Enter the app economy

21 Aug 2016

  • Digital Marketing
  • Marketing Technology

The brightest minds focus on the app economy as we discuss what this burgeoning sector means for app developers, brands and marketers.

Forget about the year of mobile. Industry pundits have declared that long gone. Instead, 2016 could well be the year of the app with Pokemon Go leading the charge. Based on the Nintendo video game franchise, the smartphone app will soon have more daily users than Twitter with web analytics tool SimilarWeb saying downloads have already outstripped dating app Tinder.

Pokemon Go and Tinder are just two of the two million or so apps available on Apple’s App Store with Android users able to access a similar number on Google Play. Together all of these apps make up the “app economy”, predicted to be worth more than $US100 billion by 2020. If you’re baffled by the term, don’t be. The “app economy” is simply the economic activity surrounding native mobile applications. Given its forecast value, it’s an economy worth getting into.

Jason Juma-Ross, Head of Tech, Entertainment and Comms at Facebook, says: “80 to 85% of the total time that's spent on mobile is spent in apps. Ten years ago, there was diffusion of attention across hundreds of thousands of different websites. Today there's a lot of concentration of attention, certainly in mobile, within a much more limited number of apps.”

Facebook is obviously one of the major players in the app space with a range of apps including Facebook, Facebook Messenger and the photo app Moments. “We have a strong portfolio and have worked hard to position ourselves around mobile over the last five or six years,” says Juma-Ross. “The bulk of our revenue now comes from mobile.”

One of the most crowded app categories is messenger apps. In addition to Facebook Messenger, WhatsApp, Snapchat and iMessage are already integrated into people’s everyday lives. Off the back of this, Sydney advertising agency The Works has launched a messenger-based social media company, On Message.

Douglas Nicol, partner in On Message says: “What we know is people tend to adopt several of these chat platforms. There is a repertoire of use in different occasions. You might have a group with your family on WhatsApp. Then you might have social conversations with your friends on Snapchat.”

On Message aims to help marketers catch up with consumers who have already adopted messaging platforms as their main form of communication. Instead of implementing an ad network across these platforms, the start-up will help brands to work with bots, chat and even custom keyboards within messaging apps.

This is a growing area for Facebook as well. Juma-Ross says: “From a commercial perspective, a lot of companies are starting to use these platforms to connect with their customers. We recently worked with Domain to launch a messenger box that gives people access to listings and property information over messenger. Then we've worked with KLM globally to enable you to see your flight details, check in information and where the gate's moved to, all within a single messenger thread.”

The scope for consumers and brands alike within messenger apps is vast. Nicol says: “There is evidence of these different platforms being used in different ways, and what that means is there is an opportunity for other entrants into the market.”

With the plethora of apps, and the oft quoted stats around user drop off – less than 25% of people go back to an app again after they’ve download it – surely market saturation for apps is conceivable.

Rebekah Campbell, Co-founder and Executive Director of Hey You, an app that lets you to skip the ordering and payment queue at your local cafe, says there’s plenty of room other apps. “The key is finding something people will find useful everyday,” says Campbell. “The great apps are not so much engaging. They are either utilities or they are addictive.”

For Hey You, the addiction factor comes from coffee, the gateway drug to the app. “Once you use it for coffee, we then encourage you to use it for other things like lunch, dinner with the family,” says Campbell. Users are already hooked enough for Hey You to be processing around 14,000 paid transactions each day.

With the rise and rise of apps, the question of what happens to the mobile web is an interesting one. Facebook’s Juma-Ross doesn’t see it going away any time soon. He says: “There are different areas of the mobile web that are still important and also provide good experiences for people. There's more options for people to be able to select where they want to go to do the things that they want to do.”

Nicol agrees saying: “The mobile web will live on arguably longer than apps, because of their accessibility. All of those things will continue, but I think you will see aspect of mobile web integrated into mainstream platforms.”

From a brand perspective, Nicol says apps are currently helping many businesses solve problems presented by their legacy technology infrastructures. He says: “For a lot of brands, apps are making up for the shortcomings on their websites and their backend integration. For example, if you look at Qantas, if you want to put two bookings together based on your Frequent Flyer profile, you can't do that on the web version of their site, but you can do it on their app.”

Campbell sees the app economy as having a positive impact on society by making people be nicer to one another. She says: “Think about Airbnb. When you use Stayz or one of those other sites to book holiday houses, it is very disconnected from where you are staying. You go and pick up keys from a real estate agent. You don't know who owned the house and you don't really care. With Airbnb, when you are booking, you see the person's face, their name and you find out a bit of their story.”

This personal interaction, Campbell believes, makes you a part of the community. The same theory applies to Uber and she believes there are still multiple markets ripe for app developers to explore. While she’s not personally looking into branching in this direction, the recent experience of buying a house has left her with the impression real estate could benefit from app-ification. “Somebody is going to disrupt real estate in a huge way and make a lot of money,” she says. “That's not going to be me because it's not my passion. But that's something we can easily see that in 10 years time, we will not be having real estate agents who are paid $50,000 for essentially listing a house. That's not sustainable in the new world.”

In the longer term, we may well see consolidation of apps. Nicol says: “Overtime, I don’t believe you will have apps in the way we have them. You will have them for transient use when you are going on a trip, but I think your day-to-day functional stuff, that’s much more likely to be integrated into a single natural interface which would be a couple of apps. It becomes part of one stream of conversation with your friends and brands and is much more convenient rather than jumping between apps.”

In this brave new app world, you could soon be doing your banking via Facebook Messenger or WhatsApp. Perhaps not Snapchat but no one is ruling anything out just yet.

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