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Disintermediation and the App Economy

  |  May 31, 2011   |  Comments

How the delivery of IP data through apps is changing how users access content.

Interactive media has never been simple, but it used to be much more straightforward. For a solid 10 years or so, there was really one platform to think about: consumers had all of their interactive experiences on the PC. Email, mostly accessed on the PC, was the primary outbound communication. Display ads, though never terribly effective, were the main form of advertising. The goal for companies and their agencies was simple; get 'em to the website.

Empires were built on this premise - companies as diverse as eBay, Zappos, and Amazon in the pure digital space, as well as the many traditional companies that embraced the web with incredible results in categories like retail, automotive, and consumer packaged goods. Your website was something over which you had total control, and once you got a critical mass of traffic based on reach and frequency, you started work on funneling consumers into a deep brand experience or a purchase decision.

Today? Things have changed - and they've stayed the same. It's still about getting people to get to know your products or services through interactive media; now there are just more channels.

One example of this that I'm really proud of is Vevo, a service that we helped to build. If you don't know what Vevo is, the elevator pitch is "Hulu for music videos." A joint venture between Universal Music Group and Abu Dhabi Media, Vevo was one of the great success stories of 2010. The Vevo platform came from nothing and, in just seven months, surpassed Hulu to become the fourth most popular video site on the web.

vevo

How did this happen? Vevo went to market with a very smart strategy that bucked most media company trends, and was based on the idea that a "view" of a Vevo music video had the same value wherever it happened. Traditionally, media companies have been highly proprietary and totally unwilling to let media leave their own controlled channels. This shift in strategy led to a partnership with YouTube, and to the creation of iPad, iPhone, and Android apps. Users can either follow links back to the site (a great outcome) or continue to enjoy the strongly Vevo-branded properties on the various non-PC platforms - either way, Vevo forges a strong and loyal relationship with its audience.

Another example of apps on the rise: the daily deals category. We've seen a massive shift recently, as Groupon and LivingSocial have been flooding to apps as the engine for both notification (historically, the job of email) as well as fulfillment (traditionally, the job of the website). Gilt Groupe has also moved quickly in this direction; in 2010, 7 percent of revenue was completed via mobile; a number that's jumped to 15 percent in 2011.

grouponapp1

grouponapp2

Not surprisingly, I've been asked by several clients "Do we even need a website? Should we just concentrate on our social channels and be done with it?"

The answer is easy: "No!"

For a host of reasons, you still need a best-in-class website.

  • You need to build a place where your super-fans can gather and enjoy a rich experience of your brand.
  • There's no substitute for a great website when someone decides they're interested in your brand or they do a web search and need to go straight to the source.
  • Your website is still the place where you can totally control the message and the experience and display the purest version of the brand.

So maybe the bad news for marketers and the good news for agencies is this: despite massive disintermediation, brands still need a strong web presence if they are going to influence the minds of consumers, and they must also be in front of those consumers across multiple devices.

In short, in the interactive marketplace, it's no longer a matter of "if you build it, they will come." You still have to build it, but if it's not also available through apps, deals, or APIs, not enough people will come to your proprietary property to put you ahead of the game.

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ABOUT THE AUTHOR

Andrew Solmssen

Andrew Solmssen serves as managing director of Possible's Los Angeles office, leading the firm's West Coast client teams and determining best practices for engagement management.

He previously served as managing director at digital firm Schematic, where he played a key role in developing some of the earliest advertising models for delivering broadcast content via the Internet. Andrew was also responsible for providing strategic guidance to clients such as Comcast, ABC Television, and NBC Universal in the areas of digital strategy, content distribution, mobile entertainment, and Internet TV. Before Schematic, Andrew served as executive producer at Web design and consulting firm Kaufman Patricof Enterprises.

A frequent speaker at industry events such as Digital Hollywood and CES, Andrew is also regularly quoted by business and trade media on the topics of digital advertising and technology innovation. Prior to his involvement in digital media, Andrew lived in Namibia as part of the Harvard Institute for International Development.

Follow Andrew on Twitter @asolmssen.

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