If you haven't played Farmville yet, you have surely heard of it. With 70 million users spending 70 million hours a week, Farmville now competes with prime time television. In aggregate, 40 percent of the 700 billion minutes spent every month across the world on Facebook are spent on social games. Users are spending long stretches of time at one go in these games. For instance, an average session on the game Bejeweled Blitz lasts 43 minutes.
While games might be one of the largest time sinks on the Internet, they are not the only ones. Users of the Internet radio service Pandora spend more than an hour and a half per day on the service, and half its usage comes from mobile devices like the iPhone. Many other mobile apps have seen high user engagement, and an average session on an iPhone app lasts 9.6 minutes.
All of these point to a trend that Internet consumption is shifting to apps, instead of webpages. Unlike webpages, apps are optimized for a proprietary platform (think Apple's iOS, or Facebook's app platform). Wired famously, and perhaps very prematurely, hailed the emergence of apps by announcing that the Web is dead, and The Wall Street Journal recently talked about the appification of everything. While some of these pronouncements may be ahead of their time, there is no denying that apps are giving webpages and the World Wide Web a run for their money.
App user versus website visitor
This trend has significant implications for marketers, and in many ways they will have to treat apps and app users differently from visitors to websites. For instance, in a world where users are willing to significant amount on time with apps, and a world that doesn't involve loading multiple pages, traditional metrics like page views are no longer as important as earlier. Another departure from the world of webpages is that ad engagement on apps can often be very high. Greystripe, a rich media mobile ad network, found that users engage for an average of 22 seconds on their iPhone ads.
It's still early days for app-advertising, and advertising-revenue is still a small portion of app revenues. The amount of money mobile apps are projected to make from app-purchases far exceeds the projected $600 million in advertising revenue. On Facebook apps, primarily social games, traditional advertising is projected to be a small percentage of revenues (however, "indirect payments" for virtual currency, i.e., advertising in the form of offers linked to virtual currency, have been a more successful form of advertising on these games).
However, even in these early days, some advertisers and ad networks have achieved strong success with app-advertising. Based on their experiences, some insights are starting to emerge on how to market to app users:
Engage with the user within the app.
Don't make the users click out: Advertising on the Web is often focused on getting the user to click through to the advertiser's website as quickly as possible. However, in the world of apps, users are highly engaged with the app, and advertisements have to allow them to get back to their app without losing any context. When Apple launched its in-app ad network, iAD, earlier this year, it quickly gained market share to pull even with the leading ad networks on mobile devices despite some initial hiccups.
Clicking on ads opens up a full screen ad within the app instead of opening a session on a browser. Apple makes it easy for users to interact with very rich ads, and at the same time makes it easy for them to return to the app. On the Facebook Platform, Rockyou recently rolled out an ad format called the Deal of the Day. The Deal of Day blends an ad or an offer inside the game experience. Users can view brand advertising in the form of videos without leaving the game and earn virtual currency for doing that.
For advertisers, the key is to understand how to derive value from these in-app advertisements. Brand advertisers are well positioned to take advantage of these placements, but direct marketers will have to innovate in order to leverage these opportunities.
Become a part of the app's experience.
Better still, enhance the experience. Since app users have a very high engagement with the app, they are more likely to listen to a marketer's message if the message is part of their experience with the app. A great example of this is Starbucks' campaign on Pandora that creates custom playlists for users based on their beverage tastes. Another example is that of Mytown, a location based app from Booyah, that partnered with H&M to offer location-sensitive virtual goods. The Rockyou Deal of the Day we mentioned earlier adds to users' experience with games by rewarding users with virtual game points.
Build a presence on the app platform.
Many of the best ways to advertise on apps are around acquiring users for the advertiser's own presence on the same platform. Juicy Fruit created a humorous iPhone app to drive brand awareness and engagement, and drove "awareness of the app through targeted advertising that includes text, banner and rich media." This is a great way to advertise in-app to drive users to your own app or other presence on the platform. Platforms are beginning to understand this as well. For instance, Twitter, having experimented with an advertising format called Earlybird that drove traffic to other websites, has now started focusing on "promoted tweets," a way for advertisers to promote their own presence on Twitter. In this case, advertisers don't need to build a Twitter app, but they can build their presence on the Twitter platform by actively tweeting.
The world of app-vertising is fertile ground for creative marketers. Advertisers who break the old rules and optimize for the app experience will be able to connect with a highly engaged audience.
Vijay Chittoor is a co-founder of Mertado Social Deals. He was previously director of product management at Kosmix. A former McKinsey consultant, Chittoor is a graduate of Harvard Business School and the Indian Institute of Technology, Bombay. He shares his thoughts on technology at his blog.