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What's the Haps on Mobile Apps?

  |  April 2, 2009   |  Comments

The popularity of Apple iPhone applications has brand marketers asking whether they should offer one too. Three factors to consider before taking the plunge.

Just ahead of questions about Twitter and Hulu, the top question I get asked as my agency's emerging media expert involves the iPhone. Specifically, iPhone applications. It seems everyone is thinking about building an iPhone app and the latest numbers on the Apple iPhone App store are pretty impressive. According to Apple, there have been 800 million downloads of the nearly 25,000 applications in the App Store. According to MobClix, a mobile analytics and application firm, 70 percent of the App Store downloads are for free applications.

Pinch Media, another mobile application analytics firm, reports the most common price for an app is $0.99. Let me bust out my iPhone calculator app: 800 million downloads x 30 percent share of paid applications x $0.99 = $237.6 million in revenue. Wow! Nearly a quarter billion dollars has been spent on iPhone applications in less than a year.

A tipping point of sorts was reached when Kraft's iFood application hit the trades. Here's a brand whose target audience skews away from mobile's tech-savvy male demographic. Not only did Kraft build an application that provided deep engagement with its brand, but it was also able to charge for the privilege. The iFood Assistant currently ranks 70th in the App Store by downloads. According to Pinch Media, it takes about 5,000 downloads to crack the top 100 and 25,000 to crack the top 25. So every day that Kraft's $0.99 application is in the top 100, it generates at least $4,950 in revenue. After giving 30 percent to Apple, Kraft makes $3,465. That will cover development costs fairly quickly.

Of course, Kraft didn't built the application to make a couple thousand dollars; it built it so app users would make its Easy Fettuccine Alfredo with Philadelphia Cream Cheese and Kraft Grated Parmesan. This one did. (Disclosure: Kraft Foods is a client of MediaVest and Digitas, sister firms to my agency.)

Many brands will want to duplicate Kraft's success. But they will encounter challenges.

For example, Charmin sponsored the "Sit or Squat" public bathroom finder application. The application's user-generated features pose some risks for brands. Let's say a user of "Sit or Squat" is directed to a bathroom that like the one Ewan McGregor used in "Trainspotting." Is the sitter or squatter getting the brand message that Charmin wants? Maybe the utility is enough, but maybe it isn't.

The iFood Assistant has a lot of things going for it. Kraft has a site full of recipes already, it had an early start (November 2008) when cracking the top of the App Store was much easier, and the app's functionality and navigation lend themselves to an application format rather than residing simply on the mobile Web. So if you're thinking about building an application for your brand, think about the following.

Lead With an Insight

Is there something about your brand that can provide utility to consumers? Think about that long and hard. Even some things that seem like a perfect fit might not be. Volkswagen has a driving game to promote its cars. Games are popular, driving games are popular; Volkswagen should have a hit, right? The game has very bad reviews. One reviewer says, "Having an 07 Rabbit, I thought this would be fun to play but the accelerometer steering is sluggish making you crash very frequently." That's definitely not what Volkswagen wants to communicate about its vehicles.

Can a Smart Web Site Do the Same Thing?

The iPhone's browser is great (and the other smartphones will catch up quickly with theirs). Rather than build a special software program, it may make sense to just upgrade your mobile Web site. While there are many sports apps for the iPhone, ESPN has so far decided not to do a SportsCenter app. The more I think about it, the more I think that's a smart idea. The ESPN Web site, optimized for many devices, puts scores up front on the page. ESPN.com is a top destination online and on the mobile Web and likely gets more usage than the sports apps.

You'll Need to Promote It, and Not Just on Mobile

Cracking the top 100 applications increases downloads by 2.3 times, according to Pinch Media. If achieving that goal requires 5,000 downloads in a 24-hour period, you'll need to do some promotion. For mobile banner ads, assume 1 percent click rate on your ads and a 10 percent conversion rate for a free application or 1 percent conversion rate for paid applications. Getting 5,000 downloads requires 5 million impressions in a single day. At a $10 CPM (define), which is a bit low for the mobile Web, an advertiser would need to spend $50,000 in one day to spend his way into the top 100. That's tough. It's better to incorporate the application promotion into more aspects of your advertising. Online display, online search, and even print and TV ads can raise awareness of your application.

Does your company or client offer one of the best online marketing products or services? Nominate it now for one of the 2009 ClickZ Marketing Excellence Awards!

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ABOUT THE AUTHOR

Davis Brewer

Davis Brewer is lead strategist of emerging channels for Spark Communications. As the lead strategist, Davis manages the robust expansion of all Spark client activity in the digital advertising space.

He acts as a client resource for the agency's digital futures practice, providing insights and analytics as well as risk management, for the latest emerging advertising opportunities in the digital media space. In this dual role, he continues to oversee his existing list of forward-thinking clients.

Davis began his career at an online advertising agency in San Francisco at the height of the dot-com boom. He quickly became a successful agent in the digital commerce arena after moving back to Chicago, armed with the unique perspective of a bubble-burst veteran.

A pioneer of behavioral targeting online, Davis was named a 2006 Rising Star in "DiversityBusiness" magazine. He received his degree in English from Dartmouth College.

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