MOBILE WORLD CONGRESS

THOUGHT
LEADERSHIP
DEVELOPERS AS INNOVATORS
SERIES

www.inmobi.com
14 - 17 FEB, 2011
 MOBILE WORLD CONGRESS

DEVELOPERS AS
INNOVATORS

THOUGHT LEADERSHIP SERIES:

DEFINING THE NEXT PHASE OF MOBILE ADVERTISING
13 February, 2011

As 2010 came to a close, it was clear that the debate over if “this will be the year of mobile advertising” ended with it.
Good riddance! Mobile advertising is clearly here to stay and it’s absolutely huge. Ad spending figures aside, consumers
have announced their intentions by flocking to mobile, and advertisers have no choice but to follow.

While the journalists and bloggers busily draft lists and make predictions, at InMobi, we decided to take a slightly
different approach. Rather than simply add to the noise, we took a step back and asked ourselves “what will define the
next phase of mobile advertising?”

We chose to develop a series of whitepapers and offer in depth analysis, for a select number of topics. For the series we
discuss three concepts that we think will define the next phase of mobile advertising. We invited partners in the industry
to collaborate with us, and invite you to join the conversation on twitter@inmobi or on our blog at
www.inmobi.com/inmobiblog.

James Lamberti
VP, Global Marketing and Research
InMobi,

ABOUT INMOBI
InMobi is the world’s largest independent mobile advertising network. With offices on four continents we provide
advertisers, publishers and developers with a uniquely global solution for advertising. Our network is growing fast and
we now deliver the unprecedented ability to reach 194 Million consumers, in over 115 countries, through more than
U.S. $31.5 Billion mobile ad impressions monthly. We recently were selected as a 2010 AlwaysOn Global 250
Company to Watch in Silicon Valley.

InMobi is venture-backed with marquee investors including: Kleiner, Perkins, Caufield & Byers and Sherpalo Ventures.
The company has offices in London, San Francisco, Bangalore, Tokyo, and Singapore.

© 2011 InMobi. Developers as Innovators Page 1 www.inmobi.com

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DEVELOPERS AS
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DEVELOPERS AS INNOVATORS
With the first decade of mobile advertising now behind us, developers can at best be described as pawns in another man’s
game (Steve Jobs?) or worse, completely marginalized by monolithic telco incumbents. In this next phase of mobile
advertising, developers will become the primary focus. The industry that once sought to manipulate and control them, will
now find it essential to cater to their needs. The developer community will be a significant force in innovation and wealth
creation in the mobile industry for 2011 and beyond.

TREND #1: (LACK OF) INNOVATOR’S DILEMMA

Consumers are way ahead of the advertising industry when it comes to mobile technology. In a world where the majority of
media consumption among smart device owners is now mobile, ad spending should be much higher than the 1% or 2% we
see today. The reason we see disparity in consumer behavior relative to ad spend is the result of a fixed web innovator’s
dilemma. For publishers and advertisers in developed markets, there is simply nothing forcing advertisers to change.
Consumers can be reached in many ways at scale and the existing media industry has only recently become comfortable
with fixed web. Under these conditions, no one should expect a rapid shift to mobile advertising among existing advertisers.

Developers are different. They are 100% committed to mobile, have no preconceived notions about advertising, have
substantial technical and analytical prowess, and collectively have a product or service desired by hundreds of millions of
consumers globally. As Figure 1 below indicates, mobile apps are already a U.S. $2 Billion business for iTunes alone and
growing faster than payments to record labels. Figure 2 shows the wealth creation in advertising occuring also.

FIGURE 1. BIGGER THAN MUSIC: ITUNES MUSIC VS. APPS GROWTHS FIGURE 2. GAINING SHARE: IN APP
APPLE’S CUMULATIVE PAYMENTS TO ITUNES SUPPLIERS BY MEDIUM AD IMPRESSION GROWTH

$12,000m 40%
Payments to record labels Europe
$10,000m Payments to Developers 35% USA
30%
$8,000m
25%
$6,000m
20%

$4,000m 15%

31 months
10%
34 months
$2,000m
5%
$0m
0%
Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jul -10 Dec -10
Source: Asymco.com, Jan 2011 Source: InMobi Network, Jan 2011

The outcome is that developers will drive innovation in mobile advertising. They have billions to gain, nothing to hold them
back, and are in control of their own destiny. This last point leads to our next trend.

© 2011 InMobi. Developers as Innovators Page 2 www.inmobi.com

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TREND #2: THE MOBILE ECOSYSTEM’S BULLSEYE

Using an influencer grid (see below,) it’s easy to see why innovation will come from developers. The grid is organized into
seven mobile ecosystem segments going down the left side. Across the top, we have key areas of the mobile advertising
ecosystem. In the cross sections we have defined three states: A notation of control, influence, or no influence.

FIGURE 3. THE MOBILE ADVERTISING ECOSYSTEM: DEVELOPERS IN CONTROL

Ad Targeting Reporting Ad
Segment Technology
Impressions Data & Analytics Spend
Manufacturers NI I C NI NI
Publishers C I NI I NI
Carriers C I NI NI NI
Developers control or
influence all areas of the
Developers C I C I C mobile advertising ecosystem

Ad Networks NI I C I NI
Ad Agencies NI NI NI NI C
Brands NI NI NI NI C

C = Control: ecosystem player has direct control of this aspect of mobile advertising
I = Influence: Ecosystem player influence this aspect of mobile advertising
NI = No Influence: Ecosystem layer has no ability to influence this

Developers are the only segment of the mobile ecosystem that have influence or control in every dimension. Furthermore, in
the next phase of mobile advertising the ad impressions controlled by developers will continue to grow, this will in turn push
an ever increasing share of data and ad spend into the developer segment. Developers will find themselves a highly sought
after group given their pivotal role in the mobile ecosystem.

© 2011 InMobi. Developers as Innovators Page 3 www.inmobi.com

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TREND #3: TRULY GLOBAL

Another critical dimension to consider is the global nature of developers. Unlike the rest of the media community, geography
is irrelevant. Developers will chase a download frenzy in Norway just as happily and easily as one in Thailand. Figure 4
shows just how global the mobile advertising app ecosystem is with the majority of iOS inventory outside the US and
Android showing the same trend.

FIGURE 4. A WORLD OF OPPORTUNITY: iOS AND ANDROID SHARE BY REGION

iOS AND ANDROID BY REGION

Region October Impressions Pt Chg Region October Impressions Pt Chg

Asia 1,081,388,223 +20.9 North America 601,994,209 -37.0
North America 1,066,360,665 -32.4 Europe 320,438,296 +19.1
Europe 989,212,208 +4.7 Asia 219,570,270 +16.3
Middle East 177,921,371 +4.2 Middle East 6,469,837 +0.5
Africa 15,903,587 +0.2 Africa 3,667,987 +0.2
Others 85,868,084 +2.5 Others 14,976,589 +1.0
0% 3%
1% .5% 1%

5%
Asia North America
19%
32% North America Europe

29% Europe Asia

Middle East 52% Middle East
Africa Africa
27%
Others Others
31%

Source: InMobi Network, Jan 2011 Source: InMobi Network, Jan 2011

In this new, truly flat world, borders don’t matter. Developers will find ways to innovate in mobile advertising that we’ve yet
to even consider. “Our experience on the Papaya network is that mobile advertising plays a key role in revenue generation
across all geographical demographics, whether it be the emerging markets, U.S. or Europe,” says Paul Chen, Director of
Business Development at PapayaMobile.

Paul Chen adds, “As developers continue to find the most effective advertising solutions in different locations around the
world, they will drive innovation for specific advertising mediums in an effort to achieve maximum ad revenue in those
geographical areas.”

© 2011 InMobi. Developers as Innovators Page 4 www.inmobi.com

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TREND #4: DEVELOPERS ARE SAVVY BUSINESS PEOPLE

Mobile gaming is great example of evolved business models emerging from the developer community. It is a highly
competitive industry and the competition continues to increase. Given this, dynamic developers cannot expect to create a
successful, well monetizable game without proper business planning. Developers have taken note. They are increasingly
becoming more business savvy and understand the value in the implementation of effective monetization strategies.

As an example PapayaMobile, Android’s largest social gaming platform, has continuously evolved the monetization
solutions they provide to developers. “In game banner ads used to be the status quo for monetizing freemium games. But
as developers have become more attuned with other monetization and business solutions, PapayaMobile now must offer
tools for wall advertisements, in-app microtransactions, support for various billing solution, and others,” says Paul Chen.

CONCLUSION
Developers are no longer an interesting byline of the mobile ecosystem. They are global, independent, innovative, and
savvy technicians and business people. The rest of us will end up following their lead in the next phase of mobile
advertising as a result.

Authors
James Lamberti, InMobi
Contributions from Paul Chen, Papaya Mobile

“Competition is tough and developers are beginning to realize that a

business mentality is needed to evaluate which solutions will most effectively
sustain and grow their revenue. From our perspective, we expect continued
maturity of the various monetization solutions in the market, with offer,
banner, and brand advertisements generating 30-40% of revenues going
forward and microtransactions accounting for the rest.”
Paul Chen, PapayaMobile

ABOUT PAPAYAMOBILE:
PapayaMobile is an open, mobile social network for Android focused on casual gaming and virtual currency. Papaya
offers developers a fast and easy way to reach more than three million users worldwide and make more money instantly.
Android users love Papaya because they can play multiple games and get a complete social networking experience all
in one, easy to use app. Founded in 2008 by Si Shen and Wenjie Qian, Papaya is headquartered in Beijing and has an
office in Menlo Park, Calif. For more information, please visit: http://www.papayamobile.com/.

© 2011 InMobi. Developers as Innovators Page 5 www.inmobi.com