It’s widely recognised that the success of Apple’s iPhone has a lot to do with iTunes and the mammoth number of apps in the App Store. With more than 100,000 apps available across many categories, it seems there’s an app to suit everyone, for every need.

However, despite apps being a legitimate and increasingly powerful distribution channel for content, services and brand experiences, iPhone users are seemingly reluctant to spend a lot of money to access paid apps.

So, can brands charge for their apps?

Apps are gradually being recognised as a new distribution channel for brands, particularly those that can deliver content, or provide access to their services via mobile Internet. Furthermore, many iPhone users are looking for more brands to engage with them via their mobile device, however, not at a cost.

iPhone users are looking for new interactions or ways of dealing with companies anywhere, at anytime, and branded apps provide companies with another opportunity to connect with their customers. But, most brands cannot charge for access to their own distribution channels, or for content that is not unique – why pay to access something that can be obtained elsewhere for free?

There will be, of course, exceptions, particularly when a branded app can be a primary distribution channel for unique content or intellectual property, and/or the experience has significant benefits and value to the consumer. Although, at this point in time, consumer brands are yet to fully explore how they can become part of their customers’ lives via owning app territory on their customers’ Smartphone.

While many iPhone users may pay for apps, and download them directly to their phones, there is some reluctance to make other purchases via a mobile device. Concerns about security are an issue for many, however functional barriers also contribute to lack of mobile transacting. Apps which are purpose built for transacting are readily used by some people, but they are few and far between.

iPhone users essentially fall into three groups when it comes to shopping via their smartphones:

Security concerns mainly relate to sending data over public or unsecured WiFi networks, which iPhone users avoid (when transacting) online by using their own WiFi, or sticking with 3G. However, if they’re going to transact at home, then a computer is usually accessible, so the concept of mobile purchasing is somewhat irrelevant. Purchasing via a computer also offers the benefit of being able to easily print receipts for proof of purchase.

Interestingly, security is not just related to a fear of having their details stolen, but also user error when it comes to entering data on a mobile device. The small screen and touch keyboard are seen as being more likely to result in typing errors – especially if attempting to purchase from a classic site, rather than a mobile-friendly site, or via an app.

“I am a bit reluctant to make purchases from my iPhone due to security concerns and just in case I incorrectly type in my payment details – e.g. a $20 donation becomes a $200!”

Fit for purchase

iPhone users were more likely to make purchases from their devices via purpose built apps, like eBay or Dominos Pizza, than to attempt to purchase via the internet on their smartphone. These apps not only make it easier to undertake a transaction because of their design and features, they also, importantly, communicate that the app is fit for purpose.

It’s critical that apps which are used for transactions are branded and deliver a positive customer experience. In a virtual environment, the trust markers will predominantly be the brand, and the quality of the app design and functionality – without these elements, doubts about security and authenticity are elevated. Branded apps are also more convincing than mobile sites, when it comes to transactions, again because of a sense that they are designed specifically with the user context in mind (versus merely scaling down a web experience). A clear example of this can be found with banking apps versus purely mobile internet banking.

People who are already comfortable purchasing through the iPhone are looking for more opportunities to use their device in this way. Particularly for items such as tickets for movies or events, or for books or small items where the desire to purchase might be triggered spontaneously, rather than being planned. Apps provide the user with a chance to do it ‘here and now’, thus reducing the time between consideration and purchase if they’re on the the move.

“I feel totally secure making purchases with my phone: I’ve bought apps, music, eBay items, from Amazon, done banking, concert tickets, movie tickets…It’s especially good if, say I’m out with friends, we’re talking about a concert and we can look it up and purchase right there…no more ‘note to self’ to look into it later”

While some nervousness will prevail amongst cautious consumers, the iPhone operating system is perceived to offer some inherent protection against cyber fraud and the like. There’s an belief that, being a Mac product, the iPhone is not yet a target for viruses, malware or internet scammers. Again, belief in the brand provides a sense of security.

It’s early days when it comes to mobile purchasing, but when estimates are that by 2011 85% of handsets shipped globally will have some sort of browser, and given the ever-increasing reach of 3G networks, smartphones will become a huge opportunity as a distribution channel. The challenge is for companies to invest early in creating great app and mobile sites that deliver trusted customer experiences, where we won’t think twice about tapping ‘buy now’.

Apple’s iTunes App Store has in excess of 100,000 apps across a multitude of categories. There’s apps for fun, for making your life easier, for saving time, for sleeping better, for unleashing your creativity. Basically, there’s an app for just about anything you can think of doing via your iPhone (and for many things you’ve never thought of doing).

The problem is, how do we find these apps when there’s so many of them in there? It’s like being in the biggest shop in the world, but all products fit into 20 simple categories. For new apps, whether free or paid, branded or unbranded, the real challenge is being found in the first place. In a digital shop where browsing is very linear, from one click to the next, it’s difficult for apps to rise to the surface so that they are found before ‘shoppers’ move on.

Latitude Insights conducted an online research community amongst iPhone users from March to April 2010, in which finding apps was an interesting topic of discussion. The main method used to find apps were the Top 25 lists, and word of mouth recommendations from other iPhone users.

App downloading can be either planned or spontaneous. Sometimes people will specifically look for an app they know the name of, or a type of app (but do not know its name) by using a key word, or category search. Other times, browsing the app store may be like window shopping – purposeless, but sometimes resulting in a new acquisition.

iPhone users recognise the inherent problem in relying on the Top 25 list to find new apps. Following the ‘crowd’ when it comes to apps means that the most downloaded apps, continue to be the most downloaded. There’s a certain level of ‘cred’ associated with having a more unique or rare app.

“I would imagine that there are a lot of great apps that never make it into the Top 25. Especially, considering that most of the apps in the most popular list are so amazingly stupid”

Branded or commercial apps need to utilise other communication channels to promote their apps, to facilitate uptake/downloading. Ironically, it may be that non-mobile media, particularly websites and print in the form of both advertising and reviews, are the best way to tell the target market you have an app for them. And then a good app can begin to rely on recommendation to build its fan base.

Ultimately, a good recommendation or a positive experience with an app on someone else’s iPhone is the strongest driver of app selection. That’s why ‘what apps have you got?’ could be the universal catch-cry for iPhone users.

Our presentation of insights from our iPhone online research community.
Stay tuned for a few more insights over the coming days.

Latitude Insight’s case study of iPhone users uncovered just what consumers find so fascinating about the iPhone, why they use that four-letter word – LOVE, and how brands can become part of this ‘affair’.

The study revealed that Smartphones change user’s lives. Initially thinking they are getting a new phone, with email and web capabilities, they find iPhone gives them so much more.

It helps them communicate. It makes them more connected because of its web capabilities. But going even further, the real benefits are about being more entertained, more efficient in what they do, having more freedom because they are not stuck to a computer, and having more ability do things away from home and work. It’s a whole new world where users can do things anywhere, anytime.

Smartphone users also admit to relying less on their computer now they have a mobile device. With predictions that by 2011, 85% of handsets will have some sort of browser, it’s important brands recognise the opportunity mobile devices gives them in terms of another distribution channel to engage with their customers.

Furthermore, with over 100,000 apps available, many free, it’s important apps have lasting traction. They need to ‘do’ something and have a tangible impact on time or convenience to be worthwhile and valued by users.

It’s official, today Facebook reached its 500 million friend mark, and to celebrate the site has launched a page for users to share their Facebook Stories.

These stories are a testament to the influence of social media in the lives of everyday people. Themes range from love, friendship, and family to politics, sports and small business.

The language employed by these users depicts just how influential Facebook is. Littered throughout these stories are words such as connect, helped me, together, reach, closer – and, what I think is the most significant word Everyday.

It is the everyday-ness of Facebook that makes it extraordinary.

Social media has come a long way since the birth of Facebook in 2004. It is no longer the exclusive territory of tech-savvy kids, but a legitimate form of communication… and it has just become the daily habit of 500 million people.

There is some debate over the value of social media tools in qualitative research, particularly in regards to open communities for research purposes. Open communities are public social networking sites, such as Facebook, Twitter, MySpace etc, which provide a continuous stream of peer-to-peer conversation.

Although both open and private communities sit under the social media umbrella, they require different research approaches from a qualitative perspective. Understanding the benefits and limitations of each type of community is essential in research design, data collection and analysis.

Below I’ve outlined some key considerations for researchers…

Benefits of open communities

Organic conversations - As public communities do not have a formalised structure, the conversations that occur are completely natural – giving researchers an understanding of topics that are of genuine interest to the consumer.

A wider audience – 75% of Australians are members of social networking sites. Many of these people may never have participated in market research and probably never would.

Cost effective - With no community set up costs, listening to these conversations is essentially free.

Limitations of open communities

Lack of context – As open communities are available to the public, there is greater difficulty in determining whether conversations reflect your target audience.  There is no real way of telling who is ‘talking’ and whether they have a predetermined agenda.  The lack of context provided is another challenge in gaining relevant insight.

Time consuming – Conversations are spontaneous, unprompted and live 24 hours a day. Trawling through thousands of conversations can be relatively time ineffective, with no guarantee that people will be talking about your brand/product.

Restricted pre-determined research objectives – As mentioned above, the raw, spontaneous nature of conversations means that defining a specific set of research objectives is unrealistic, and potentially counterproductive in listening to open communities in the first place.

No methodology is without flaw, however a balanced understanding of each tool and its application will provide a wider scope for research. While open communities offer a platform for listening to organic conversation, they do not give researchers the ability to direct discussions for further probing. However, these types of communities may be a useful starting point, and, when coupled with additional tools, can provide the researcher with a deeper understanding of the consumer.