UK: Killer Apps? - Appearance Isn’t Everything

Smart is the new beige – the evolution of mainstream computing

Computing devices are everywhere. What used to be a beige box on your desk is now in your pocket, on your coffee table and inside your TV. But these are very different computers to those that have gone before – more tactile, more customisable and above all, more personal than any device in history.

Their proliferation has been so explosive that 2010 could well be the last year where traditional PCs form the majority of computers sold worldwide. By 2014 smart devices will be the mainstream. As Figure 1 outlines, Deloitte estimates that 700 million smartphones will find their way into the world's pockets in that year alone, not to mention 10's, even 100's of millions of connected TVs, tablets, media centres, even cars. Forget the Web, this is the new global channel.

Needless to say, part of the reason for the success of these smart computing platforms has been the rapid growth of a base of applications (aka apps), enabling customisation of the device to suit the users' preferred modus operendi. At the time of writing, around 350,000 apps were available on Apple's iTunes based store and over 200,000 on the competing Android Market.

Deloitte research into mobile consumption reveals that, on average, 45% of the 34% of consumers who have a smartphone download an app at least once a week.iii So whilst it is clear that it has some way to go before it rivals TV or the web for penetration, the smartphone app market is becoming a noticeable player.

The promises and pitfalls of a smarter world

So far, so Star Trek; it is wholly understandable why global brands have indulged in a mad scramble to launch "an iPhone app" to take advantage of the new frontier. And, akin to many new frontiers, the mobile app market has gold aplenty. Clearly there are sales opportunities – eBay is expected to make $1.5B from smartphone users in 2010 – but the customisability, connectivity and interactivity of smart devices promises to make them the ultimate advertising platform.

Why do we say this? For one, because they are software driven and the software is easily and cheaply customisable, smart devices inherently segment the base of consumers. You can tell a lot about a person from the apps on their iPhone. Furthermore, handheld smart devices offer a lean forward experience where the user is concentrated on what they are doing and have only a small amount of screen real estate to focus on. The invisibility of full screen browser advertising is less of a problem on mobile platforms in general and apps in particular. All of the above is accentuated by the potential of a rich flow of user data – location today, but also potentially motion, temperature, light levels and increasingly images. It is fair to say that the ultimate cultural and economic impact of smart devices has yet to be felt.

For brands, this feels like a golden opportunity to reach consumers directly and in a more meaningful, long term manner. Both brands and their customers are in an experimentation phase, with interesting new possibilities, whether this be teaching people to cook (using a particular brand of ingredients, of course), helping them order a pizza or configuring the car of their dreams (and then arranging a test drive).

As with every gold rush, reality is more challenging than the theoretical winnings. Deloitte has conducted research into app stores to understand quantitatively the success of apps on the main platforms. Unsuprisingly, the main challenge to global brands is to stand out from the crowd; such is the popularity of the devices and their apps. As with any multichannel environment, the key to success is to be noticed. And this is really hard for brands and advertisers.

The trouble is that in traditional media and on the browser-based Web, someone else does the tough job of attracting customers to a channel where an advertisement, be it banner, print, insert, video or audio then does the job of selling the brand. On the app platform it is the brand's job to be noticed upfront.

The returns for success are potentially huge – Volkswagen's Touareg game was downloaded over a million times, with an average playing time of eight minutes, 3,500 test drive requests, and an average player age of 35v. All for the few tens of thousands of dollars cost of an app. But our research suggests that this kind of success is fleetingly rare. Only 20% of the apps published by major consumer and healthcare brands globally were downloaded enough times to appear in our figures and of that 20%, less than 1% were downloaded more than a million times.

And this situation is likely to get worse. As app stores become more popular and users become more mature, getting noticed will become ever-harder. Gone are the days when a pint of beer sliding along a bar will catch the interest of users enough to be downloaded, let alone used regularly.

However, non-participation in the app world does not appear to be an option either. More than three-quarters of mobile app users said they expected all brand name companies to have a mobile app and nearly as many said they expected the app to be easier to use than the company's website.iv

In summary, then, if non-participation in app stores is not an option and effective participation is increasingly challenging, how can brands succeed? Our research indicates that there are a number of key characteristics for apps, which if followed significantly increase the chances of success.

Success factors

Playtime is over(a.k.a. 'utility is king')

A common mistake that brand owners make is to assume that to get consumers to interact with their brands on mobile requires an app. We suggest that the first test of whether an app is needed in lieu of a mobile website is whether that app will offer the user some functionality that is desirable to them. If not, then stick with the website as informational or ad-serving apps combine poor download volumes with poor reviews and may in fact be brand damaging.

Successful branded apps appear to fall into two broad categories – time-killers and utilities. Whilst research shows that games are the most popular category, a branded game must rely on its intrinsic entertainment value to drive downloads rather than the underlying brand. VW and Audi have achieved great results with driving games on the iPhone, however these were the only examples our research uncovered where a major brand had achieved significant downloads with a gaming app.

It is also worth remembering that the mobile app platform is only four years old and its rate of change is extraordinarily fast. At the time that Volkswagen Group succeeded with simulation games there were relatively few similar games on the market. That is no longer as true and competition is forcing up the cost to produce a hit. For example, Firemint's "Real Racing 2", released in early 2011, cost $2M to developvi – a far cry from the estimated $100k cost of an advanced app in early 2010. With games receding as a realistic option for brands seeking to advertise on mobile, the other option is to provide utility apps. Kraft's iFood Assistant is a good example of the type, having been downloaded by around half a million consumers. Kraft's app provides recipes indexed by ingredients, meal type and preparation time as well as a shopping list feature and instructional videos.

In our view, iFood Assistant has been successful because it bundles together a number of characteristics that have driven success for other brands:

  • The app harnesses the power of network effects, allowing customers to upload and share their own recipes, improving the experience for all users
  • The brand is prominent throughout the content, driving brand awareness
  • The app acts as a loyalty programme, offering coupons and discounts
  • The app gathers invaluable data on user habits and allows for targeted recipes and coupons to encourage repeat usage
  • The app uses the hardware features of the device to offer enhanced experience (in the case of iFood Assistant, a GPS store finder)

The latter is very important. Mobile apps represent an opportunity for users to fully engage and experience a brand, thanks to specific functionality available on smartphones, for example: touch screens, accelerometers, microphones and GPS. In our view, companies should consider whether they can develop an app that creates value for users using these functions, rather than just creating a stripped out version of their website or mobile microsite.

Our research found that, out of the functionality available on smartphones, extensive use of some specific functions is likely to give a branded app significantly higher likelihood of success (see Figure 2).

Playing the app store ratings game

As the number of apps available increases and users become more targeted in their acquisition of apps, the methods used by consumers to discover apps will become more sophisticated and therefore more open to manipulation. The "search" function is now the most common means by which consumers discover apps, so it is crucial that brands understand how to maximise their chances of appearing at the top of search results.

Positive feedback ensures that those apps successful enough to make their way into the top rankings continue to receive the most new downloads; however, Apple prohibits developers and companies from paying to promote their apps directly on the app store – hence it is hugely important to understand how to influence ratings in order to get noticed.

Apple app store rankings tend to be based on a 24-hour rolling window, so bursts of promotional effort will have a greater effect than a longer campaign at regular intervals.

Similarly to search engine optimisation ("SEO") for traditional web search, there are a number of effective ways to promote products on an app store, for example:

  • Use keywords in the app name
  • Use the keyword in the name of the developer
  • Encourage users to write reviews
  • Spread the word to app communities, writers and bloggers
  • Mention popular related apps as keywords
  • Make use of incentivised downloads to drive traffic to the store

The lesson here is to treat app store ratings in the same way as web search – optimisation of the metadata that drives them is an important part of the development and release process. Similarly, the now common subtext to advertising on other media to "download the smartphone app" must remain, even if it is already becoming as ubiquitous and therefore forgettable as the disclaimer.

(Plat)form over function

Equally important as playing the ratings game is deciding which platform to play it on. Although Apple set the trend and developed as the main platform and richest, most populated, platform, its market leading share has been eroded by Google's Android (see Figure 3). With Nokia and Microsoft now cooperating and RIM taking the Blackberry ever more mainstream, the platform aspect of branded apps is becoming more complex.

This is important because the synergies realised by developing apps for multiple platforms are relatively insignificant – Deloitte estimates that the cost of developing the same application for two platforms is 160% of the cost of developing for one.

It is therefore important to target apps to a platform in the same way that advertisements are targeted at a TV channel, newspaper or website. As previously stated, iTunes is the richest platform for apps and iPhone has a significant market share, however its user base is relatively concentrated. Deloitte research shown in Figure 4 shows that the iPhone is typically a professional, white collar device. Targeting apps intended for users outside this group using the iPhone may therefore prove an unsuccessful strategy.

To be successful at treating each platform as a different channel, with different levels of engagement and demographics, businesses must keep the organisation's collective ear to the ground on new technology releases and the ranging strategies of operators to ensure that mobile campaigns take best advantage of the huge marketing spends of carriers and co-incident handset acquisition by consumers, which enable new features to be exploited.

The next chapter ...

The integration of app functionality and platform features is likely to dominate the next phase of exploitation of mobile platforms by advertisers and brands. To date, apps use features locally in a closed manner – an app might ask to use location data, but we have seen no evidence of apps really doing anything monetisable with it yet.

But if data gathered locally could be exchanged with information from the cloud, be that contextual information about location, environment and motion or individual-specific data, then targeted advertising can be taken to a new level.

Here is an example of a scenario that could illustrate the experience of brand engagement for mobile users in a future of targeted contextual advertising: Let's imagine a consumer who has accepted to receive ads in order to benefit from a free Premiership Football video goal alerts (or any other application/content that is ad funded).

The consumer's phone holds lots of valuable insight:

  • It is near the King's Head pub (and that the consumer has been walking around the high street for the last 20 min)
  • That it is in proximity to a phone that it has paired with in the past (in this case, owned by the consumer's wife)
  • It's fairly warm (the phone knows this because it has a weather feed from Yahoo and a sensor that monitors the temperature)
  • It's 4.30pm (time for a drink!)
  • That the consumer is registered with the Barclaycard contactless mobile payment service

Having analysed all this data in real time, the app decides to serve an offer for a cold branded drink, which gives the owner a 'buy-one-get-one-free' coupon that he can redeem immediately, paying by contactless payment at the King's Head. The rules for serving these adverts can be relatively simple – had it been a cold day at 8.30am near a Starbucks, a coupon for a coffee in return for registration details into the Starbucks' loyalty scheme would have been served.

And as more devices become computers, the possibilities for such an ecosystem expand exponentially. For example, the commercial being served to the TV could be matched by a commercial or offer being pushed to the tablet computer that's in your lap. Apps allow this kind of functionality to be considered, but they are only possible in concert with a commercial model that enables all the participants to benefit.

Consumers clearly need to see the benefits, financial or otherwise, of receiving more personalised advertising on devices that have hitherto been advert-free, and consent to let their personal data being used in this manner. Likewise, brands need to ensure that they can monetise larger and more complex investments in platforms – that may mean co-operating with traditional advertising vendors, companies with similar ambitions in other industries or even competitors.

Crucially, hardware vendors and network service companies, in particular mobile operators, need to see the benefits of such schemes. Today, the feed of data from handsets to media planners is still inconsistent across operators and platforms and as a result, difficult to use on any scale by advertisers.

The success or failure of apps advertising will be largely determined by the ability of players in different parts of the value chain to collaborate and agree a means to sharing benefits created in the ecosystem as a whole.

Summary

Our research has shown that apps, (and more generally non-PC computing experiences) are likely to become more significant to businesses in the next five years. Brands seeking to advertise on these channels need to understand how to create apps that meet their goals – brand engagement or direct enhancement of their products and services – and make best use of the technological capabilities of the platforms that enable them.

We have found that brands succeed by:

  • Simply offering the consumer useful functionality
  • Understanding how to manipulate app store ratings to gain prominence
  • Targeting apps at the platforms that are most likely to be used by their audience
  • Make use of handset functionality to offer something relevant and targeted to the individual and their immediate environment

In the future, we believe that apps can offer a compelling advertising medium for brands, provided they are willing to work with service and technology providers to create an ecosystem that is beneficial for businesses and consumers

Footnotes

i. Deloitte analysis based on vendor actual shipments & Deloitte forecast

ii. 148apps.biz; The official Google blog

iii. Deloitte "Addicted to Connectivity" survey of 31,000 global mobile users

iv. EffectiveUI survey conducted by Harris Interactive, Nov 2010

v. http://press.fishlabs.net/en/target-group-thrilled-withvolkswagen-touaregchallenge /

vi. http://pocketfulofmb.com/ios/firemint-on-thebeautiful-real-racing-2-and-flight-control-onplaystation-move /

vii. Deloitte "Addicted toConnectivity" survey of 31,000 global mobile users

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions