Today most companies regard mobile apps as novelties, market differentiators, or convenience tools for their customers. But a few (e.g., RoambI) consider their iPhone apps an integral part of their business model. The apps I'm referring to include branded RSS readers, mobile alternatives to a marketing Web site, and other "mobile content apps."
Content consumption is shifting away from the desktop and towards mobile devices. Mobile social media consumption in Japan is growing at five times the rate of social media consumption on the desktop; this is not a fad. Some experts believe the mobile content apps market is already creating a bigger impact than the online advertising industry.
Build it and they will come… maybe!
Businesses generally fund these app initiatives as marketing expenses; their hope is to draw customers and prospects in closer by increasing brand awareness. However, these apps can include utility value as well. For example, Chipotle's app lets you order a burrito; Starbuck's lets you customize your drink; and Kraft's lets you pick what's for dinner and build your shopping list. Utility value is what keeps users coming back to a mobile app.
In-app purchase may indeed turn out to be useful for addressing the economic issues associated with building and justifying a mobile strategy. However, I always get a bit nervous when a client says they want to "monetize content." I think it's more appropriate (and far more market-savvy) to think about "monetizing the audience"— in other words, thinking about these issues from a customer-centric perspective.
Businesses that build mobile content apps typically regard them as adjuncts to their overall online content strategy, often times reusing their own online content in a mobile application, or supplementing their own content with other syndicated information. But companies that think this is a near-zero-cost endeavor may be in for a few surprises.
The true cost of mobile apps
Content publishers need to understand the nature of the mobile app beast before developing a revenue/cost recovery model. The excitement of jumping into a new distribution channel can blind your organization to the harsh realities of supporting a new platform; an initiative that may not be sustainable.
I see lots of companies tossing together an iPhone app and attaching a price to it, hoping to recover the cost of developing the app. Unfortunately, they don't give adequate consideration to the true ownership costs. Consider an iPhone app with a flat purchase price of $2.99. Is this a quasi-promise to your customer base that you'll never raise the price? Is your company obligated to make the app available without charge on another platform when your customers tire of their current platform?
The bigger issue I have with flat fees and mobile apps in general are the costs associated with updating the app. What happens when you need to create an Android or iPad version the app that may require new development costs? Do you charge for new versions to cover your development costs? Do you spread the costs of multi-OS apps evenly across all apps?
End-of-life is inevitable
Dropping an app can be just as costly in terms of sustained customer ill will as maintaining or upgrading it. Because of this, all apps should include an end-of-life strategy. It may be a transitional approach to expected changes in technology or industry, but you should realize from the start that all products have a life cycle. You should have the appropriate policies in place to manage customer expectations when it ends.
Creating a mobile strategy
A sound planning process should include how your organization will address the questions mentioned in this article. Here are some key ideas that will help you formulate a comprehensive mobile app strategy:
Business Objectives: Without sound business reasons to back up your mobile strategy, you'll be hard-pressed to explain the costs or march toward the same goal.
Think Local: Almost everything that impacts our daily lives does so at a local level. More than 60% of the time, we reach for our devices to find something, and local search is a key business driver. Ask lots of questions about local search in the context of developing your mobile strategy.
Native or Web?: This is the cornerstone of a mobile app strategy. Do you build it as a native app (which is installed into the user's phone), or as a Web service (which can be easily updated and supported across many mobile platforms)? Serious consideration should be given to this question since mobile browser technology is advancing rapidly and with HTML 5, Web apps can run offline. Neven Mrgan's Glyphboard is a great example of this. It uses HTML 5's offline caching technique.
All businesses can benefit from a mobile strategy, but not all businesses will benefit from a mobile app. For some, a Web-based mobile strategy might do a better job of focusing on key competitive methods for your business and making your products or services readily discoverable by mobile users.