To Mobile Or Not To Mobile? Digital Strategies for Advertisers September 2009

1. To Mobile Or Not To Mobile?Digital Strategies for AdvertisersSeptember 2009

2. What we’ll be covering today . . . . Mobile Subscriber

3. Landscape

4. Mobile consists of a diverse set of media vehicles, each with their own unique reach and opportunities Mobile Subscribers (in millions) Q2 2008– Q2 2009, National UNIQUE USERS (%) 221M 132M (60%) 68M (31%) 55M (25%) Audio 39M (18%) Apps 27M (12%) Games 23M (10%) 6.8M + 8.4M via web (7%)

5. Total Smartphone subscribers increased 72% from Q2 2008 – Q2 2009 Smartphone Subscribers and Device Penetration Q2 2008 – Q2 2009, All Mobile Subscribers (In Millions)

6. Smartphone penetration continues to grow steadily among recent acquirers; nearly one-fourth of new handsets are smartphones Smartphone Device Penetration Among Recent Handset Acquirers Acquired device in the past 6 months, Q2 2008 – Q2 2009 22.5% 22.1% 21.7% 17.7% 15.6%

7. Smartphone penetration varies by country; Italy and Spain lead the way Smartphone Penetration Across Global Markets All Subscribers *Smartphone penetration represents Q1 2009 data due to survey cadence variances Question used:B1900 Source: Nielsen Mobile Insights, US, Q2 2009; Nielsen Mobile Insights, Canada, Q1 2009; Nielsen Mobile Insights, Europe, Q1 2009

8. User Profile

9. The major difference between iPhone users and all smartphone users are Income and Business vs. Personal Usage All Smartphones iPhone Mobile Demographics, Q2 2009

10. Mobile Media Consumption

11. iPhone owners spend nearly as much on data charges ($37.60) as voice plan charges ($42.00) each month Average Billed Revenue Per Subscriber Component All Lines, Q1 2009, National

12. Over 23% of all Streaming Audio users and 13% of mobile Internet users have an iPhone User Composition by Advanced Data Feature Q2 2009 Data vs. Voice-Only Users Q2 2009 27.8% 38.3% 41.0% 49.0% 54.8% 57.5%

13. Advanced data usage is not limited to early adopters; “If you pay for it you will use it” Advanced Data User Penetration Q2 2007 – Q2 2009 *iPhone launched in June 2007 13

14. iPhone owners over index on both music downloads and video viewing; built-in handset features are emphasized as well Media Usage Q2 2009 Features Regularly Used on Handset Q2 2009

15. Mobile media adoption occurs at different rates depending on country; China in particular is adopting SMS and Internet SMS Usage Penetration Across Global Markets All Subscribers Mobile Internet Usage Penetration Across Global Markets All Subscribers 15

16. AT&T subscribers send/receive more text messages than voice calls; iPhone users even more so – especially teens Average Number of Monthly Calls vs. Text Messages – All AT&T Subscribers Q1 2009, National Average Number of Monthly Calls vs. Text Messages – iPhone Users Q1 2009, National

17. Top performing SMS campaigns are coming from a wide variety of sources and genres Unique Users (000s) by SMS Brand AT&T and Verizon, Q2 2009 Top Standard Rate SMS by Transactions (000s) AT&T and Verizon, Q2 2009 4.2B Total Standard Rate Transactions in Q2 2009 Source: Mobile Media Measurement – Media SMS Report Page 17

18. Social networking is driving mobile Internet growth Mobile Internet Audience Growth by Category July 2008 – July 2009, National Mobile Social Networking audience up from 6.4M in Jul-08 to 18.3M in Jul-09

19. Over 91M subscribers recall seeing some form of mobile advertising Mobile Advertising Exposure (in millions) National – All Mobile Subscribers (In Millions)

20. SMS and MMS are the most popular forms of mobile advertising responses Ad Recall and Response Q2 2009 Top Responses Among Ad Responders Q2 2009 47% of ad viewers made a response in Q2

21. Teens are most accepting of mobile advertising Perceptions of Mobile Advertising US Q2 09

22. Outlook 22

23. Garter predicts a large increase in smartphone adoption over the next few years

24. The previous digital revolution could give us clues as to how the Mobile trajectory will play out over the next few years Internet Audience by Category 2003 2009 Source: Nielsen Netview 24

25. The previous digital revolution could give us clues as to how the Mobile trajectory will play out over the next few years Internet Audience by Category More dynamic, participatory applications Broadband Penetration 2003 2009 Technology Comfort Level End of the walled garden 25

26. The previous digital revolution could give us clues as to how the Mobile trajectory will play out over the next few years Mobile ----------- ? Internet Audience by Category Lag effect of 1-2 year contracts Wide array of “connected” mobile devices Mobile commerce Falling prices More dynamic, participatory applications Mobile Trajectory Broadband Penetration ------- 2009 ------- 2015 2003 2009 Technology Comfort Level End of the walled garden 26

27. Mandate 27

28. The way we’re thinking about mobile marketing High Intensity Research Low Intensity Research Retail

29. The important Mobile Marketing activities can be aligned with consumers’ interactions with devices App downloads Mobile Video/TV Full track music downloads Advanced mobile internet (social networking, LBS) SMS Taking pictures Basic mobile internet (email, IM)

30. As Smartphone penetration and engagement rises, there will be greater opportunity to capitalize on the dynamic features of these devices Utility Enrichment 2009 2015

31. Best Practices: Provide information to Support a Purchase • Barnes & Noble iPhone Apps What is it? Barnes & Noble offers two mobile applications, allowing consumers use their phones to • Buy and read books (eReader) • Browse virtual bookshelves Why we like it • Limits Need for Planning in Advance –Reference book reviews and recommendations on-the-go • Supports In-Store Experience – Reserve copies at brick & mortar location • Innovative – Take photo of book cover with phone and get access to reviews, product details and more • Personalized –Location-based: get directions to nearest store, find local events • Inspirational –Watch video interviews, browse recommendations Who should be doing it? • Retailers (e.g. Consumer Electronics Retailers) • Shoppers looking to make informed purchase decisions quickly, without having to set aside time for researching before heading to the store For whom?

32. Best Practices: Coupons, Discounts • Mobile Coupons Upload digital coupons to cell phones via coupon aggregators (e.g. shortcut$.com, Cellfire) or retailers/manufacturers (e.g. P&G eSaver) What is it? • Limits Need for Planning in Advance –Allows shoppers to find the best deals on-the-go • Easy & Green – Eliminates clipping and printing coupons • Accessible –Platform can be SMS or MMS, making it a viable option even for those without smartphones • Personalized –Location-based: get directions to nearest store carrying product of interest Why we like it • Retailers, Low Intensity Research Manufacturers (e.g. Mass Merchants, Packaged Goods) Who should be doing it? For whom? • Cost conscious shoppers looking for the best deal on-the-go, without having to set aside time to hunt for coupons/deals before heading to the store

33. Best Practices: Information & Inspiration • Kraft’s iFood App Kraft’s iPhone/iPod Touch application offers recipes, simplifies grocery shopping What is it? • Limits Need for Planning in Advance – On-the-go recipes and grocery list functionality save time, reducing need to plan before heading to the store • Inspirational – Recipes, how-to videos • Personalized –Location-based: get directions to nearest store carrying product of interest; store grocery lists; stick to a set budget • Integrated – Linked to Kraftfoods.com Why we like it • Retailers, Low Intensity Research Manufacturers (e.g. Pharmacies, Packaged Goods) Who should be doing it? • Power Moms who do not have time to set aside for meal planning before heading to the store For whom?

34. Best Practices: Sponsorship • Pepsi Sponsors “Drink Up, Rock Out” • As part of its joint sponsorship of “Drink Up, Rock Out” with MTV and the Rock Band game, Pepsi has an iPhone app that lets users turn photos of themselves or friends into their favorite rock stars What is it? Why we like it • Interactive & Fun – Application allows users to share their creations • Taps into Engaged Fan Base – Spreads awareness by appealing to music enthusiasts and gamers • Timely – Tied to highly anticipated release of The Beatles: Rock Band • Retailers and all types of Manufacturers (e.g. Automotive Manufacturers, Consumer Electronics Retailers) Who should be doing it? For whom? • Consumers who enjoy using their mobile devices for entertainment

35. Best Practices: Fun & Useful Apps • Information • Companies provide category-relevant mobile games or applications • Gillette’s uArt iPhone/iPod Touch application allows men to test out facial hairstyles • Charmin sponsors Sit or Squat, a bathroom-finder application What is it? Why we like it • Tongue-In-Cheek, But Relevant – Applications provide value, beyond marketing brand • Sharable –Gillette application allows men to share their creations, spreading awareness of Gillette • Retailers and all types of Manufacturers (e.g. Apparel Retailers, Packaged Goods) Who should be doing it? • Consumers who enjoy using their mobile devices as a one-stop-shop throughout the day, ranging from practical activities to entertainment For whom?

36. Key Takeaways The key driver of mobile growth is good devices and fast, affordable data. If people have it, they will use it…a lot. Smartphones are poised for serious growth in sales over the next few years. If you don’t have already have a mobile strategy, it is time to start thinking about one. It isn’t just about apps. There are a wide array of mobile marketing activities that can work well for your brand. The key to unlocking Mobile is to take advantage of its unique anytime/anywhere enablement of information exchange.