The Fable of Free: Lessons From an iPhone App

  |  June 22, 2009   |  Comments

A case study proves that free isn't always good and that you can never underestimate the value of timing and good metrics.

Marketers everywhere are tasked with devising clever promotions to drive interest in products and services. Often these promotions include free trials or demos or free versions of these products or services, with the hope that limited free use will hook consumers into long-term purchase of the real thing. Such promotions are often successful, but there's also an inherent danger in free, especially when a free version displaces or devalues the brand.

Such was the case with iPhone app Colorama -- Kids Coloring Book. Colorama is just what it sounds like -- a digital coloring book with simple drawings developed for the iPhone and iPod that allows kids (OK, adults too) to select from among 53 blank drawings and fill them in with color using the touch-sensitive interface. Drawings can be saved, shared, used as wallpaper, and more. As far as apps go, it's a winner. Fun, easy, and useful.

The app was developed and launched in early 2009 by my colleague Ethan Arutunian in his spare time, with artistic direction by his wife and additional development by a friend. Colorama's initial development and marketing were well executed, and Arutunian was careful to place analytics tagging throughout the product to measure things, such as weekly downloads, frequency of use, most popular drawings, drawings per person, and so on.

To generate momentum at launch, Arutunian sent an initial e-mail blast to friends and colleagues informing them of Colorama's availability in the app store ($0.99). Within the first two weeks, Colorama rose in the rankings to among the top five kids' games. Then when spring came around, they got the idea to capitalize on an event; so they launched a free Easter promotion.

It consisted of a free Easter book that contained a limited number of drawings. After coloring any of the drawings, users were prompted to buy the actual Colorama book at the download store. Additionally, Arutunian used the same analytics tagging with the free version so he had immediate access during the limited promotion to track downloads and user behavior.

It seemed like a no-brainer -- "Hey, let's give kids some eggs and bunnies to color" -- but the promotion quickly devolved into a marketing miscalculation.

What parent doesn't want to download a free Easter coloring book a week before the holiday? Downloads of Colorama's free version skyrocketed in early April. At the same time, downloads of the actual version dropped off dramatically. Users clearly preferred "free" over "buy." The full version dropped out of the top five rankings, eventually settling at number 15. Sales dropped by half.

Uh-oh.

Sensing big trouble and constantly monitoring his real-time analytics data, Arutunian pulled the free Easter promo after only three days. But the damage had been done.

I like to use the analogy of radio: whatever's on the air is what's popular. It's self-fulfilling. Take a song off the radio or don't play it at all, and few will buy it. Perception and visibility are reality. In this case by not being in the top five rankings Colorama lost its initial momentum and perception of an app that kids need to download (despite it being a very cool product that my kids love!).

Had Arutunian not been monitoring the analytics data and had not pulled the eggs out of the basket, as it were, who knows how low the ranking may have dropped. The Colorama case study proves what savvy marketers already know: free isn't always good and that you can never underestimate the value of timing and good metrics.

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ABOUT THE AUTHOR

Shane Atchison

In 1998, Shane co-founded ZAAZ to advocate a different approach to Web services — one that respects and delivers on the power of the individual and the promise of Web technologies. As CEO, Shane leads the company's long-term strategic vision of working with leading financial service organizations, consumer brands, startups, non-profits, and community-based organizations, helping each realize the potential of the Internet and its meaningful impact on their business.

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