The MGI Newsletter

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We hope this message finds you well. It is with great excitement that we present to you the second edition of the quarterly MGI Newsletter – your window into the latest advancements within MGI, Verve Group and Gamigo Group.

While our fourth quarter financial report will be released on February 29^th, we are pleased to provide you with a qualitative update on our business. In this edition, we are particularly excited to present the first episode of our new Ad-Tech Insights series. This is another format in which we will be providing you with insights into the market and MGI.

Here's a sneak peek of what's inside:

Stay Connected With MGI’s Verve (Media) and Gamigo (Gaming) Activities:

If you wish to stay closely connected with Verve and Gamigo, we encourage you to follow them on LinkedIn (Verve / Gamigo) and explore their respective websites (Verve / Gamigo). These platforms serve as hubs for regular blog posts, product updates and other noteworthy topics, providing you with a real-time connection to the pulse of MGI Group's activities.

Your Ongoing Support Matters:

Your trust and support are pivotal to our continued success, and we are dedicated to sharing our journey with you every step of the way. We genuinely appreciate your interest in our business, and it is our privilege to bring you valuable updates with each newsletter.

Thank you for being an essential part of our investor community. We sincerely hope you find this edition of the MGI Newsletter both informative and engaging.

Kind Regards,
​Sören Barz
​Head of Investor Relations

In the Wake of Google's Identifier Depreciation, MGI Pioneers the Future of AI-Driven Advertising

Depreciation of Web and Mobile Identifiers by Google

It is happening! After years of speculation within the sector that Google may postpone, or outright cancel the program, Google has now communicated that it intends to phase out third-party cookies for the Chrome browser by the end of 2024, which will have consequences for online mobile and PC web advertising. The tech giant revealed in a September 2023 press release that it has introduced relevance and measurement APIs for Privacy Sandbox. Originally scheduled for late 2023, the process of eliminating third-party cookies encountered delays due to onboarding issues and regulatory scrutiny.

In January 2024, Google introduced the Tracking Protection Tool, which affects around 1% or around 30 million Chrome users worldwide. The purpose of the tool is to restrict cross-site tracking.

While this will initially mainly affect the web, Google plans to release the Privacy Sandbox beta for Android 13 for a small percentage of Android users in the near future, which will affect in-app advertising on mobile phones.

The move comes after Apple introduced its App Tracking Transparency (ATT) and its changes to its Identifier for Advertisers (IDFA) in 2021. Subsequently, Apple has seen its advertising business grow from $3.1 billion dollars in 2021 to $5.1 billion dollars in 2023 (source: emarketer) while many mobile publishers had to accept declining revenue and advertisers suffered significantly lower ROIs. In response, many have shifted their budgets from iOS to Android. Others, like Verve, profited from the introduction of ID-less advertising, by having invested in contextual targeting and consequently gaining market share.

What is Privacy Sandbox?

Google’s Privacy Sandbox is a concerted effort by Google, together with other stakeholders, to establish a framework that enables effective advertising while respecting the increasing demands of user privacy. Privacy Sandbox is planned to be implemented on both Chrome and Android. Google will still be able to track everything users do while still respecting privacy and companies will be able to make money on user data without seeing the data directly.

The idea behind the Privacy Sandbox is to move away from the reliance on third-party cookies, which are considered less privacy friendly. Google's efforts are part of a broader industry-wide movement towards enhancing user privacy online, responding to increased concerns and regulatory changes surrounding data privacy. The result allows Google to maintain its walled garden strategy, keeping its own access to data, while reducing the access to data for its partners.

Data will remain within Chrome as users will be identified based on browsing history and grouped into cohorts based on interests. Advertisers will be able to target the different cohorts. However, cross-site targeting will be limited, and only essential user data will be disclosed.

When it comes to the changes to GAID (Google Advertising ID), the data will be collected and stay on device for Android, and users will be assigned under different categories, such as “car enthusiast” or “football fan”, for instance.

With regard to the phasing out of third-party cookies - although this has been announced by both Apple and Google as a privacy measure - there is also criticism. The U.K.’s regulatory body, Competition and Markets Authority (CMA), for example, has expressed concerns that the rollout of Privacy Sandbox could benefit Google’s own advertising business, raising the walled gardens brick-by-brick.

MGI is an Early Innovator of AI-Driven Advertising to Prepare for a World Without Identifiers

At MGI, we anticipated the paradigm shift towards an ID-less environment early on and started investing in AI-driven solutions back in 2019. We launched our AI-driven on-device targeting solution ATOM for the first time in 2021. Since then, we have scaled it further and started integrating into our standard mobile SDKs as the next step. Additionally in 2021, we acquired the assets of Beemray, an AI-driven data platform specializing in contextual advertising. After the acquisition, we continued to develop the Beemray AI, resulting in our highly effective contextual targeting Moments.AI product, which we successfully introduced in March 2022. In 2022, we also acquired the AI-driven mobile demand side platform Dataseat, which specializes in ID-less performance-based targeting such as user acquisition and app-installs for mobile devices. In 2023, we launched a ground-breaking ML solution that optimises SKAN-only campaigns and delivers impressive results, as shown in the graph below.

Our AI-driven solutions are trained with data from our vast data pool, which is filled with first-party data from our own games, plus data generated via our multitude of direct integrations with publishers as well as our contextual and third-party (i.e., demographic) data.

Being the leading open market mobile ad exchange in North America, we have direct integrations with over 20,000 leading apps, reaching two billion mobile devices as well as more than 60% of all U.S. housholds via Connected TV devices. With our owned and operated games we reach a further one billion users. Owned and operated has the substantial advantage of having easier access to getting consumer consent to use the data.

MGI is therefore well-prepared for the new world in which advertising is no longer based on identifiers but instead focusses more on user privacy. While in the previous years advertisers and agencies where slow in testing and adopting ID-less targeting solutions, we see a heavily increased interest now that Google has officially confirmed and rolled out its cookie deprecation program.

Further information on the topics of cookie deprecation, privacy and AI can be found in the detailed article by Kendra Barnett in The Drum, which also features our EVP/GM International Evgeny Popov. https://www.thedrum.com/news/2024/01/25/happy-data-privacy-week-here-are-the-top-global-privacy-changes-expect-2024

AI-Driven Advertising That Works - A Selection of Case Studies

Ad-Tech Insights by MGI - Media and Games Invest - Episode 01

We are thrilled to announce the premiere of our new initiative AdTech Insights by MGI. The episodes are designed to provide valuable information and backgrounds about the advertising market and MGI by interviewing various players, offering a closer insight into MGI and are meant to encourage active dialogue with our investors and stakeholders.

As part of MGI's commitment to an ongoing dialogue with investors, we invite you to send us your questions and suggestions for future topics. Your input will help shape the direction of AdTech Insights.

The inaugural episode features an exclusive interview with Chris Kane, the Founder and CEO of Jounce Media. Established in 2015, Jounce Media is an independent research firm and a pioneer in programmatic supply chain management, trusted by the world’s leading marketers, media companies and advertising technology platforms.

In this episode, Chris Kane explores Jounce Media's mission to quantify the way that the average ad campaign deploys its investments across one million websites, half a million mobile apps and 50,000 Connected TV (CTV) apps. The focus is on Jounce Media's monthly Supply Path Optimization (SPO) report, unraveling the complexities of the programmatic supply chain and its impact on the industry.

Why is This Important for MGI Investors?

MGI today operates the leading open market mobile SSPs / mobile exchange for buying and selling brand as well as performance in-app advertising in the U.S., the largest advertising market in the world, and is also a top five player in Europe and Asia. On the supply side of our ad software platform, we have a strong focus on direct integrations and have technical SDK integrations in more than 20,000 apps from leading publishers. According to the recently published Jounce Media's Supply Path Report, MGI has the widest range of premium in-app inventory in the market.

In-app advertising currently accounts for approximately 80% of the media volume on MGI's advertising software platform. So, the topics that Chris and Jounce Media have analyzed in such detail are of high importance and form an integral part of the decision-making process not only for us but also for many other players in the ad tech market.

^{If you would like to get in touch with Chris Kane and Jounce Media visit the website (https://jouncemedia.com/) or send an email to contact@jouncemedia.com.}

Thought Leadership and Notable Media Placements

During the fourth quarter, our thought leadership themes emphasized privacy, contextual advertising and mobile. Experts from Verve Group were regularly featured in major media outlets, sharing insights about topics that matter to Verve’s business objectives.

Highlights include:

Thanks to our involvement in important industry groups such as IAB Europe and IAB U.K., Verve Group bolstered our thought leadership and credibility by contributing to major publications and providing expert speakers for panels, educational events and more.

External Validation of Excellence

Case Study by Amazon Publisher Services

Verve Group's in-app marketplace PubNative shows a strong performance on Amazon Publisher Services, according to a recent case study published by Amazon Publisher Services ("APS").

Verve Group's in-app marketplace, PubNative, is a privacy-first, performance-centric in-app marketplace offering programmatic solutions for publishers and advertisers and forms part of MGI's Ad Software Platform, Verve Group. The company’s capabilities enable mobile publishers to maximize ad revenue with demand from 85+ DSPs and 5,000+ advertisers and brands. PubNative enables non-intrusive, buffer-free ads that suit publishers’ app context and users and also provides stringent in-app safety measures and levers that guarantee creatives of the highest quality.

In 18 months, Verve Group's in-app marketplace PubNative has seen a 256% increase in revenue on APS. The catalyst for this was APS' broad reach in 70 regions worldwide, combined with Verve Group's global footprint and the differentiated demand Verve offers through its privacy-first and performance-centric platform.
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​https://aps.amazon.com/aps/wp-content/uploads/2023/11/Verve-Group-Success-Story-Q3-23.pdf

Further Improving CTV

Verve Group’s increased focus on building our CTV business helped our Supply Side Platform (‘SSP’) climb the charts on Pixalate’s Seller Trust Index of top SSPs for CTV. Pixalate calculates CTV seller trust scores for Roku, Amazon and Samsung, based on key seller factors such as traffic quality, household reach and transparency.

● No. 6 on Roku, up from No. 11

● No. 12 on Amazon, up from No. 18

● No. 11 on Samsung — our first time making the list

In addition to improving our rankings, Verve Group’s overall trust scores improved considerably. Our trust index score for Amazon increased by 33%, and our Roku score went up by 17%.

These external recognitions of Verve Group’s strength as a SSP offering high-quality inventory at scale — especially on mobile in-App and CTV — help us continue building trust and credibility in the marketplace.

Product Development

We rolled out the industry-first machine-learning technique for better user acquisition campaigns on iOS. This new bidding model allows for privacy-compliant measurement and optimization on campaigns using SKAdNetwork 4 (SKAN). So far, the clear majority of clients’ campaigns have outperformed goals, with a 40% decrease in cost per app install (CPI). This means that app developers and mobile marketers can acquire new users at a much lower cost.

Verve Marketplace for in-app and omnichannel buyers also implemented important new features, including:

Updates From Our Games

In Q4, we continued to release a multitude of casual games, and our premium game portfolio also saw a number of events and patches for Halloween, Thanksgiving, Christmas and New Year's Eve, such as the December patch for Fiesta Online, the Snow Festival in Trove and Rift - Fae Yule Has Returned. Furthermore, we have successfully relaunched Trove in China.

Investor Relations Update

Stay informed about upcoming investor-related activities, including earnings calls, meetings and any opportunities for direct engagement with our Investor Relations team. We value your input and are here to assist you.

Past Events:

Looking Ahead:

Stay in Contact

Thank you for being a part of our investor community, and we hope you find this newsletter informative and engaging.

For further information, please contact:

Sören Barz
​​​Head of Investor Relations
​​​+49 170 376 9571
​​​soeren.barz@mgi-se.com, investor@mgi-se.com
​www.mgi-se.com

Danesh Zare
​​​Senior Investor Relations Manager
​​​+46 70 916 7932
​​​danesh.zare@mgi-se.com