Mobile Marketing

360i Report: Mobile Applications

July 25, 2010

360i Point of View on
Mobile Applications

Applications have become an enduring form of mobile media, thanks in large part to the ease of buying apps from Apple’s App Store and the increasing usage of apps on Google Android handsets. With apps’ popularity come new challenges for marketers, as consumers’ attention is split between apps and the mobile web. Marketers will have to prioritize and make tough decisions when allocating finite resources.

This is the fifth in a series of reports on mobile marketing, with more to come. Read the others on 360i’s Digital Connections blog, where you can also subscribe to receive subsequent updates. The previous report on Mobile Social Marketing covers how marketers are using mobile social applications and complements the insights below, while a future edition will cover barcode scanners and other commerce-centric apps.
Mobile app usage trends
One of the biggest drivers of app usage is smartphone penetration. As noted in the first POV in this series, Nielsen reports that by Q3 2011, roughly half of US mobile subscribers will use smartphones, and smartphone market share will only increase from there.
Mobile ad network AdMob, which Google recently acquired, surveyed mobile users in February and found that Android and iPhone users spend about 80 minutes daily using apps, while iPod Touch users spend even more time. iPod Touch users spend more money, too – $11.39 per user that purchases apps, compared to $8.36 for Android and $8.18 for iPhone. The App Store garners about twice as many paid app downloads per user compared to the Android Market.
It’s not just smartphone owners who download apps, though. Nielsen reported that users of both smartphones and the simpler feature phones show similar preferences in terms of the apps they download, with games, music and social networking ranking among the top categories for both.
Smartphone users are more likely to download apps and on average have 22 apps installed compared to feature phone users with 10. Nielsen also notes the variability within the average number of apps per user of smartphone operating systems. iPhone leads with 37, followed by Android (22), Palm (14), Windows Mobile (13) and BlackBerry (10).
Apple’s leadership here is uncontested. Over 5 billion apps have been downloaded across Apple mobile devices as of June 2010, and over 225,000 apps are currently available.
The second largest app market, GetJar, doesn’t belong to any operating system or handset maker in particular. This independent provider offers apps across various platforms and is only the second app store, after Apple, to record over 1 billion downloads. GetJar currently offers approximately 75,000 apps across 2,200 supported devices.

How marketers can use mobile apps
Marketers have three primary options for reaching consumers through mobile applications:

Advertise: Ad networks such as AdMob, Quattro Wireless, Millennial Media, Medialets, Greystripe, Celtra and countless others can run ads within applications. It’s also possible to run custom promotions directly with many app publishers and developers. Major publishers such as top news and weather apps may offer app ads bundled into a broader cross-channel deal. Ad formats may include text, video, polls, lead generation forms, click-to-call, store locators and games.

Integrate: Marketers can work with select app publishers and developers to create custom, integrated experiences that are far more involved than ad buys. Several such examples are included in the Mobile Social Marketing report. Some apps even reject standard ad units and will only run custom promotions. These are of course harder to develop and scale than running a mobile banner across thousands of apps, but the impact can be considerable, as the marketer may find deeper ways to connect with its target audience.

Build: Building applications is an option for marketers, and the examples below show how apps have successfully been developed to fit in with a marketer’s overarching goals. There are several challenges though:
As shown above, most popular apps are for gaming and entertainment, which may be a fit for certain entertainment and CPG brands but is often not in line with the objectives for other marketers.
There needs to be enough budget available to build the app and promote it. Without a strong commitment to promotion, the app may never gain enough visibility to break through the tens or hundreds of thousands of other apps. Marketers should consider what channels they have available for promoting the app, from email to in-store to branded social profiles.
It requires an ongoing commitment. The best apps, branded or unbranded, go through constant iterations as they improve based on consumer input, internal ideas and changes in the technological capabilities of mobile operating systems and handsets. Updates also encourage consumers who may have moved on to other apps to return and give it another shot. This kind of commitment takes strong leadership and buy-in to muster the time and budget required to keep it going, especially if the app takes time to gain traction.

How marketers are using branded apps

Marketers have already deployed thousands of custom-built apps and some have proven more impactful than others. Here are just a few examples of how very different marketers are approaching mobile applications. The application examples provided here are all for the iPhone, since marketers tend to follow the lead of both consumers and developers in starting with the most app-friendly platform, but some marketers have found success creating apps for Android, BlackBerry and other operating systems.

Universal Pictures
When Universal Pictures wanted to promote the movie MacGruber, it realized there was one thing every iPhone user needed: a mullet generator. The studio was kind enough to provide such an app for moviegoers everywhere. The mullet-adorned photos could be saved, emailed or uploaded to Facebook, and the app also included games, sound clips and other content about the film. Universal Pictures Manager of Digital Marketing Ben Blatt told Mobile Marketer that there was a mobile ad campaign to directly promote the app, and then a broader mobile campaign to raise awareness about the movie.
Kraft’s iFood Assistant, one of the first and still most popular branded mobile apps, helps grocery shoppers decide what to buy and offers home cooks recipe ideas. The most entertaining content, cooking videos, still serves a very functional purpose, and consumers are willing to pay $0.99 for the privilege — money they can potentially earn back by reviewing the “budget wise” suggestions within the app.
Tiffany & Co
Consumers shopping for products with higher price points than a typical grocery list can also find relevant apps. Tiffany & Co created an app that lets marriage-minded consumes browse engagement rings and schedule expert consultations via phone or in-store. The app includes a tool, shown below, that lets users place a ring on the screen to determine what size it is.
Apps or mobile web?

Often marketers must make a prioritize whether to build a mobile-optimized website or build a mobile application. comScore reported that mobile subscribers are about as likely to download apps as they are to use browsers.

Here are some of the evaluation criteria marketers should use when deciding whether to build mobile applications.

What devices are used by your target audience? Are they likely to use smartphones? Feature phone users are far less likely to download apps and will tend to prefer mobile sites optimized for their smaller screens. iPhone users will also be more likely to download applications than BlackBerry users, though BlackBerry users will appreciate apps that work across devices.

Are you already attracting mobile web visitors? Have you reviewed the operating systems used by your site’s visitors to see if significant numbers are coming from mobile devices already? What’s the experience like for them when they get there?

What’s the mobile search volume for brand and non-brand terms related to your site? What comes up in mobile results currently? Are consumers finding better mobile experiences at competitive sites? Is there enough mobile search volume to warrant or even mandate an investment in a mobile site today? How are the monthly query growth rates trending?

Do consumers interact with you on a regular basis? Will consumers visit your content daily (such as for social networking, news or weather)? Will loyal customers return weekly to check out deals? Will they only be in the market for your products once or twice a year? Apps can give consumers quicker access to information and functionality consumers want to use on a regular basis, but a mobile site may be more fitting if it’s something consumers only need periodically.

Do you want to deliver an immersive experience beyond what the mobile web can do? Mobile websites can work perfectly well for product information, comparison shopping, store or venue location, basic information about entertainment properties and commerce. Advanced elements like games and barcode scanners don’t work as well, or at all, on mobile sites. If you want to provide immersive entertainment or rich product demos, such experiences may only be possible through apps.

What about the iPad?
The iPad is on track to be one of the fastest selling mobile devices ever, if not the fastest. In short, it matters. Yet it’s not a mobile device in the traditional sense. It’s more of a stationary device, used in situations where one is sitting in one place, whether it’s at home, at work, at a coffee shop or on the train.
Silicon Alley Insider analyzed the top 50 apps for the iPhone and iPod Touch and compared them to the top iPad apps. Games and utilities were popular for both groups, but iPad users also showed strong interest in content and productivity apps. iPad users are more inclined to lean back and consume content or lean forward and get to work.

The iPad may in time resemble the iPhone more, presumably with a front-mounted camera in a future edition to enable video chat and other app interactions. But it will never be as portable as a device someone can stick in their pocket. Click-to-call won’t matter at all, and location won’t matter as much. For a marketer targeting an audience that’s using the iPad or sees how the iPad fits into ways to achieve marketing objectives, the options of advertising, integrating and building remain relevant.

The iPad may in time resemble the iPhone more, presumably with a front-mounted camera in a future edition to enable video chat and other app interactions. But it will never be as portable as a device someone can stick in their pocket. Click-to-call won’t matter at all, and location won’t matter as much. For a marketer targeting an audience that’s using the iPad or sees how the iPad fits into ways to achieve marketing objectives, the options of advertising, integrating and building remain relevant.

360i’s Concluding Thoughts
For the foreseeable future, apps will only consume more of consumers’ time and attract wider audiences, especially as smartphone penetration keeps rising. The competition for attention within the app market is daunting, and standing out requires a marketer’s steadfast commitment. If creating a branded experience isn’t the best fit for a marketer’s plans and goals, there are still other ways to reach app users. Marketers will increasingly want to explore such options as mobile applications attract more of consumers’ media consumption.

Next Steps

Contact your strategic advisor at 360i to figure out how to further your goals through mobile marketing.