Apps & Brands Benchmark 2015 - Conjure

Apps & Brands Benchmark 2015

Who we are Once upon a time Conjure was a mobile app development house. Now we’re so much more. While our customers are still major brands and disruptive startups, we now build daring, original apps for emerging new technology platforms. As the apps industry has evolved, so have we. We began by developing standalone apps for campaigns, but today we work with our clients on a long term basis as their trusted software partner in a rapidly evolving industry. We make apps for phones and tablets, as well as cars, TVs and wearables. But we don’t just make apps. We also develop back-end and content management systems for those apps, as well as analytics tools to measure business return. Here at Conjure we don’t believe in spending all day behind a desk. We have an innovation workshop where the team are encouraged to tinker, develop, experiment and play with the latest tech, ensuring that they stay ahead of the curve. We believe that the best apps should be part of a solid business strategy and work with our clients to ensure that they are always aligned with a brand’s wider offering. Over the years, we have produced beautiful and powerful apps for companies including Ripley’s Believe it Or Not, Beko, Drinkaware, Wildgoose, and the NHS Trust. We were founded in 2009 by MD Sam Clark, Technical Director Chris Tingley, and Product Director Chris Connell, and have offices in London and Reading. www.conjure.co.uk

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Apps and brands: a market matures Businesses have finally got to grips with apps – but have consumers moved on while the C-suite and marketing types were wrestling with the rise of mobile? Sam Clark, CEO of Conjure, introduces the apps and brands benchmark 2015. Apps are both a technological and cultural phenomenon. Open one of those archaic things—a newspaper— on a Friday, turn to the weekend review section, and you will find a list of apps the paper’s writers think you should try out over the weekend. Open that same newspaper (or one of its supplements on a Sunday) and you are equally likely to find yourself reading an intelligent full length review of one or more apps.

“Apps are no longer solely synonymous with Apple, the company responsible for the app phenomenon” Technologically speaking, ‘native’ apps have thrived, even as brands have rolled out more sophisticated mobile websites, and seen off what many saw as a ‘challenge’ from HTML5. And Apps are no longer solely synonymous with Apple, the company responsible for the app phenomenon. Developing for Android is now considered a no-brainer, and hand-wringing over potential malware in the Google Play store has (mostly) subsided. App monetisation models have matured also, with the rise of ‘freemium’ pricing contributing greatly to the increased profitability of apps. What does ‘profitability’ mean in this context? Well, Apple, for one, has just announced that total App Store revenues rose 50% to $10 billion in 2014 – an especially impressive number given that the revenues amassed in the preceding five years only came to $15 billion together. Not all brands may have embraced apps – but all have certainly accepted them. There has been a shift in the type of apps brands build: ‘stunty’ apps for one-off marketing campaigns are less of a focus as brands concentrate on perfecting apps that mobilise their core businesses. Brands are less likely to have multiple apps for multiple initiatives – and more likely to update one master app on a monthly or weekly basis. Brands’ anxiety over getting discovered in the over-stuffed chaos of the app stores has subsided – most understand that their customers will come looking for them on mobile - in time. Finally, brands are no longer obsessing over keeping customers ‘inside’ their apps for long periods – instead they want the visits those customers do make to be effective. So much for what the brands are thinking and doing – how are UK consumers reacting to the newly matured world of apps? Information on this side of things is hard to come by. So we decided to find out for ourselves. Conjure commissioned respected consumer research agency OnePoll to question 2,000 UK adults on their


usage of brands’ apps across a range of devices and operating systems how they were using them and crucially, how much they were spending through them. This brief unveils what we found out – and how we interpreted the data. In the following pages you’ll find helpful visualisations of the data, alongside a few words from me on what we at Conjure think it all means. If you’re thinking of commissioning an app for your business and would like to know how our research affects your plans, my door is always open!

Sam Clark CEO of Conjure E: [email protected] T: 020 7403 5778 A: 12 Cole Street, Borough, London, SE1 4YH


Who we surveyed OnePoll put our carefully crafted questions to a nationally representative sample of 2000 British adults; fieldwork was carried out from 18/11/14 to 21/11/14. Region East Anglia East Midlands London North East North West Nothern Ireland Scotland South East South West Wales West Midlands Yorkshire and the Humber

% 6.45% 5.25% 16.85% 4.20% 11.70% 2.95% 8.00% 12.80% 7.70% 5.15% 9.60% 9.35%

Response 129 105 337 84 234 59 160 256 154 103 192 187

Respondents by age

27%

10%

55+ Respondents by gender

21%

45-54 35-44

54%

46%

Female Male

19%

21%

25-34 18-24


An up-to-date snapshot of the tech used by UK adults Does anybody still use a feature phone? Are tablets beloved of the over-55s? Are fitness trackers as much of a phenomenon as the media thinks they are? We asked our respondents to tell us what tech they use, and their answers reveal just how much the mobile revolution has changed our relationship with computing in recent years.

Devices used by UK adults


Devices used by UK adults in different age groupings

Our data suggests that over three-quarters of Brits now use smartphones. The 23% who are still holding out are most often the over-55s. UK adults without a smartphone at this point are unlikely to be waiting to upgrade – a small proportion will be unable to justify the cost of buying a smartphone outright or taking out a contract to acquire one – while the rest of the no-phone/feature-phone brigade have opted out because of the imagined complexities of using a smartphone. Conjure reasonably expects the size of this hold-out group to decline to almost nothing over the next 5-10 years. Tablet penetration in the UK has now reached 61% - an astonishing figure when you consider that the category was only really launched (by Apple) in 2010. The buzz around tablets may have died down somewhat, but our research suggests that tablets were still the most popular tech purchase amongst Brits over Christmas (15.7% declared their intention to buy a tablet; 13.4% said they were going to buy a smartphone – see the press section of our website for more of our Christmas tech buying data). As has been clear for some time, tablet-optimised versions of apps need to form part of brands’ mobile strategies – brands without such optimised versions are highly unlikely to be realising their potential returns from mobile – regardless of whether those returns are in the form of revenues, publicity or goodwill.


“1 in 10 Brits now have a smartwatch” Despite the rise of the tablet, three-fifths of Brits (61.4%) still use a desktop PC/Apple Mac. Brands are going to need to consider the PC experience when formulating their web strategies for the foreseeable future. Aligning the look and feel of their presences and synchronising user activity across desktop and mobile devices will remain brand priorities in this area. Just over 1 in 10 Brits (10.3%) now have a smartwatch (including 17.8% of Londoners), and the Apple Watch is widely expected to give smartwatch ownership a massive boost when it launches later this year. While the category is not certain to take off at this stage, early buzz and levels of cut-through with consumers show that it is not too early for brands to start considering how smartwatches will fit into their mobile strategies – especially if their favoured customers are 18-24 year olds, almost 1 in 5 of whom now own a smartwatch. While a limited number of brands will want to consider dedicated apps for wrist-displays (e.g. brands with mobile apps that use a consumer’s location to drive interactions), all brands with app strategies should be thinking hard about the implications of the rise of the smartwatch on the way they send notifications to consumers with their apps. Finally, brands with location-aware apps should also start thinking about producing in-car versions of their apps sooner rather than later – while only 7.5% of British adults currently have in-car computers capable of running apps, that proportion is almost certain to grow in the near future. In-car tech was a major theme of the Consumer Electronics Show 2015 in Las Vegas, and the odds that your next car will run apps are very high indeed.


The mobile operating system wars – who’s winning? How many more people use Google’s Android compared to Apple’s iOS? How many Brits have a foot in both camps? Has Windows Phone broken any new ground? While these questions and questions like them were once academic, the overwhelming similarities between the hardware produced by the main smartphone and tablet manufacturers like Samsung and Apple means it is software that sets devices apart and affects consumers’ buying decisions (and thereby brands’ developing decisions). So which software platforms do brands need to develop apps for – and which should they be at least considering in their quest for maximum reach? We asked respondents about their usage of different mobile phone operating systems in a bid to find out…

Which mobile operating systems do Brits use?


Half of British adults (49.6%) now use the Android operating system as their window onto to mobile world, meaning that brands can ill afford to omit developing for the platform despite the ongoing Android fragmentation ‘situation’ (i.e. essentially, a wide variety of versions of Android—each with their own quirks and quiddities—are in the hands of the public, and this means brands have to invest more in developing apps capable of handling these differences). The other operating system that brands can’t afford to ignore is Apple’s iOS: although it has less market-share than Android its users are arguably more valuable to brands – as we will see later on in this report.

“Microsoft did well to increase Windows Phone’s market penetration in the UK to 10%” Microsoft did well to increase Windows Phone’s market penetration in the UK to 10% in a short time after its launch – and 15% of British adults now have Windows Phone-based devices. Although brands have been slow to develop for Windows Phone, those brands which have done so have undoubtedly benefitted from the quieter and less chaotic atmosphere of the Windows Phone Store and the gratitude and increased engagement from Windows Phone users (who have grown tired of being snubbed in favour of Android and iOS users). Microsoft has made no secret of the fact it wants to create ‘one Windows’ with an architecture that will enable it to run across all devices (e.g. desktops, mobiles and tablets) – in theory this should make developing for Windows easier for programmers and more lucrative for brands (as they’ll be able to reach Windows desktop and mobile users with a single cross-device app) but it remains to be seen if this will be achieved with the release of Windows ‘10’.


Brands’ apps – how many Brits are downloading, year-on-year The number of branded apps consumers have downloaded in the last 12 months/in the 12 months before that/since they got their devices – compared.

Number of branded apps downloaded

In the 12 months to November 2013, Brits downloaded an average of 5.5 apps, and in the 12 months to November 2014, Brits downloaded 5.85 apps. In other words, the average number of branded apps British adults are downloading did not really increase year-on-year. More than 1 in 3 Brits didn’t download a single app from a brand in the 12 months to November 2014 (with men slightly more likely than women to reject apps from brands outright). Put these numbers together and it’s clear that brands still have more to do when it comes to promoting their apps and demonstrating the usefulness of their mobile assets – even if the proportion of Brits abstaining altogether from branded apps fell by just over 7% year-on-year.


Overall, the relatively low number of branded apps Brits are downloading over a 12-month period shows that the average consumer is now extremely selective about the brands they allow onto their phones – and in turn, this shows just how much brands are under pressure to add value with their apps, which need to hook users as soon as they are opened.

Brands’ apps – how much time are Brits spending inside them? What turns consumers off branded apps? Consumers’ app usage habits

219 491

In the last 12 months I have spent less time using the branded apps on my smartphone/tablet than I did in the last 12 months before that In the last 12 months I have spent no time using branded apps on my smartphone tablet

701 589

In the last 12 months I have spent the same amount of time using the branded apps on my smartphone/tablet as I did in the last 12 months before that In the last 12 months I have spent more time using the branded apps on my smartphone/tablet than I did in the last 12 months before that

Consumers may not be downloading more than an average of 6 apps from brands in a year – but that fact that 1 in 4 of our respondents have spent more time using the branded apps on their devices in the 12 months to November 2014 is extremely positive; it suggests that even as consumers are becoming more discerning there are many brands getting better at keeping consumers engaged with their apps. It is, of course, also positive for brands that almost a third of Brits (29.5%) spent as much time using apps in the year to November 2014 as did so over the 12 months before that. Clearly there is still an appetite and an appreciation for apps put out by brands. It is not, however, insignificant that more than 1 in 10 Brits (11%) spent less time using branded apps over the past year (compared to the one before). We asked those respondents who admitted that their level of engagement with branded apps was diminishing to tell us why.


Brands’ apps – how much time are Brits spending inside them? What turns consumers off branded apps? Reasons consumers are spending less time using branded apps

60

24

15 22 32

50

36 46

36

The buzz around apps has faded and so branded apps are less exciting to me I don't spend as much time using my phone/tablet as I used to There are now too many branded apps on my device to engage with The brands I like are doing less interesting and innovative things with their apps I like all the apps I already have and so don't feel the need to use new ones The brands whose apps I use have not been updating their apps as frequently (e.g. with new content, or to coincide with their other marketing campaigns and projects) I perform the tasks I used to use branded apps for using third-party apps None of the above

Crucially, brands are most likely to put off consumers when they get their notification strategies wrong – when their apps’ push notifications are too pushy – 1 in 5 Brits (19%) setting aside brands’ apps are doing so because of intrusive notifications (by way of comparison, only 7% of respondents said that they were losing interest in branded apps because those apps weren’t getting updated enough). The fact that 16% of the consumers falling out of love with brands’ apps are doing so because the buzz around apps ‘has faded’ should be less concerning to brands, which need to engage users engage long-term with their content and mobile services rather than with their status as part of a fad. Although 14% of those Brits spending less time using branded apps are doing so because they’re using their mobile devices less overall, we expect this group to flip the other way when mobile completes its ascent and becomes the new normal (and in some ways loses its distinction as mobile altogether). Finally the 11% of respondents who attribute their fading attraction to brands’ apps to the sheer crowdedness of the app space, and the 11% of respondents who attribute their lessening interest to the fact that their favourite brands are doing less innovative things with apps show just how important it is for brands to think outside the box when it comes to promoting their apps, and how important it is that they keep innovating with the form.


Brands’ investment in mobile begins to pay off With brands launching better and more fully featured apps, and consumer trust in the mobile channel increasing daily, it stands to reason that brands’ revenues through the app channel are increasing. Conjure polled British adults on their year-on-year app spend (November 2012-14).

Consumer spend through branded apps, year-on-year

The average Brit spent £89 through branded apps in the 12 months to November 2014 – 24% more than in the preceding 12 months (when Brits spent an average of £72.30). Dramatic as this year-on-year growth is, we expect next year’s figures to show an even steeper increase. The small, but not insignificant percentages of respondents who spent upwards of £200, £300, and £500 through the app ‘channel’ in the 12 months to November 20.


Additionally, our research also reveals that the received wisdom – that Apple devotees are more ‘valuable’ than their Android counterparts – still holds true. Brits who only use iOS spent an average of £89.36 through brands’ apps in the 12 months to November 2014, whereas those Brits solely plugged into the Android ecosystem spent an average of £62.80 – a difference of £26.56 - or 29.7%. Crucially, despite the increased penetration of Android over iOS, the superior value of users of the latter in terms of revenue generation means that the value to brands of developing for Android and iOS remains roughly the same.


Key findings In light of the data illustrated and explained above, the key points for brands to take away from this brief are as follows:

Tablet-optimised apps are a must for brands. Think this is pretty obvious? A recent study of supermarket apps conducted by Conjure found that several of the nation’s biggest supermarket brands still didn’t have tablet-optimised versions of their apps – British brands remain too complacent on this point Brands need to start working on their smartwatch contingency plans now. With penetration at 10% (almost 20% amongst young people) and the Apple Watch on the way brands must at least have a smartwatch plan in place in the event that they really start to take off this year Want reach? Now is the time to develop for Windows Phone. While the penetration of Windows Phone is nowhere near as impressive as that of Android or iOS, our data suggests it may be the software of choice for up to 7.5m adults in the UK. When you take into account the fact that there are fewer apps to compete with, that it’s easier to get discovered in the Windows Phone Store and that WP users are hungry for new and useful content it’s clear to see that the time to develop for Windows Phone is now! Especially as Microsoft’s OS isn’t going anywhere for the foreseeable future… Apps must be truly useful and work first time – with consumers only downloading an average of 6 apps from brands per year, there’s little margin for error when it comes to content and reliability. Our data suggests that consumers are not going to give brands a chance to ‘iterate to success’, or download a second app for a brand if the first one they try is a bust The usefulness of brands’ apps is increasing – which is why 1 in 4 Brits are now spending more time using the branded apps they have; competitors just getting up to speed on the apps front will find it hard to compete with established brands with genuinely useful apps – their releases must add value for consumers – or flounder Notifications, notifications, notifications – pushing announcements to users too frequently/in the wrong way is more likely to end a consumer’s relationship with an app than a dearth of notifications is; getting notifications right—making them timely, useful, and context aware, in other words—is absolutely key to the success of a branded app. Brands should be testing the impact of their notifications across their entire user-base to determine the approach that best ensures the stickiness of their apps


Innovation still matters – while the majority of brands are now rightly focusing on developing apps that provide robust support for their core businesses (as opposed to marketing or stunty one-off apps), innovation still matters to consumers (just over 10% of Brits are less enthusiastic about apps put out by their favourite brands because those brands have stopped innovating). Brands still need to think about how they can take advantage of the wide range of instruments stuffed into the modern smartphone to wow their users Brands not doing apps properly will miss out on rapidly increasing channel revenue – the amount Brits are spending through brands’ apps is growing fast and will continue to do so for the foreseeable future (as trust in the channel and apps that can take payments increase); brands without apps/without effective apps are quite simply limiting their earning potential and hampering their own growth

Sam Clark CEO of Conjure E: [email protected] T: 020 7403 5778 A: 12 Cole Street, Borough, London, SE1 4YH
