Global Mobile - A World-view by Havas Digital

1. Global Mobile A Worldview August 2009 Consumer trends and practical opportunities in mobile marketing

2. Lead Contributors Sixto Arias Managing Director Mobext Spain sixto.arias@mobext.mobi Chris Bourke Managing Director Mobext UK chris.bourke@mobext.mobi Phuc Truong Managing Director Mobext US phuc.truong@mobext.com Dimitri Dautel Managing Director Mobext France dimitri.dautel@havasdigital.com Mark Egan Director of Global New Business Havas Digital mark.egan@havasdigital.com © 2009 Mobext :: Havas Digital

3. CONTENTS 1. Introduction. .................................................................................... 4 2. Highlights........................................................................................... 5 3. Interesting facts............................................................................ 6 4. Worldwide consumer trends: insights into what’s driving growth in mobile products and services...................................................................................... 7 • Asia: focus on Japan and South Korea. Leaders of the Revolution.............. 7 • Europe: focus on UK and Western Europe. High Growth........................................................ 13 • North America: focus on United States. Catching Up......................................... 20 • Latin America: focus on Brazil and Mexico. Growing Demand................................ 28 5. Coming to a 3rd Screen Near You!............................. 32 • The iPhone Phenomenon & the Touchscreen Revolution. ................................. 32 • Mobile Video/TV................................................................... 35 6. Mobile in the Mix: Opportunities for Marketers. .......................................... 37 7. Conclusion: Putting Mobile in the Mix for your Brands................................................. 51 8. Glossary of terms...................................................................... 54 9. About us and contact details......................................... 55 References. .......................................................................................... 57 © 2009 Mobext :: Havas Digital

4. GLOBAL MOBILE A WORLDVIEW INTRODUCTION 1 The mobile platform boasts a dizzying number of options available to marketers – including, but not limited to: text and multimedia messaging, content and display advertising adapted for mobile mini-browsers, “conventional” online content and display advertising for PC-like browsers (from newer smartphones like the iPhone and Android G1), mobile applications, mobiles games, paid search, as well as proximity-based interaction through outdoor media/ displays and shortcodes used in integrated marketing efforts, both of which cover the “last mile” for reaching consumers. The irony of mobile marketing is the enormous penetration of mobile (greater than 100 percent in some countries due to multiple device ownership) and the enormous flexibility of the aforementioned tactics juxtaposed with the ability for personal, even tailored, communication. To that end, Mobext believes that the mobile platform has enormous potential to both reach fragmenting audiences and increase interaction between brands and those audiences. Mobext helps advertisers develop tactics for their brands and feature the platform as an integral component of their marketing strategies. In this Insight report, we will tackle the following key questions: • What are consumers doing that is stimulating the growth of mobile marketing? • What are the evolving capabilities of mobile marketing and what should marketers do to leverage the channel? • How does this compare around the world, region by region? • What relevant case studies of successful campaigns offer insights about mobile marketing and advertising? We are always interested in your particular business issues and questions, whether you’re already a Mobext client or just want to know more about this subject. Please feel free to get in touch. Contact your local Mobext contact, the Media Contacts/MPG managing director in your country, or an author of the Insight report. Phone numbers and e-mail addresses are at the back of this publication and at http://www.mobext.mobi. © 2009 Mobext :: Havas Digital

5. GLOBAL MOBILE A WORLDVIEW Highlights Landscape: Growing consumer familiarity with mobile devices. The increasing mass- 2 reach of text and picture messaging in Asia, Europe and America signals that mobile has evolved from a voice medium to a multimedia communications channel. The next phase of growth is being driven by consumer demand for digital photography, email, music and access to favorite Web applications, anytime and from anywhere. Possibilities: Measurable experiments central to learning new tactics. Given the diverse possibilities and the lack of a dominant approach, mobile marketing is at a relatively em- bryonic stage. A 2008 JupiterResearch survey of US marketers revealed that 26 percent of respondents engaged in some form of mobile marketing.1 These tactics include direct-response text and picture advertising and promotions (SMS/MMS), branded content, quick response codes (QR codes), paid mobile search, and banner ads. Advertisers who are advancing their mobile initiatives see the channel as a new opportunity to reach consumers in a personal way. Marketers are learning that the mobile platform can be used to effectively target individuals who have opted in to receive communications through text messages, shortcodes, mobile browsing and purchase of premium digital content. Recommendations. Given high SMS penetration in the US and Western Europe, Mobext believes SMS should be offered as a consumer response channel wherever possible, espe- cially for non-interactive media like traditional television, print and outdoor. As targeting becomes available, for example, through location-based services like mobile search that are still in an experimental stage, marketers willing to innovate can break through the clutter of marketing messages. Consumer guidelines from industry bodies like the Mobile Marketing Association (MMA) should be adopted by agencies to effectively plan their initiatives. For example, “pull” mobile marketing is a best practice supported by the MMA. Pull marketing, as in the case of Bluetooth, is where a consumer sees the opportunity to interact with mobile and actively initiates contact. A real world example of this best practice is going to the cinema, seeing a poster and downloading via Bluetooth an ad for an upcoming film or a ringtone for sound- track of the showing film. This approach contrasts with push mobile marketing, where a cinema randomly sends ads to consumers who pass by. Mobext recommends that marketers familiarize themselves with the MMA’s best practices, which are updated annually to guide implementation of shortcode programs, interactive voice response, and off-portal mobile Web sites. Several executives from Mobext have leadership roles in regional MMAs. Link to download the MMA Best Practice Guidelines www.mmaglobal.com/bestpractices.pdf © 2009 Mobext :: Havas Digital

6. GLOBAL MOBILE A WORLDVIEW Interesting facts In its Q4 2008 results, Nokia estimated that global industry mobile volume in 2008 was 1.21 3 billion devices, or a shipment of 3.3 million units per day.2 Nokia is also estimated to com- mand roughly 40 percent of the global smartphone market.3 Since the European launch of the ad-supported mobile virtual network operator Blyk in September 2007, 200,000 16-24 year olds have signed up in the UK by invitation only (as of 9 February 2009).4 On its Web site, Blyk cites case studies of SMS and MMS campaigns with response rates ranging from 34 percent to 67 percent.5 According to a report from Monocle magazine, mobile TV in Asia reached a tipping-point back in 2005 when South Korean teenagers downloaded an average of 16 minutes of short- form video each day. An NTT Docomo press release from February 2007 announced achievement of a 5 Gbps transmission speed. 6 A few years ago, the announced goal was a commercially viable 4G network by 2010.7 Such a network could transmit contents of an entire DVD in under a minute. To put this in context, based on current 3G data transfer rates in US / Western Eu- rope, a DVD could take nearly a full day to download. Estimated* iPhones Around the World Brazil............. 400,000 Portugal..... 50,000 France.......... 1 million Spain............. 450,000 Mexico. ....... 240,000 US.................... 8 million (and 3.5 million iTouches with Wifi) Source: *Mobext estimates © 2009 Mobext :: Havas Digital

7. GLOBAL MOBILE A WORLDVIEW Worldwide consumer trends 4 Asia: focus on JAPAN AND South Korea Leaders of the revolution For decades, Japan has been the world-leading market for the mobile industry. An early- adopter culture is combined with well-funded telecom companies and a strong tradition of research and development. It is no surprise that the Japanese have pioneered many of today’s 3G mobile products and services. One representation of a market’s mobile sophisti- cation is the average revenue per user (ARPU) from data services as well as the percentage of total revenues that data services comprise. When measured along those two axes, Japan is far and away the world’s mobile leader.8 Philippines ($2.1 - 45%) Japan 40% Indonesia Singapore Hong Kong China New Zealand UK (average across carriers in the country) Source: Chetan Sharma Consulting, 2009 Germany Austria US Ireland Portugal Italy Belgium Switzerland Data as % of total revenues Czech Malaysia Norway 20% Netherlands Sweden South Korea Denmark Mexico France Finland Canada Israel Spain Russia Greece Turkey Thailand 10% Brazil India Asia Europe Americas $5 $10 $20 Average Wireless Data ARPU (USD) for carriers in a country South Korea is another mobile powerhouse, where key outputs include pilots of 4G technologies and trailblazing TV services. In Japan and South Korea, over half of all mobile subscribers are on a 3G network. © 2009 Mobext :: Havas Digital

8. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends JAPAN AND SOUTH KOREA Mobile Internet To illustrate Japan’s strong demand for mobile services, the country’s population is 127 million, and there are approximately 110 million mobile subscribers, according to the year-end 2008 figures from the TCA.9 Factoring in some duplication, the penetration has peaked around 80 percent of the country’s population. In the mobile market itself, 3G accounts for almost 80 percent. Explosive growth in mobile Internet usage is mirrored in a rapidly expanding marketing industry. In addition, Asians are much more likely to pay for select kinds of mobile content than people from other regions.10 Willingness of adults in select countries worldwide to pay for select mobile content, by region, 2007 (% of respondents) NORTH LATIN ASIA EUROPE AMERICA AMERICA GAMERS I am willing to pay for access 8.5% 1.0% 1.6% 1.1% I am willing to pay a limited 29.5% 12.1% 13.0% 12.6% amount for access The activity is important but 43.6% 71.6% 53.7% 64.8% I do not want to pay for access I do not mind receiving ads in 18.4% 15.2% 31.8% 21.5% exchange for free access INSTANT MESSAGING I am willing to pay for access 7.3% 1.0% 3.1% 1.3% I am willing to pay a limited 28.2% 13.8% 9.9% 8.9% amount for access The activity is important but 48.0% 76.3% 63.6% 67.9% I do not want to pay for access I do not mind receiving ads in 16.4% 8.9% 23.4% 21.9% exchange for free access MULTIMEDIA (MUSIC, VIDEO) I am willing to pay for access 6.1% 1.1% 1.7% 1.3% I am willing to pay a limited 29.9% 8.4% 9.4% 10.4% amount for access The activity is important but 42.5% 74.2% 57.5% 66.3% I do not want to pay for access I do not mind receiving ads in 21.5% 16.3% 31.3% 22.0% exchange for free access NOTE: ages 16+; numbers may not add up to 100% due to rounding KPMG International, “Consumers and Convergence II”, October 18, 2007 Source: www.eMarketer.com © 2009 Mobext :: Havas Digital

9. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends JAPAN AND SOUTH KOREA Handsets and devices Japanese consumer trends suggest that the role of the desktop computer may soon be overtaken by radical new 3G smartphones, which bring together all the “must-have” features of computers, together with games consoles, camcorders and terabytes of memory. For marketers, the shift toward mobile computing creates opportunities for new services that work with the new generation of smartphones – to make life more informative, produc- tive, and enjoyable. Cross-platform New entertainment formats that work across media, including TV, Internet and mobile, address audience fragmentation while increasing interaction time between brands and consumers. Audiences at live sporting events are benefiting from new mobile services designed to enhance viewing experiences. Typically, an advance awareness campaign using outdoor, printed and online media is used to promote a mobile Web site. During the event, the site provides a news feed for event visitors, as well as deeper information such as team and player profiles. There are also branded downloads like games and wallpapers, that can be used after the event and shared with friends. For roaming events like golf and motor sports, mobile content can be targeted at audiences using infrared technology. By tailoring the content and experiences that make up a cross- platform campaign, Japanese marketers offer a variety of touchpoints that raise awareness of the activity and increase interaction time with audiences while at the event. This leads to greater audience retention and return for the brand. © 2009 Mobext :: Havas Digital

10. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends JAPAN AND SOUTH KOREA South Korean mobile TV producer TU Media reports that consumption patterns of mobile video differ from those of traditional TV, with commuting time, lunchtime and even indoors during office hours being most popular. Another insight is that South Koreans place more emphasis on the quality of the content they consume over length. The most popular genres are live sports and news, according to CEO Suh Young-kil, who said so at CommunicAsia in June 2007. Suh said that the average user watched for over an hour a day.11 Broadcaster-produced content is not all that South Koreans watch on their handsets. Similar to a high-end sophisticated Webcam setup, the 1-year old SHOW Monitoring System trans- mits live video from a camera to a phone, perfect for security and surveillance. M-commerce The m-commerce landscape in Japan demonstrates the potential future of the retail market for the rest of the world. M-commerce is expected to grow 45 percent to USD $26 billion in 2011, compared to 2007.12 Shopping with mobile devices is already a mainstream activity in Japan. A 2007 study from the UK’s Guardian reported that three-quarters of Japanese consumers said they enjoyed online clothes shopping with their mobile device at least once a month.13 M-COMMERCE IN JAPAN, 2007-2011 (billions) 2007 $17.9 2008 $20.5 2009 $23.0 2010 $24.5 2011 $26.0 Cybozu Media and Technology, 2007 as cited by US Commercial Service, “Japan: Service and Retail Franchising”, May 2008 Source: www.eMarketer.com One innovation, which has bloomed from NTT DoCoMo’s e-wallet devices, is called ‘Os- aifu-Keitai’. Customers wave their specially equipped phone over a reader device to use them as e-money, e-credit cards, train/plane tickets, membership cards and door keys. The wallet handsets have contactless integrated circuit (CIC) chips embedded, and there are 50 million of these phones in Japan.14 The e-wallets have become hugely popular, for the simple reason that they combine convenient timesaving services. Marketing and CRM applications include bill payment, online banking, and loyalty programs, all of which illustrate a rich opportunity for service providers who can introduce the e-wallet product elsewhere in the world. The drawback is security vulnerability since so much personal information is concentrated in a single device. © 2009 Mobext :: Havas Digital 10

11. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends JAPAN AND SOUTH KOREA South Koreans are also as comfortable transacting in m-commerce as e-commerce. Mobile trends blog mTrends reported that 63 percent of South Koreans make payments with their mobile phones, nearly everyone buys ringtones, and 37 percent download mobile games.15 Response Mechanisms The mass-market adoption of Quick Response (QR) codes gives packaged goods marketers an effective mechanism to direct consumers from product packaging to Web sites. There, they can offer product information and engaging promotional content and experiences. Ambient media containing QR codes is used within the media mix to raise awareness, drive traffic, and in some cas- es provide deeper layers of information – for instance, about TV characters and plot lines. As evidence of the huge potential for QR Codes, a ‘What Japan Thinks’ report from 2008 reveals that when the Japanese use a phone to request information about an ad, 42 percent scan a QR Code, and 35 percent send a blank email (to access the URL from the reply). Sur- prisingly, a third of those surveyed said they would type a URL directly to access information – exposing the myth that people won’t enter URLs on mobile devices. Indeed, URLs are a 16 viable response method but should be kept to a minimum length. Social Media Online networks play a major role in Japanese culture, helping to foster a sense of community that is often missing from everyday Japanese life. Mixi, Japan’s largest social networking site, has more members accessing from mobile devices than PCs. Niche social networks, like Mobile Game (often condensed to “Mobaga” or “Mobagay”) Town from company DeNA, enable the Japanese to connect around passion areas, games, and minutiae, and have proven to be a big hit. The success of niche social media demonstrates that the long tail of the Internet creates new opportunities for publishers and broadcasters alike. starting page game screen profile page avatar in virtual room Source: http://www.techcrunch.com/wp-content/uploads/2008/08/mobagetown-screens.png © 2009 Mobext :: Havas Digital 11

12. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends JAPAN AND SOUTH KOREA Cyworld, South Korea’s top social networking site, started in 1999, and took off in 2003, the year it was acquired by telco SK Communications. With near universal reach in the country, many young Koreans are “Cyholics” and the extension of Cyworld into mobile devices further increases Cyworld immersion. Cyworld has extended into the US, China, Japan, and Taiwan and still has more expansion plans on the horizon. Cyworld zone: MINI HOMPY Map, Video service ITEM SHOP MY PICTURE 1. Guest book 2. Photo album EMOTION 3. Friends list EXPRESSION 4. Diary 5. Plaza 6. BBS About service fees 7. Club Find subscribers 8. “My Cy” (settings) Registering for fixed payment © 2009 Mobext :: Havas Digital 12

13. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE Europe: focus on UK and Western Europe High Growth Although still trailing the early-adopter cultures of Japan and South Korea, the UK and Ger- many lead the European region with 65 million and 49 million mobile subscribers, respectively. Individual mobile penetration is fairly saturated with a current 80 percent penetration of the European population.17 TOP FIVE COUNTRIES REPRESENTED 77% OF EUROPEAN MOBILE MARKET IN 2007 MOBILE PENETRATION AND SUBSCRIBERS BY COUNTRY IN 2007 80 145% 150% Percentage of Overall Population Number of Individual Mobile Users (in millions) 133% 60 125% 116% 116% 111% 114% 113% 114% 40 107% 108% 112% 110% 108% 104% 100% 97% 20 86% 4 4 4 3 65 49 48 47 37 13 9 8 8 7 7 6 0 75% Germany UK France Italy Spain Netherlands Greece Portugal Belgium Sweden Austria Switzerland Denmark Finland Norway Ireland Number of individual mobile users Active mobile SIM penetration Source: JupiterResearch European Mobile Forecast, July 2008 (Western Europe) Mobile Internet The combination of more affordable and easy-to-use handsets like the iPhone, together with the roll-out of flat-rate data plans, popular email services from Yahoo! and Google, and deployment of faster mobile networks (3G and 3.5G), is fuelling steady growth of the mobile Internet. comScore estimates that one out of four Britons aged 15+ accesses the Internet using a mobile device.18 In the past, factors that hindered mobile browsing were a lack of knowledge about how to access the mobile Internet and a lack of awareness of flat-rate data plans. However, operators are increasingly bundling flat-rate data plans along with voice services. IAB UK announced that the number of people on unlimited data plans doubled in 2008.19 © 2009 Mobext :: Havas Digital 13

14. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE MOST MOBILE SERVICES WILL REACH CRITICAL MASS BY 2011 ADOPTION OF VARIOUS MOBILE SERVICES, 2007 TO 2013 100% Percentage of Mobile Subscribers 80% 60% Mass market 40% 20% Critical mass 0% 2007 2008 2009 2010 2011 2012 2013 SMS 72% 73% 74% 75% 76% 76% 76% BROWSING/INTERNET 23% 28% 33% 38% 41% 45% 47% MMS 24% 26% 39% 31% 32% 34% 35% MUSIC 15% 22% 26% 29% 31% 32% 34% VIDEO/TV 8% 12% 17% 21% 25% 28% 31% GAMES 16% 19% 23% 26% 28% 30% 31% E-MAIL 8% 10% 13% 16% 19% 22% 25% IM 1% 2% 4% 5% 7% 9% 10% Source: JupiterResearch European Mobile Forecast, July 2008 (Western Europe) As a whole, most mobile services in Europe are forecasted to reach critical mass by 2011. 3G will be mass market (greater than 50 percent penetration) by 2010 and 3.5G will be mass market in 2012. By country, Italy leads the way with 20 million 3G subscribers, representing 41 percent penetration. In 2007, Spain had 9 million 3G subscribers (25%), the UK has 11 million subscribers (23%), and France and Germany 8 million subscribers (16% and 13% penetration, respectively).20 Three popular consumer activities in the UK for the mobile Internet include listening to music (23%), accessing news and information on a mobile browser (20%), and accessing email (13%).21 Trailing the UK, the markets with the strongest uptake for the mobile Internet are Germany, Italy and Spain, respectively. The impact for the marketing industry is significant, as mobile marketing advances from direct-response SMS campaigns and mobile Internet sites to new areas like 3G mobile video, picture messaging and branded games. Although digital advertising spend continues to grow in the region, mobile represented a fraction of advertiser’s interactive budgets. The slice of the pie is predicted to increase globally over the next few years. Bernstein Research forecasted that mobile advertising worldwide would quadruple from $4.2 billion USD in 2008 (7% of online ad spending) to $17.0 billion USD by 2012 (19% of online ad spending).22 © 2009 Mobext :: Havas Digital 14

15. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE WORLDWIDE MOBILE AD SPENDING ($ BILLIONS AND % OF TOTAL DIGITAL ADVERTISING) 20 18% 20% 16% 16 16% 13% 12 12% 10% 8% 8 8% 6% 4 4% 2.7 4.7 6.8 10.1 13.6 17.5 0 0% 2007 2008 2009 2010 2011 2012 Source: Bernstein Research, “US Internet – The End of the Beginning“, May 2008 Gadgets and devices Years of phone subsidization in the UK have resulted in many upgrades to smartphone devices. Penetration is also high in Spain and Italy. Regional carrier O2 announced at the end of February 2009 that it had sold 1 million iPhones (over 16 months). This is surprisingly slow compared to Nokia’s N95 smartphone, which reached the milestone in seven months in 2007. Nevertheless, the iPhone effect on Web consumption is pronounced, even over other smartphones. British iPhone users are twice as likely to check mobile email as the typical smartphone user and two and a half times more likely to access news or information through a downloaded application.23 MOBILE CONTENT USED BY iPHONE, SMARTPHONE AND MOBILE PHONE USERS IN THE UK, JANUARY 2009 (% OF TOTAL) TOTAL TOTAL MOBILE iPHONE USERS SMARTPHONE USERS PHONE USERS Accessed news/info via browser 79.7% 48.0% 19.8% Accessed e-mail 75.4% 35.4% 13.1% Listened to mobile music 65.6% 40.5% 22.6% Accessed news or info via 55.6% 22.1% 6.3% downloaded application Accessed weather 55.5% 26.1% 9.2% Used web search 55.1% 31.9% 12.3% Accessed social networking site 54.8% 29.6% 12.7% NOTE: based on three-month average for the period ending January 2009; ages 13+ comScore Mobile as cited in press release, March 26, 2009 Source: www.eMarketer.com © 2009 Mobext :: Havas Digital 15

16. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE In the short term, all handset manufacturers will be affected by the economic downturn as consumers wait longer to replace their mobile phones. In the long run, however, because of price reduction and subsidization from retail partners, the 3G iPhone will continue to ap- peal to more of the mass market, slowly eroding the market share of Nokia, Sony Ericsson and Samsung. Exclusive relationships between carriers and high-end handsets will become the norm. Cross-platform With a view to fix audience fragmentation, leading broadcasters and producers are pio- neering new content formats to work across TV, the Web and mobile devices. TV producer Endemol launched a reality series for Bebo called “The Gap Year” which targets the highly , desirable 18 to 24 year old age group, and secured sponsors including Canon, The Royal Air Force, Tourism Auckland and Tourism Australia. Channel 4 is a major player whose Short Cuts “catch-up” subscription service offers viewers highlight packages from its stable of popular entertainment programming. Celebrity Big Brother is a popular reality TV show that offered Channel 4 audiences free one-minute mobisodes (made-for-mobile episodes) from the series, along with 10-second ads. Trials of the ad-subsidized mobisodes on Channel 4 mobile show high consumer demand. Advertiser interest in mobile cross-platform offerings make this content viable for publishers, including anything from animated banners and program sponsorship to interactive ads, pre and post- roll ads and viral trailers. CNN is another prime example of multi-platform distribution. CNN International has several prominent distribution deals for CNN mobile video content with telecom operators around the world, including Vodafone, Sky, Orange and the previously mentioned TU Media in South Korea. Source: http://cnnmobile.com/cnni_BN/services.do © 2009 Mobext :: Havas Digital 16

17. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE A study from CNN International reveals that nearly one fifth of its viewers, 18 percent of the audience, regularly listen to podcasts and one-third listen to online radio. A further 70 percent read magazines online and 74 percent say they watch recorded TV. CNN says the study emphasizes the significance of mobile, which is often overlooked but has the same audience size that the CNN Web site had two years ago. CNN has responded to the increase in the mobile audience by changing their fixed price of media inventory to a CPM-based model. M-commerce Premium mobile content is dominated by entertainment (video, games, music). The five largest European countries (UK, Germany, France, Italy, Spain) will account for close to 80 percent of the mobile content market by 2013.24 Meanwhile, consider the market for the early content revenue driver, ringtones. Competition from paid-for music downloads, side- loaded music (where music is downloaded to PC from fixed-line Internet, then moved from PC to mobile) and increased access to music through flat-rate data plans all factor into ringtone revenue reaching a plateau and likely declining over the next few years. An example of a typical m-commerce transaction today is the service offered by Transport for London, which allows people driving into the capital to pay the £8 daily or £160 monthly traffic congestion charge via text messaging. As the m-commerce market develops, the challenge for marketers is to design easy-to-use products and use clever campaign ideas that educate consumers about how to use them. Finally, the global not-for-profit group GS1 is governed by industrial and retail groups in order to standardize mobile technologies for accelerated adoption. Technologies include barcode reader and NFC (near-field communication) applications. Search Google dominates mobile browser-based searches in Western Europe, ranging from 63 percent in France to 88 percent in Italy.25 The data does not factor searching through all-in-one applications like Yahoo! Go or searching via bundled applications, where distribution deals with carriers play a role. Top Mobile Search Brands By Mobile Searcher Penetration Three-month average ending June 2008 (United States and Western Europe) top brand penetration second brand PENETRATION France Google 62.9% MSN/Windows Live Search 9.6% Germany Google 85.1% Yahoo! 9.4% Italy Google 88.1% Yahoo! 19.5% Spain Google 82.5% MSN/Windows Live Search 12.1% UK Google 74.0% Yahoo! 16.2% Source: comScore M:Metrics MobiLens © 2009 Mobext :: Havas Digital 17

18. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE Social media Steady demand for user-created content combined with social tools continue to fuel the growth of social networks. Flat-rate data-plans are set to do for social networking what affordable broadband did for the fixed-line Internet. Consumers use more of everything. As of January 2009, 13 percent of UK mobile phone users access social networking sites. 26 Nielsen Online estimates the figure to be nearly 2 million people, or 23 percent of mobile Web users.27 Facebook is already the fourth most popular mobile Web site, competing with BBC properties, Google, and Hotmail.28 The growth of social media for mobile demonstrates how user behavior is evolving from checking weather or airline flight status to time-intensive interaction. TOP 10 UK WEBSITES, RANKED BY UNIQUE MOBILE INTERNET AUDIENCE, Q3 2008 (Millions) 1. BBC NEWS 1.7 2. GOOGLE 1.7 3. BBC WEATHER 1.5 4. FACEBOOK 1.5 5. WINDOWS LIVE HOTMAIL 1.0 6. BBC SPORT 1.0 7. eBAY 0.9 8. YAHOO! MAIL 0.9 9. SKY SPORTS 0.8 10. GMAIL 0.6 NOTE: accessed at least once during each month of the quarter Nielsen Online, “Mobile Media View” as cited in press release, November 24, 2008 Source: www.eMarketer.com Response mechanisms A milestone was reached in Britain, following in Japan’s footsteps, when market-leading daily tabloid publisher The Sun carried out a large-scale pilot of QR code technology in 2007. Consumer response was confirmed a success due to 11,000 readers responding to QR codes during the first few weeks. A pullout supplement that ran in the tabloid educating readers about using QR codes was a key factor in the pilot’s success. With big advertisers like Sky, Twentieth Century Fox, News Corp International and Ladbrokes all participating in © 2009 Mobext :: Havas Digital 18

19. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UK AND WESTERN EUROPE the pilot, it is clear that usage of QR codes will grow over the medium term. Nokia handsets even come with QR-reading capability pre-installed.29 Another example of QR integration is this year’s launch of the Volvo C70. The pan-European marketing campaign to launch the vehicle includes QR codes in print media as a method of piquing consumer curiosity and extending a mechanism for further information gathering. Finally, Mobext recommends that marketers note the key differences comScore noted between late 2007 and late 2008 for receptivity and response to SMS ads in Western Europe. Just about all industries that saw increased volume of SMS ads also had a decreased response rate. Conversely, all industries that delivered more SMS ads year-over-year had an increased response rate. This trend will be an important to keep an eye on.30 As is the case with email marketing, mobile marketers will be delicately striking a balance with consumers among promotional offers, message frequency, and response rate. SMS ADVERTISING AUDIENCE AND RESPONSE RATE IN SELECT COUNTRIES IN WESTERN EUROPE, BY PRODUCT CATEGORY, AUGUST 2007 AUGUST 2008 (THOUSANDS AND % CHANGE) RECEIVED SMS AD RESPONSE RATE AUGUST AUGUST % CHANGE AUGUST AUGUST 2007 2008 2007 2008 Downloads for mobile phone 40,792 35,915 -12.0% 4.4% 3.9% News or informations 25,929 22,122 -14.7% 2.8% 3.2% Mobile phone or plan 32,222 31,574 -2.0% 4.6% 4.7% Entertainment 12,644 11,230 -11.2% 4.3% 5.1% Total mobile and media sectors 111,587 100,841 -9.6% 4.1% 4.1% Clothing/fashion 3,982 5,503 38.2% 5.8% 6.4% Restaurants 1,037 1,424 37.3% 11.6% 15.5% Cars 4,407 3,731 -15.4% 11.2% 7.9% Food 1,413 2,162 53.0% 9.2% 12.6% Financial services 8,963 9,956 11.1% 3.7% 4.7% Consumer electronics 3,957 4,647 17.4% 6.3% 6.7% Travel 5,779 6,602 14.2% 4.9% 5.8% Total non-mobile or media sectors 29,539 34,024 15.2% 6.2% 6.8% NOTE: France, Germany, Italy, Spain and the UK; three-month averages for periods ending August 2007 and August 2008 comScore M:Metrics as cited in press release, October 31, 2008 Source: www.eMarketer.com © 2009 Mobext :: Havas Digital 19

20. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES NORTH AMERICA: focus on UNITED STATES CATCHING UP The US mobile services market had long lagged behind Asia and Europe. However, the US market has accelerated quickly, thanks in large part to the iPhone. As of June 2008, the US market had 226 million mobile subscribers and reached the same penetration of 3G subscribers (28 percent) as the top five countries in Europe. The actual number of US 3G subscribers was 64 million.31 Mobile Internet Demand for mobile Internet services has skyrocketed in the last two years (US audience growth of 74 percent),32 thanks to the combined uptake of flat-rate data subscriptions, a massive increase in 3G subscriptions, and of course, the iPhone. With quick iPhone prolif- eration, US mobile Internet penetration (50 million people, representing 18 percent of mobile subscribers) is higher than the UK and many other Western European countries.33 mobile internet penetration (by market) 18.2% 16.9% 16.0% 13.5% 13.2% 12.4% 11.9% 9.6% 7.1% 4.3% 2.2% US UK Canada France Italy Spain Russia Germany China Brazil India Nielsen Mobile. Mobile Internet penetration amongst mobile subscribers. Latest estimates (US, February 2009; EU, Q1 2009; Canada Q4 2008; BRIC Q1 2008) Source: The Nielsen Company, The Global Online Media Landscape, April 2009 © 2009 Mobext :: Havas Digital 20

21. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES Messaging continues to gain traction through mobile devices, with 53 percent of American mobile subscribers using SMS, 26 percent using MMS, 15 percent using mobile email and 12 percent using instant messaging services. 34 Lastly, mobile video is growing – up to 10.3 million Americans are watching mobile video. The penetration rate is still in the single digits (5 percent of American mobile subscribers), a mere blip compared to the estimated 50+ percent penetration of mobile video in Japan and South Korea.35 Although consumer mobile Internet services continue to grow in the region, the mobile platform still represents a tiny fraction of US advertiser’s interactive budgets. eMarketer predicts this ratio to grow from less than 3 percent in 2008 to 9 percent in five years’ time. US MOBILE ADVERTISING SPENDING, 2008-2013 (Millions and % CHANGE / % OF TOTAL ONLINE ADVERTISING SPENDING) 10% US Mobile Advertising 9.0% Spending + % change 8% 7.1% 6% Mobile Advertising 4.7% Spending as a % of Total Online 3.7% Advertising 4% Spending 3.1% 2.8% $1,410 (41.7%) $2,390 (69.5%) $3,330 (39.3%) $995 (30.9%) $648 (35.0%) $760 (17.3%) 2% 0% 2008 2009 2010 2011 2012 2013 NOTE: includes mobile message advertising, mobile display advertising and mobile search advertising. eMarketer, February 2009 Source: www.eMarketer.com Gadgets and devices Better marketing of smartphone multimedia features, including photography and music, has driven a dramatic upgrade cycle in the past few years. Price is a key driver since most operators subsidize phones. Smartphones now comprise nearly a quarter of the US handset market.36 © 2009 Mobext :: Havas Digital 21

22. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES Telecom subsidization makes the 3G iPhone affordable (USD $199) to the mass market. As alluded to previously, the iPhone has been instrumental in advancing mobile data services, with 84 percent of iPhone users using email, 82 percent browsing news and information sites, 59 percent using a news and information application or widget. A surprisingly high 31 percent of iPhone users watch mobile video (likely a mix of QuickTime movie trailers and YouTube, as heavily promoted by Apple), compared to the 5 percent market average.37 service penetration by smartphone type, us (% OF RESPONDENTS) 64% Browsing: news info 82% 62% 72% E-mail 84% 44% 25% Applications: news info 59% 29% 28% Access SNS 44% 28% 19% Music 60% 28% 6% Video 30% 21% 7% RIM Downloaded games 32% 11% iPhone 7% Respond SMS ads 6% Smartphone 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: comScore MobiLens November 2008 Research firm NPD noted that Research in Motion (RIM) was the top vendor in the US market in Q1 2009 due to a two-for-one promotion, overtaking the iPhone 3G, and pushing market share to 50 percent. RIM’s BlackBerry Curve, Storm and Pearl were among the five most popular models. Meanwhile, the most formidable challengers over the next few years may prove to be Google’s Android-based phones, which ranked fifth (the T-Mobile G1).38 It took Apple two and a half months in 2007 to reach the one million units sold mark. On its recent earnings call, T-Mobile announced that it has sold its one millionth G1 phone based on the Android open-source operating system, meaning it took Google six months. Never- theless, it is still an impressive feat considering the incredible anticipation and fervor for the iPhone. The traction has T-Mobile forging ahead with additional handsets based on Android. Not to be outdone, Apple announced that with the release of its latest iPhone 3G S in late June sold 1 million units in 3 days. © 2009 Mobext :: Havas Digital 22

23. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES Cross-platform In response to growing changes in audience behavior, owners and producers of television content are designing new formats and adapting their business models. For example, the 12 to 34 year old audience MTV serves watches less broadcast TV. In order to address this trend for the top show “The Hills”, MTV created a virtual version of the show that has already attracted over two million users. In addition, MTV provides mobile streams of the show that are simulcast with the TV broadcast. According to MTV, it had 1 million streams of “The Hills” in Q1 2008. CBS launched quiz format “Million Dollar Password” as a modern update on the classic “Pass- word” game show. The program gives its audience choice and control about how to watch the series, with TV episodes, catch-up clips for the web and a casual game for mobile. The long-running series America’s Next Top Model is another TV format that has devel- oped a mobile game to reach its audience. Many American marketers believe it is up to the broadcasters to invest in achieving sufficient audience before they invest in advertising content for Web and mobile. A few brave brands are jumping in. History has shown this mentality pays off – advertisers in novel ad formats and new media benefit from significantly higher awareness and recall than advertising in tried and true media. © 2009 Mobext :: Havas Digital 23

24. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES M-commerce Unlike Japan, Americans are not accustomed to using their mobile phone to pay for goods or services. According to a Nielsen Mobile press release a year ago, less than four percent of Americans have engaged m-commerce. However, data usage is an indicator of sophis- tication and ease with the mobile platform. Half of all data-service users say they expect to participate in mobile commerce in the future. Nielsen’s research found that men are more likely than women to use their phone for commerce. The biggest hurdle for m-commerce is similar to the original challenge that faced e-commerce. Forty-one percent of data users not conducting mobile commerce cited security as their biggest concern.39 Ticket value for m-commerce will grow over the medium term in the US, from cheap items like mobile content to more expensive items like clothing. Mobext recommend that marketers assess their own businesses. Are your customers prepared to engage in m-commerce? What infrastructure is necessary to accommodate them? US ONLINE RETAILERS THAT HAVE A MOBILE COMMERCE SITE, OCTOBER 2008 (% OF RESPONDENTS) Have mobile commerce site: 4.4% Do not have mobile commerce site: 95.6% Internet Retailer, “Website Design, Content and Rich Media”, conduced by Knowledge Marketing, January 2009 Source: www.eMarketer.com Following the notion of Osaifu-Keitai, Texas Instruments has been testing cashless payments where consumers attach a one-square-inch sticker with an embedded RFID chip to their mobile device. The goal is to offer a tap and go payment service that doesn’t require consumers to install anything on their mobile device. © 2009 Mobext :: Havas Digital 24

25. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES Search As in Europe with the fixed-line Internet, Google also dominates browser-based mobile searching in the US (63 percent compared to 35 percent for Yahoo!), although Yahoo! has a stronger mobile search presence in the US than in other countries.40 Again, there are multiple types of searches not captured here – “on-deck” searches, local searches, and app/widget-based searches. Nevertheless, the fact that Google is synonymous with search bodes well for the company in the mobile sector. An intriguing shakeout will be the battle of services from Google (GOOG-411), Jingle Net- works (1-800-FREE411), and other free directory assistance providers and the mobile operators’ fee-based services for directory assistance. Mobext believes that the end result can only be an inevitable loss of the carriers’ revenue stream from directory assistance. Social media Among smartphone users in the US, mobile browsing has quickly evolved from quick hits of checking information like sports scores and weather updates to longer visits of browsing and interacting with content on social networks. Mobile social networking and blogging is an increasingly common daily activity. In fact, more than four times as many Americans access a social networking site or blog with their mobile device on a daily basis than did a year ago.41 “Soon after the launch of the 3G iPhone, Facebook, with one of the most popular iPhone applications available, surpassed MySpace in mobile usage in the U.S.” Source: Nielsen Online, Global Faces and Networked Places: A Nielsen Report on Social Networking’s New Global Footprint, March 2009 Besides Facebook and MySpace, mobile community MocoSpace announced that it reached 6 million users at the end of last year, primarily through word-of-mouth among its young members.42 As more people ramp up their use of social media while on the go, mobile will do what the hyperlink did for Web sites, speeding up the flow of communication and ignit- ing communities – all of which will make the world feel smaller. Another social network and micro-blogging service that has exploded onto the scene is Twitter. According to comscore in March 2009, worldwide visitors to Twitter.com increased 95% from 9.8 million to 19.1 million. At its core, Twitter is a communication platform that enables its users to quickly and easily send and read each others’ updates (known as tweets). Tweets are text-based, have a limit of 140 characters and can be sent via Twitter.com, SMS or through external applications via API (application programming interface). © 2009 Mobext :: Havas Digital 25

26. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES Media companies such as Viacom and Time Warner to name a few have quickly adopted Twitter through its many media outlets. By doing so, media companies and regularly users alike have another method to quickly disseminate (and receive) information to Twitter users. A recent example that demonstrates the effectiveness of Twitter as a communication vehicle (as well as other social media for that matter) was the sudden death of global pop icon Michael Jackson. Once it was announced by the media (TV, radio, on-line, etc.) that Michael Jackson had died, tweets containing “Michael Jackson” comprised 22.61% of the total tweets (http://mashable.com/2009/06/25/michael-jackson-twitter/). Therefore, if users followed the many media outlets via Twitter or linked to their friends through the service, the immediate global awareness of Michael Jackson’s death occurred in minutes. A “gallery’ of Twitter ‘Followers” 7 Things to know about Twitter…. http://net.educause.edu/ir/library/pdf/ELI7027.pdf © 2009 Mobext :: Havas Digital 26

27. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends UNITED STATES Response mechanisms One of the highest profile uses of mobile response has been on the popular American TV show American Idol where viewers are encouraged to use shortcodes to vote for their con- testant of choice. As a show sponsor, telecommunications giant ATT benefits from text voting through messaging revenues. However, ATT also received widespread criticism for sending unsolicited text messages to subscribers that promoted the show. While campaigning last year, US President Barack Obama encouraged people to sign up for campaign updates by providing their mobile numbers to have an additional channel by which to communicate with supporters. Nielsen Mobile estimates that 2.9 million mobile users received the text with the announcement of Joe Biden as Obama’s running mate.43 A number of US brands have been actively using shortcode marketing, including Coca Cola (as part of its “My Coke Rewards” program), Subway, Arby’s, Papa Johns, Domino’s Pizza, Pizza Hut, BestBuy, Foot Locker. 44 As long as there is a perceived value exchange, US consumers are willing participants. US MOBILE PHONE USERS WHO HAVE RESPONDED TO MOBILE PHONE OFFERS, BY OFFER TYPE, MARCH-APRIL 2008 (% OF RESPONDENTS) Responded to a text message for a product or service 70% 17% participated in surveys sent to my mobile phone 42% 10% responded to an e-mail offer for a product or service 30% 7% responded to a web offer on mobile phone’s internet browser 22% 5% responded to a coupon offer for a product or service % of responders to 18% mobile offers (n=193) % of all respondents 4% (n=800) NOTE: ages 15+ Direct Marketing Association (DMA), “Mobile Marketing: Consumer Perspectives” July 2008 cited by Marketing Charts, July 21, 2008 Source: www.eMarketer.com © 2009 Mobext :: Havas Digital 27

28. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends BRAZIL MEXICO LATIN AMERICA: focus on BRAZIL mexico GROWING DEMAND After years of limited Internet adoption and slow broadband growth, Mobext sees a great growth curve ahead for mobile services and interactive marketing in Latin America. The region has had economic growth for two years in a row, led by Brazil and Mexico, the countries with the most Internet users in the region. Latin America’s growth is significant because mobile will be the primary Interactive screen for a new generation of consumers. Former Mobile Marketing Association President Laura Marriott noted in July 2008 that mobile penetration in Latin America was six times the PC penetration.45 “Mobile is not simply viewed as an extension of the Web in BRIC (Brazil, Russia, India, and China), as it is in the US, West- ern Europe and parts of Asia-Pacific. Mobile is the Internet for an increasingly large and attractive consumer segment – an important distinction for marketers to keep in mind.” John du Pre Gauntt, eMarketer Senior Analyst Mobile Internet and content consumption MOBILE SUBSCRIPTIONS AND PENETRATION WORLDWIDE, BY REGION 2005-2008 (MILLIONS AND % OF POPULATION) NORTH LATIN middle east EUROPE ASIA-Pacific total AMERICA AMERICA and africa 2005 224.8 691.7 820.0 232.0 188.2 2,156.7 % penetration 68.4% 73.1% 22.8% 43.1% 18.9% 27.6% 2006 251.5 801.8 1,058.1 296.1 271.7 2,679.2 % penetration 75.9% 90.4% 29.1% 54.4% 26.7% 34.3% 2007 277.0 889.2 1,363.0 362.4 379.9 3,271.6 % penetration 82.8% 100.8% 37.0% 65.8% 36.6% 41.3% 2008 294.0 938.1 1,686.5 425.6 475.1 3,819.4 % penetration 87.1% 106.6% 45.3% 76.3% 44.8% 46.5% NOTE: numbers may not add up to total due to rounding IDATE and ENTER, “Mobile 2009: Markets Trends”, sponsored by Oesía, February 5, 2009 Source: www.eMarketer.com © 2009 Mobext :: Havas Digital 28

29. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends BRAZIL MEXICO eMarketer predicts Brazil’s already hefty 140 million subscriber base to grow to 176 million by 2012.46 Popular consumer behavior includes; 51 percent using text messaging, 15 percent sending receiving photos, and 11 percent accessing music, videos and ringtones.47 Given that a high proportion of Brazilians are pre-paid users, promotions such as free air- time or alert services have proven extremely popular. Content revenues are a high growth area. With 73 percent penetration of mobile, 40 percent mobile subscribers accessing the mobile internet, and only 5 percent actually using the mobile internet (adoption rate), Brazil represents both the largest market in the region for mobile services as well as the largest upside potential.48 Mexico’s mobile market grew at a rate of approximately 15 percent per annum, reaching more than 70 percent penetration by close of 2008. And, at early 2009 Telmex’s sister company, América Móvil (Telcel), still accounted for around 72 percent of the mobile market. Deployment of 3G service in both markets translates to richer and more interactive mobile content experiences and advertising campaigns. MOBILE PHONE PENETRATION IN MEXICO, 2003-2008 (% OF POPULATION) 2003 29.1% 2004 36.3% 2005 45.1% 2006 52.6% 2007 62.6% 2008 70.3% Comisión Federal de Telecomunicaciones (COFETEL) with company reports, “Telefonía Móvil”, March 19, 2009 Source: www.eMarketer.com Gadgets and devices As noted previously, Nokia commands roughly 40 percent of the global smartphone market, but saw a precipitous drop in its Latin American operations in Q1 2009 compared to the same quarter a year ago.49 The variety of Nokia’s smartphone portfolio provides a major strategic advantage, including a wide variety of high-end, mid-tier, and basic models. However, Mexico City-based América Móvil, the largest mobile operator in Latin America, started selling the iPhone last year and quickly amassed backlogs of consumers. The lower subsidized price of the 3G iPhone will continue to extend the phone’s reach throughout the © 2009 Mobext :: Havas Digital 29

30. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends BRAZIL MEXICO region. Apple may be able to leapfrog key competitors like Nokia and RIM to take a market- leading position for Latin American smartphone sales. Cross-platform Brazil’s growth of online advertising has the potential to be a major catalyst for cross-platform content consumption. Although 3G services are still early, Brazilians are already aware of cross-platform content. An April 2008 study by Accenture demonstrates that Brazilians are divided in their demand to watch television on their mobile devices (59%) versus their PCs (51%).50 Fiat, an active mobile marketer, launched a campaign last year with display banners on a local carrier and showing video on the mobile Web site. Federico Pisani Massamormile, CEO of Hanzo and chairman for the Latin American region of the Mobile Marketing Association, sees participatory TV contributing to future mobile data revenues.5 1 Mobext believe that this trend bodes well for publishers (and their marketing partners) that are developing content for key audiences including teens, young adults and mobile professionals. Search Two mobile operators dominate the playing field in Latin America, Telefónica and America Movil. In 2007, Yahoo! announced availability of its oneSearch mobile search product for Argentina, Brazil, and Mexico and distribution deals setting oneSearch as the default search engine for both companies. Not to be completely excluded, a few months later, Microsoft announced an alliance with Telefónica to distribute Windows Live Services (Hotmail, Mes- senger, and Spaces, but minus Search) on all Telefónica handsets, expanding on availability that already existed in Argentina and Chile. Meanwhile, Google’s mobile strategy has been centered on its own Android platform rather than distribution deals. Google is betting on consumer mindshare and reputation for people to use Google with their mobile devices. This has been a successful strategy for Google so far, as demonstrated by the market share for browser-based searches in Europe and the US. The more the pendulum swings in the market toward full-featured smartphones, the stronger an effect Google has on the market. On the other hand, the more people that use handsets with only basic email and Web access, the more influence mobile operators and handset manufacturers influence the regional mobile search landscape. Social media In addition to US-centric social networks MySpace and Facebook looking to penetrate the Latin American market, the two biggest social networks are hi5 and Orkut in Brazil. Hi5 launched hi5 mobile in August 2008 and is optimized to run on a variety of phones, including but not limited to, the iPhone, RIM’s BlackBerry, Nokia, Motorola, Samsung, LG, and Sony Ericcson handsets. The mobile version of the Orkut Web site has been out for a year © 2009 Mobext :: Havas Digital 30

31. GLOBAL MOBILE A WORLDVIEW 4. Worldwide consumer trends BRAZIL MEXICO and the Orkut Mobile App has recently been released. Like Facebook’s feature of uploading mobile photos directly to profiles, Orkut also allows users to directly upload mobile photos to their Orkut profiles. AirG is a social network player for “on-deck” users as part of a white label service. Its mobile social network service covers 19 million mobile users through Telefonica’s Movis- tar brand in Ecuador, Peru and Venezuela. Custom branded as Conexion Latina, the service allows users to communicate to peers with features like photo profiles, instant messaging, photo and video sharing, blogging and user searching. AirG reveals some characteristics of its user base: a majority of its users spend more than one hour a day in the community; nearly 60 percent don’t own a PC; six in ten have at least a high-school education; and the five most popular handsets used to access AirG retail for less than $100 with a service contract. Thanks to a bright outlook for social network growth in Latin America, mobile communities will be one of the primary drivers of future mobile usage. View Facebook profiles on your mobile © 2009 Mobext :: Havas Digital 31

32. GLOBAL MOBILE A WORLDVIEW Coming to a 3rd Screen Near You! The iPhone Phenomenon 5 the Touchscreen Revolution Arguably, no other handset has jump-started mobile marketing globally as much as the Apple iPhone. Along with the iPhone, a rash of touchscreen mobile devices are on the market, including but not limited to, the iPod Touch, BlackBerry Storm, G1 Android, HTC handsets, Samsung’s Star and Preston, and the upcoming Nokia N97 and Palm Pre. With the current pace of innovation in handsets, sales of smartphones worldwide are set to dra- matically increase. SMARTPHONE SALES WORLDWIDE, 2009 2013 (% OF TOTAL MOBILE PHONE SALES) 2009 14% 2013 38% Informa Telecoms Media, “Mobile Operating Systems: The impact of open source and importance of user experience” as cited in press release, March 20, 2009 Source: www.eMarketer.com “Even in this challenging economy, consumers are migrating toward Web-capable handsets and their supporting data plans to access more information and entertainment on the go”. Ross Rubin, director of industry analysis, The NPD Group, in a press release, May 4, 2009 Source: eMarketer, June 2009 Apps (or widgets) on these handsets have challenged the notion that a browser is best for users to interact online. Like the peripherals ecosystem for iPods, developers are incredibly busy creating apps for the growing iPhone consumer base (35,000 applications and count- ing). Apple’s App Store, having recently celebrated its one billionth download from iPhone and iPod Touch users, has sparked comparable stores from competitors (Android Market, BlackBerry App World, Nokia’s upcoming Ovi Store, Microsoft’s upcoming Windows Mar- ketplace for Mobile). © 2009 Mobext :: Havas Digital 32

33. GLOBAL MOBILE A WORLDVIEW 5. Coming to a 3rd Screen Near You! NUMBER OF MOBILE APPLICATIONS DOWNLOADED BY US SMARTPHONE OWNERS, BY MANUFACTURER, MARCH-APRIL 2009 (% OF RESPONDENTS) APPLE RIM PALM MOTOROLA TOTAL n=104 n=237 n=56 n=84 n=830 0 2% 32% 23% 36% 27% 1-5 15% 46% 50% 37% 44% 6-10 22% 15% 18% 13% 14% 11-15 15% 4% 5% 4% 5% 16-20 18% 1% 2% 4% 4% 21-30 10% 0% 2% 0% 2% 31+ 17% 1% 0% 7% 4% NOTE: numbers may not add up to 100% due to rounding. Compete, Inc. provided yo eMarketer, May 2009 iPhone leading the field in Apps – total downloads and range of App categories – largely based on the novelty of its Touchscreen functionality and its lead in working with App developers for iPhones... LEADING MOBILE APPLICATION CATEGORIES DOWNLOADED BY US SMARTPHONE OWNERS, BY MANUFACTURER, Q1 2009 (% OF RESPONDENTS IN EACH GROUP) iPHONE RIM PALM MOTOROLA ALL OWNERS Games 79% 26% 44% 33% 37% Music 55% 12% 20% 27% 28% Entertainment 78% 19% 16% 24% 26% Weather 57% 18% 19% 24% 24% Navigation 33% 22% 9% 27% 21% News 43% 16% 20% 18% 18% Social networking 35% 21% 9% 11% 16% Utilities 42% 10% 15% 18% 16% Business 25% 11% 5% 16% 13% Travel 29% 11% 2% 10% 12% Finance 32% 11% 5% 17% 11% Productivity 27% 6% 15% 14% 11% Sports 23% 13% 7% 10% 11% Education 23% 6% 9% 12% 9% Photography 20% 5% 5% 10% 9% Books 23% 3% 11% 5% 8% Healthcare and fitness 19% 3% 13% 8% 8% Lifestyle 29% 3% 2% 10% 8% Reference 28% 4% 5% 11% 8% Other 2% 4% 5% 4% 4% Compete, Inc., “Smartphone Intelligence Report” as cited by MediaPost, May 5, 2009 Source: www.eMarketer.com © 2009 Mobext :: Havas Digital 33

34. GLOBAL MOBILE A WORLDVIEW 5. Coming to a 3rd Screen Near You! The iPhone’s Safari browser is able to render a Web site as-is. Therefore, it may be tempt- ing to think that the mobile Internet is now simply an extension of the fixed-line Internet. However, a touchscreen interface still requires design and content differences for a user “on the go.” As a result, when building out a mobile presence, marketers have to keep in mind these implications for the mobile Internet: • Different menu sizes: due to the limited display, most menus take up most, if not all, of the visible area. Menus have to be concise. • Direct linking: tailoring to the “on the go” mentality is key. It is imperative to minimize the number of levels a consumer has to drill down. When producing content for mobile users, provide direct links that enable users to quickly and easily retrieve nuggets of information. • No rollover/mouseover effects: the main gesture for touchscreen handsets is swiping for navigation. Whereas a hovering pointer exists with a laptop or desktop computer, a touchscreen device does not have an equivalent pointer. Marketers and content producers accustomed to menus and panels expanding with a mouseover action need to adjust and provide an alternative compelling user experience. • Limited scrolling: another best practice is to minimize scrolling to a single direction and also to limit the amount of scrolling necessary. • Utility of apps/widgets: there is a finite amount of room on handsets. That said, users will make room for apps that provide the most benefit, whether that benefit is productivity, savings, income, or entertainment. Avoid creating an app/widget without a clear benefit or else it will eventually be part of the apps “graveyard” (with adverse brand image effects). © 2009 Mobext :: Havas Digital 34

35. GLOBAL MOBILE A WORLDVIEW 5. Coming to a 3rd Screen Near You! Mobile video/TV Outside Asia, mobile video/TV is a medium for much of the world that is far from mainstream. With some exceptions (including the examples we have cited as well as operators like 3 Italia and Swisscom), one of the obstacles is investment, a chicken-and-egg situation. Marketers believe broadcasters should invest in the medium but many are reluctant to do so without accompanying advertising revenue. Therefore, the primary income stream for video service providers and content owners is subscription revenue, which leads to the second historic challenge with mobile video/TV-network infrastructure and handset development in each region capable of supporting a video-consuming mobile audience. TYPES OF MOBILE APPLICATIONS DOWNLOADED BY US MOBILE PHONE USERS*, DECEMBER 2008 - FEBRUARY 2009 (% OF RESPONDENTS) GAMES 61.6% LOCAL DIRECTORY APPLICATIONS 53% MUSIC APPLICATIONS 50.5% CHAT/INSTANT MESSAGING 40.1% 31.6% SOCIAL NETWORKING APPLICATIONS 10.3% VIDEO PLAYER APPLICATIONS 9.1% NONE OF THESE 1.5% NOT SURE NOTE: n=497, * who have downloaded mobile applications Skype survey conducted by Zogby International, provided to eMarketer, March 17, 2009 Source: www.eMarketer.com Video/TV applications will take some time to reach critical mass, but will surely gain popularity in years to come. As mentioned previously, the iPhone 3G has ignited all kinds of consumption, including mobile video. US mobile video operator MobiTV is slowly building, having reached 6 million subscribers.52 A key question is how content owners choose to apply the lesson learned from the Internet content explosion – paid subscriptions for premium content giving way to free content distribution. Given bandwidth costs and a limited viewing audience, ad-supported models are unlikely to be sustainable in the near term. © 2009 Mobext :: Havas Digital 35

36. GLOBAL MOBILE A WORLDVIEW 5. Coming to a 3rd Screen Near You! What’s more, because mobile video requires more bandwidth, a key consideration of its growth depends on the mobile carriers. Can their networks support more users consuming mobile video? A prime example of the carriers’ weariness of mobile video is that fact that ATT recently prohibited the use of Slingbox mobile’s iPhone app on its 3G network; it can only be used via wifi. These network constraints may be addressed as carriers introduce next generation data transmission technology such as WiMax and LTE. How much of an impact will YouTube have? Consider the recent deal forged with sports cable network ESPN for an ESPN video player on YouTube. Chances are, YouTube will continue to be a tremendous force on the digital video landscape for the foreseeable future. The launch of a Hulu iPhone app could also prove to be a game-changer for mobile video, both in the US and overseas, depending on the success of Hulu’s international efforts. Source: http://www.flotv.com From an advertising standpoint, marketers have already proven that they can successfully attract audiences to watch mobile videos about products or services they find relevant. Yet the hurdles of scale and a fragmented marketplace mean that mobile video/TV advertising has a long way to go before being regularly considered alongside other media vehicles. While these are the same hurdles podcasting faces as an advertising medium, mobile video/TV has a much brighter outlook in the longer term. While podcasting has a small head and a very long tail, mobile video/TV will have a much larger head of content, thanks to established producers (television networks) porting their professional content across plat- forms. Again, Mobext can help you navigate this area to optimize your marketing spend. © 2009 Mobext :: Havas Digital 36

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