Source: company filings, BII es mates

55. Real-time bidding is automating what’s left
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014 2015 2016
Source: eMarketer
RTB As % Of Digital Display Ad Spending

56. So, will Facebook ever be bigger
than Google?

57. Unlikely.

58. Google is like
advertising at a store.

59. Facebook is like
advertising at a party.

60. Social referrals to commerce sites are tiny
Facebook referrals up 92% year-over-
year…
80.6%
9.7% 7.5% 1.7% 0.5% 0.02%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Google Yahoo Bing AOL Facebook Twi er
Percentage
Of Traffic
Drivers of E-Commerce Traffic
Source: RIchRelevance

61. And speaking of advertising
at stores...

62. E-tailers are now building ad businesses

63. Amazon ad revenue is already $1+ billion a year…

64. And as eCommerce continues to take share…
Offline Retail Sales
E-Commerce
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(millions)
U.S. Retail Sales
Source: Federal Reserve Economic Data--St. Louis Fed, BI Intelligence es mates

65. New brands are blending marketing and commerce
Groupon
Gilt Groupe
LivingSocial
Rue La La
HauteLook
Beyond The Rack
Zulily
Ideeli
One King's Lane
ShoeDazzle
Fab
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2008 2009 2010 2011
Total
Revenue
(millions)
Social Commerce Revenues
Source: Company Filings, BII Es mates

66. MOBILE

67. So, what do people
do on mobile?

68. Well, first, they do pretty much
everything they do online…

69. They play games and social-network…
25 24
15
24
11
1210
107
7
Q1 2011 Q1 2012
Daily Smartphone App Consump on, Minutes Per Category
Games Social Networking News Entertainment Other
Source: Flurry Analy cs

70. They listen to music...
5%
Pandora
70%
1%
Facebook
33%
Twi er
55%
0%
25%
50%
75%
2008 2009 2010 2011
%ofTrafficfromMobile
Source: Mary Meeker, Kleiner Perkins, companies

71. They consume content…
134%
94%
82%
80%
77%
74%
74%
72%
70%
69%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Health
Informa on
Online Retail Men's
Magazine
Content
Electronic
Payment
Gaming
Informa on
Job Lis ngs General
Reference
Classifieds Auc on Sites Family
Entertainment
Total
Mobile
Audience
(thousands)
Top Mobile Categories By Growth In Audience, Dec. 2010 vs. Dec. 2011 (U.S.)
Dec-10 Dec-11
Source: comScore MobieLens, 3 mon. avg. ending Dec-2011 vs. Dec-2010

72. They look at pictures and video.
63
93
110
152
231
276
324
378
472
425
Mar 2011 June 2011 Sept 2011 Dec 2011 Mar 2012
U.S. Video Engagement, Monthly Minutes Per Ac ve User
Google Internet Sites iOS & Android Photo & Video Apps
Source: Flurry Analy cs, comScore Video Matrix

73. They use their devices while they watchTV
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Monthly Mul ple Times A Week Daily
Source: Nielsen Cross-Pla orm Report Q2, 2012
Percentage Of Smartphone Users Who Use Their Phones
While Watching TV

74. They shop…
PC
Smartphone
Tablet
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Ecommerce Website Traffic By Device
Source: Monetate

75. They use smartphones to make buying
decisions in stores.
19.7%
18.8%
20.4%
14.6%
13.1%
14.1%
8.3%
10.9%
6.3%
24.0%
22.3%
16.2%
20.2%
12.3%
10.0%
11.1%
7.2%
5.2%
Took Picture Of
Product
Texted/Called
Friends/Family
About Product
Scanned A
Product Barcode
Sent Picture Of
Products To
Family/Friends
Found Store
Loca on
Compared
Product Prices
Found Coupons
For Deals
Research Product
Features
Checked Product
Availability
U.S. Smartphone Owners Ac vity In Retail Stores
Males Females

76. They pay for stuff
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2008 2009 2010 2011
Total
Payment
Volume
(millions)
PayPal Mobile Payments Processed

77. They buy content
0%
10%
20%
30%
40%
50%
60%
70%
Downloaded
Music
Books Movies Magazines TV Shows Streaming
Radio
Sports News
Media Content Paid For On A Tablet, Q4 2011
US Italy UK Germany
Source: Nielsen

78. And they do stuff they
DON’T do online…

79. Play Angry Birds, et al
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Mar 10 Jun 10 Sept 10 Dec 10 Mar 11 Jun 11 Sept 11 Dec 11
Total
Downloads
Or Sales
(thousands)
Angry Birds Downloads vs. Nintendo DS Sales
Note: Includes Nintendo 3DS Sales
Source: New reports, company releases, BI Intelligence estimates

80. Take and share pictures
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
3/2011 4/2011 5/2011 6/2011 7/2011 8/2011 9/2011 10/2011 11/2011 12/2011 1/2012 2/2012 3/2012 4/2012 5/2012 7/2012 7/2012 8/2012 9/2012
Total
Users
(thousands)
Instagram Es mated Users
Source: news reports, company releases, BII Es mates

81. BOTTOM LINE:
Mobile devices =
More Internet usage +
New applications

82. Source: comScore, Telefonica, Macquarie Capital (USA), December 2011
In fact, mobile has made digital 24/7
Share Of Device PageTraffic Over A Day:

83. This leads to another big
question…

84. Mobile usage is up across the board
Sent Text Message
Used Browser
Used Downloaded Apps
Played games
Accessed Social Network
Or Blog
Listened to music
0%
10%
20%
30%
40%
50%
60%
70%
80%
Feb
10
Apr
10
May
10
Jun
10
Jul
10
Aug
10
Sept
10
Oct
10
Nov
10
Dec
10
Jan
11
Feb
11
Mar
11
Apr
11
May
11
Jun
11
Jul
11
Aug
11
Sept
11
Oct
11
Nov
11
Dec
11
Jan
12
Feb
12
Mar
12
Apr
12
May
12
June
12
July
12
Aug
12
Sep
12
Shareofmobilepopulaonthathas...
U.S. Mobile Content Usage
Source: comScore

85. People are consuming a huge amount of
content through mobile…
41%
27% 26%
23%
59%
53%
29% 29%
22%
9% 10% 9%
5%
57%
53%
25%
27%
20%
Books Movies TV Shows Magazines News Social
Networking
Downloaded
Music
Sports Streaming
Radio
Media Content Accessed Through Mobile Device
Tablet Smartphone
Source: Nielsen Q4 2011 Mobile Connected Device Report

86. As mobile increases, all other media decreases
45%
25%
17%
4%
9%
7%
44%
26%
16%
6%
8% 8%
43%
26%
15%
9%
7% 7%
42%
26%
14%
12%
6%
5%
TV Online Radio Mobile Print Other
Source: eMarketer, October 2012
Share Of Consumer Time Spent With Major Media
2009 2010 2011 2012

87. So mobile advertising
will be huge, right?

88. Hmmm…

89. The “bullish” mobile-ad story is the huge
gap between time-spent and ad spending.
42%
25%
22%
11%
1%
43%
7%
26%
15%
10%
TV Print Web Radio Mobile
2011 U.S. Ad Spending vs. Consumer Time Spent By Media
Ad Spend Per Media Time Spent Per Media
Source: Mary Meeker (KPCB), eMarketer, IAB

90. But maybe there’s a good reason
for that gap…

91. The screen is really small.

92. Mobile monetization still behind the desktop
$3.87 $5.00
$17.61
$6.62
$25.00
$58.95
Pandora Zynga Tencent
ARPU, Desktop vs. Mobile
Mobile Desktop
Source: Pandora, Zynga, Tencent

93. Mobile CPMs are much lower
$3.50
$0.75
Desktop Internet Mobile Internet
Effec ve CPM, Desktop vs. Mobile
Source: comScore, Vivaki, Mobclix Exchange

94. Most “mobile” ads are mainly web search +
display ads viewed on mobile
Search
62%
Display
28%
Messaging
10%
2011 Global Mobile Ad Spend By Category
Source: IAB

95. Google completely owns mobile search
Google
Yahoo!
bing
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec
08
Mar
09
Jun
09
Sep
09
Dec
09
Mar
10
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Global Mobile Search Market Share
Source: Global StatCounter

96. So Google owns mobile, too
Google
Millennial Media
Pandora
Apple
Yahoo
MicrosoOther
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Mobile Ad Market Share
Source: news reports, company releases, BII es mates

97. Overall, mobile is still a tiny fraction of
digital ad spending.
Mobile
$0
$5
$10
$15
$20
$25
$30
$35
2007 2008 2009 2010 2011
(billions)
U.S. Digital Adver sing Revenues
Source: IAB, BIA-Kelsey, BII es mates

98. And it’s growing much slower thanTV +
Internet in the first 5 years
$358
$1,012
$2,162 $2,162
$3,698
$80 $160
$392
$806
$1,171
$55
$267
$907
$1,920
$4,621
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
Year 1 Year 2 Year 3 Year 4 Year 5
Compara ve U.S. Adver sing Media
Annual $ Revenue Growth (First 5 Years)
Broadcast TV Mobile Internet
Source: IAB, McCann-Erickson, BIA-Kelsey, BII es mates Note: Adjusted for infla on

99. But!

100. “Native” mobile ads are finally beginning
to appear…
• Ads in timelines (Twitter / Facebook)
• Shareable ads
• Location-based mobile ads

101. Location-based mobile ads can target users
at the mall, restaurants, car dealers …
0
10
20
30
40
50
60
70
80
M
all
LibrarySchoolCam
pus
Hotel
Airport
BigBoxRetailers
QuickService
Restaurants
OtherRestaurants
ElectronicsRetailers
CarDealers
ClothingRetailers
Source: JiWire, Q3 2012
Monthly Ad Requests Per Mobile User By Loca on

102. Targeted mobile ads have higher CPMs
$10.00
$5.00
$5.00
$3.50
$- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00
Flurry video ads
Adsmobi video ads
LSN Mobile local ads
xAd local
Source: Ad pla orms, BII Research, Greg Sterling, Opus Research
CPMs For Selected Mobile Ad Pla orms

103. So, yes, mobile ads are just getting started
Media
Local
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E 2017E
Mobile Ad
Revenue
(millions)
U.S. Mobile Ad Forecast
We are here

104. APPS

105. App Store downloads on pace to hit 60
billion by mid-2013
0
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
35,000,000,000
40,000,000,000
45,000,000,000
50,000,000,000
55,000,000,000
60,000,000,000
65,000,000,000
1/1/11
2/1/11
3/1/11
4/1/11
5/1/11
6/1/11
7/1/11
8/1/11
9/1/11
10/1/11
11/1/11
12/1/11
1/1/12
2/1/12
3/1/12
4/1/12
5/1/12
6/1/12
7/1/12
8/1/12
9/1/12
10/1/12
11/1/12
12/1/12
1/1/13
2/1/13
3/1/13
4/1/13
5/1/13
6/1/13
Apple App Store Downloads

106. Smartphone users spend more time on apps than web
Mobile Web
Apps
0
20
40
60
80
100
120
140
Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12
Minutes Spent
Per Month
(Biillions )
Total Time Spent Using Mobile Web vs. Apps
Source: Nielsen Smartphone Analy cs

107. Mobile app revenue is growing fast, but
still relatively small.
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2008 2009 2010 2011
(millions)
Mobile App Revenue
Source: iSuppli, Forrester Research, company releases, BII es mates

108. Because most downloads are free
Mobile App Store Downloads, Free vs. Paid: 2011
Source: Garner, September 2012
Total Downloads
Free Downloads
89%

109. “Freemium” is the dominant model

110. Games are the biggest money makers

111. Mobile has become a
platform game.

112. Platform markets tend to
standardize around one or two
platforms.

113. Right now, mobile is a two-horse race.
Android
Apple
Blackberry
Windows
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Global Mobile Pla orm Market Share
Source: Gartner, IDC, Strategy Analy cs, BI Intelligence es mates, and company filings

114. Android has the largest smartphone
platform globally.
Android
Apple
Blackberry
Symbian
Other
Microso
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Share of
Global Unit
Sales
Smartphone Market Share By OS (Global)
Source: Gartner

115. Partly because it owns China
Android
Apple
Symbian
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Source: Analysys Interna onal
Chinese Smartphone Market Share By Pla orm

116. And it’s the same two-horse story in tablets
iPad
Android
Kindle
Nook
Blackberry
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Tablet Market Share By Pla orm
Source: Es mates based on informa on from IDC, Strategy Analy cs, and company filings

117. But a big mystery has
arisen...

118. Where are all these Android
users?

119. Apple is dominating app revenue
Apple iOS
Android
Other
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2008 2009 2010 2011
(millions)
Mobile App Revenue By Pla orm
Source: iSuppli, Forrester Research, company releases, BII es mates

120. And most commerce and web traffic is from Apple
iPad
iPhone
Android
Android Tablets
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Source: Monetate
Ecommerce Website Traffic By Mobile Pla orm

121. Do Android folks actually use
their devices?

122. Mobile profits are going mainly to two players.
Apple
Nokia
Samsung
RIM
Motorola
Sony Ericcson
LG
HTC
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2007 2008 2009 2010 2011 Q1 2012 Q2 2012 Q3 2012
Opera ng Profit Share By Vendor
Source: Company releases, Canaccord Genuity es mates

123. So, what’s the future of media?

124. Digital?

125. Yes.

126. Mobile?

127. Yes.

128. Mobile ONLY?

129. No.

130. Digital is now a 4-screen world…

131. Maybe 5 screens soon…

132. But mobile FIRST?

133. Only if you have a totally
mobile-centric app...

134. ...Or you want to annoy your
users and customers.

135. Thank you very much.

136. Henry Blodget
Founder, CEO & Editor-in-Chief, Business
Insider
Alex Cocotas, Analyst
Marcelo Ballvé, Editorial Director
BI Intelligence is a new subscription service from Business Insider
that provides in-depth insight, data, and analysis of the mobile industry.
More info at intelligence.businessinsider.com
Peter Lee, Intern
Josh Luger, Director of Subscription Products