monetizing mobile social networks
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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
© 2008 Infinita Inc.
Mobile Social NetworkingAwareness and Adoption among Mobile Users (in %)
No AwarenessAwareness, but no AdoptionAdoption
Source: Impress R&D, September 2006/2007
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
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.
© 2008 Infinita Inc.
Mobile Social Networkingmobagetown
© 2008 Infinita Inc.
mobagetown: Business ModelMobile Social Networking
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.
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
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.
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%)
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
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%
© 2008 Infinita Inc.
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.
© 2008 Infinita 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.
© 2008 Infinita 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)
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
Coca Cola-branded versionof mobagetown (above), branded games (top right),branded Decomail (left)
Source: DeNA Co., Ltd.
★ 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
© 2008 Infinita Inc.
UNIQLO-outfitted Avatars and Branded GameSource: DeNA Co., Ltd.
mobagetown x UNIQLO Tie-up
★ Advertiser: UNIQLO
★ Campaign Date: April 2008
★ Campaign Outline
• 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
© 2008 Infinita Inc.
mixi x CC Lemon Tie-up
★ Advertiser: CC Lemon (Softdrink)
★ Campaign Date: May 2008
★ Campaign Outline
• 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.
Mobile Advertising on mobagetown and mixi Mobile
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.
© 2008 Infinita Inc.
Mobile Advertising on mobagetown and mixi Mobile
© 2008 Infinita Inc.
mobagetownRevenues Breakdown by Segment
Source: DeNA Co., Ltd.
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%
© 2008 Infinita Inc.
Avatar Items/Virtual Currency Salesmobacasino
Source: DeNA Co., Ltd.
★ 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
© 2008 Infinita Inc.
mobacasino
Source: DeNA Co., Ltd.
“Insert MobaGold”
Avatar Items/Virtual Currency Sales
© 2008 Infinita Inc.
Freemium Games
Source: DeNA Co., Ltd.
★ 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
© 2008 Infinita Inc.
Dentsu/Robot “TsuiTsui”Mobile Advergaming
Source: Dentsu
© 2008 Infinita Inc.
mobagetownEvolution from Social Networking/Games Site to Mobile Portal...
Source: DeNA
© 2008 Infinita Inc.
“For search, too:mobagetown.”
“A new experience in mobile search.”
mobagetown...and Mobile Search Engine
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
Mobile Search/Content-Matched Advertising
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
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
© 2008 Infinita Inc.
Selected ClientsInfinita
© 2008 Infinita Inc.
Thank you!
www.infinita.co.jp/research
billich@infinita.co.jp
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