IMPACT: Freemium App Model Pays Off; Survey Stresses Mobile Shopping Opportunities » mobilegroove

Either U.S. mobile subscribers instinctively know where to find the best deals or the vast majority of consumers simply underestimate the money they can save if they use all the features offered by their mobile devices to find the best bargains.

With the holiday shopping season upon us, it’s not surprising to read that more retailers and brands are pursuing (or are planning) strategies that integrate mobile into the store experience. An Aberdeen survey of 129 retailers, for example, found that 38 percent of respondents are at some stage of integrating mobile into the in-store and overall retail experience.

So marketers are gearing up to grasp the holiday shopping opportunity. What about the consumer end of the equation?

A new Mobile Marketing Association (MMA) survey of mobile users in the U.S., finds that nearly three in five (59 percent) consumers expect to use their mobile phone this year to do holiday shopping or at least organize celebrations. Some 15 percent expect to use their mobile phone to an even greater extent to organize their shopping and planning.

A breakdown of results shows that consumers are using their mobile phones for a variety of shopping-related tasks.

Roughly one-third will use their mobile phones to search for the location or for directions to where a product is sold, 32 percent will use their phones to compare prices on-the-fly and stay within budget and 30 percent will use mobile to research gift ideas. Additionally, 13 percent said they would use their phones to purchase gifts, and 12 percent expected they would use their phones to interact/respond to advertising via TV, billboard or newspapers.

HOW I SEE IT: It’s shocking to see that only 32 percent of those who will use their mobile phones intend to use them to check prices while they are on the move. Personally, I NEVER buy a product of any significant value without conducting comparison shopping (either on my computer or via my mobile phone) first. Last holiday season, for example, I bought a car at exactly the price I wanted to pay because I researched the dealer costs by reading up on Consumer Reports on my iPhone. This survey tells me that marketers have to do more to drive home the point that mobile is central to shopping wisely and well. Using mobile to compare prices should be second nature, particularly in the current economy. Marketers are also well advised to make a case for mobile commerce, informing people that they can visit a retailer’s mobile website at the point of purchase and/or pay for items using their phone. (Indeed, consumers have a wide range of payment methods – ranging from credit card and PayPal to mobile operator billing — at their disposal.) Granted time is short, but marketers that can deliver a clear message that underlines the value of their mobile destinations (all the better if the websites really support consumers with more than just a landing page).

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Agility is a “must have” trait for players in the mobile ecosystem, according to mobile industry analyst Chetan Sharma (who is also a contributor to this website).

Chetan believes that the fast pace of device introduction has allowed nimble players (Samsung and HTC) to lead the pack of handset makers, while other more established players (LG and Sony Ericsson) have lost ground.

Interestingly, Chetan says that Microsoft has what it takes to shake up the smartphone market in 2011. As he puts it: “By taking a different UI route, it [Microsoft] actually has a shot to be a viable third option to iPhone and Android, pushing RIM from the top 3.”

HOW IS SEE IT: Manufacturers must balance being “fast to market” with the need to deliver quality products at the right price. Samsung has done well with its smartphones, but its Galaxy tablet was thrashed this week by Engadget for focusing too little on the chief stakeholder: people.  As the blog pointed out: “The browser is miserable … When better browsing is 1/2 reason to go for larger screen, that’s insanity.” That should tell marketers to look before they leap onto the next technology. With the advance of all matter of connected devices, marketers’ heads are figuratively on a swivel watching the rapid pace of product introductions. But rather than be first, it’s imperative that marketers evaluate the product experience before diving in with dollars and brand promises.

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In a previous post I wrote about the monetization of applications. In it, I made the point that some developers make a great living at it while many fail to sell enough to make the endeavor worthwhile.

So what are the monetization models and which ones really pay off? A new report from Distimo offers some answers.

It says that about one-third of the top-grossing iPhone apps are based on a freemium model that allows consumers to make purchases (buy new levels and features in a mobile game, for example) from within the application.

Remco van den Elzen, CEO co-founder of analytics firm Distimo, told GigaOM that he believes in-app purchases now represent about 30 percent of all iPhone App Store revenue. “We’re seeing more developers implement more in app-purchases especially with games,” he said. “Freemium apps are also picking up significantly. A lot of developers realize it’s a successful model.”

HOW I SEE IT: The freemium model is win-win for the developer and the consumer. Consumers are able to try out an app and then choose what else they want to buy on their terms. Developers finally have a way to connect directly with the consumer, an in-app interaction that means both a boost in sales and an increase in customer engagement. By going free at the start, the app developer overcomes one of the toughest challenges in all app stores everywhere: how to get discovered. This is because the freemium model represents low-risk to the consumer (they buy what they want and directly from the source). Put another way, the model effectively exposes the app to a larger audience of mobile users and lets them trial it before they fork over the cash.

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A career author and sought-after speaker, Jeff Hasen builds, strengthens and protects brands. Companies benefiting from his talents have landed on Wired’s list of most innovative entities on Earth and been named pioneers and the early leader in the burgeoning mobile marketing category. Jeff co-created the certification program for the Mobile Marketing Association (MMA). He is one of only two individuals certified by the MMA to train professionals and students on mobile marketing definitions, techniques and benefits. At Hipcricket, he conceived and led the execution of an accelerated rebranding effort in advance of the mobile marketing software and services company being named “the early leader in the mobile marketing space in the U.S.” by Frost and Sullivan. Hipcricket also won consecutive annual pioneer awards from CTIA — The Wireless Association. Follow Jeff on Twitter (@jeffhasen).

This entry was posted on Friday, November 12th, 2010 at 7:43 pm and is filed under Mobile Marketing, Mobile Research. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.