Killer Applications for Mobile

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Killer Applications for Mobile

  1. 1. 10/6/2009 Killer Apps Killer Apps The what, why, and how of branded applications
  2. 2. 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.
  3. 3. 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.
  4. 4. 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.
  5. 5. 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
  6. 6. 10/6/2009 Killer Apps Author: Joanna Lyall, Mindshare Head of Invention, Mindshare London. Joanna.lyall@mindshareworld.com

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