IMAGINE THE FUTURE

Leveraging innovative business models

Context

“In-content” advertising is emerging as a powerful new alternative for ad placement. Rather than before, following, or during a commercial break – ads are placed “within” a video or game. The two competing models are classic ad viewing that is on-top of the content, and advanced click-on ads where Internet features enable viewers to interact with the ad real-time when they are most motivated.

Innovative business models

Business opportunities

• Content producers – gain an additional revenue source with this massive, high quality broadcasting platform (beyond TV and cinema), which also discourages piracy because it’s free to users • Advertisers - Solution to reach viewers who are escaping from TV commercials - Channel to target viewers, one-on-one, according to their interests - Unlimited and tailor-made ad space, even in blockbusters, for more options, less competition, and reduced placement costs - Ability to track ROI in advertising and improve spend• Content aggregators – compelling business opportunity for first-movers with the technology and the connections to bring together producers and advertisers – with broad user appeal

Key Highlights

• Advertisers are increasingly challenged in planning and tracking communication and media spend because of fragmenting and de-linearized broadcasting platforms

• Initially concerned with content piracy, major content producers are massively investing in mobile and Internet platforms with a predominance of VOD model which guarantees monetization. However, legal Internet viewing model might only reach critical size through free broadcasting

• Pure players such as VideoClix intend to combine the strategic interests of both advertisers and content producers by developing in-content advertising formats for online videos or video games

• These initiatives are driving the emergence of “branded content”, the controversial advertising trend of creating content for a specific brand

“In-content” advertising- Newsletter # 5, 2009 -

C O N TE N T P R O D U C E R S

V ideo content w ith ad revenue prospect

A D V E R TIS E R S

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W EB V IEW E R S

Targeted display ads are delivered on viewers' click

4 Videos are available in high-qualityfree through the VideoClix Player

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to find out m ore

VideoClixTV collects authorized high quality content

1 VideoClixTV transforms content into interactive ad clickable video

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Traditional ad adaptation to “In-content” advertising

Advanced “In-content” advertising (example of VideoClix.tv)

C onten t

A d vertis ing

Free fo r users

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VideoClix.tv profile

• Commercial launched in 2006 (VideoClix technology developed in 1999)

• Employees: 44 in Europe, Asia, North America and Central America

• Founder: Babak Maghfourian

• Source of revenue: advertising revenue sharing with content producers (CPC, CPL, CPA), selling annual licenses, commission on products sold

• Community members: over 11,000 licensees around the globe

About A.T. Kearney

A.T. Kearney is a global strategic management consulting firm known for helping clients gain leading results through a unique combination of strategic insight and collaborative working style. We serve the largest global clients in all major industries from our offices located in 35 countries. We have developed a leading Communications and Media practice with more than 600 dedicated professionals worldwide, focusing on addressing strategic and operational issues of the Telecom, Media and High Technology industry.

For further information about the A.T. Kearney CHT practice please visit: www.atkearney.com

Website

A.T. Kearney interview of VideoClix.tv founder – Babak Maghfourian

• What problem does VideoClix solve?

“VideoClix allows advertisers to get their message across in a non-intrusive manner. It is user initiated and more effective than traditional advertisement. Traditional CTR (click through ratio) is less than 2%, but VideoClix CTR is higher than 4%.”

• What is VideoClix’s Value proposition? “Multiple value: new revenue channel for content owners, non-intrusive yet very effective advertisement, additional info on all objects in video, increased sales and conversions for ecommerce stores, higher retention and increased traffic for video portals.”

• What is new /unique?

“VideoClix turns what is inherently a passive experience into an active and engaging experience. A layer of

information and monetization that has never existed before.”

• How large is the business behind it?

“The clickability is the tip of the iceberg. It was achieved in 1999 and perfected in early 2001 and 02.The real

business is the relationships, the content partners, the traffic and ad sales that truly fuel this engine.”

Example of other “In-content” advertising initiatives

• Trial version launched in October 2008• An automatically placed overlay advertising process to superimpose company logos into clear spaces (such as blue skies) during online video programs

• Launched in August 2007• InVideo advertising by Google allows advertisers to run “20-10-80” overlay ads on selected YouTube videos (a 80% transparent teaser overlay appears in the bottom 20% of the screen for 10 seconds)

ITV In-Video Advertising

In-Game Advertising

YouTube

• Launched in 2002• The Microsoft-owned company has developed a straightforward and seamless process for executing in-game ad campaigns

• Launched in 2008• AdSense for Games, which is currently in beta, will allow video, image or text ads to be displayed at any point in online games (particularly in casual games)

Massive Google