Branded Social Applications Come Under Fire

Back in November I wrote that the new GlamApps program validated the business of branded social applications. Yesterday Brian Morrissey of AdWeek wrote that branded applications “are as popular as desolate Second Life islands.” In many cases Brian would be right. An advertiser launches an application, traffic surges after an initial ad campaign, and typically traffic falls off. Regularly, a small percentage of people stick around.

Take for example the “Ballers Network” which Nike launched and which Morrissey refers to in his article. He states “Despite its global ambitions and support in three languages, the application has a mere 3,400 users per month.” Now compare that to traditional advertising. How many monthly users does a T.V. or radio commercial have after the commercial has run? None.

Brian’s article is a compelling piece just as most contrarian pieces are. Unfortunately few metrics are provided besides what Morrissey portrays as the dark aftermath of a branded application campaign. Granted, he has a point but it would be great to back up his position in which he quickly dismisses these advertising investments with some raw numbers. How do you define success exactly in the branded application space and what alternatives exist?

After talking with countless industry executives about their position on how to compare branded applications to traditional forms of advertising, I’ve come up with my own conclusions. Prior to diving into those, I’d first like to share the thoughts of several industry professionals that I reached out to.

Industry Perspectives

Hussein Fazal, CEO of AdParlor (who’s also a sponsor of this site), pointed to the Reebok Talkin Krazy application which has had significant activity over the past month. Currently the application has over 73,000 monthly active users. While it exhibits many of the traditional trends for branded applications (immediate surge followed by a steady drop off), the amount of activity over the past month has been substantial.

Mike Lazerow, CEO of Buddy Media, points to the Kidnap application which continues to have a substantial number of users. He also accurately points out that the quotes used in Morrissey’s piece were of companies which directly compete with companies which help organizations develop branded social applications.

If you were to take Brian’s advice though, you might as well jump off the platform bandwagon and head back to wherever you were spending your money before. While many branded application campaigns would support Brian’s position (that branded applications don’t work), so too would numerous television commercials in an argument against advertising in the traditional media space.

How to Succeed

Many applications experience rapid growth and then drop off soon after but a select few (the Kidnap application being the primary example) illustrate the potential for success. Such successes requires that the product development company behind the campaign knows how to develop effective applications. Honestly, this is part of the reason that I didn’t get into the agency business.

Success with applications takes a substantial amount of A/B testing as the application grows and it also takes a substantial amount of luck. That’s why we are seeing a few shining examples of widespread successes and why many brands have decided to run tests with existing applications. Can successful applications be developed? Most definitely but it requires expertise in the space.

Buddy Media uses the following numbers to support the argument that branded applications are a worthy investment, “users spent an average of 2 minutes and 35 seconds engaged with our branded applications per visit, or 75 times greater than the time consumers spend interacting with traditional banner ads and five times greater than the time spent watching a typical TV commercial. And 85% of our users returned for multiple interactions with our app-vertisements, with 56% of the total user base returning nine times or more.”

Personally, I’d use back of the napkin math to figure out where an investment should be spent. There are numerous theoretical equations that could be used to determine effective use of an investment. I propose one such equation below but there are many other potential models one could use:

(average time spent engaging with ad x total number of users) / total cost of campaign = cost per engagement

This isn’t exactly a ground breaking equation. Many have been trying to determine how to measure engagement for a long time now. Ultimately the world of advertising doesn’t always have an easy way for measuring ROI, especially for organizations with broad spanning advertising budgets. That’s why the only rational way for determining how to invest social media advertising is through relative engagement.

Rather than spending money on television advertising, it makes a lot of sense to redistribute a portion of that budget to custom applications as well as integrated campaigns with existing applications. Social media is about diversification and developing an omnipresence. That’s why proper allocation needs to be determined.

I’ll leave that to the media buyers who place actual numbers on these things, not those sitting in an ivory tower. While it makes sense to question how to allocate budgets, does it still make sense to question whether branded applications should be a factor in the budget allocation equation?

Image modified from the original AdWeek article