BROMPTON, U.K. -- Smart marketers will embrace mobile as a communications platform—but the best use of the new medium won’t look anything like the current generation of tiny display ads. Historically, that’s a familiar scenario. Whenever new media emerge, consider television in the 1940s and 1950s and the World Wide Web in the 1990s, there’s a period of fumbling while marketers try to repurpose ads that worked in the old media. That’s why early-1950s TV commercials featured narrators reading what were essentially radio advertisements, and why 1990s websites were filled with static display ads taken directly from print campaigns. Neither effort was effective. New media require new methods of advertising, and those evolve over time. The same will be true of mobile apps.

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The best way for marketers to communicate through mobile phones and tablets will be with apps. Apps will trump traditional ads in part because consumers don’t perceive them as advertising—they value them for their functionality and thus don’t find them intrusive. For marketers, apps will also be attractive because they’re actually more cost-efficient than traditional ads, and they sometimes create entirely new revenue streams.

If you observe how people use their smartphones, and if you look beyond calling, e-mailing, and texting (activities that aren’t particularly conducive to advertising), you’ll see that apps dominate. Users spend, on average, 82% of their mobile minutes with apps and just 18% with web browsers. They download about 40 apps to their phones and regularly use about 15.

Smartphone apps fall into five categories:

· Games and entertainment, which, according to one study, account for 42% of time spent on smartphones;

· Social networks (especially Facebook), which account for another 31% of smartphone time;

· Utilities, including maps, clocks, calendars, cameras, and e-mail;

· Discovery, including apps for Yelp, TripAdvisor, and Flixster;

· Brands, such as Nike and Red Bull.



The challenge for brand marketers is clear: If smartphone users spend most of their time with apps but regularly use only about 15, and if few of those 15 are for branded products, the marketing real estate on users’ mobile screens is constrained indeed. How can marketers reach and engage these consumers?

Instead of buying tiny banner advertisements, marketers should create apps that add value to consumers’ lives and enhance long-term engagement with their brands. To do so, they need to understand how and why users choose apps. My research reveals three strategies that can help them succeed.

1. Add convenience. Most airlines have mobile apps that allow customers to check in and to monitor their flights’ status. Most banks have mobile apps that let people track their bank balances and pay bills. ESPN’s app lets sports fans check scores. Of course, people can also do these things on desktop computers or from a mobile browser, but the smartphone apps function more quickly and smoothly, so most customers prefer them. And every time a consumer uses one of these apps—or even glimpses it on the screen while swiping to find something else—it increases her exposure to the brand.

2. Offer unique value. Some apps take advantage of mobile capabilities to do things traditional desktop computers can’t. In South Korea, where the UK–based retailer Tesco has a grocery delivery business called Home Plus, the chain plastered the walls of subway stations with life-size, high-resolution photos of products on store shelves, complete with QR codes that can be scanned with a smartphone. This allows consumers to shop and arrange for delivery while waiting for their trains. Within three months of the system’s rollout, the number of registered users of Home Plus had increased by 76%, and revenues had increased by 130%. After a decade of badly trailing its competitor E-Mart, Home Plus is now closing the gap in overall market share, including offline sales. Since it was launched, in April 2011, the app has been downloaded more than a million times, and the company is now expanding its virtual stores to bus stops.

3. Provide social value. Facebook added its billionth user in October 2012; its app is one of the most used in the mobile world. Yet Facebook, like other social media companies, has struggled to monetize its user base through advertising. Marketers question the effectiveness of ads on social media sites, because ads interrupt the user experience of connecting with friends. Activities that enhance connections among friends are a different matter.

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