Can branded mobile apps make a comeback?
Remember Kraft's iFood Assistant? The meal planning/shopping assistant application was one of the first breakout hits in Apple's (NASDAQ:AAPL) App Store--launched in November 2008, iFood Assistant eschewed the free download approach common among consumer-branded apps, instead carrying a 99-cent price tag along with a wealth of recipes, how-to videos, coupons and related culinary-themed content. Consumers ate it up, and for a time, iFood Assistant even topped the App Store's Paid Apps list. But as a new Deloitte study points out, comparable success stories are few and far between: The Volkswagen Touareg Challenge and Audi A4 Driving Challenge racing games were hits in their time, but on the whole, only a small handful of mobile apps published by major consumer and healthcare brands have eclipsed the 1 million download milestone. Most fail badly: Eighty percent of branded apps under the Deloitte microscope failed to reach even 1,000 total downloads.
Given that both the quality and quantity of mobile applications have increased exponentially since iFood Assistant and Volkswagen Touareg Challenge reigned over the App Store, the continued viability of consumer-branded apps is a huge question mark. Deloitte notes that at the time Volkswagen scored with its simulation games, there were few comparable experiences available to iPhone users--here in 2011, a title like Firemint's Real Racing 2, developed at a cost of $2 million, makes Volkswagen Touareg Challenge seem as antiquated as a horse-drawn carriage. But consumer brands can't simply concede defeat in mobile, either. Deloitte states that more than three quarters of mobile app users expect brand-name companies to offer a branded app--not only that, but they expect that app to offer a more user-friendly experience than the company's mobile website.
From a historical perspective, the vast majority of branded mobile apps have fallen into one of two categories: Games and Utilities. Brands almost certainly can't compete with dedicated mobile game developers and publishers in the current app environment, which means they must stake their claim in the utilities segment. Deloitte credits iFood Assistant's popularity to a series of factors like social networking interaction (users can upload and share their own recipes), customer loyalty tools like coupons and discounts, targeted recipes and offers customized according to consumer usage habits, integration with smartphone features (e.g., a GPS-enabled store finder) and the prominence of the Kraft brand throughout the app experience. In essence, iFood Assistant succeeded not simply because the Kraft brand and products lent themselves to compelling and useful mobile experiences, but because Kraft identified how to leverage the larger marketing opportunities inherent in mobile technology. Most companies can't pull all that off.
But those brands that can pull it off pose a serious threat to the present app store status quo. As always, discovery remains a massive challenge facing mobile software developers--with more than 425,000 applications in the App Store alone, it's virtually impossible for consumers to find apps with unfamiliar names or titles created by unheralded developers. Branded applications don't suffer from that dilemma. Plug a familiar consumer brand keyword into an app's name and its discoverability explodes--it's like search engine optimization, only optimized for the App Store instead. Consumer brands also enjoy the kinds of marketing opportunities and advertising budgets that startups can only dream about--they can promote their apps in their television commercials, print ads and billboards, in direct marketing efforts and on the labels of their products. This recent Geico commercial not only mocks the stupidity of some smartphone apps but also promotes the insurance company's own stupid app, the BroStache. If brands can create innovative, engaging apps to rival the best the App Store has to offer and flex their marketing muscle to fuel consumer interest, all bets are off.
The next wave of branded apps also could shake up the emerging location-based daily deals segment. Just this week, mobile social network foursquare began leveraging its location-tracking capabilities and wealth of customer data to offer targeted deals from partners LivingSocial, Gilt Groupe's Gilt City subsidiary, AT&T (NYSE:T) Interactive, BuyWithMe and Zozi. What's to stop consumer brands from delivering their own personalized, location-specific bargains within their GPS-enabled smartphone apps? Starbucks offers its own in-store mobile payment solution, enabling consumers to pay for coffee via smartphone, manage their Starbucks Card account, reload their card balance and locate nearby locations--can other chains and franchises be far behind with mobile payment apps of their own? The possibilities are limitless. Maybe consumer brands can no longer keep pace on mobile games, but that doesn't mean their apps can't be game-changers.--Jason