iPhone Apps Represent New Window Of Opportunity For Retail Marketers

By John Gaffney

After all the same store sales plunges, consumer spending pullbacks, profit nosedives and pricing collapses, one of the few the most positive image of 2008 can be found in a swirling picture of snow set against an iPhone screen and a big red bullseye. With Target, Amazon, and The Gap leading the way, the past two weeks has definitely put mobile applications on the retail agenda to stay.

“It’s a very similar market to ten years ago when retailers started flocking to online advertising,” says Chris Negron, sales executive for online music service Pandora. “Now everyone wants to be mobile. I would say 50 percent of our online clients are looking to develop a mobile application and a good number of those are retailers.”

The importance of this initial flurry is twofold. First, it has taken mobile phone applications and advertising from the planning stage to reality in a short period of time. Second, it has established the platform as a legitimate touch point for retail consumers. Pandora has been officially listed by Apple as one of the top ten applications (out of 10,000) in the iTunes app store. It was one of the first applications developed for the device, and its service carries mobile on-screen ads.

Negron is not at liberty to discuss the retailers initially involved in his service, but he says there are major companies other than Target, Gap and Amazon. He has seen the retail interest level developing into the more substantial breakouts from the three retailers who bowed proprietary applications over the past two weeks. Here’s what the three are aiming at with their applications:
• Target: Developed by San Francisco-based AKQA, the Target app makes use of the “accelerometer.” Shake the iPhone and the gravity and vibration cause the screen to change. While other accelerometer applications are used to simulate beer chugging,in Target’s case it is a snow globe that settles around a product and then the logo. “Good mobile phone applications are good branding applications,” says Kevin Barenblat, CEO of Context Optional, which has developed iPhone applications for several brands. “That’s what Target does.”

• Amazon: Barenblat says Amazon’s entry defines the utility that must be associated with the brand magic for mobile apps. Amazon’s application offers access to other retailers, such as Target and Macy's, but its features, which include "one-click" shopping, are focused on Amazon. It also includes Amazon Remembers, an experimental feature that uses the iPhone's camera to help create visual lists of products you want. Take a photo, and the iPhone app uploads the image to Amazon.com; the service then tries to match products in the same category.

• Gap: Barenblat also urges retailers to make sure their mobile apps are viral. The Gap fills this requirement. Its first mobile app features music videos with Christmas carols being sung by popular artists. The videos can be sent to friends via email. Another allows users to mix and match clothing on male or female models, and then tap to buy the items.

The most important “to do” for retailers planning mobile app development is long-term planning. Negron counsels retailers that are either planning ad campaigns on apps like Pandora or developing proprietary solutions to think beyond the initial buzz. The iPhone for example, started with just 300 apps in June. By the fourth quarter of next year it could easily have 20,000 different applications ranging from the novelties like beer chugging to serious retail e-commerce channels.

“Think through the series of apps as you would a media plan,” he says. “They are changeable and they will all need to have their own promotion plan to achieve scale. Different applications will fit different times of the year.”

Most analysts believe e-commerce applications will be the rule rather than the exception for cross-channel retailing by spring. “Think beyond the first iteration,” Barenblat says. “And don’t settle for cool factor alone. Think in terms of ROI.”