Brands Pulling Mobile In-house

As the handheld economy matures, marketers are questioning the need for outside app developers

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Mobile app money has turned many tech startups into multimillion-dollar firms in recent years while padding the coffers of ad agencies acting as middlemen. But the link connecting brands to apps developers via agencies is starting to look tenuous as CPGs and retailers hire their own mobile technologists, according to an informal poll of Advertising Week attendees last week.

“It is a house of cards for ad agencies,” said Patrick Moorhead, vp of mobile sales at Catalina Marketing. “Brands will wake up to the thought of: ‘Why involve the [agency of record] in the conversation at all if we can save five points on the deal?’ ”

In other words, mobile money is starting to stay home, similar to the way brands brought Web developers in-house a decade ago. Mondelez International brands (formerly Kraft’s snacks business) already performs some app development in-house and last week launched a mobile startups program that could bolster its abilities in this area. And Gannett told Adweek that it planned to bring all mobile app development in-house before 2013.

Matthew de Ganon, vp of mobile product and operations at Gannett, predicted that companies across other sectors would follow suit. “It’s so integral to the brand that you own your destiny in mobile,” he said.

The Weather Channel blazed a trail in this regard, putting the kibosh on outsourced mobile app creation three years ago. Asked if in-house mobile app building would become commonplace, Cameron Clayton, evp of digital at TWC, replied: “Totally. It’s a strategic pillar of business.”

Ideeli is preparing to relaunch its mobile app in the next few weeks. It’s testing a new tech boutique after being unhappy with the performance of its last vendor. But the fashion deals site envisions a future where it develops its apps itself.

“I completely see that,” said Mark Uhrmacher, CTO at Ideeli. “We are receiving 20 percent of our sales through mobile devices. People who want to have a lot of control over their customer experience will want to take control of their mobile environment.”

So while none of this looks good for companies that need app cash to prosper, Geoffrey Handley, CMO of mobile shop The Hyperfactory, had a counterpoint. He said that even if a majority of brands bring apps in-house, mobile will evolve—just as the Web space has mutated in the last 10 years—and specialty firms like his will still be in demand. “We are just going to see more collaboration,” Handley said, “and we are going to see more areas of depth and specialization.”

@Chris_Heine Christopher Heine is a New York-based editor and writer.