THE FUTURE OF

APPS
January 2015

In this Fast Take we review how mobile

applications are changing consumer behavior and
the corresponding opportunities and imperatives
that apps present to brands.
We also examine the influence our app-centric
culture is exerting on other forms of media and the
front-and-center role apps will play in emerging
spaces such as wearables, payments, and the
internet of things.

APPS PAST AND PRESENT:

the origin of apps and the current status
quo
THE CONSUMER PERSPECTIVE:
how apps are influencing consumer
behavior
WHAT BRANDS NEED TO KNOW:
opportunities and imperatives for marketers
TRENDS: how apps are evolving and the
key role they will play in emerging platforms
TAKEAWAYS:
key insights and case studies

Apps Past
and Present

Apps available globally

on iOS and Android
surpassed 2.5 million in
2014as we enter 2015
those numbers will climb
and apps will continue to
grow in importance for
brands.

The Early Days Of Apps

Mobile applications have been around
much longer than most people realize.
The first apps were simple calendar and
spreadsheet utilities and came preinstalled on the first PDA, the Psion Series
3, in 1984. The more sophisticated
devices that followed such as the Palm
Pilot and Blackberry offered games and
more complex tools that consumers could
choose to installbut the pickings were
slim and accessible to a very small subset
of consumers.
It wasnt until the Apple App Store
launched in 2008 that apps became a
truly mainstream phenomenon. In those
days, mobile websites were still in short
supply, typically slow to load, and hard to
navigate. Fast-loading, streamlined mobile
apps offered a welcome alternative. The
speedy adoption of the first iPhone, and
the abundant apps developed by 3rd
party Apple enthusiasts and select brand
partners introduced a new model for
content consumption and a new
ecosystem in which brands could play.

The Current App Ecosystem

NICHE PLAYERS

THE MAJOR AND MINOR

PLAYERS
Apple and Google own the biggest app
marketplaces. Googles footprint is slightly
larger but Apple consumers are still
perceived as more valuable by advertisers
due to their generally higher HHI and
higher propensity to engage in all forms of
m-commerce.

1.2 MILLION

One key signal of the growing

importance of apps is the rapid
emergence of new app stores.
Wireless carriers, handset OEMs, and
independent 3rd parties are launching
storefronts to sell native (i.e.
downloadable) and HTML5 apps.

1.3 MILLION

The next biggest app purveyors,

Microsoft , Amazon, and Blackberry
have significantly smaller inventories
that mirror their smaller market share.

300K

240K

130K
Stats: Statista 1.15

The Mobile App Landscape

Whats Driving The Trend?

Theres an app for that

Not only do we spend 52% of our

digital time in apps, we spend 86% of
our mobile time in apps5. However,
a small handful of categories account
for that time and branded apps barely
figure into the equation. Exact
numbers arent available but its
estimated they account for less than
20%6 of the time spent on mobile
devices.

Apples tongue-in-cheek slogan to

promote the iPhone 3G is now a
truism. There is literally an app for
everything, from learning a new
language to tracking the quality of
your sleep.
Consumer enthusiasm shows no sign
of waning; in the US, users now spend
52% of their digital time using apps1
and more than half of mobile users
access apps every day2. Yet a study
from Compuware3 reveals that 80%90% of apps downloaded are used
once before being deleted and the
billions invested in app install ads
indicate most brands have yet to
discover a winning formula for the
medium
The projected $35b to be spent on
8apps globally in 20154 underscores
the1.)fact
they
going
but
Stats:
comScore
8.14arent
2.) comScore
8.14 3.)away
Compuware
3.13 4.) Statista
1.15 5.) Flurry 4.14
the landscapeand the opportunity

Nonetheless, its clear consumers are

gravitating towards apps versus the
web and marketers need to
understand how they fit into a
marketing strategy. The design of
apps is likely a key factor in their
popularity e.g. the cleaner navigation,
more streamlined layouts, and
opportunities to personalize the
content. And, as consumers are
bombarded with digital content from
multiple sources, the most user
friendly and efficient customer
experiences will win out.

The
Consumer
Perspective

Leisure Is A Key Driver Of App Usage Today

Games, messaging, and social interaction
occupy most of the time spent in apps 1.
Whats more, consumers tend to concentrate
42% of their time using one single app
according to comScore, nearly three out of
every four minutes of app usage occurs on one
of an individuals top 4 apps 2. Facebook takes
the lead and other prominent social, search,
and entertainment properties round out the top
15 most popular apps in the US 3.

Stats: 1.) Flurry 4.14 2.) comScore 8.14 3.) comScore 10.14

Apps Dominate
Our Casual Lives,
But More And
More Utilitarian
Usage Is Growing
The leisure focus of apps
makes them an appealing
medium for advertisers
engagement is high in terms
of attention and time spent
with content.
Yet purpose-driven activities
are on the rise. Certain
verticals are seeing
increased demand and
enthusiasm for app
experiencesmost notably
retail. According to the 2015
Internet Retailer Mobile 500
Report, 42% of mobile
commerce for global
retailers now comes from
mobile applications.1
11
Stats: 1.) Internet Retailer 1.15

Very little of current app use is

purpose-driven, but thats a
good thing for brands from an
advertising perspective.

For all that consumers love

apps, they dont feel a need to
have lot of them

The competition for space on smartphone desktops is

fiercethe typical US consumer has roughly 32 apps
installed2 (the average global consumer has only
263 ), and downloads an average of 0-3 apps per
month.4

Creating A
Branded App Is
A Much Bigger
Challenge Than
In-app
According to Compuware,
Advertising
most people feel that on
mobile devices, apps are more
efficient than websites.
However, the bar is set very
high for apps when it comes to
customer experience79% of
users will try an app a second
time if the initial experience
does not impress; only 16%
will give it a third try 1.
For marketers, its a risky
propositioneven the bestplanned media campaign
wont earn an app a spot on a
consumers mobile desktop if
the app itself doesnt offer
valuable content and a
superlative experience.

12
Stats: 1.) Compuware 3.13 2.) Googles Mobile Planet 9.13 3 Googles Mobile Planet 9.13.
4.) comScore 8.14

What
Brands
Need to
Know

Key App Opportunities For Brands

Apps figure prominently into consumers daily lives so brands need to understand
the ways in which they can and should be present. Three key categories of opportunity
exist:

BRANDED APPS

Apps tend to fare better

as CRM tools as only a
committed customer is
likely to use one. Its
important to keep this in
mind since apps are a
pricy undertaking and the
cost of promoting one is
generally 2-3X the cost of
development. However, a
well executed app can be
a powerful tool to
14establish a close 1:1
connection with a
Stats: 1.) Gartner 1.14
consumer.

IN-APP
ADVERTISING

In-app is the fastestgrowing sector of mobile

advertising, expected to
reach $17B by 20181 and
with good reason, given the
time consumers spend
using them and the volume
of apps available. In-app
ads yield consistently high
engagement and also offer
marketers that cant justify
building a branded app the
opportunity to create applike experiences within ad
units.

PROXIMITY

Branded apps have the

ability to directly tap in to
technology like Bluetooth
and NFC to add an element
of digital interactivity to-real
world experiences like instore and out of home.
However, brands that have
no app can still leverage
these technologies by
partnering with 3rd party
apps to achieve a similar
effect, delivering hyper-local
messaging, push
notifications, and ads.

Consumers May Love

Apps, But Not Every
Brand Should Build
One
The value of having a logo on the mobile
home screen is incalculable but its
challenging to achieve. Getting a
consumer to proactively seek out and
download an app takes far more effort
and investment than directing traffic to a
website.
Its also more challenging to compel
consumers to keep and use an app. The
estimated media cost for a loyal iOS user
averages $2.251, but theres no
guarantee a significant number of users
can be achieved. 90% of branded apps
have less than 10K2 downloads and the
majority of apps are deleted after one or
two uses.
With this in mind, marketers need to ask
a few key questions before seriously
considering an app:
Does my brand have content
and/or utility that will be useful and
Stats: 1.) Fiksu 10.14 2.) Gartner 1.1 3.) Kleiner Perkins Caulfield and Byers
5.13 engaging in app form?
15

CONSUMERS LOOK AT
THEIR SMARTPHONES OVER
150 TIMES PER DAY3

A Formula For Success With Branded Mobile Apps

The mobile home screen is arguably the most coveted real estate in the world, but brands
can only earn their way there with great content and smart marketing. Brands that have a
value propositioni.e., content and utility that will be relevant, and engaging in app form
must understand the mobile app lifecycle in order to succeed.
The first, most important step is to refine and validate the concept for an app through datadriven ideation and testing with beta users that match the target audience.
Post-launch, a carefully curated combination of paid, owned and earned media and
application of user feedback in a process of iterative refinement will give brands the best
chance at creating a sticky app that earns a place on mobile home screens.

POST-LAUNCH
MARKETING

DEVELOPMENT

BETA TESTING

CONCEPT
VALIDATION

IDEATION

THE MOBILE APP LIFECYCLE

Paid: search, display, and rich media
designed to drive awareness & downloads
Earned: Word of mouth, influencer
outreach, and social efforts designed to
boost awareness and advocacy
Owned: App-store optimization, promotional
content distributed via owned spaces to drive
ongoing engagement and advocacy

SOCIAL LISTENING
(e.g., app store comments, direct feedback, social
spaces, etc.

Mobile Apps
Mobile Web

Vs.

Were often asked if apps will

supplant the mobile web or if
HTML5 will kill mobile apps,
but in our POV, its not an
either/or proposition.

According to Flurry, we only spend 14% of our

mobile time in browsers1 but its important to note
that much discovery of new content happens via
search in the browser. Hence, while a consumer will
often opt for an app after becoming a loyal user,
mobile optimized web content is still a necessity for
every brand. However, its interesting to note that
many brands are starting to apply app-centric
design principles to mobile sites.

Apps are a user experience

paradigmthe code behind
them is of secondary
importance to brands (and of
little or no importance to
consumers). Eventually it will
be possible to create a web
site identical to a native app,
but its the site that will mimic
the application in form and
function.
Point being, the app model of
content delivery
streamlined, contextual and
personalizedis here to stay.
17

YOUTUBE MOBILE
WEBSITE

YOUTUBE
MOBILE APP

In-app Ads
Offer More
Than Just High
Engagement
Its a given that the
high level of
engagement in apps
make them an
appealing medium for
advertisers. But theres
an additional benefit
thats less obvious at
first glance. The
creative canvas of
HTML5 enables
advertisers to create
app-like experiences
within ad unitsa great
benefit for marketers
that cant build a
branded app to
capitalize on consumer
enthusiasm for this
medium.
18

An ad unit
developed by
MEC for
Marriotts
Residence Inn
offers
functionality and
immersive
features such as
booking and
video tours that
one would expect
to find in an app

New App Categories Will Spark More Serious

Usage
CONNECTED
HOME

Connected home
systems and
appliances are
poised to reposition
apps as
indispensable tools
for productivity and
life management.

CONNECTED
CAR

With the
introduction of selfdriving cars, its a
given that
consumers will look
to consume digital
content in their
hands-free driving
time.

CONNECTED
TV

Connected TV apps
have potential to
revitalize traditional
broadcast media by
offering viewers the
convenience and
utility of apps with a
bigger visual palette.

WEARABL
ES

Wearables present
the most immediate
opportunities for
brands. Though still a
nascent market,
awareness is high
and projections for
adoption optimistic.

Though initial ads for

Opportunities
the Apple Watch were
In reality, selfabound, from
debuted at CES 2015,
driving cars are still
its more likely that
content synched to
a long way off, but
wearables will be
TV programming to
the connected car
used primarily to
highly personalized,
trigger ads on larger
will usher in new
one-to-one
screens such as TV
opportunities to
messaging both on
and digital out of
reach consumers
the screen and
home.
hyper
local
UP UNTIL NOW, APPSwith
HAVE
BEEN
LARGELY ABOUT
FUNcompanion
AND GAMES, BUT NEW CONNECTED
within
targeting and INTERFACES
will
PROMISE
apps on mobile
TO POSITION THEMplace
AS FUNDAMENTAL
TOOLSdevices.
FOR MANAGING OUR HOME, WORK, AND
a new
PERSONAL LIVES.
emphasis on audio

It remains to be
seen where brands
will fit in, but
possibilities include
sponsored content
and offers delivered
to these apps on an
opt-in basis.

2015 App
Trends

6 Key App
Trends For
2015
All media evolves and
apps are no exception.
In 2015 consumer
reliance on apps will
continue to grow and
expand into more
fundamental, purposedriven uses courtesy of
wearables and the
connected car and
home. In the process,
two key trends will
emerge in overall
digital design and
marketing.

21

The growing
influence of appcentric
design
As
apps occupy
more and

more of consumers mobile

and overall digital time, appcentric design principles will
begin to exert considerable
influence over .com design
across all devices. The
growing popularity of HTML5
will further contribute to this
trend by making it possible
for web applications to
replicate the functionality of
native
ones. demand
Increased

for app-specific
paid, earned, and
owned
strategy
As
more apps
are produced

and more app stores launch,

the competition for loyal
users will become fierce. Paid
media in the form of app
install ads will see significant
investment, but there will also
be a new emphasis on Owned
and Earned elements such as
promotional content, web SEO
and app store search

6 Key App
Trends For
2015
The introduction of
Bluetooth Low Energy
and NFC into iOS will
encourage brands to
invest in proximity
marketing, designed to
reach consumers at
pivotal decision-making
points in the customer
journey.
Those that have
deployed successful apps
of their own will enjoy an
edge with proximity
marketing but
opportunities will be open
to all brands through
media and partnerships.

22
Stats: 1.) Apple 10.14

Apps as
proximity
triggers
Beacons
require an app to

activate digital experiences in

the real world, leading more
brands, particularly those
with a brick and mortar
presence, to consider
creating a native application
of their own.
The demand for proximity
marketing will also create
new lines of revenue for
successful apps by enabling
them to charge 3rd party
brands to filter beacon
Apps as through them.
experiences

payment
Consumer
enthusiasm for
conduits

mobile payments is promising

over 1 million users signed
up for Apple Pay within the
first 72 hours1. For brands,
this fast adoption of mobile
payments will increase the
pressure to create mobile
apps through which users can
quickly, easily, and securely

6 Key App
Trends For
2015
As this medium
continues to evolve in
2015, were already
seeing significant
changes in the way
their value is
perceived and in the
way they fit in to a
brands overall
marketing
infrastructure.

23

A move away
from premium
mobile
apps
When
apps first
went main-

stream in 2008, there was a

strong trend towards putting a
price tag on app downloads.
Now however, it is common
knowledge that driving
downloads is competitive and
expensive and the trend for both
branded and mainstream apps is
swinging in the opposite
direction. In 2015, well see an
increase in freemium app model
free to download and
augmented by premium in-app
More cross-platform
purchases.

integration between
brand web sites and
apps
Apps
have traditionally been

perceived as a sort of brand satellite

a lesser extension of the more
important .com presence. However,
as apps dominate more and more of
our digital time, were seeing more
emphasis on integration with all
other elements of marketing. In
2015, well start to see more
continuity between content and
functionality on branded websites
and apps, particularly in regard to
management of personal
information and accounts.

Key Takeaways
APPS AS A DESIGN PARADIGM
Consumers love the more streamlined look and feel of mobile applicationsthe
technology used to create apps doesnt really matter to them. Soon well be able
to create app experiences in the browser that are identical to those achieved with
native code and it wont matter to brands or consumers which is which. Apps are
a design paradigm and provide observant brands with signals on how consumer
expectations of content are changing.

APPS AS A BRAND EXTENSION

Developing a native (aka downloadable) app isnt the answer for every brand
given the current patterns of user behavior; only brands with a clear value
proposition and the resources to promote it should attempt to do so. A firm
understanding of the mobile app lifecycle, from initial ideation and concept
validation all the way through to post launch Paid, Owned, and Earned promotion,
is essential to success.

APPS AS A MEDIA OPPORTUNITY AND CONNECTIONS

MEDIUM

24

Mobile applications present brands with appealing media opportunities on

multiple levels, not the least of which is the ability to present richer, more
engaging ads to a growing and highly engaged audience. Advertising within the
more popular apps that currently command the bulk of consumer attention (e.g.
gaming, messaging, social) also enables brands to create an app-like experience
without the cost and risk of developing one. Most compelling of all, in-app
advertising offers the opportunity to leverage the increasingly popular proximity

Interested In Creating Your Own App?

Great branded apps reduce friction in a frenetic world, providing education,
information & entertainment. The average consumer rarely swipes past the
first two screens and to be relevant, thats where your app has to be. Apps that
provide content and utilities that make lifes little tasks easier give brands a
chance to earn a spot on the home screen.

25

MARRIOTTS
MOBILE
BOOKING APP

AT&TS
CUSTOMER
SERVICE APP

NETFLIXS
MOBILE
STREAMING
VIDEO APP

TIFFANYS
BRANDED
MOBILE
APPLICATION

THE FUTURE OF
APPS
For more information, please
contact:
Whitney Fishman Zember
whitney.fishman@mecglobal.co
m
Rachel Pasqua
rachel.pasqua@mecglobal.com