Araceli Carmargo-Kilpatrick

Nathalie Nahai

The  areas chosen for discussion were:

• Putting an idea into social media
• Connecting with disenfranchised audiences
• Measuring success and value
• Personal v’s professional profiles

Putting an idea in social media

• Be reactive rather than proactive – it’s a conversation , respond to feedback
• Intellectual property (IP) of sharing ideas – get over it.  100% of nothing is nothing, but putting an idea out there will gather a tribe and encourage collaboration
• Also (re: IP) putting an idea out there helps to create an association with you
• Gets community open to sharing and contributing ideas
• Open source – using momentum at early stages to get people excited about contributing
• Ask your audiences what they want- using service design model
• Be clear about what action is needed:
  • Put this into an online environment
  • Form networks
  • It’s rare that ideas happen overnight
    • Take every opportunity to engage
    • Provides opportunity to research
    • Demonstrate and encourage passion

Connecting with disenfranchised audiences
(Using example of 45-year old plus women in theatre)

• Use Facebook to talk to people and learn and create a sense of community
• Tailor it specifically to audience – show understanding and respond
• Specific idea of putting women in touch with other women to go to theatre “Theatre Buddy”
• Provide a platform for community to talk to each other / create a channel which meets a need

Measuring success and value

• Create your own value and objectives, and measure your own success
• Twitter helps to cut down on time, sharing and receiving information
• Twitter helps to raise profile – engage with a wider audience and more quickly
• Important to maintain authenticity and personality
• People work with people, not a product/brand
• Don’t look at numbers and think of the long-term
• Use social media (e.g. blogging) as a creative catalyst and keep doing it anyway

Personal v’s professional profiles (on FB, Twitter, LinkedIn) and whether you need to separate the two

• No rules
• Social media = brand personality.  There is a tension between needing to control the brand and expressing personality
  • Create parallel streams for different audiences
  • Don’t dilute messages
  • Never underestimate the power of showing personality
  • Use the 80/20 or 90/10 rule in terms of useful/non-useful(tweeting about breakfast!)
  • Use it to put ideas out and learn more about the environment (e.g. using Google Analytics to monitor)
  • Strategy – analyse the market and use tools to automate. E.g. posting blog posts to Twitter, Twitter to FB.  Any automatic RT’s
  • For every argument about how to use social media, there’s a counter argument!

The App store – over a billion downloads, more than 200,000 apps and lots of PR and profit for Apple. But is there any profit in it for anyone else?

Certainly there are some high profile cases of apps that have and are making their developers a load of money. But how about the standard developer or company that spends £20k on an app? Are they able to get a slice of the pie? Can they make any money? Or is it just luck and the whim of Apple and their ‘What’s Hot’ choices that do it? I guess the question we are asking is:

Is it possible for a good quality cheap app to make a profit?
We can start by qualifying the word cheap. In the App Store everything is cheap when compared with other markets for software ( or any other market for that matter). The average price for an app is around 59 pence. Generally apps are priced between 59 pence and £5.99 with some specialist apps priced much much higher. So generally everything on the App Store is cheap i.e. the price of the product is not an indication of its quality and/or the cost of development. It is an indication of a value frame that has been created by Apple when it set up the App Store which seems to have its roots in the cost of a song on iTunes (99 cents). In this sense developers have walked into a rigged market, Apps marketed  and enjoyed like candy, cheap suck it and see bits of software which generally have no more value than the length of a visit to the toilet. The original App Store, launched by Apple in 2008, was aimed at attracting as many downloads as possible in a very short time in order to create a massive positive PR storm and help launch the iphone as a game changer in the mobile phone market. And of course, it worked. The customers were enthused and anyone who was everyone produced an app, and the press went wild.

Now for the reality check.
The average earnings of an app on the App Store are estimated at £2000. Only 10% of the Apps sell more than 100,000 and 56% sell less 10,000. If the average cost of a decent app is £20k, and the average price is 59 pence, how many sales are needed to break even? (read more about the Economics of iPhone apps in Tomi T Ahonen’s bloghttp://communities-dominate.blogs.com/brands/2010/06/full-analysis-of-iphone-economics-its-bad-news-and-then-it-gets-worse.html)

£0.59 x 70% (30% goes to Apple) = 41 pence
£20,000 / £0.41 = 48, 780 sales for break even.

However, these figures do not include any kind of marketing budget which you will need in order to generate those sales. Yes, you might get lucky and catch a wind, or Apple might pick you out, but here we are talking about the business case for creating an app. Let’s put £10k in (some PPC, a You Tube Video, some PR, a small amount of offline advertising etc) for marketing meaning the App costs £30k which means we need to sell  73,170 apps to break even. What we can conclude from these figures is that even for a modest outlay of £30k in order to make any amount of profit the app has to be in or close to the top 10% and sell over 100,000. Profit from 100,000 sales is only £11k, and that is gross profit. It seems impossible that this could continue. A lot of commentators are saying just that, advising businesses to look at the  more profitable Mobile Web market instead. (Read more about the Economics of iPhone apps in Tomi T Ahonen’s blog http://communities-dominate.blogs.com/brands/2010/06/full-analysis-of-iphone-economics-its-bad-news-and-then-it-gets-worse.html.)

So what’s going on?
How can a market sustain itself if the general majority of producers are making a loss? One could argue that app market is international and the iphone uptake is growing everyday and therefore there are massive opportunities to quadruple those kind of sales figures – – just look at Angry Birds and Bejewelled. And then there is the Android market fast catching up. Well, yes and no. Angry Birds, and before it Bejewelled, are massive winners, but they and a few like them are one offs up there through a mixture of a great app, Apple’s endorsement and a fortuitous knack of catching a buzz. But a few winners cannot keep the App market going on their own, and the more apps that are uploaded to the App Store the less likely it is that most of them will make any money due to the numbers and lack of distribution channels available. In fact, there is only one distribution channel and that is the App Store. The App Store, in its current form,  is like having only one Tesco in the whole of London in which you can sell your product, and it isn’t one of those big open stores, it is small corner shop with a few items displayed in the front and a massive warehouse attached behind it. For your customers to find you if you are not displayed in the front they need to either know that you exist (through other channels), or they can aimlessly search through the 200,000 page catalogue. If you’re lucky they may by chance find you. It is not hard to foresee the App Store turning into a horror shop of bad coding, terrible design and useless apps because the companies who want to make a major investment in great intuitive genre pushing apps go elsewhere due to the impossibility of making a return.
How can the App be saved from itself? How can it secure it’s position as a credible alternative to the unboundaried Web? How can the future of the App Store as a vibrant and innovative software developer’s channel to market be secured?

We think it is pretty simple.
The answer is to charge a real price for the apps based on the quality, functionality and design of the app. And redesign the App Store to be more like the Amazon website and open it up to the user community so they can create more of the reviews, lists, and help identify and source the quality.

The Apple App Store is a strange beast.
The more time and effort  spent on it looking for particular solutions to problems in app form, the more frustrating and useless the App Store seems. The reasons for this are the subject of another blog post, but it is enough to say that as the number of apps grows the whole design of the store needs to be rethought.

Something has gone wrong with our value judgements.
Pricing an app that costs £20k at 59 pence with estimated total sales of less than 50,000 is not a loss leader, it is a loss follower. It is not sustainable and is bad business. The pricing of apps need to take into account that the app is only bought once, for life, and updates are expected.

Pricing Example 1 : Guardian App
A very good example of erroneous pricing is the Guardian App. Sold at £2.39 it just about replaces the need to buy the newspaper in the morning (and is much easier to read on the tube). It is a life long app and in itself generates no other revenues for the Guardian (it carries no advertisements) except brand value. It is a very well designed app with a substantial amount of money and time invested in it. How was the price calculated? Figures are a bit sketchy but by February of 2010 they had passed the 100,000 downloads mark. We can probably safely guess that has doubled since then. So on 200,000 downloads the Guardian would have turned over around £500,000 minus the cost of development, maintenance and marketing. Let’s estimate £100,000 leaving a nice gross profit of £400,000. Not bad, until you realise that this a one off. Just a little more thought and it is obvious to anyone that such an app, which after all will have some negative effect on newspaper sales, should be either an annual subscription or 3 times the price if it is a one off payment.

Pricing Example 2 : Things
An example of how to price is Things, the to do list. There are a large amount of free and 59 pence to do list apps, all pretty much doing the same thing. Things however sell their ipad app at £11.99, the iphone app at £5,99 and interestingly the Mac version at £44.95 (something odd about the fact that the ipad version is one quarter of the Mac version – a behavioural economics nudge perhaps?). How come they feel they can charge so much more than the competition? The answer is the usual one. Design. Things have put a lot of effort into the look & feel of their products and because of this they believe in the value of their products to their end users. And therefore because they believe their products are worth more than a packet of chewing gum, their customers believe that too. And they value the app.

What are we saying exactly?
We are saying  – don’t put your app in the bargain bucket by pricing it at 59 pence or even 99 pence, unless it is aimed at that market. Charge what the app is worth – and never charge less than £5 because if you do you devalue your app and create an expectation in the customer that apps of that quality are worth very little (note: the higher your price the more imperative it is you offer a lite/free version in order to allow customers to try before they buy – don’t expect them just to trust you). Instead of concentrating on what competitors are charging, concentrate on developing great quality experiences on the iphone and ipad that a customer wants to return to again and again, apps that create value and change.

Just to put some figures on this idea.
If it costs £30k to produce and market an app, and we charge £9.99 for it (instead of 59 pence) the break even point is 4,291 sales.
£9.99 x 70% = £6.99
£30,000 / £6.99 = 4,291 sales for break even.
That seems achievable for an app that solves a problem in an innovative and beautiful way with the added benefit of valuing the work, effort and creativity put into the development.

You get what you ask for.
Generally, and this is borne out by quite a few behavioural economics studies, you get what you ask for. If you ask for 59 pence, that is the value that will be assigned to your work. Therefore, the quality and value of future apps is dependent on customers’ altering their perception of the costs and value of a good app. And this perception will only change if App developers’ start valuing their work more by charging real prices, and letting the rest fight it out in the bargain buckets.

It is easy to dismiss the things we don’t understand

It is easy to dismiss the things we don’t understand as irrelevant and of no use to us. Take Twiiter – it’s just a load of pointless chatter about nothing. Or Facebook – just a load of needy people collecting online friends because they have none offline. Or YouTube – a load of silly banal videos. Or blogging – wannabe journalists and writers writing their diaries online for all to see in a pathetic attempt to get someone interested in their little lives.

Although some of that is true of all of the social media platforms in part, these criticisms are very blinkered, and defensive. In fact, Twitter is an amazing platform for businesses to network, build real connections with customers, push innnovation and be ahead of the market. And Facebook is a great touch point where customers can easily interact with brands on their terms,  YouTube is the second largest search engine in the world, and blogging is a great way of creating relevant sticky content, becoming experts in a field and increase SEO ranking.

But most importantly of all, the decision to ‘do’ or not to ‘do’ Social Media today is not about what will happen in the next 3 months, or next year. It is about what will be happening in 5 years time.

Ask yourself

1. Where will Digital will be in 5 years time?

2. Where will your company will be in relationship to that?

3. Where will your customers be in relation to Digital and Social Media? Will it be part of their lives?

The answer which should come into your mind all flashing and big is: How can I afford not to  get into Social Media?

How can I afford not to get into Social Media?

Below, for those who like a good list, we give you a list of reasons (eleven) why you cannot afford not to get into Social Media:

1. It is a logical extension of business networking allowing your employees and your business to learn, express, share and interact

2. Gives your brand narrative

3. Creates sticky content and therefore reasons for your customers to return to your site

4. Is a critically important touch point (and the easiest and fastest)

5. Creates brand ambassadors

6. Drives innovation in your business

7. Improves staff morale and internal brand value

8. Adds dynamism to static brands

9. Is the best feedback loop ever invented

10. Is now expected by your customers

11. Your future customers are growing up with it

In this manic early-decade confusion I propose that a new type of Agency is emerging – the Creative Tech Agency – which is digitally creative, innovative, agile and hungry. I also propose that the traditional Advertising Agency is soon to become a symbol of what we will very quickly look back on as the bloated past of pre-digital communication channels. The future is small, specialized and digital.

The Hole in Most Digital

There’s something wrong with a lot of digital. It seems off-centre, incongruent, lacking in fluency. Much of it seems to miss the point. But what is the point of digital? The point is that digital is a channel in it’s own right. It is no longer an after-thought, it is the key to almost all marketing campaigns because we don’t just visit online, we all live online now. Therefore all digital products and services are brand experiences now. Digital is no longer just functionality, it is an all encompassing touch point which must match and enhance the non-digital version. This is the potential of digital, but it is obvious that so many Agencies (Advertising/PR/Marketing/’Digital’/Marketing) have failed to grasp this. Proof of this is easy to find in all the high profile but barely designed or unresolved websites with a total lack of offline-online brand continuity, lack any thought for the user experience or interaction. But it isn’t just websites, it is apparent in badly executed mobile apps, unusable back-end systems, incomprehensible software interfaces and quick ROI social media campaigns. It seems everyone and anyone has jumped into digital without much thought or experience of how to do it. But how and why is digital creative so different from non-digital creative? Why is it that some of the best offline agencies have found it so difficult to do digital?

Linear and Non-Linear Thinking in Digital

There is a type of thinking that I am going to call Linear Thinking and another type I am going to call Non-Linear. They could also be called Logical and Intuitive, or Left hemisphere and Right hemisphere. Or even simply Thinking and Feeling. What ever you want to call them the difference between them is well known – one follows a pre-ordained linear ‘appropriately logical’ path and is based on cognition, the other jumps about laterally on a non-linear path and is based on emotion and feeling. Both are needed in non-digital and digital creative work, but there is a crucial difference between them – in digital non-linear thinking must be in a much tighter relationship to linear thinking than is the case in non-digital. This is because digital is experiential and must be based on user interaction underpinned by interfaces underpinned by digital technology. In non-digital this is less of the case – creatives go off and come up with their ideas and pass their ideas ‘over the wall’ for the non-creatives to implement. And here is the key to why some Advertising Agencies turned Digital Agencies have such a hole in their digital – they pass their creative ‘over the wall’ to their Tech team without any involvement of an interaction designer, UX consultant or coder. Even worse, in a lot of agencies the Tech Team isn’t even part of the same company and the creative is biked over with instructions to just build it. It is obvious what this approach results in: unresolved, incongruent digital which provides no brand experience value and can actually damage brand perceptions. The other version, (in reverse), produces slightly better results – a Tech Agency builds the technology and then buys in the creative to be stuck on at the end  – and is the exact digital example of what designers complain about in product design, nicely summed up by the saying ‘putting the lipstick on a gorilla’. The digital produced is generally functional, robust but again lacks the necessary innovative and experiential elements needed to hold up the brand expectations of customers. Many of the uninspiring iphone and ipad apps currently available will have followed this kind of process, and when using one of these apps it is very clear what is missing – the user experience. The app works fine but it provides nothing other than the functionality. This is the case with a lot of digital knocked out by Advertising and PR agencies at the moment – it works fine but does nothing more. It adds nothing, creates nothing, dreams of nothing. So what is needed to create interactive emotional digital that competes and transcends the best offline creative work? Equal collaboration between Advertising Agencies and Tech Agencies is one possibility. Or better still, a new type of agency which incorporates great tech and great digital creative in parallel internal processing. This type of agency is beginning to emerge from the maelstrom – and I call it the Creative Tech Agency.

The Creative Tech Agency – creative, technical, collaborative, digitally hungry

A new breed of Agency, specific to digital, is emerging with all the necessary skills to deliver innovative and robust digital for their clients. These agencies are generally small, agile, digitally born and extremely collaborative. They begin from extreme tech and seamlessly, without friction, incorporate creative into that tech. These agencies approach digital with a binocular vision – they have one eye on the tech and one eye on the creative  – as they continually match creative ideas to creative tech solutions. The human being is the centre of everything via interaction design, user experience, behavioral economics, usability, digital branding, heuristics. Creative and Tech exist together, in a symbiotic embrace, one unable go very far with out the other. This is what I call digital creative  – a qualitative mixture of linear and non-linear thinking, the former led by technical constraints and digital innovation, the latter by human experience and brand. Generally because the Creative Tech Agency is born into digital, and has a solid tech background, it has the confidence and the understanding to produce work that engages and interacts with audiences and pushes past the limitations of traditional offline advertising in order to reinvent what advertising can do in the future via emerging online channels. Tech is the key driver for success in this  type of Agency as everything is built on top of new and bold technology. A Creative Agency that incorporates a Tech Agency will not deliver the same quality of creative digital because non-digital creative will lead with non-linear thinking first, and will therefore encounter all the problems traditional Advertising Agencies are encountering now when they try to buy in non-native Tech.

The Future – Guerilla Digital and Specialization

The future of advertising is already here. Advertising has no home, it most move with us where ever we go. From newspapers to magazines to radio to television. And now into digital. But digital is fragmented and comprises many new and yet to be invented micro-channels. It is easy to see why the traditional Communications Agencies are in disarray. You can almost hear the screams of incomprehension as smaller, hungrier, more agile ‘guerilla’ specialized digital agencies win more and more accounts from them. And as they turn their large bows into digital, they will keep turning and never find the steady course of digital they are so used to and so want because as they turn digital has already moved on, evolved and been reborn. Over-bloated and standardized, large traditional Agencies are set to become a reminder of what we are leaving behind as we enter a decade of fragmented-unified digitally led advertising, conceived and executed by Creative Tech Agencies. Let’s get ready to rumble.