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Does number of app downloads trump consumer engagement?

Apple announced this week that more than two billion applications have been downloaded from its App Store. But is the number of downloads the most important metric for gauging the success of an application?

There are 85,000-plus applications available to the more than 50 million iPhone and iPod touch customers in 77 countries worldwide, and 2 billion downloads is an eye-popping number. However, just getting a consumer to download an application does not help brands or marketers to achieve their goals if that consumer does not interact with it regularly or make a purchase through the widget.

“Success measurement for apps is really case-by-case depending on what the goals are for the particular app,” said Kevin Ranford, director of Web marketing at 1-800-Flowers, Carle Place, NY. “For example, a news or gaming app may have the goal of driving up time spent on the app, but we are more focused on transaction volume, average order value and repeat purchase rate.

“While we are excited about the high volume of downloads we’ve received to date, we are looking at sales as a key metric,” he said. “There’s a small but rapidly growing base of transactional apps available right now, compared to say entertainment, news and gaming.”

Apple claims that the rate of App Store downloads continues to accelerate, with users downloading more than 2 billion applications in slightly more than a year, including more than a half-billion applications in this quarter alone.

“No doubt 2 billion is an impressive number, as it certainly displays the consumer appetite for applications, but for us, while we have well over a million downloads from the iTunes stores, it’s more about the engagement we see,” said Jeff Litvak, general manager of mobile and emerging products at The Associated Press, New York.

“We’re impressed by the frequency of engagement we seeing,” he said. “Registered users and monthly users on our iPhone app are climbing steadily because it provides utility.”

IPhone and iPod touch customers worldwide can currently choose from a range of applications in 20 categories such as games, business, news, sports, health, reference and travel.

“Second only to weather apps, the highest usage apps are the news apps, which leads to more downloads but also higher retention and usage, because it becomes an active part of consumers’ everyday life,” Mr. Litvack said.

“It’s about building an audience and a user base,” he said. “The number of downloads doesn’t tell you anything about the user base, and especially if it’s free, consumers may download it but never use it.”

Saying that Apple’s iPhone has had a tremendous effect on the mobile marketing and advertising industry is an understatement, according to industry executives (see story).

As handset capabilities and form factors continue to improve, the mobile channel becomes more desirable for advertisers. Thus, increased adoption of smartphones such as the iPhone is driving the growth of mobile advertising (see story).

Low-down on downloads
Mobile advertising has been an effective tool to drive downloads of applications (see story).

However, once a consumer downloads a brand’s application, what next? How does a marketer keep consumers coming back for more?

“We take a broader view of what constitutes significance and success for an application beyond the number of downloads,” said John Zehr, senior vice president and general manager at ESPN Mobile, Bristol, CT. “One thing people have to be conscious of is that the prevalence of free apps creates a novelty factor for downloading a new app and showing it off.

“The same phenomenon was true for the old Pet Rock during the ‘70s,” he said. “We are much more focused on developing apps that deliver repeated value for the user, beyond the novelty,  and that can become part of the daily experience for a sports fan.

“That said, I do think downloads matter.”

Engagement is critical, but consumers cannot engage with an application unless they know it exists and actually download it.

“Downloads represent the equivalent of reach and help show the growth of the platform towards a more mass medium,” Mr. Zehr said.  “However, repeat use and other engagement metrics are very important also.

“So, while we do look at downloads, we’re equally committed and focused on driving engagement and measure things like starts, session length,  repeat visits and time spent,” he said. “In the end, you have to both be on people’s phones, and be something that they use.” 

No b.s. from CBS
The more metrics brands and publishers take into account with their ultimate objectives in mind, the better they will be able to judge the success of a particular application.

When measuring the success of its applications, CBS focuses on quality of product, differentiated experience, user adoption and revenue.

“App downloads are an important metric to us, but certainly not the only measurement that we take into consideration as we develop and release our products,” said Rob Gelick, vice president at CBS Mobile, New York. “Obviously, without significant volume of downloads, you can’t generate meaningful traffic and usage, so we’re sensitive to the overall download numbers.

“However, equally important metrics include frequency of use, time spent by users within app, specific actions taken, and entrance and exit paths,” he said. “As well as these quantitative items, we solicit and incorporate customer feedback, which is enormously helpful in refining products already in market.”

While sheer numbers of downloads lets brands and publishers measure reach, regular repeat usage is the true test of an applications success for many.

“Perhaps above all else we look at customer retention and repeat use, not only within one app, but we also look at how a user might be consuming more than one CBSi Mobile app,” Mr. Gelick said.

“What we’re seeing with our most successful apps is that users come back repeatedly, and as we continue to market with both paid and organic efforts, the audience base grows,” he said. “This in turn creates more value for advertisers who are drawn to our destinations.”

Fun and mobile games
The mobile gaming category is a dependable revenue-generator that is growing quickly, and games for the iPhone and iPod touch are all the rage. Both pay-per-download and ad-supported monetization models are common.

Many mobile gamers have multiple games on their handset, which is an important metric for advertisers. So do iPhone users really download more games than other platform?

“I think that there are two metrics that matter when comparing the success of a platform, the first being the total number of downloads, which makes it straightforward to compare Apple’s App Store to other app stores like Google’s Android Marketplace, BlackBerry App World and Greystripe’s GameJump,” said Michael Chang, cofounder/CEO of Greystripe, San Francisco.

“You can then also extrapolate the number of downloads per device, and Apple wins clearly with around 40 apps per device,” he said.

The second most important metric is the total percentage of users on a platform that have more than five games on their handset, according to Greystripe.

According to comScore, in June Apple’s iPhone reached 26.3 percent in that metric, compared to 9.5 percent for Google’s Android and only 1.8 percent for Microsoft’s Windows Mobile.

“Other platform providers should watch these percentages closely, because it shows how well they are doing being a broad-based media delivery platform, not just catering to the power user,” Mr. Chang said.

Various brands are using iPhone applications to generate revenue (see story).

How should application developers and brands measure the success of their apps? Look to the bottom line.

“For app developers, total revenue is most important—pure and simple economics,” Mr. Chang said. “Whether it is through advertising or charging for it, revenue means that you are creating something valuable. 

“For brands that create apps and are purely using them for deep customer engagement, download and use numbers are critical to understand the impact of their app on the users,” he said.

“In addition, since we’ve found running brand-lift studies works very well to identify if a branded app is getting its message across to the user and being enjoyed.”

Reach and revenue matter
For certain types of applications, the goal is branding or driving consumers in-store or closing a transaction or reaching the most eyeballs to provide a desirable platform for advertisers.

In any case, once brands and developers get an application on consumers’ phones, if they have created a good experience, engagement will follow. The key is to get the word out with an effective marketing strategy to drive downloads.

“The number of downloads matters,” said Peter Melnikov, vice president at Apalon, Minsk, Belarus. “At the end of the day, developers need to generate revenue.

“The number of downloads is the most important indicator out there,” he said.

Additionally, there are indicators such as the average time users spend in the application, how often they use it and what percentage of the user-base updates the application.

“Those are getting more important for developers having a long-term strategy,” Mr. Melnikov said. “Those indicators will gain more value in the future, since it’s getting difficult to succeed with a one-time-show app now.

“With the cost for the majority of the apps being less than a cup of coffee, developers reach the point when they can influence sales with the price and will have to deliver quality content in order to survive,” he said. “The market is matured already.”

Whether you are a brand, publisher or developer, you cannot launch an application without a marketing campaign to support it. There are simply too many applications out there to rely on viral word-of-mouth spread.

And as always, the quality of the actual experience provided by the application is crucial.

“The total number of downloads is growing, with quality apps getting more downloads and fewer crappy apps entering the store,” Mr. Melnikov said. “Apple is definitely doing the cleaning, as apps are rejected for inappropriate keywords like ‘exotic,’ for having images that resemble a Polaroid and hundreds of other reasons.

“There are bans on developers who spam the App Store with substandard applications, which is good for the industry as a whole,” he said.