The State of Mobile Advertising | Q1 2013 Insights from Opera Mediaworks The world's leading mobile ad platform 12,000 + 50 BILLION + 300 MILLION sites & applications ad impressions per month global consumers reached Publishers include … In addition to providing our regular quarterly insights into mobile ad trafc and monetization by device, geography and publisher category, this edition of the State of Mobile Advertising report will highlight three important drivers of the mobile advertising market. The tight competition between iPhone and Android Advertisers include … The continued growth of international mobile ad markets The importance of “intelligent prioritization” for advertisers to reach their desired audience © Copyright 2013, Opera Mediaworks. All rights reserved. 1 The State of Mobile Advertising | Q1 2013 iOS regains lead over Android in mobile-phone Trafc share (mobile phone OS) impression volume; continues as the top OS in monetization OS Share % of trafc % of revenue iOS continues to outperform all other device platforms in terms of monetization, with the highest average eCPM and greatest percentage of publisher revenue. In what emerged as Android 31.26% 26.72% a major competition toward the end of last year, iPhone has now regained a slight lead over - Phone 30.22% 26.24% Android phones this quarter. Also of interest is the continuing importance of tablet devices - Tablet to the mobile marketplace. For the rst time we are specically singling out Android tablets 1.04% 0.49% as they grow to a small but noticeable share of the market. Meanwhile, the iPad dominates, iOS 44.53% 49.23% growing to over 6% of all ad impressions and over 12% of all revenue. Finally, as we - iPhone 31.91% 34.24% anxiously await the impact of Samsung’s S IV devices, note that the Galaxy S III devices drove 11% of all Android trafc, up from 9% last quarter. - iPad 6.54% 12.60% - iTouch 6.07% 2.38% RIM 4.23% 6.19% Symbian 5.60% 2.46% Other 14.29% 15.39% iOS Android Other Symbian RIM 44.53% 31.26% 14.29% 5.60% 4.23% © Copyright 2013, Opera Mediaworks. All rights reserved. 2 The State of Mobile Advertising | Q1 2013 Music, Video & Media remains #1 category for impression volume, now the leader in revenue generation % of revenue While Business & Finance continues to produce the highest revenue per impression, % of impressions Music, Video & Media leads all publisher categories in terms of both impression volume and total revenue generation. Social Business, Finance & Investing Site category Music, Video & Media Games Computers & Electronics Social News & Information #1 Revenue Sports Business, Finance & Investing Arts & Entertainment Music, Video & Media Health, Fitness & Self Help Games #1 Impressions Other Computers & Electronics News & Information Sports Arts & Entertainment Health, Fitness & Self Help Other 0 7.25 14.5 21.75 29 © Copyright 2013, Opera Mediaworks. All rights reserved. 3 The State of Mobile Advertising | Q1 2013 Majority of ad requests and impression volume is from USA, but Europe quickly gaining Top 20 countries by impressions United States Across the Opera Mediaworks platform, the United States continues to drive the majority of ad requests, but this lead is shrinking every month. In Q4 2012, approximately 60% of all ad requests came from the USA United Kingdom but by the close of Q1 2013 the U.S. share of requests was 50.67%. Mobile ad trafc in the USA is still on an Italy upward swing, but it is not accelerating at the breakneck pace we are seeing in Europe. The European market Canada now generates over 21% of ad requests, up from 14.61% the previous quarter. It is also signicant to note that 65% of all European ad trafc originates in the top ve countries: the United Kingdom, Italy, Germany, France India and Spain. As a further indication of the internationalization of the mobile ad market the Russian Federation Indonesia ranks No. 7 by impression volume, after leaping into the Top 10 for the rst time late last year. Russian Federation 7.76% Germany 4.10% Mexico France 1.71% Spain South Africa Australia Nigeria 14.25% China Africa Brazil 50.69% Middle East Ukraine Asia Pacic Japan 21.55% Europe Americas (non-U.S.) Saudi Arabia United States Malaysia © Copyright 2013, Opera Mediaworks. All rights reserved. 34 The State of Mobile Advertising | Q1 2013 Intelligent prioritization of ad delivery optimizes publisher reach and campaign performance As the mobile advertising space matures, advertisers and ad networks are implementing methods to optimize ad delivery performance — while still being careful to safeguard user privacy. Contextual information easily acquired from mobile trafc data, such as device (or OS) and connection type (e.g., mobile vs. Wi-Fi) often serves as the rst criterion. But, advertisers are nding that simple additions to this criteria, such as time of day or day of week, or a carefully thought-out frequency-capping regime, can provide signicant enhancement to CTR performance. (See chart below.) Lift from targeting Example: Music application, ad campaign for a restaurant 250% Last quarter, we began running top-level performance 200% campaigns that take advantage of our intelligence prioritization capabilities. While click-through rate (CTR) is still important to advertisers, conversions are ultimately what matters. Creative, relevant rich media 150% ads work well to engage potential customers and build a lasting relationship with them, but conversions are the goal, as they directly drive business forward. 100% Standard targeting 50% Targeting with intelligent prioritization % of CTR performance 0% Untargeted Intelligent prioritization © Copyright 2013, Opera Mediaworks. All rights reserved. 5 The State of Mobile Advertising | Q1 2013 In the example below, we show how for one mobile ad campaign Android was recognized as the top performer among all of the OS options. We then found that within that group, honing in on those accessing data from Wi-Fi (vs. any carrier) yielded different results based on the Android version they had. Version 2.2 and 2.3 were clear leaders, while Versions 3.1 and 3.2 surprisingly underperformed. Adjusting the campaign based on those insights dramatically enhanced overall campaign performance. Financial services campaign: 60M impressions, 415,000 clicks, 81,000 conversions Device type CVR Android + carrier CVR Android + Wi-Fi CVR Android 20.2% AT&T 31.1% + OS version iPod 13.9% Sprint 29.3% 2.2 19.2% iPhone 13.3% T-Mobile 27.9% 2.3 17.9% iPad 12.1% Verizon 23.5% 2.1 13.0% Windows 10.5% Cricket 23.3% 4.1 12.3% BlackBerry 7.0% Metro PCS 17.2% 1.6 11.8% Feature phone 4.9% Alltel 16.5% 4.0 10.2% Cellular 16.7% 2.0 6.9% Wi-Fi 13.5% 3.1 6.4% 3.2 4.7% CVR = Conversion rate © Copyright 2013, Opera Mediaworks. All rights reserved. 6 The State of Mobile Advertising | Q1 2013 Samsung GALAXY Note II — Parallax unit Samsung Mobile launched its new agship device, the GALAXY Note II, in September Opera Mediaworks is the 2012. To drive awareness of the product, the company worked with Opera Mediaworks’ world’s leading mobile advertising subsidiary 4th Screen Advertising to build an interactive Parallax unit that would explore the key features of the device through an interactive experience. platform, helping to power the global mobile economy. Users were invited to swipe up to reveal the ad and uncover the story of the new Galaxy We improve efciency, through technology, innovation, Note II, with its large HD Super AMOLED display and advanced S Pen. The viewing speed transparency and trust, to create an open and vibrant — and the direction of the story itself — were controlled entirely by the user, who could marketplace for publishers and advertisers across the pause, jump ahead or scroll back through the ad's content with a simple swipe. globe. Opera Mediaworks includes AdMarvel, an ad-serving and mediation platform; Mobile Theory, a premium mobile ad network in the United States; At the end, the ad displayed a vibrant, interactive 360-degree view of the device, with and 4th Screen Advertising Ltd., a premium ad network detailed specications and quick links to Samsung Mobile's social channels for an in the United Kingdom. Also included are impressions opportunity to engage further with the brand. served within Opera mobile properties, including the Opera Mini Smart Page and the Opera Mobile Store. Opera Mediaworks is a member of the Opera Group. Opera, Opera Software, Opera Mini and the 'O' logo are trademarks of Opera Software ASA. To launch our innovative new product, we wanted an equally innovative ad format, so we worked with Opera to create a new immersive experience. And the results were great— by far the most engagement we’ve seen in a mobile ad unit — Heesun Kim, Director of Integrated Marketing, Samsung Mobile © Copyright 2013, Opera Mediaworks. All rights reserved. 7.