Monetizing Mobile Social Networks

Social Networking Conference

Tokyo, May 8, 2008

Monetizing Mobile Social Networks

Christopher Billich, Infinita Inc.

© 2008 Infinita Inc.

Japan Mobile MarketKey Differences

Email, not SMS

Operators control handset makers

(Open) Standards

Operator Revenue

Share favors CPs

Same cost for On- and Off-Deck

access

All handsets SIM-locked

“Free” Messaging

Competition on Network Technologies

80% 3G penetration

Operators pay handset

makers

★ Regulatory/Government Level

★ Operator Business Model Level

★ Operator-Handset Maker Relationship Level

★ User Experience Level

No spectrum license costs


Mobile Social NetworkingAwareness and Adoption among Mobile Users (in %)

No AwarenessAwareness, but no AdoptionAdoption

Source: Impress R&D, September 2006/2007


mixiMobile Social Networking

Source: mixi Inc.

★ Operated by mixi Inc.

★ On-deck on 2 of 3 carriers

★ Mobile and PC Social Networking Site

★ Business Model: Advertising (>90%), Premium features (<10%)

★ #1 service in Japan SNS market

★ More than 13 million users

★ 15-20 billion PV/month

★ More than 60% of traffic generated via mobile (up from under 20% 15 months ago)

★ Key Points

★ Invitation-only

★ Clear mobile/PC differentiation


Mobile Social Networkingmobagetown

★ Operated by DeNA Co., Ltd.

★ Off-portal site

★ Free, mobile-only site combining games + social networking + avatars + mobile commerce (and more)

★ Goal: #1 mobile portal in JP

★ Business Model: Advertising/mobile commerce

★ More than 6m users in 18 months (now more than 10 million)

★ ca. 18 billion page views/month

★ Core Enabler: Virtual currency “MobaGold”

Source: DeNA Co., Ltd.


Mobile Social Networkingmobagetown


mobagetown: Business ModelMobile Social Networking



mobagetown: Revenues, Registered Members, Page ViewsMobile Social Networking

0

1

2

3

4

5

6

7

8

9

10

Jun 07 Sep 07 Dec 07 Mar 08

9.879.43

9.038.65

8.137.79

7.436.89

6.446.03

5.464.84

0

1,000

2,000

3,000

4,000

5,000

6,000

FY06 Q4FY07 Q1FY07 Q2FY07 Q3FY07 Q4

5,162

4,628

3,135

2,507

1,562

Revenues in ¥ million

Reg. Members inmillion

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Apr 07 Jun 07 Sep 07 Dec 07 Mar 08

17,924

14,927

13,383

10,793

9,239

Page Views inmillion



Advertising Expenditures across Major Media 2007 and YoY Changes 2006/(2005)Japan Advertising Market

Sources: Dentsu Communication Institute, February 2008; Production Costs + Media Spendings

Mobile: only 1% share, but+59.2% (+35.4%)growth

-5.2% (-3.8%)

-4% (-1.3%)

-0.9% (-1.2%)+10.8% (+11.7%)

+3% (+0.9%)

+21.3% (+28.6%)

-4.2% (-1.9%)


2003-2007 (in US$ billion)Mobile Content vs. Mobile Advertising Revenues

Mobile ContentMobile Advertising

Mobile Content and Mobile Advertising Revenues in US$ billionSource: Mobile Content Forum (July 2007), *Infinita Estimate (May 2008)

*

★ Mobile Content revenues growing at average annual rate of +17.3% and slowing (last: +10%, est.)

★ Mobile Advertising increasing +56.5% yearly and accelerating (last: +59%)

★ Advertising/Content Revenues Ratio shifted from less than 1:20 to more than 1:6 within past 5 years


Mobile Advertising Revenues, 2000-2011 (US$ million)Mobile Advertising Market

Sources: Dentsu Communication Institute (April 2007, estimates) (February 2008, historical data)

2007 actual figures exceeded Dentsu’s own previous estimate (US$ 556 million) by 12%

★ Mobile Advertising revenues to almost double again within next 4 years

★ Crossing the US$ 1 billion threshold by 2010

★ Mobile still undervalued as an advertising medium by a factor of 4 (2006)• Media Usage Share 4%

• Advertising Expenditures Share 1%


Examples: Banner AdvertisingMobile Advertising on mobagetown and mixi Mobile

★ Compensation model: CPM, weekly

★ Pricing: US$ 3,000 to US$ 9,000

★ Av. CPM: US$ 3-6

★ Targeting: Operator, Gender

★ CTR (mixi): 0.2-0.4%

Sources: DeNA Co., Ltd., mixi Inc.


Examples: Exit ScreensMobile Advertising on mobagetown and mixi Mobile

★ Compensation model: CPM, weekly

★ Pricing: US$ 4,500 to US$ 7,000

★ Av. CPM: US$ 4.5-7

★ Targeting: Operator, Gender

★ CTR (mixi): 0.7%

Sources: DeNA Co., Ltd., mixi Inc.


Examples: Mobile Email Advertising (Newsletters)Mobile Advertising on mobagetown and mixi Mobile

★ Compensation model: CPM

★ Av. CPM: US$ 10 (Newsletter) to 120 (Standalone Messages)

★ Targeting: Operator; Gender, Age, Region (at premium)


Coca Cola/mobagetown Tie-up SiteSource: Nikkei

★ Advertiser: Coca Cola

★ Campaign Date: 05/07-06/07

★ Campaign Outline

• DeNA created special Coca Cola-branded version of mobagetown, accessible only to double-registered users of mobagetown and Coca Cola Mobile

• Reach top scores on Coca Cola-branded games to receive branded avatar items

• Coca Cola-branded Decomail graphics to use in mobile emails to friends, thus spreading awareness for the campaign

• “Coke Character” with avatar and blog

• Campaign extensively promoted via tie-in with Coca Cola “The Coke Side of Life” TV campaign

mobagetown x Coca Cola Tie-upMobile Advertising on mobagetown and mixi Mobile


Coca Cola-branded versionof mobagetown (above), branded games (top right),branded Decomail (left)


★ Results (first four weeks of campaign)

• Almost 1 million sign-ups for Coca Coca mobile site

• 185 million page views

• 5.6 million page views on Coke character blog page alone

• 350,000 users connected with Coca Cola character as friends

• 190,000 comments posted to the Coke character blog

★ ...and the campaign lives on one year later

mobagetown x Coca Cola Tie-upMobile Advertising on mobagetown and mixi Mobile


UNIQLO-outfitted Avatars and Branded GameSource: DeNA Co., Ltd.

mobagetown x UNIQLO Tie-up

★ Advertiser: UNIQLO

★ Campaign Date: April 2008


• Download coupons for apparel retailer UNIQLO and redeem for discounts on relevant items at participating UNIQLO stores

• Exclusive avatar items corresponding to the goods purchased via entering the unique product ID from price tag on mobagetown

• Branded game, goal: “try on” the outfits that are being promoted as part of the campaign by jumping up to catch clothes flying out of a clothes dryer

Mobile Advertising on mobagetown and mixi Mobile


mixi x CC Lemon Tie-up

★ Advertiser: CC Lemon (Softdrink)

★ Campaign Date: May 2008


• CC Lemon “Corner” set up on mixi Mobile

• Branded games (Flash Lite)

• Branded profile backgrounds (“mixi Collection”)

• “Keitai Soap Opera” (mobile novel) published in daily installments

Source: mixi Inc.


mixi: “Login Jacks” and Promotions

★ Login Jacks: Fully branded versions of mixi Mobile login Page linked to promotions within the site (sweepstakes etc.)

★ Promotional campaigns that feature limited-edition products and branded content

mixi Login Screen Jacks (left) and LAWSON promotion (right)Source: mixi Inc.




mobagetownRevenues Breakdown by Segment


Avatar Item/Virtual Currency SalesPay-per-performance AdvertisingBanner/Email Advertising Revenues from <18 yrs segment

FY2007 Q4

16% 84%

30% 70%

100%

47%

32%

21%


Avatar Items/Virtual Currency Salesmobacasino


★ Launched in early April 2008

★ Virtual casino featuring multi-player Roulette, Black Jack and Poker

★ To play, users need “Casino Coins” which can be obtained in exchange for Moba Gold

★ User rank rises with play frequency, enables access to higher, more exclusive floors of the casino

★ Goals

• Deliver gaming content more appealing to adult audience

• Create additional “outlet” for MobaGold currency beyond avatar items


mobacasino


“Insert MobaGold”

Avatar Items/Virtual Currency Sales


Freemium Games


★ From late April 2008, DeNA will release exclusive mobile games developed in cooperation with top-tier games publishers

★ Adopted from well-known role-playing and simulation titles from other platforms

★ Basic play is free - MobaGold necessary to unlock multi-player mode, buy in-game weapons and tools

★ Proceeds from sales shared with publishers (rather than licensing)

★ Goals

• Deepen games portfolio

• Create additional “outlet” for MobaGold currency beyond avatar items

Avatar Items/Virtual Currency Sales


Dentsu/Robot “TsuiTsui”Mobile Advergaming

Source: Dentsu


mobagetownEvolution from Social Networking/Games Site to Mobile Portal...

Source: DeNA


“For search, too:mobagetown.”

“A new experience in mobile search.”

mobagetown...and Mobile Search Engine


Search-related vs. Non-search-related Mobile Advertising Revenues, 2007-2011 (US$ million)Mobile Search/Content-Matched Advertising

Source: Dentsu Communication Institute (April 2007)*Note: graph based on 2007 estimate (US$ 556 million), actual Search-/Non-search data for 2007 (US$ 621 million) not released yet

Non-searchSearch ★ Mobile search-related revenues

accounted for 16% of mobile advertising last year...

★ ...and will increase 5-fold to reach more than 60% of all mobile advertising revenues by 2011

...on mobagetown and mixi Mobile

★ Format: Text ads

★ Compensation model: CPC

★ Pricing: bidding mechanism (price set by advertiser)

★ mobagetown

• Search: proprietary solution

• Content-matched ads: Overture

★ mixi Mobile

• Search: Google

• Content-matched ads: Overture

Overture-delivered content-matched ads on mixi Mobile communitiesTop of page (left), bottom of page with Text Ad (right)

Mobile Search/Content-Matched Advertising


Local Search Advertising on mobagetown

★ Formats: Text ads relevant to search area

★ Compensation model: CPC

★ Pricing: bidding mechanism

★ Location-based advertising network “AdLocal” service provided by Cirius Technologies, Inc.

★ Advertisers can specify proximity (during an address- or map-based search)

★ Targeting: genre/product category, time of day, day of the week, area radius (1 to 10 km), weather (e.g. “show my advertising only if it is raining”)

Source: Cirius Technologies


Mobile Search/Content-Matched Advertising


Key Points

★Mobile Social Networking • Still lots of room for growth, but latecomers facing strong lock-in effects

• MoSNS rapidly becoming a feature, not a service

• Users gravitating towards using MoSNS as search resource

★Mobile Advertising • Baby steps along a rocky road - but great potential

• Moving towards deep tie-ups and branded content

• Shifting from CPM to Pay-for-performance

• Search and Content-Matched Advertising gaining significance

★Revenue Streams beyond Mobile Advertising• “Freemium” content and services outside core SNS functionalities


Scope of ServicesInfinita

★ Mobile and PC sites/appsproductions(domestic JP market)

★ Mobile and PC sites/appsproduction(foreign clients forJP market)

★ Outbound market intelligenceand consulting

Technical Development

Research and Consulting

★ Inbound market intelligenceand consulting

★ Domestic market intelligenceand consulting

Non-domestic Clients

Domestic Clients


Selected ClientsInfinita


Thank you!

www.infinita.co.jp/research

[email protected]

http://www.infinita.co.jp/research




Monetizing Mobile Social Networks

Business

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