The sheer volume of applications available in the mobile space guarantees that most of them will fail. Before brands dip their toe in the water of branded apps, they have an important question to ask. Do free apps make sense?

That question was a big topic of discussion at the Digiday:APPS conference in New York on Wednesday. Emcee Chris Cunningham of Appsavvy declared that within the next year we will see "Darwinism of the app space” as hordes of applications die off from lack of use. 

A major factor that contributes to the sucess or failure of apps has to do with price. Charging for access has the potential to thwart downloads, while free apps have become major loss leaders. Unless mass downloading occurs, a free mobile app doesn't serve much purpose. What's a brand to do?

Jason Richman, director of digital product strategy at NBC Universal is a big proponent of the free model: "At a time where there is effectively zero variable cost, you really want to go after as many eyeballs as possible."

But few apps have the kind of mass adoption where it pays for them to be free. Mobile analytics firm Pinch Media tracks one in four downloads in the iPhone's App Store and found that only a few applications are used very intensely for long periods of time. Less than 5%, to be precise.

"If you can say your app will be used every day, it will make sense to give it away to free," says Greg Yeardley, founder of Pinch. "But because applications are going through constant churn, it is very difficult to make money out of advertising unless you have high volume and high usage."

That creates a difficult dilemma for brands, since users are seldom willing to pay for promotional services.

Matthew Snyder, director of brand partnerships at Zumobi says that paid apps have a much higher barrier for adoption: “It’s got to have meaningful content and some real functionality. Something there that people will be attracted to pay for it and keep it on their device and continue to pay for it."

As always, brands have to think about who they're trying to reach with mobile applications. According to Alan Chapell, president of Chapell and Associates: “When you talk about free, you need to have a lot of eyeballs or the right kind of eyeballs.”

"If it’s going to be free, there is both a risk and an opportunity," says Snyder. "We try to focus on offering free apps that people will keep on their device month after month and we can monetize with our providers."

Making useful apps that can't be found elsewhere is the best way to find success in the space, even if the user base isn't massive.

"An application is not an ad campaign and you should not confuse the two. An application has to be functional, and add value to the consumer. Games are not particularly well suited for driving branded applications. In terms of driving people to deeper interaction with your brand, go for providing something functional instead of providing a huge eyeball explosion."

So what can brands add to the mobile space when so many applications are already flooding the zone? Piggybacking on social media can be a huge help, because it brings life to an app outside of the mobile space.

“When you’re thinking about building an application, if you’re building social networking usage into it," says Yardley. "It makes you a very good candidate for free. It changes things.”

Meghan Keane

Published 12 August, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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