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Alan Kohler is one of Australia’s most experienced commentators and journalists. Alan is the founder of Eureka Report, Australia’s most successful investment newsletter, and Business Spectator, a 24-hour free business news and commentary website. He also hosts Inside Business, a half-hour Sunday programme on the ABC, is the finance presenter on the ABC News - and producer of the nightly graph (or two).
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The rise of app marketing

Melinda Varley24 Nov 2009, 6:25 AM

Mobile marketing is far from new, but developments overseas promise to finally establish handsets as an essential marketing platform.

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Mobile marketing is far from new, but recent developments overseas promise to finally establish handsets – particularly smartphone leaders the iPhone and Blackberry – as an essential marketing platform. The big question is, are we ready to make the same leap here in Australia?

In the UK – the most sophisticated and saturated mobile market in Europe – marketers spent almost £29 million on mobile advertising in 2008, according to the Internet Advertising Bureau and PricewaterhouseCoopers. The Mobile Marketing Association now expects total spend to reach £1 billion by the end of 2009.

In the US, ad spend on mobile is expected to reach $US6.5 billion by 2012. And although in Australia the medium remains in its infancy, growth is poised to almost treble with communications specialist Telsyte forecasting that spend will grow to $20 million by the end of 2009 from just $7 million in 2008.

Furthermore, over the next five years mobile advertising spend is projected to surge to $250 million. That’s a fair slice of Australia's $12 billion media and advertising market.

Mobile advertising is gaining traction in Australia, mainly driven by advances in multimedia handsets such as Apple’s iPhone and Research in Motion’s (RIM) Blackberry.

And while Australia’s mobile market may be a little behind that of Europe’s and the US, big brands are catching up fast as applications become a right of passage for the Gen Ys.

Optus has jumped on the bandwagon not just with its contract to sell the iPhone, but by becoming the first telco in Australia to release its own mobile applications store last week. The store works on a wide range of Symbian, Google Android, Blackberry, Windows and basic Java phones – but not the iPhone.

Apple and its iPhone need no help at all, however. The Apple Store has already proved its popularity with more than 100,000 apps now on sale. In fact, downloads via the Apple store topped one billion globally this April.

But, despite the number of apps available – and this is everything from branded games, virtual pints of beer and social networks – 80 per cent are never even downloaded. Therefore the chances of a brand making a successful, engaging and above all else useful iPhone app is slim.

However, there are a number of brands and advertisers that have got this new form of marketing spot on. Online auction site eBay, for example, has just revealed that it's iPhone application has resulted in more than $US400 million in extra sales. More than 4.6 million people worldwide have downloaded the app since June.

Pizza Hut has also had a positive return on investment with its app. After being live in the Apple Store for just three months, the Pizza Hut app that allows customers to order and create their own pizzas on their touch screens has been downloaded more than one million times, resulting in the company earning an extra $1 million in sales in the US alone – a relatively simple idea and some good results considering brands can get away with developing a mid-level iPhone app for just $US10,000.

Following its huge success with the iPhone, Pizza Hut is now said to be in discussions with other smartphone platforms such as BlackBerry, the Google Android and the Palm Pre as the fast-food chain believes that the app is driving sales it may not have otherwise had.

Domino's in Australia have since followed in Pizza Hut’s footsteps, and its new iPhone application even features in its new television campaign. But will it have the same success here as Pizza Hut has had in the US?

Australia simply doesn’t have the same penetration that the rest of the world does when it comes to the iPhone. And although Apple and Optus won’t release official figures of sales, by January this year 125,000 handsets had been shipped downunder.

Therefore, 63,000 downloads of Melbourne’s Metlink application is an impressive figure. Metlink's iPhone app gives users times for trains, trams and buses throughout Victoria. It is rated the fourth most popular free travel app behind Google Earth, Urban Spoon, Kayak Flight and Hotel Search.

And last month, as the grocery wars heated up, Coles released an app to lure in customers away from number one rival Woolworths. The Coles Shopmate app quickly found success reaching more than 30,000 downloads in a just a few weeks of its release and earning it second place in the 'Top Free Apps' list.

Even Qantas has turned to mobile with an app that allows users to search and view all Qantas timetables and information about airports. While the app only has basic functionality, Qantas is looking to expand the app to include the ability to book tickets and display electronic boarding passes.

The potential for reach via mobile is an enormous opportunity for brands and advertisers as well as mobile handset manufacturers given there are now nearly four times as many mobile phones globally as there are computers.

And the marketing potential is not just in terms of brand awareness, but in the handset's ability to communicate relevant information to consumers in a way that they will understand and, importantly, in any environment they choose.

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