Pavan Lee(Li, Peiwen)Sr. Research Manager Mobile Media,Microsoft Corporation

ScottHaigesPresident

ROI Research

Stuart Knapman

PartnerEssential Research

Future of Mobile Advertising

Warm-Up Exercise: U.S. Mobile Market Size

What is the U.S. mobile penetration? – 90% – 17% are smart phone owners

How many U.S. mobile content subscribers have Internet access? – 137 million

How many people are actively using mobile Internet? – 67 million– 56% are smart phone owners

Source: Nielsen Mobile Internet & CTIA Custom Research 2009; M:Metrics 2010

While Excited About the Opportunity, We Are Aware of the ChallengeMicrosoft is Focusing on Multi-Screen Advantage

Microsoft Commissioned this Researchto Minimize the Knowledge Gap

Mobile consumptions and behaviors across 10 verticals

The role mobile plays in the media mix

Consumers’ attitudes towards mobile

Opportunities mobile present to marketers

Differences between Smartphone and iPhone users

Qualitative – Focus groups in DC and NY– Smartphone & iphone owners– Partner: Essential Research

Quantitative – Online survey– Smartphone and iPhone owners– Partner: ROI Research

Research Questions Methodology

Our Research Uncovered Three Main Themes

1. Smartphones Are Significantly Changing Consumers’ Relationship with Digital Media

Smartphones Are Highly Personal Devices: Enter with Caution

Brands require permission to enter

But high engagement means rich opportunities

“I sleep with my mobile on the pillow next to me”Female, 25-44, Smartphone user

Mobile Media Consumptionis on the Increase

Mobile is 3rd highest media channel consumed

50% expect their mobile internet access to increasein next six months

65% say mobile internet is the most important feature when considering a new phone

The Role of Mobile vs. Other Screensis Becoming Clear

MediaExtension

MessageInteraction Side-Loading Unique

Behaviors

Half of Your Audience Use Mobile After Seeing an Ad in Other Media Channel

40%

37%

37%

37%

33%

76%

58%

69%

62%

57%

Ads Seen:

Any Channel

53%84%/

Look for More Info On:

Look for More Info On:

1/3 Use Both Mobile and Online

37%

31%

33%

32%

Look for More Info On:

+

Ads Seen:

2. Despite Claimed Resistance to “Mobile Advertising,” ConsumersAre Actively Welcoming Brands In

Perception of Advertising Saturation: Fear that Mobile is Next

But in Reality, Consumers Welcome Great Mobile Advertising“Now we are talking about this, I’ve realized I actually do elect to hear

about a lot of products. A lot of this is really advertising I guess.”Male, 35-44, iPhone user

Location-Based Advertising Opportunity

61% of consumers are interested in receiving location-based coupons and offers

“I get emails on my phone telling me somewhere hasa sale on and I end up buying things I probably don’t need.” Male, 25-44, Smartphone user

Mobile Advertising Driving Actions17% percent of respondents recall seeing a location-based ad on their mobile phone. Activities that frequently result from seeing location-based mobile ads…

Mobile Ad

3. The Opportunities Differ fromOne Verticalto the Next –But None Are Excluded

There is Growing Confidence in Using Mobile Phones to Make Purchases...

Entertainment Travel CPG

34% 27% 24%

Percent who say they are very/extremely comfortable making purchases via mobile

…And Consumers Recognize the Potential of Mobile Engagement with Different Verticals

Social Sharing

MobilizedBrand Comms

Location-BasedServicesPersonal

Style Assistant?

…And Consumers Recognize the Potential of Mobile Engagement with Different Verticals

Mobile Coupons

ShoppingAssistant Embrace

Side-LoadingPOS

Enhancement

Location-BasedServicesBillboard

Interaction

Enable Multi-Screen Strategy

“I think this is all pretty cool… This could either save me money or make me spend more, I’m not sure!”

Female, 25-44, Smartphone user

Summary

We need to redefine “mobile advertising”if we are to really understand the opportunities, particularly within multi-screens

We need to be inspired by changing consumer behaviors and needs, to think differently about how brands can best add value in the mobile environment

“If it can better our lives, it’s better advertising”Female, 25-44, Smartphone user