The economics of mobile app campaigns: understanding the costs and benefits
There’s no typical price for a mobile app campaign, writes Paul Lin, but here are some useful ways to determine what a reasonable investment looks like.
All marketing campaigns, and business strategies in general, are built upon the basic concept of cost versus benefit. In my previous article, we established the benefit part of the equation – we looked at how people are moving away from desktop into a more mobile and tablet centric world, and how you can leverage that statistic to create apps to your own marketing advantage, to get the kind of success that mobile campaigns such as ‘Game of Phones’ or ‘Snack! in the Face’ have achieved over the last 12 months.
Now it’s time to look at the other side of the mobile app campaign equation: how much does it cost, what are you paying for, and, when compared to the benefits mentioned in Part One, how cost effective is it compared to traditional campaigns?
To start off with, asking for an outright ‘average price of apps’ is like asking about the ‘average price of buildings’. Just like a building can be anywhere between a tin shed to the Sydney Opera House, an app can be as simple or complex as it needs to be, and the costs can be as little as a few thousand dollars to hundreds of thousands of dollars. Therefore, like property investment, it’s not so much about identifying a fixed price, but rather, how much it costs relative to something else, and comparing the amount of returns you would get per dollar spent on one investment over the other.
Identifying what exactly to compare apps to is the first difficulty in valuing the cost of mobile campaigns, and understanding the economics behind mobile apps is something that is complex and often misunderstood. Being a new discipline in the realm of software development, the costs of mobile apps are often misquoted and unfairly compared to websites from the Web 2.0 era. This is a false comparison, as mobile apps are built with different technology, using different types of engineers, with different development life cycles and infrastructure, and more importantly, are used in a completely different way to achieve different types of results when compared to websites.
To many marketing professionals, software development is web development, but in reality, modern front-end web development has only passing similarities to traditional software development. Web started from HTML, which is a markup language (think fancy text documents with tags) rather than a pure programming language, and even though front-end web development has grown in complexity and depth over the last 10 years, it still lacks the technical complexity and integrity of C, Java, and other traditional programming languages that are used to build desktop computer programs.
In addition, advances in technology and tools mean that websites can be built by designers with very little or no experience in computer science and software engineering, which in turn drives the cost of web development down.
Mobile apps, on the other hand, are based on the traditional software development model, which is more similar to building Microsoft Word, databases, and Xbox video games, and the web browser that websites run in.
Together, it means that rather than websites, a better comparison for apps and the cost of apps should be around IT implementation projects – consider how much was spent on your last IT upgrade, when they had to install a new database or CRM or your new marketing automation system – these costs are much more comparable to mobile app campaigns than a simple website is. The investment in an app needs to go into the higher costs of the engineers, the longer duration of development (typically websites development life cycles are quoted around days or weeks, but mobile apps are in months), and the corresponding infrastructure investment.
That said, while apps are more expensive than websites, cost is also a relative concept depending on your frame of reference regarding what you’re using the investment for.
Functionally, apps, in a marketing sense, are these days often the lead or core part of a marketing campaign. Whereas websites are more frequently used in a supporting role to promote a campaign, TV show or live event, mobile apps campaigns like ‘Game of Phones’ or ‘Snack! in the Face’ are the campaign. Thus, if you considered mobile apps as a separate marketing channel – if you were to sponsoring a real-life music festival, a TV ad, a billboard next to a highway or a full page ad in a national newspaper – how much would that cost, and what would you be willing to spend on it?
When placed into this frame of reference an app’s purpose is reconsidered and the value of mobile apps becomes a lot clearer. It needs to be thought about less in relation to digital and websites and more like, ‘It’s getting me better results than sponsoring an event’.
When you take into account the amount of eyeballs and views for Virgin Mobile’s ‘Game of Phones’ or KFC’s ‘Snack! In the Face’, with 2.5 million views in three weeks and 4.85 million views in four weeks respectively, how much would it cost if you were to try to get that amount of views elsewhere? How much would a TV ad of equivalent 4.85 million views cost? And this isn’t even taking into account the targeted nature of these views. An app creates an audience who is voluntarily seeking out the brand and experience through downloading an app, rather than being a non (or little) targeted medium like TV or billboards.
At the end of the day, once the costs of apps are understood and accepted – that it’s proper software, built by software engineers over a relatively long timeframe, it’s simply about treating mobile app campaigns as a complete marketing channel, and comparing what you would get from investing in this channel over other marketing channels. And when you start measuring success of mobile campaigns in millions, it’s clear that the benefits of apps clearly outweigh the costs of strategy, design and implementation.