Two years ago, I argued that we were in the midst of an "app bubble." Brands and venture capitalists were eagerly investing in an overcrowded marketplace that didn’t demonstrate real value to most consumers. As smartphones have made their way into the purses and pockets of more and more consumers, brands have only increased the pace of experimentation, making the challenge of breaking through in app stores even more difficult. Around 26,000 applications were submitted to the iTunes App store in each of the first seven months of 2012.
But the problem most companies are facing in mobile today isn’t simply a lack of appreciation for the realities of demand in the app market. Applications, just like any digital initiative, must be grounded in clear strategies that harmonize specific business needs and user interests, while reflecting a pragmatic view of the marketplace. Most marketers are making the same mistakes in mobile that they’ve made on the web for years—expecting consumers to dedicate time and attention to their brand messaging without providing any valuable service or fulfilling any consumer need. Aside from the potential short-term PR boost and the value of educating employees with limited backgrounds in digital and mobile, building a branded app for the sake of having an app is a waste of time and money for everyone involved.
Based on my experience with helping companies coordinate their entrance into the mobile marketplace, there are three distinct approaches that work:
•Mobile as Marketing: Let’s say you’ve launched an application to build your brand. You spent internal resources and a few hundred grand on outside help but only your most loyal fans have downloaded it. That’s because your app isn’t an awareness tool, it’s a new product that you’ll need to market to users. One of the biggest fallacies in mobile marketing is that creating an application will solve awareness problems. Instead, think about mobile as a media channel. If awareness is your goal, consider innovative display advertising, like this award-winning tablet execution from Brazil; broker a sponsorship deal with a promising or successful app, like these efforts from Target and KitchenAid; or tie your ads and content to popular applications with large user bases, like Shazam and Instagram.
If you’re intent on using an application for brand building, try making it an integral, high-engagement component of a larger, mass-media marketing program. Coca-Cola tried this with “Chok” in the Hong Kong market. Whenever a particular Coca-Cola TV commercial came on, users who flashed their phones at the screen at a specific angle collected virtual bottle caps and earned the chance to win prizes. The app added actual physical interactivity, gamification mechanics, and a novel form of entertainment that was much more engaging than regular old TV advertising.
•Mobile as Service Enhancement. Chase’s popular banking application introduced the ability to deposit checks without even visiting a bank or ATM. The Kindle application lets people read on the go, even when they’ve left their Kindles at home. HBO GO enables subscribers to watch their favorite shows anywhere they have access to an Internet connection. Lowe's lets customers pick up purchases from the store in less than 20 minutes, like ordering takeout for dinner. Each of these mobile products makes the company’s primary product or service more attractive to its customers. In these application-as-enhancement cases, it’s about taking the core capabilities of mobile—like ubiquitous connectivity, GPS, accelerometer, camera, and video—and turning them into a brand-relevant utility that has lasting appeal for customers. To get started, ask your team to think about how mobile technology could make your products and services more valuable, and how you could extend your core offering with mobile devices.
But don’t expect to increase brand awareness through a service-enhancing application, unless you are planning to invest in significant advertising or PR to support the effort. And, in most cases, you’ll still need to promote the application to your own existing customers, in order to create a user base. Even HBO needed to advertise its HBO GO offering to subscribers before positive word-of-mouth turned “GO” into a brand builder. Applications can be a powerful way to enhance your core product or service and, in turn, develop closer relationships with your customers. So, think about your investment as a CRM play to increase the volume and intimacy of brand-consumer interactions and bolster brand loyalty.
•Mobile as a Business. Making money is the most challenging approach to mobile. Significant costs are often overlooked in the planning stages and, in most cases, it’s difficult to profit until you have built a large user base. The three primary revenue models for apps are: paid applications, in-app micropayments, and ad sales. It typically takes many of these small deposits before the company can cover its costs, which include not just the design and development of the application, but also ongoing internal management, maintenance (usually requiring the addition of new employees), and the cost of promoting the app.
For businesses considering this approach, risk and return must be painstakingly measured, like any other business endeavor. The initiative needs to be planned and launched like a startup and managed like a full-fledged product line, in order for it to succeed.
As consumers become comfortable doing more and more with their phones and tablets, mobile will become essential to business performance. But businesses can’t afford expensive misadventures that produce poor results and begin a vicious cycle of diminishing investments in digital. To get it right, align your mobile efforts with clear goals and realistic KPIs, balance service to users with value to the business, and ensure mobile products are well-managed and maintained. Very few businesses have figured out mobile yet, but the opportunity is wide open to make smart investments that will keep your business one step ahead of your competition for years to come.
—Author Aaron Shapiro is the CEO of digital agency Huge.
[Image: Flickr user Thomas Hawk]