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Professor Sunil Gupta and Researcher Saloni Chaturvedi (India Research Center) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2016, 2017 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

S U N I L G U P T A

S A L O N I C H A T U R V E D I

InMobi: Reimagining Mobile Advertising

Miip, InMobi’s latest product, is fundamentally revolutionary in the way it transforms advertising into moments of discovery for consumers.

— Naveen Tewari, Cofounder and CEO, InMobi

On the evening of August 18, 2015, the hall at the Today Art Museum in Beijing was packed. Amid the bright lights and the expectant crowd, Naveen Tewari, Cofounder and CEO of InMobi, a global mobile advertising network, felt a wave of euphoria as he stepped onto the stage to deliver his first speech in Mandarin. Tewari was about to launch InMobi’s latest offering, a discovery platform called Miip. Often called India’s first unicorn, InMobi served about 7 to 10 billion ads a day and was considered a pioneer in the Indian technology industry. The launch of Miip came on the heels of InMobi’s bold move of declining an offer to be acquired by Google.1

The InMobi cofounders had long believed that there was something fundamentally wrong with the way advertising worked; Miip was the result of InMobi’s efforts to transform advertising. Tewari explained, “You can clearly sense that there is limited value that advertising is adding to people’s lives; knowingly or unknowingly, it is just a necessary evil. A $600 billion industry cannot be living off these kinds of emotions.” He added, “Advertising was meant to be beautiful and useful. However, the advertising world has lost sight of the objectives along the way, which is to help consumers make smarter choices and decisions.”

Visually represented by a mascot, Miip, at its heart, was the belief that advertising needed to become more relevant for discovery of products. Tewari explained:

[So] advertising cannot remain a disconnected stranger to the user anymore. It needs to have a familiar trusted face, something that can make it friendlier to the user. Very rarely do you discover anything new all by yourself. You often rely on friends to make suggestions about something you might love, find useful, or that will make your life easier. We believe Miip will be able to do exactly that—it will become your trusted advisor, making personalized, relevant suggestions for everything from shopping, to movies, to music, to travel and more. Your mobile phone is a deeply personal device, or a lonely experience. We want Miip to be your friend on mobile, and to take your hand and show you things you never knew existed.

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Using data gathered across its app partners, Miip would present users with products or services that were relevant to them at a particular moment. For example, a Game of Thrones fan browsing an article on the TV series would see related information, music, videos, and merchandise through Miip. Often, the individual items would be accompanied with the option to buy. Miip was designed to be non-intrusive, blending with the app environment (see Exhibit 1 for examples of Miip). InMobi expected its revenues to grow eight times by 2018, of which transactions via mobile advertising— largely driven by Miip—would account for approximately 70%. However, to achieve this growth, InMobi needed partnerships with e-commerce and payment players. It needed to deliver on its promise of bringing relevant content to the user. And it needed to gain the user’s trust.

After the thunderous applause, Tewari invited Jessie Yang, InMobi’s China General Manager, to address the audience and highlight the different user experiences possible with Miip. As Tewari stepped down, a million thoughts ran through his mind. With its first consumer-facing product, InMobi had made an exciting promise to the world. Tewari wondered if Miip would be able to deliver on that promise.

The World of Mobile Advertising Marketers’ mantra of reaching “the right person, with the right message, at the right time” has become a lot

more achievable in the past few years. Mobile devices, unlike desktop computers, are typically used by only one person, which is a great help to advertisers who want to target specific users. Being closely connected to people’s personal lives and daily habits, the mobile device is the true “mini-me”.

— The Economist, September 14, 20142

The global advertising market was estimated to grow from $570 billion in 2015 to $719 billion in 2019.3 Mobile ad spending was expected to grow the fastest, from $72 billion in 2014 to $199 billion in 2019.4 The rapid penetration of smartphones across the world was expected to drive much of this growth. (See Exhibit 2 for smartphone penetration by country.) In many emerging markets, smartphones were the first point of internet access for millions of users. For example, mobile phones accounted for 65% of total internet traffic in India.5 Mobile phones were also driving transactions. Almost 24.5% of all online purchases during the 2014 holiday season in the U.S. were conducted on a mobile device.6 Mobile devices accounted for 70% of all transactions for India’s largest e-commerce player, Flipkart,7 and over 41% of all e-commerce transactions in India in 2015.8

Globally, consumers spent an average of 1.5 hours every day on their mobile phones, or 27% of their total time on all media (print, radio, TV, internet, and mobile).9 In the U.S., the average time spent by a user on mobile devices was higher, at 2.8 hours per day.10 Mobile advertising, however, accounted for a small part of total advertising; in the U.S., for instance, it was only 10.9% of total advertising spending in 2014.11 This disparity indicated an opportunity for mobile advertisers.

A large part of mobile advertising was app-based, because users worldwide spent a disproportion- ately large amount of time on apps (88%) compared to mobile browsers (12%).12 Within the app ecosystem, users in the U.S. spent a majority of their time on social media, games, and entertainment, while users in countries like Korea and the UK spent a maximum amount of time on instant messaging apps. (See Exhibit 3 for the split of user time on mobile by activity and country.)13 The rapid penetration of smartphones, their large share of a user’s time, and their location tracking capability provided huge advantages for advertisers. However, the mobile phone’s small screen often posed a challenge, as users ignored small ad banners and did not respond well to long-form video ads. In addition, tracking policies across apps were unclear, leaving users concerned about privacy. Further, studies indicated

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that most users, especially those who perceived mobile phones as an extension of them, were resistant to advertising.14 This led to the rise of ad-blocking apps fueled by Apple’s announcement of this feature in its operating system.

The Ecosystem

The mobile advertising ecosystem comprised advertisers, publishers, several intermediaries that connected advertisers and publishers, demand and supply aggregators, and data management platforms that enabled advertisers to predict the effectiveness of their mobile campaign (see Exhibit 4 for a map of the mobile ad ecosystem).

Advertisers Anything from mobile apps to brands to small retailers could be a mobile advertiser. In 2015, mobile apps, especially gaming companies, formed the largest community of mobile advertisers. Supercell, the maker of hit mobile games such as Clash of Clans, spent over $1 million a day on marketing in 2014.15 Some of the largest brand advertisers, such as Coca-Cola and L’Oreal, had a limited presence in mobile advertising, as they were struggling to use mobile to build brands. Many of them were still experimenting, which led to a fragmented mobile strategy with different apps for different campaigns or brands. Coca-Cola, for example, had approximately 300 apps, and L’Oreal, 240 apps in the app store.

Publishers There were two types of mobile publishing systems, “walled” gardens and “wild” gardens. Walled gardens, such as Facebook or WeChat, allowed only the ads that they served to be published on their apps. Wild gardens consisted of apps where third-party advertisers could also run ads. Most publishers were concerned about user experience and monetization. Vasuta Agarwal, InMobi’s Head of Business Development, Asia Pacific, and Head of Global Partner Management, Publisher Partnerships, explained: “In emerging markets like China and India, there is still a disproportionate value placed on monetization versus user experience. However, in Europe and the U.S., user experience will come first and then monetization.” The priority that publishers awarded to user experience influenced the frequency and type of ads they opted for.

Intermediaries Ad networks and ad exchanges helped bring advertisers and publishers together. Ad networks such as InMobi consolidated inventory across publishers, sliced them according to certain parameters, and sold them to advertisers according to their requirements. While ad networks primarily aimed to make the process of buying advertising space more efficient for both publishers and advertisers, premium ad networks also guaranteed audience demographics and quality. Ad exchanges allowed each impression to be auctioned off to the highest-bidding advertiser in real time. Exchanges also provided impression-level data to advertisers to help them compare ad space. Although the exchange mechanism provided greater control and transparency to the advertiser, exchanges required a robust technological infrastructure, since each impression was auctioned in milliseconds.

Several players in the global mobile advertising space played more than one role. For example, Google and Facebook acted as publishers, while also operating their own ad networks. Together the two controlled over 50% of mobile ad revenues, since they commanded a large user base on their own properties. The rest of the market was highly fragmented with hundreds of players.

Players varied by size, specialization, and country of focus. For example, Chartboost specialized in helping game developers customize, design, and execute their video ad campaigns. Flurry, acquired by Yahoo, specialized in detailed analytics while also operating an ad network. Mobile ad companies had grown in number during 2011–2014 to supply the growing demand for mobile ad inventory. However, this growth was accompanied by fragmentation and rapid technological innovations that negatively affected existing players. For example, Millennial Media, one of the early leaders in the

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mobile ad network space, went public in March 2012 and was valued at $2 billion. However, with the rapid changes in technology, it slowly lost its competitive advantage, and in late 2015, AOL bought it for $238 million.16 Another company, Criteo, that focused on Europe and went public in 2013, traded at 30% less than its issue value in July 2015.17

Despite the skepticism generated by these instances, most players were positive about the growth of the mobile ad industry. Manish Dugar, InMobi’s CFO, described the future of the market: “Currently, apps that account for 15% of a user’s time on the mobile earn 90% of the total mobile ad revenue. As the number of smartphone users grows from 1.2 billion to 5 billion, it is fair to believe that the app economy will become more fragmented in terms of their share of user time. While there will be some acquisitions and growth for the market leaders (Google and Facebook), market share will drop, with third-party players growing more than the owned and operated apps.”

Types of Mobile Advertising

Mobile advertising differed in its format, based on the objectives of the advertiser.

Formats Mobile ads could be served in various formats, such as banner, interstitials, video, rich media, and native. Banner ads followed standard web-style advertising, where a banner would appear at either the top or bottom of an app or mobile web page. Interstitials were full-screen ads that usually appeared at transition points in apps or mobile web pages. A fitness-tracking app, for example, could show an interstitial ad right after a workout, but before the user viewed statistics related to her session. Video ads were typically served on video apps (e.g., YouTube). A specific type of video ad called “rewarded video” had become a popular form of advertising, especially for gaming apps. Mobile wallets or recharge apps, for instance, would assure users of a certain credit in return for watching a video ad. Rich media ads involved interactive content, such as shaking the phone to reveal different flavors of a beverage or blowing on the screen to reveal content. Native ads created a seamless experience for the user by blending into the app; for example, a native ad would mimic the appearance of a news item in a news app, or a social feed in a social app (see Exhibit 5 for samples of the different formats). The mobile advertising industry was moving from banner to native, since native ads were less intrusive and were viewed more frequently than banner ads.

Objective Mobile advertising could be classified into two types, performance and brand, with the end objective dictating the advertiser’s choice. Performance ads were designed to drive a particular consumer action (for example, clicks or game download), and advertisers only paid when the action was completed. Within performance advertising, app downloads and transactions were two significant segments. Advertisers mostly used app downloads to acquire customers. Since the acquisition of high- spending users depended on the quality of the user experience and engagement, many advertisers also paid based on post-install metrics. Transaction-driven advertising was used largely by businesses focused on commerce, such as e-commerce players and local service providers like Uber, typically directing consumers to the advertiser’s site to complete a purchase. In 2015, performance advertising made up 60% to 70% of global mobile ad spending. The composition of the performance advertising market had changed over time; in 2011, chatting apps were the largest players; in 2012–2013, music apps; and in 2014–2015, gaming apps. The aim of brand advertising was to build awareness and create consumer loyalty. In many cases, this was a paid display of branded products.

Measuring the Effectiveness of Mobile Ads

Depending on their objective, advertisers used a variety of metrics to measure the effectiveness of mobile ads, such as cost per mille or thousand impressions (CPM), cost per click (CPC), cost per video

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view (CPV), cost per action (CPA), or cost per installation of an app (CPI) (see Exhibit 6 for details). Increasingly, advertisers were demanding a strong link between mobile ad spending and business metrics such as revenues and profits. For example, gaming companies shifted their focus from app installation to the profitability of their customers. A 2015 study of new users of free-to-play games found that in the first 90 days, only 2.2% of all new users made any purchase within the app, and the average spending of those who paid was $20.62 during that period.18 Other studies showed that 30 days after installing a game, less than 10% of gamers were still actively playing it. Since most popular games made almost 90% of their revenues from in-app purchases, customer profitability rather than CPM or CPI became important to gaming companies.

InMobi

Evolution

Founded in India in 2007 by Naveen Tewari, Amit Gupta, Abhay Singhal, and Mohit Saxena, InMobi initially operated as mKhoj, an advertising company that provided local information through SMS-based search. Soon the company pivoted, changing its business model to become a mobile advertising player. During this time, the founders used their personal credit cards to fund operations, facing some tough months as they worked on developing a product for the market. Once the product gained some traction, the company raised an initial round of funding from Kleiner Perkins Caufield & Byers, and Sherpalo Ventures (see Exhibit 7). After it grew from an eight-member team to an employer of over 75 people in four offices worldwide, MKhoj rebranded itself as InMobi in 2009. Although, it initially focused on advertising on the mobile web and through value-added services provided by mobile phone networks, the company refocused on app advertising as the world evolved from feature phones to smartphones.

InMobi used its funding to grow its ad network business by building partnerships with advertisers and publishers. It had global ambitions and concentrated first on non-U.S. markets. As InMobi’s presence and partnerships grew, its founders decided to focus on owning more pieces of the mobile value chain between the advertiser and the publisher (see Exhibit 4). InMobi took the first step in this direction by raising a second round of funding and acquiring Sprout, the developer of an authoring tool that allowed advertisers to develop creative content that could run on scale. InMobi also set up a dedicated team to help its clients design creative ads for mobile phones. For mobile-first advertisers and app developers, InMobi launched its own tracking and attribution platform.

As InMobi focused on becoming integral to the advertiser-publisher value chain, a number of new players entered the mobile advertising market. Facebook was the most prominent of these. Although its initial focus was on web advertising, Facebook moved to advertising on its app in 2012. Starting with brand advertising, Facebook quickly moved to app downloads, leveraging its ownership over a large share of a user’s time on the mobile platform to become a significant player. Tewari recalled, “Facebook came in, focused on its strengths, and leveraged its property and user base brilliantly. While we had to solve for both sides of the equation—advertisers looking for return on investment and apps that have monetization expectations—Facebook had its own real estate (its mobile app) and only had to solve for the demand side.”

Facebook’s success raised several questions for InMobi. Piyush Shah, Chief Product Officer, recalled: “Users didn’t know us and a large part of user time was captured by the walled garden, which we couldn’t access. So the big question for us was—if we have to be big in advertising, we need access to users—should we build a property of our own?” After much debate, the company decided against creating or even acquiring a property. Shah reflected on the decision: “An app can die down; there is a

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shelf life that we had to hedge against. So, we said, let us be the neutral player that helps apps acquire users, and when they start growing, let us be their preferred advertising partner. Let’s try and own that fragmented wild garden through our platform.” Tewari added, “We started thinking about the apps as more than supply and more as a partner that could provide us with useful information about users— static information about network, device, as well as the user’s preferences through app usage.”

In 2014, InMobi launched its native ad platform to democratize the blended experience across apps. “Our native ads platform,” explained Shah, “allows a developer to create a container to serve an ad on any app.” InMobi ran this at scale by using an auto-stitch mechanism, where a program took elements from the advertiser’s page on the Google Play app store and other elements, like the logo, to create an ad that seamlessly merged with the publisher app. If an app used a swipe-through mechanism for a carousel of cards, the ad would appear as one card. If a news app used rectangular slots for individual news items, the program would auto-stitch elements, such as the logo and message, to create an ad that followed the same rectangular format and blended in with the app.

Business Operations

InMobi had set up sales teams at 17 offices worldwide to forge partnerships with advertisers, agencies, and publishers. InMobi’s 900-people global presence afforded the company several advantages. CFO Dugar explained:

While most companies have a strong regional focus, our operations are distributed across the major regions of the world—the Americas, EMEA, and APAC. This is important because the network effect is that much stronger if you can take demand from anywhere and supply it anywhere in the world, giving the advertiser global scale. For example, if a player wants scale in the East, he doesn’t have a choice but to work with InMobi, since we can reach users in Korea, Japan, China, Australia, New Zealand, and elsewhere.

InMobi expanded its operations to China in 2012, since the country had a much larger smartphone penetration and per capita income than India and presented a huge opportunity. However, differences in culture and language also made China a difficult market to operate in; in fact, a number of startups had stayed away from China because of these challenges. Choosing to set up independent operations rather than a joint venture, InMobi focused on adopting the Chinese mind-set, hiring local talent with a global mind-set, and creating for the Chinese market. These factors contributed to InMobi’s growth in China, making it the largest independent ad network in the country.

By 2015, InMobi was serving 7 to 10 billion ads a day through its ad network and ad exchange. In its network business, InMobi entered into contractual arrangements with large clients, where it was paid on the agreed-upon metrics, such as cost per install. In its exchange business, advertisers were charged on a cost-per-click basis. “The exchange business,” explained Abhay Singhal, Cofounder and Chief Revenue Officer, “is about plumbing. You can either own your own pipeline or you can just tie up with somebody who has already laid their lines. We have entered into an exclusive partnership with Rubicon Exchange in the U.S., a premium online exchange that has been well integrated into the agency world and with premium publishers, and this is working very well for us.” InMobi served almost 5,000 advertisers through its exchange and another 100 through individual contracts.

Alongside its focus on geographic expansion and its network and exchange businesses, InMobi also worked on growing its data sciences capabilities. In 2013, it acquired Overlay Media, a data sciences company, which helped it collect and understand user’s location data and behavior over time. This data allowed InMobi to make inferences about users’ socioeconomic patterns and habits to help target

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them with the right ad at the right time. Singhal emphasized the importance of location data: “Location data is the page rank of mobile, and it is the primary axis for targeting.” “This is just one part,” explained Shah. “Then there are all the things we have learnt about users depending on their historical responses to our ads. Did Mary respond to a beauty ad in the morning? Does she respond better to an electronics ad when she is on her tablet at night and a gaming ad when she is on the tube in the morning? The trifecta of location, time, and user behavior is magical in what it tells me about the user.”

Mohit Saxena, Cofounder and Chief Technology Officer, added:

Understanding a user is about inference. A human can be identified by many traits; to me, you can be a professor, to someone else, you can be very playful and jolly, and to someone else, you could be a foodie. It depends on how the person knows you. In understanding the user, what is very important is the trait that is prominent at that moment. And that it not predictable. That is inference. An ad will be effective only if it address[es] the right trait at the right moment. This is much harder than gathering data about a person’s commute. So we try to map traits against moments.

Miip The world’s biggest private transportation provider, Uber, owns no taxis; the world’s biggest retailer, Alibaba,

owns no inventory; the world’s largest accommodation provider, Airbnb, owns no properties. We will be the world’s biggest discovery platform without owning an app.

— Piyush Shah, Chief Product Officer

The Concept

Miip was conceived with the idea of serendipity-driven purchases, much like a visit to the mall where a consumer intended to buy just a pair of jeans or a shirt, but ended up buying either something different or several additional things. The mall enabled the discovery of these additional items by putting consumers in an environment conducive to exploration. With Miip, InMobi sought to recreate the same space for exploration and discovery on users’ mobile phones, providing them the option of browsing through the most relevant products and services. It envisaged that relevant and curated product discovery would allow advertisers to unlock higher customer value throughout the life cycle of the consumer.

Amit Gupta, Cofounder and President, North America, explained: “The mobile, unlike the TV and radio, is probably the only medium which can wait for the perfect moment to talk to the user about a product or a service that is relevant in that moment. Miip is our attempt to utilize this ability completely, to reimagine this ability, making it an enriching experience for the user.” Singhal added, “If I know when you leave [the] office, and I know you don’t drive, I’ll show you Uber in case you are interested in getting a cab. If I know you like to go out for dinner on weekends, I’ll show you a new restaurant that has opened in a locality you frequent.” Depending on the app, Miip could also customize what it showed the user based on the context. If the user was on a weather app, Miip would showcase products that were suitable for the weather in the user’s location. InMobi understood that some users could find this intrusive or worry about their privacy. Hence, it planned to introduce a dashboard accessible through the mascot, which would allow users to control whether they saw Miip at all, and if they did, the amount and level of data it collected.

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Design

Miip’s design included four aspects: discovery, transaction, storytelling, and conversation. Discovery included native slots in apps where Miip could show the user relevant products and services. Transaction referred to the ability to facilitate purchases through Miip without leaving the app that the user was browsing. The storytelling allowed advertisers to create a story around a particular theme. The conversation, which was intended to create a community, allowed users to make comments on their Miip-initiated purchases. As users became more familiar with Miip, they would see a “Miip it” button that invited them to express their emotions about a particular product. Over time, InMobi expected to build an emotional graph of each user that would help it predict the user’s behavior.

The genesis of the Miip mascot and the name “Miip” were rooted in InMobi’s desire to build something that the users could trust. After months of debating whether to use their own brand or create a new one, the team decided that InMobi had too much of a B2B connotation. “We wanted users to have something catchy, something they could associate with,” recalled Mansi Jain, Director of Commerce. Tewari added, “We used a brand name because we wanted to take responsibility for what we were about to show. Because we used a brand name], internally, every product manager, every engineer is worried about what is appearing on Miip right now.” A mascot was used to aid easy visual recognition of Miip. InMobi planned to build Miip as a brand that evoked loyalty and trust. While some natural advertising would take place for Miip because of its presence across 40,000 applications, InMobi also planned to use print and TV advertising.

Miip would appear in users’ apps only after it had gathered significant intelligence on their habits and preferences. It would show the user several cards when it first appeared, based on the app, the context, and user data. Over time, the system would refine its understanding of a user’s preferences and show more relevant cards. At the back end, Miip integrated merchants’ or advertisers’ product feeds, extracting and normalizing them across merchants to provide a consistent experience for the user. InMobi’s algorithms would crawl products (each tagged with certain keywords) across partners to match the user and the product. To make it an easy and seamless experience, Miip would also provide a “buy” button that would take the user to the merchant site for the transaction.

Partnerships

Miip provided advertisers with several distinct advantages. Its ability to propel discovery-led shopping allowed advertisers to connect with users not just during the few hours when they browsed such apps, but also during the nearly 70% of time they spent on the mobile device. The remaining 30% was spent on apps that did not allow third-party advertising. Jessie Yang cited China’s example: “According to our research, only 30% of user time is actually spent on Taobao or WeChat.a What about the remaining 70%? That time is in InMobi’s territory through the 40,000 apps that are on our platform.” This ability was especially advantageous to retailers, who faced frequent app uninstalls due to the lack of relevant engagement and were constrained by the limited time consumers spent in shopping apps. Singhal remarked, “We know that a consumer spends roughly 45 hours a month on mobile properties in India. However, less than two hours per month of a user’s time is spent on all e-commerce sites on mobile in India.” Highlighting Miip’s core strength, Jain added, “Flipkart cannot access the rest of the time, neither can Amazon, but InMobi can actually reach out to users and let the users discover new things. The hypothesis is that even today a lot of the products are locked up in destination apps like Flipkart. A user will discover only 5% or 10% of the product catalog while browsing their app, a Taobao, owned by Alibaba, was China’s leading consumer to consumer online shopping platform.

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especially since users have such a large number of shopping apps to choose from.” In addition, such advertisers lacked a holistic mobile marketing solution that would include customer acquisition, maximization of the consumer’s lifetime value, and reactivation of disengaged consumers. Further, since Miip had access to user data across apps, it understood users better than individual e-commerce apps or service providers.

InMobi had partnered with several players, such as Amazon in India, to showcase their products through Miip. InMobi’s management anticipated interest from other market leaders despite concerns about competition and ownership of data. For example, large retailers preferred that transactions through Miip were completed on their app or website, since they wanted to control the transaction. Some retailers were concerned about their user data being leveraged to drive transactions for other retailers. Discussing these possibilities, Tewari remarked, “Miip is opening up a sales channel because it allows retailers to get access to consumers and present products that they couldn’t have through their own app, especially since the consumer is not even in the intent shopping zone when Miip shows up.” In addition to e-commerce and publisher partnerships, InMobi had also partnered with Stripe in the U.S., PayTM in India, and Alipay in China to facilitate payments on Miip. InMobi had opted for a revenue share deal with advertisers for Miip. Typical revenue share ranged from 12.5% to 25%, with clothes and accessories commanding higher revenue share than electronics.

Test Results

In order to test its commercial feasibility, the team ran several tests during the pilot phase, showcasing several products and linking the user to the destination shopping site or service provider. Initial results indicated high user engagement, measured by the number of products that a user discovered. After three months of running such tests, which made about 5 million impressions a day, the team decided to add a dummy buy button. Tewari remarked, “We started off wanting to make the consumer’s life better and ended up creating an absolute discovery platform with commerce built into it. In fact, we didn’t even realize we could eventually put a buy button on it, till six to nine months into it.” Further experimental trials revealed that a large number of users clicked these tiny buy buttons, eventually prompting InMobi to join with payment partners to include real buy buttons for its tests. “In some of the sample tests,” Singhal reflected, “we saw that engagement rates were increasing over time, which meant that familiarity was resulting in some kind of trust.”

The Future As Tewari watched Yang conclude her presentation, he hoped that their vision of Miip would turn

into a reality. Dugar remarked, “Total e-commerce gross merchandise value is expected to reach approximately $650 billion to $1 trillion by 2018. If Miip can capture even 1% of its market, it can deliver the estimated revenue.” However, the success of Miip was anything but certain. A similar attempt by Facebook in 2011, known as FCommerce, was not successful. Facebook had signed up big brands to set up online stores on its business pages, but users seemed reluctant to mix social networking with purchases, and most brands shut these online stores within a year.

The New York Times, while reviewing Miip, had captured some of this uncertainty: “But will the chattering monkey annoy users, like Microsoft’s infamous Clippy digital assistant did a generation ago? Or will it endear them?”19 If Miip succeeded, it could be the next billion-dollar opportunity for InMobi; however, if it failed, would InMobi regret refusing Google’s offer?

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Exhibit 1 Examples of Miip

Miip Mascot

Personalized Discovery: Miip personalizes the discovery experience over time, by understanding consumers through conversation.

[Each panel below shows a mobile screen that dynamically changes as consumers engage with Miip.]

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Exhibit 1 (continued) Examples of Miip

Curated Recommendations: Miip curates highly relevant products and services for consumers to discover.

Seamless Experience: Miip lets consumers enjoy a complete discovery experience by enabling them to transact within the discovery zone.

Source: Company documents.

For the exclusive use of F. Patel, 2021.

This document is authorized for use only by Fenil Patel in Principles of Advertising - Spring 2021-1 taught by YASHAR DEHDASHTI, Texas Wesleyan University from Feb 2021 to May 2021.

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Exhibit 2 Smartphone Penetration: Top 10 Countries (in millions)

Country 2013 2014 2015 2016(est.) 2017(est.) 2018(est.)

China (excluding Hong Kong) 436.1 519.7 574.2 624.7 672.1 704.1 US* 143.9 165.3 184.2 198.5 211.5 220.0 India* 76.0 123.3 167.9 204.1 243.8 279.2 Russia 35.8 49.0 58.2 65.1 71.9 76.4 Japan 40.5 50.8 57.4 61.2 63.9 65.5 Indonesia 27.4 38.3 52.2 69.4 86.6 103.0 Brazil 27.1 38.8 48.6 58.5 66.6 71.9 Germany 29.6 36.4 44.5 50.8 56.1 59.2 UK* 33.2 36.4 39.4 42.4 44.9 46.4 South Korea 29.3 32.8 33.9 34.5 35.1 35.6 Worldwide 1,311.2 1,639.9 1,914.6 2,155.0 2,380.2 2,561.8

Source: “2 Billion Consumers Worldwide to Get Smart (phones) by 2016,” eMarketer.com, December 2014, http://www.emarketer.com/Article/2-Billion-Consumers-Worldwide-Smartphones-by-2016/1011694, accessed February 2016.

* Indicates forecast from August 2014.

Exhibit 3 Split of User Time on Mobile by Activity and by Country

Country

Time spent on Mobile (minutes per day)

Social Media

Entertain- ment

General Information

& Search Games Email Local

Search Shopping

S. Africa 148 23% 17% 15% 14% 15% 9% 7% USA 144 18% 16% 12% 23% 12% 8% 7% Kenya 141 24% 19% 16% 12% 11% 10% 8% Nigeria 117 23% 19% 18% 13% 11% 9% 8% UK 113 21% 20% 14% 23% 12% 7% 8% China 111 16% 23% 15% 20% 7% 9% 11% Singapore 110 16% 17% 14% 18% 14% 11% 10% France 106 20% 20% 12% 20% 11% 10% 7% India 102 21% 21% 13% 15% 12% 8% 9% Australia 100 21% 16% 13% 20% 13% 9% 9% Germany 99 22% 21% 12% 21% 11% 6% 7% New Zealand

98 20% 17% 14% 20% 14% 8% 8%

Japan 97 15% 17% 12% 21% 19% 5% 10% S. Korea 81 14% 23% 17% 19% 8% 8% 11%

Source: Company documents.

For the exclusive use of F. Patel, 2021.

This document is authorized for use only by Fenil Patel in Principles of Advertising - Spring 2021-1 taught by YASHAR DEHDASHTI, Texas Wesleyan University from Feb 2021 to May 2021.

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Exhibit 4 Mobile Ad Ecosystem and InMobi’s Services

Source: Company documents.

Exhibit 5 Examples of Mobile Ad Formats

Banner Ad Interstitial Ad Native Ad

Source: Casewriters.

For the exclusive use of F. Patel, 2021.

This document is authorized for use only by Fenil Patel in Principles of Advertising - Spring 2021-1 taught by YASHAR DEHDASHTI, Texas Wesleyan University from Feb 2021 to May 2021.

516-030 InMobi: Reimagining Mobile Advertising

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Exhibit 6 Metrics Related to Different Types of Advertising

Metric Type of Ad Ad Rates

CPM: Cost Per Mille (or thousand)— advertiser paid per thousand impressions

Typically used for display, search, and video ads

$0.5-$1.5 (display/ banner ads)

$4-$25 (video)

$1.5-$5 (native)

$5-$10 (interstitials)

CPC: Cost Per Click—advertiser paid if a user clicked on the ad

Typically used for display, rewarded ads, search, and video

$0.30 - $1.06 (display/banner ads)

CPI: Cost Per Installation—advertiser paid only if the user downloaded the app

Typically used for display, rewarded ads, video, and discovery apps

$1-$14 (free apps)

50%-75% of a paid apps’ price

CPV: Cost Per View—advertiser paid only if the user watched a complete video

Typically used for rewarded ads and video

$0.03-$0.06

CPA: Cost per Action/ Engagement— advertiser paid only if the user performed a specific action or actions after installing an app

Typically used for display and rewarded ads

CTR: Click-through Rate—used to measure the effectiveness of an ad campaign (number of click-throughs as a percentage of total impressions)

Typically ranged from <1% to 2%. Click to Install rates were much higher, ranging from 19.3% to 40%

Source: Casewriter, compiled from company estimates, emarketer, and “Mobile Ad Formats Explained,” Trademob.com, http://www.trademob.com/downloads/mobile-ad-formats-explained/, accessed February 2016.

Exhibit 7 InMobi: Funding

Funding Round Investors Date

Amount ($ Million)

Angel Funding Mumbai Angels Aug 2006 0.5 Series A Kleiner Perkins Caufield & Byers and Sherpalo

Ventures May 2007 7.1

Series B Kleiner Perkins Caufield & Byers and Sherpalo Ventures

July 2010 8

Series C Softbank Sep 2011 200 Softbank Aug-Nov 2014 5

Source: Company documents.

For the exclusive use of F. Patel, 2021.

This document is authorized for use only by Fenil Patel in Principles of Advertising - Spring 2021-1 taught by YASHAR DEHDASHTI, Texas Wesleyan University from Feb 2021 to May 2021.

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Endnotes

1 Jim Edwards, “Google could be about to do a $1 billion deal that would solidify its domination of mobile advertising for years,” Business Insider, March 11, 2015, http://www.businessinsider.in/Google-could-be-about-to-do-a-1-billion-deal-that- would-solidify-its-domination-of-mobile-advertising-for-years/articleshow/46528875.cms, accessed January 2016.

2 “Moving Targets,” The Economist, September 13, 2014, http://www.economist.com/news/special-report/21615870-what- advertisers-love-and-what-they-hate-about-mobile-devices-moving-targets, accessed January 2016.

3 “Moving Targets,” The Economist.

4 Cindy Liu, “Worldwide Ad Spending,” eMarketer, accessed January 2016.

5 Mary Meeker, “Internet Trends- 2015,” May 27, 2015, http://www.kpcb.com/internet-trends, accessed September 2015.

6 “2014 Holiday Recap,” Custora E Commerce Pulse, January 2015, Custora, http://pages.custora.com/rs/custora/images/Custora_E-Commerce_Pulse_Holiday_2014_Recap.pdf, accessed March 2016.

7 Matthieu Coat, “E-commerce: Indian Giant Flipkart betting on Mobile,” atelier.net, August 6, 2015, http://www.atelier.net/en/trends/articles/e-commerce-indian-giant-flipkart-betting-mobile_436904, accessed September 2015.

8 Mary Meeker, “Internet Trends- 2015.”

9 InMobi, “Global Mobile Media Consumption: A ‘New Wave’ Takes Shape,” February 2014, http://info.inmobi.com/rs/inmobi/images/Global%20Mobile%20Media%20Consumption%20Wave%203%20Report.pdf, accessed September 2015.

10 Mary Meeker, “Internet Trends- 2015.”

11 Cindy Liu, “US Ad Spending,” eMarketer, accessed January 2016.

12 IAB Mobile Marketing Center of Excellence, “Apps and Mobile Web: Understanding the Two Sides of the Mobile Coin,” December 2014, http://www.iab.net/media/file/IAB_Apps_and_Mobile_Web_Final.pdf, accessed September 2015.

13 Sarah Perez, “Consumers Spend 85% of Time on Smartphones in Apps, but only 5 Apps See Heavy Use,” TechCrunch, June 22, 2015, http://techcrunch.com/2015/06/22/consumers-spend-85-of-time-on-smartphones-in-apps-but-only-5-apps-see- heavy-use/#.mmegwb:5bJy, accessed September 2015; Sarah Perez, “U.S. Mobile Users Spend the Most Time in Facebook and Instagram, Elsewhere Messaging Apps Dominate,” TechCrunch, May 13, 2015, http://techcrunch.com/2015/05/13/u-s- mobile-users-spend-the-most-time-in-facebook-and-instagram-elsewhere-messaging-apps-dominate/#.mmegwb:aQuc, accessed September 2015.

14 Andrew J. Roahm, Tao (Tony) Gao, Fareena Sultan, and Margherita Pagani, “Brand in hand: A cross-market investigation of consumer acceptance of mobile marketing,” Business Horizons 55 (2012): 485-493; Catherine Watson, Jeff McCarthy, and Jennifer Rowley, “Consumer Attitudes towards Mobile Marketing in the Smartphone Era,” International Journal of Information Management 33, no. 5 (October 2013): 707-908.

15 Stuart Dredge, “Clash of Clans and Candy Crush Saga dominate apps ‘superstar economy,’” The Guardian, July 8, 2014, http://www.theguardian.com/technology/2014/jul/08/clash-of-clans-candy-crush-saga-mobile-games-apps-economy, accessed March 2016.

16 Ingrid Lunden, “AOL Confirms It Is Buying Millennial Media in $238M Deal to Expand in Mobile Ads,” TechCrunch, September 3, 2015, http://techcrunch.com/2015/09/03/aol-acquires-millennial-media/, accessed March 2016.

17 Alex Konrad, “AOL Mercy Kills Millennial Media, One-time Hot Ad Tech IPO, For Just $238 Million,” Tech (blog), Forbes, September 3, 2015, http://www.forbes.com/sites/alexkonrad/2015/09/03/aol-puts-millennial-media-out-of-its- misery/#384df8cc2dcb, accessed March 2016.

18 “The Swrve New Players Report,” Swrve, 2015, https://www.swrve.com/whitepapers/files/SWRVE-new_players-report- 2015.pdf, accessed March 2016.

19 Vindu Geoel, “Meet Miip, the Ad Monkey in your App,” New York Times, July 14, 2015, http://bits.blogs.nytimes.com/2015/07/14/meet-miip-the-ad-monkey-in-your-app/?_r=0, accessed March 2016.

For the exclusive use of F. Patel, 2021.

This document is authorized for use only by Fenil Patel in Principles of Advertising - Spring 2021-1 taught by YASHAR DEHDASHTI, Texas Wesleyan University from Feb 2021 to May 2021.