The app stores grow in size and it becomes very hard to gain visibility and sufficient usage for the majority of the services offered. What was first a market place for small developers has now become an important marketing and sales channel for well established brands. Less known services and brands, that initially may have gained some attraction, now find it harder and harder to succeed. The app stores have turned into huge warehouses where the consumer may find what she’s already familiar with and is looking for, but with quite limited or low precision support to encourage exploration of new services. Increasingly the most successful and used apps rely on a brand with an existing user base from other media such as the online web, television, and print. There are exceptions but they become more and more rare.
Why have the very promising phenomena of the app store resulted in a very limited usage for most services offered? There is fundamentally nothing wrong with the app stores but the expectations are far too high. Why? This is due to a number of reasons:
- The app stores are not really built as stores. Let’s just compare to the ordinary grocery store. The most frequently bought items, such as the milk, is far into the store and on the way there you are bombarded with promotions and offers. The business is carefully managed to: promote products in cooperation with the suppliers; align with other marketing channels; make us buy specific products by intelligent shelf management; improve loyalty by cards and programmes resulting in increase revenue and decreased customer acquisition cost etc. For the app stores to really become stores there is a long way to go.
- Most of the services offered are actually not good enough. The services are actually not meeting a demand from a big enough market segment. Many developers are prepared to take a chance developing and launching a new service, but many times with limited knowledge about the market need or how to reach a specific target group. Most services should never have been developed and are just a waste of resources. Trial and error may many times be a quite costly way to determine if there is a true market need or not.
- There are very limited means to reach a specific target group. Many apps would probably be quite appreciated by a specific and limited group but there are not good enough support to make this happen. The logic is now mainly based on that the end user knows what she’s looking for or that she’s regarded as an average user offered the same as anyone else. There needs to be ways for the suppliers to target specific groups is a cost efficient way.
- Most services are not marketed at all. With the exception of established brands with existing marketing channels, the services are hardly marketed at all. You can hope for that you get some free PR, being mentioned in a popular blog or similar, but what are really the chances of getting attention among 100.000 apps without a know brand or a substantial marketing budget? I would say that they are quite slim.
- Recommendation is underdeveloped. As the number of apps grow to very high numbers it starts to become much harder to find what you are looking for. Search will help you to find what you know exist, while recommendations will help you find what you did not know existed or that you were looking for. The recommendation tools are today quite limited and recommendations are mainly found on online web sites. Seems like quite a detour.
- The app stores have a too wide scope. As the stores grow and the end users become more advanced there is a growing need for niche app stores or sites focusing on specific interests. You need to put the services in some kind of context which will also improve the marketing and PR possibilities significantly.
- Most apps are bad business. The business cases for most apps are rather optimistic. Far too little resources, if any, are allocated to marketing and with limited revenues further development and promotion of the service become quite a challenge. Even a very good app may be buried under piles of other less attractive services and with very limited possibility avoiding a slow death.
Is there a solution to the problem? From the app store owner perspective they need first to figure out what they want to achieve running a store. With the limited competition a warehouse approach may be ok for the time being. However, eventually the present app stores have to decide if they should stay as “app warehouses”, if they should develop into real managed niche stores or shopping malls. One may also question the sustainability of the business models and if there’s really a need for the app stores further down the road. If staying with the present strategy they need to strengthen the recommendation functionality and possibilities to involve the end user. There need also to be better possibilities for suppliers of apps to directly target specific customer segments.
As the app store owners presently are quite happy, advice given to the developing community may be more worthwhile:
- Add the chapter Marketing to your business plan. As we all know, no product will sell itself. Don’t rely on that the app store will market and sell your service. Partner up with known brands, market through existing channels and allocate resources and money for this.
- Address specific needs of a defined segment that you have the possibility to target. Do the homework. Is the market really big enough?
- See to that the service is good enough. Depending on addressed market you have to see to that you really fulfil the needs of that target group. Services giving a close to good enough experience for many but not really good enough for any, will hardly gain usage or loyalty.
- Enable viral marketing. Make sure a happy user can act as an ambassador for the service and recommend this within her network.
- Keep costs down and have a realistic view on the revenue potential. Make sure you have enough to develop a good enough product and to market it. Go for general platforms, such as UMIs, to avoid high additional costs redoing the same service in different versions for all different devices. Consider a browser based approach as opposed to the more costly and harder to manage app/client approach.
- Minimize your risk. Have a portfolio approach as it is very hard to predict what services that will really become successful. Calculate and prepare for that the majority of the services will fail.
Within the Internet world we see one example after the other of successful services that manage to utilise viral marketing and distribution, and many times in combination with a sophisticated PR strategy. We also see examples of services that seem to take off by themselves mainly due to accidentally good timing and due to that the service gives an exceptionally good user experience or something unique. Working in the mobile space I have long been quite envious of the speed by which new services can reach new users within the PC-environment. We have struggled so hard trying to get a decent take up of new mobile services, but to be honest with limited success.
Viral marketing is in essence quite simple in theory, but in reality not that easy to achieve. The key is that there has to be a value for the individual to give and for the receiving party to receive. It also has to be easy and possible to give and receive. Regarding distribution of services that are expected to be used frequently, then the efficiency in distribution becomes even stronger when there is a mutual value for both parties that the services are used. This leads to limited churn as individuals then encourage each other to continue using the services. One example of this is the area of communication services, such as the IP-telephony service Skype.
Looking at barriers to viral marketing and distribution, comparing the mobile environment with ordinary Internet services, huge differences can be seen. The value for giving and receiving services may not be so different, but when it comes if it’s easy or even possible to share digital content mobile to mobile is quite a different story. On the PC sharing a link, a program, a movie etc is more or less just a few clicks away. On the mobile you need to take many other considerations into account. Does the receiver have a device that can use the service, do I even know what device she has, does she have the same operator, does she have the correct settings etc. Even if the answers to all these questions are positive, which may happen in some rare cases, just needing to even being worried about them have most probably discouraged the giver enough not to even try.
But do not let the present situation stop us from further exploring the opportunities. To distribute content freely mobile to mobile does hold one of the most interesting potentials and new forces of the Internet. Once the barriers to sharing content freely mobile to mobile an even faster viral distribution can expected compared to the present PC experience, as: there are about four times as many mobile phones as PCs; the phones are always on and they are personal and the phone is always accompanying the user. The UMI concept holds the potential to overcome the barriers to mobile viral distribution and doing so before any standardised and universal mobile operating system is agreed upon. Some basic success factors for mobile viral distribution are:
- Creating value for the giver
- Creating value for the receiver
- Additional value for the giver if the services is used by the receiver
- Notification to giver that the service given is used
- Distribution independent of what device the receiver has
- Distribution independent of what operator the receiver has
- Services are easy to down load, install, find and use
- That content and services are free or initially for free
I just come from yet another meeting with a major consumer retail brand that would like to explore the potential of the mobile as a new channel to communicate with their customer base. I remember an executive in one of the leading European mobile operators stating: “Within two years all major brands will have mobile presence – or they will not exist”. This was about three years ago but seems today as a rather relevant statement.
There is today a general enthusiasm over mobile marketing combined with a healthy awareness regarding the limitations. The initial a bit naïve view that just doing an app will solve my needs as a brand to reach the technically advanced customers, have now matured into understanding what can be achieved but also that this is not just about doing an app.
Looking at mobile marketing successes in the past, they are mainly sms-based campaigns. But this is not a scalable approach. If we should redirect marketing spending to this type of activities then each consumer will be spammed far beyond what anyone can accept, eventually totally killing the opportunities. Will then moving from the sms-approach to the app solve the issue?
Moving into an app-approach is mainly to extend the present web marketing with a mobile extension but with some pros and cons. You then get the same issues as on the web like: how do I become visible and searchable; how to incentivise customers to return frequently to my digital shop; the need to log in to get there personal offers; etc. The mobile do except for its given limitations also bring some additional values like: the mobile is always accompanying the consumer, all offers can be reachable from the mobile when on the move as well as club memberships; you get a strong tool for viral marketing campaigns; etc. Mobile marketing has a fantastic potential but sms-campaigns and apps are not the complete solution. We need to find ways to extend the present web into the mobile and taking advantage of the unique benefits of the mobile, but without ending up in an app jungle.
Coming back to the consumer retail brand and their ambitions. What do they ask for? They want to explore the mobile as a new communication and marketing channel for their key customers. They want to be able to reach all customers irrespectively of what phones and what operator they have. They want to have simple solutions based on existing web services and functionality and that they can manage real time themselves without involving it-departments or consultants. This all sound very reasonable and is essential to get this to work. What they ask for is a Universal Mobile Interface.
Finally some general advice to those that plan to utilise mobile marketing:
- The mobile channel will not replace print and web but will act as a complement to the existing channels.
- Mobile marketing will initially attract a limited but growing segment of the customer base.
- Base the mobile solution on the present web services and do not build a separate mobile system.
- Incentivise and educate the customer base to gradually move from print to digital channels.
- The content on the site needs to be updated even more frequently on a mobile site. A “dead site” will immediately loose the attention of the consumer.
- Build in viral elements such as mobile to mobile coupon distribution.
- Choose scalable solutions that have the potential to reach and be used by the majority of the customer base.
- Start with limited pilots gaining experience and avoiding disappointing customers with immature services.