10/6/2009
Killer Apps
Killer Apps
The what, why, and how of branded applications

10/6/2009
Killer Apps
Killer Apps
Would any marketer in their right mind have predicted that more than four million people would
download a clock application to their iPhone - a device which of course has a clock built in? Would
any business person have predicted people would be prepared to pay for it?
If you leaned towards the sceptical on the iPhone clock, you probably wouldn’t be among the
350,000 people who paid 99p for an app called iFart last Christmas.
These examples - and many more like them - illustrate the excitement building in the world of
applications. This new model for revenue and new platform for distribution is something that
should be on every marketer’s agenda right now.
Every brand should be thinking if an app could play a role in their business.
What is an App?
Applications - colloquially known as ‘Apps’ - are small software programmes that can run on
mobiles, iphones, social networks and other personalised websites like igoogle. When applications
are built to work on multiple platforms they are known as widgets. Their purpose is to make it
easier for us to get and share information, content, videos and pictures. The best apps provide a
real benefit to the user by making content more accessible or available than it normally would be. In
many cases apps are also built for entertainment, with ‘just for fun’ and gaming being top
categories on most platforms.
Games apps make up a significant chunk of app revenues across iPhone, facebook and Myspace.
Game developers in particular are benefiting from having a multitude of platforms: games are the
largest iTunes category, and the second largest category on both Facebook and Myspace. In
addition, four of the top ten most successful Facebook app providers are game developers. Rumour
has it that iTunes might open a premium store for more expensive apps where games would
feature heavily.
The Runaway Success of the App
Of all app platforms iTunes is growing the fastest. Less than a year since its launch in July 2008, in
April 2009 the Apple App store has delivered 1 billion downloads from an estimated 35,000 apps.
When you compare this to Microsoft who have achieved 20,000 apps on windows mobile in 8 years,
Blackberry who have 70, Android with 800 and Facebook at 33,000 (last published in 2008), you
can understand the excitement. Only Facebook really have any comparable volume but considering
they have 175 million global users and iPhone/itouch combined have only 30 million then there is
something quite special about what Apple are doing. There are a number of reasons why they have
been the most successful but there are two that are most pertinent; distribution and billing.
The iTunes store makes it very easy to find and discover new apps that suit your needs, the store is
accessible online and via your handset making it easy to go app shopping at any time.
The billing mechanic has to be the real killer app here. Itunes have a billing relationship set up via
their online store with all their customers. Because your iphone or ipod touch syncs with the store,
your details are saved in the cloud and available upon entry of a password allowing you to buy an
app in 2 clicks on your phone or online. This simple transaction combined with the generally low
cost of apps makes the store very appealing to users.

10/6/2009
Killer Apps
Other platforms, both mobile and web based, have struggled to get scale to their app market
largely because of billing and the store distribution. For mobile operators this is quite ironic given
they have a billing relationship with a large percentage of their customers. However, in the UK the
significant pay as you go mobile market adds a barrier to the billing model, so there has to be an
alternative if apps on other mobile platforms will take off.
There is a lot to discuss about the app world so for the purpose of this document we will focus on
the biggest platforms: Itunes, Facebook and Myspace. We will be looking at creating apps as
marketing tools and the monetisation of them.
Branded Apps
Firstly lets separate branded apps from brands using apps as another entry point into their
business, e.g. BA, Amazon, eBay and BBC.
Developing an app as an access point into your business is a more strategic and long term
investment, and most likely it will be the best way to truly deliver added value to your customers. It
will be an extension of their digital experience elsewhere, allowing access to content and
information anywhere and anytime on a mobile platform. A good example of this is BA’s flight
times and check in app for iPhone.
On the pure advertising side of branded apps the focus is more short term and high impact.
The starting point for creating a branded app is to understand your audience’s behaviour on social
networks and platforms and identify something significant or a need that could be helped by the
presence of an app: something that would make their lives better or different.
You also need to understand the difference in app usage, on a social network vs an iPhone for
example. Generalising for a moment to make this point clear, app usage on Facebook is very social.
It is focused on sharing information, pictures and videos with your friends. On the iPhone the app
usage is more personal and location based, such as the journey planner app or catch up TV and
gaming to pass the time as you travel. Once you are clear on which is the best platform for your
audience, you then need to examine the brand fit. Does your brand have a right to connect with the
need you have identified? Would its presence be accepted in that environment?
On the right is a list of 20 branded apps on iTunes. A broad range of brands have tested out this
platform with varying degrees of success. One of the most famous branded apps is Carling iPint.
For humour, you have to love Charmin ‘Sit or Squat’ for their sponsorship of an existing app that
allows you to find the nearest toilet when you are on the go. Kraft were the first brand to charge for
their app - the ifood assistant at $0.99 - this app offers something quite useful with recipes and
shopping lists on the go. Zippo with their virtual lighter has become the top ranked free app in the
lifestyle category.
Monetising apps
There a two main ways to make an app pay. You could charge for download and usage, or
alternatively there is an ad model. The current average price for a paid for app download is 99p,
although this price point is seeing decline.
The number of apps available is on the increase and the total number of people installing them is
also increasing, but volume of choice will soon outweigh the number of participating users.

10/6/2009
Killer Apps
All-Time Top iTunes Apps
Predicting success is hard. If you study the rankings the list is quite random, although interestingly
the most popular paid app is the most expensive one in the store at $5.99. It appears that people
will pay more for better products.
Assuming you have built an app that is truly useful then the best path to take is to pay to
download. If you take the free model and want to monetise it though advertising you will need to be
in the top 5% to get close to making the same amount of money as you would from a paid
download. The problem is that you probably won’t know how successful your app will be until you
release it and test the market.
If you release it for free initially you can’t really start to charge once it is successful. One way
around this is to release a ‘lite’ version first. For example ishoot is one of the most successful
iPhone apps achieving 2.4 million downloads of the iShoot Lite. From this free product they then
promoted an upgrade to the full game iShoot which saw 320,000 downloads at 99p a go. If you can
start broad and create advocacy amongst an audience, then asking them to pay 99p for more is
very acceptable. Our recommended approach is to either release a lite version first or if there is
nothing inherant about your app that screams free then sell it. If you are hugely successful and
heading for the top 5% of the market then you can switch to a ad funded model to gain more users.
For example a free newspaper vs a paid for newspaper in the real world would have a tough job
asking someone to pay get that content on the iPhone unless the product was compelling.
As of 21st May 2009 the top two paid for apps are the Moron Test and a game called StickWars, the
top free apps are ‘What’s your Sex Appeal’ and Brain teaser. The lesson here is not to aim too high
if you want to be popular!
Micropayment Subscription Model?
The next iTunes release in August this year is rumoured to include an update to the payment model
which will allow for subscriptions based apps to be built. This is exciting news for content owners
who want to monetise their content more than once. Any brand who has something new to say each
day or month will benefit from a subscription micropayment model allowing users to sign up to get
regular content updates upon request. Is this how some of us will read our newspapers and
magazines in the near future?
Apps and Social Networks
The Facebook application leader board shown below highlights the earlier point about social
network apps being socially focused. They are all applications that allow the user to showcase
personal content to their community in different and more creative ways. Due to the lack of an app
store on Facebook and Myspace there is no easy way to find out which brands have apps. Based on
the top pages in Facebook we can see that TripAdvisor, Coca-Cola, Nutella, Pringles, McDonalds and
Converse are all playing in this space. One of the challenges on the social networks is the way
content is spread out. Many of these brands have numerous apps and fan pages which means there
are no real economies of scale. If brands actively managed their social presence the sum of the
parts could be very powerful.

10/6/2009
Killer Apps
Developing Apps
There are a number of independent developers building apps for a variety of platforms. For
example on the iTunes platform, of the top 10 paid and top 10 free apps, 50% were made by small
developers and only 10% came from inside Apple. The iTunes platform is relatively cheap and
simple to develop for and they take a 30% cut in revenue. Churn rate of app usage is high, only
around 1% of the total downloaded maintain longer term use.
Paid for apps keep users coming back for longer and the entertainment category appears to retain
the highest long term use, where as Sport is best at short term use. 20% of people who downloaded
an iTunes app went on to use it the next day, this increases to 30% amongst paid for apps. A key
metric to look for is engagement. How much time and how often are users coming back to your
app? Always make sure your app is developed with analytics built in so that you can learn as you
go.
The Near Future
Apps will form an increasingly significant role in both marketing and as access points to
businesses. The iTunes platform is still relatively small and limited to owners of iPhones and
iTouches. As this audience grows that market will become increasingly compelling. For Facebook
and Myspace the challenge will be in creating consistent experiences for purchase and security and
providing an easily accessible store with search functionality.
The apps opportunity is a real one for many brands. If you’re serious about getting involved, then
keep in mind these rules of engagement:
Audience insight: observe your audiences behaviour on social platforms.
Brand fit: be genuine about who you are as a brand and where you will fit in.
Distribution: how will potential users find your app? Build in a distribution and promotion
plan to any app launch.
Cost model: will it be paid for or free? Is there an opportunity to drive revenue?
What’s your app going to be?
Sources and references:
Ubercool: Http://www.ubercool.com/a-case-for-branded-apps/#ixzz0G37SOjPR&A
Inside Facebook
Appdata.com
Forrester Research
Engadget

10/6/2009
Killer Apps
Author: Joanna Lyall, Mindshare Head of Invention, Mindshare London. Joanna.lyall@mindshareworld.com