The Application Economy

Over at Forrester's Groundswell blog, Josh Bernoff recently wrote this in the context of social applications doing well in a recession:

"I say social applications and not social media for a reason. People will want to boost word of mouth in a recession. This is great news if you're selling community apps to companies. It's also good news for Facebook community applications and groups. You're a company and you want to charge up your citizen marketers about your product -- you can build your own application or climb on board an existing network and work within it."

I think he's right.  But I want to take a step back even further—I don't think it's just about social applications doing well in a recession as much as it is that useful online applications (not just social) could really be the biggest threat to both traditional advertising and what I like to call traditional digital advertising.  I owe this post to my wife, who's online behavior inspired it.  As a stay at home mom and "middle of the road" internet user, here's how she typically spends a day online:

Morning:
Check e-mail on Hotmail
Searches on Google
Spend time responding to and e-mailing friends + family
Checks out links from friends (recommendations)
Browses real estate sites (it's a hobby)

Afternoon
Checks e-mail
Searches on Google
Watches a video on YouTube
Browses Ebay
Browses travel deals on Expedia
Books flights for parents on Southwest
Browses Craigslist

Late Afternoon
Plays with kids on Webkinz, Noggin etc.
Checks e-mail
Searches on Google
Browses real-estate sites

Evening
Checks e-mail
Browses Ebay/Checks status
Watches TV on DVR

It's The Application Economy, Stupid.
My wife never clicks on an Ad banner.  She gets annoyed by talking people who pop up on her screen and she only watches shows on our DVR and skips commercials.  While she doesn't use Facebook, Flickr, Twitter, Myspace or other social applications—she does spend the majority of her time on sites, or "web applications".  For advertisers, the enemy isn't social media as much as it is that she chooses to spend her time on applications she finds useful.  Everything else is noise.  Everything else is something to be ignored.

The biggest threat to advertising is useful.  It's that simple.  Useful is a time and attention grabber.  It takes away from most forms of marketing.  Useful as Webkinz shows us can also entertain—but to my wife, it's useful because it's quality time spent with the boys. 

It's truly the application economy.  Social applications included—but as my wife's scenario indicates, it's the application part that really matters as many internet users are still not active participants in social media.  So marketers are indeed faced with a challenge.  Continue to cram Ads (noise) into multiple digital platforms (phones, web, GPS—anything with a screen)—or they can try to figure out how to be useful.   Right now—the marketing industry is at war with the people who create useful experiences.  These experiences "distract" us—more accurately, they reward us.  The application economy is as "un-sexy" as it sounds—and that's exactly why advertising needs to take it seriously.

Comments

[Tim Brunelle]

David,

Spot on. And how ironic. We were just discussing "Useful Advertising" or "Utility Advertising" in our Future of Advertising course at MCAD yesterday. And what a struggle--it's not about your brand message anymore, it's about what you can provide or enable (or not provide, not enable...as Rory Sutherland, Ogilvy UK, points out, "It's perfectly acceptable for a brand to shut up.").

Consider Forrester's latest piece on the need for ad agencies to evolve. This is exactly the case in point.

The Application Economy: "It's not what you say, it's what you enable."

Rock on.

Tim

[Mac Randall]

Great post David. I think the question "is it useful" should the first question asked about any new marketing idea.

[joe szabo]

Useful messages are one thing, but useful applications are what propel brands to the consideration set.

As more consumers turn into "prosumers", simple messages are not enough. We demand more. And any agency - digital, tridigital, or plain old traditional - that can sell a useful application to their client will do well.

Brands like Hotmail, Google and flickr are the ones that started it; they provided us with the value we look for when hopping online. We love utility more than we think. Problem is most agencies don't find utility sexy. Flash, now that's sexy.

Maybe this recession will help after all. About time.

[Tim Walker]

Good stuff here, sir. I expect that the phenomena you describe will drive the better agencies and advertisers to change their thinking in fundamental ways. It's going to be hard, because so many of them have had so much success doing it the old way.

[Charlie Gower]

Service service service. Advertisers will get there eventually.

[David Sanchez]

NOISE Overhype amplifies the proliferation and fragmentation of useless web applications. It massive mess out there not hundreds, but thousands of developers and Venture Capital been invested in just noise. Mostly looking to find the next g-toper., the funny thing that trendy Weekend Camps and other venues trigger more useless noise. There is nothing wrong with useless noise, is actually an “accelerated innovation lab”. The noise into the platforms is going to get even much worse over time; totally inhabitable, obviously only the winners are those executing well plan business models. Is just matter of wait and see who plays the best sonata that will call out unique brands.

[Joe Connolly]

The product/service must be useful, the message must be useful and the medium that delivers the message must be useful.
Traditional advertising was just taking the meat, now it has to use everything right down to the bones
great post David

[Gavin Heaton]

Got to agree ... the time for interruption is over. But it is also like Tangerine Toad said at the Daily Fix (http://www.mpdailyfix.com/2008/02/branded_at_birth.html) -- just as kids are defined by the brands that they engage with, we too are branded by the applications that we use.

My mum doesn't know what Internet Explorer is, but she uses web browser . She doesn't know how to search for a website, but she can Google it. These are the building blocks of her engagement with the Internet.

But notice how the names become verbs? It is not about the brand for her -- but its utility. The results. Those brands that become "everyday words" are the ones that have achieved something great -- they have become part of the way in which we think and act (which is why I could never understand Google resisting).

[Bryan Fuhr]

After reading this, I got to thinking about the word "application." So I looked it up in the dictionary.

It turns out an application is "a form used in making a request." The word that struck: "request."

Isn't that what brand advertisers have been dying for the consumer to do for the last 50 years?

[ed]

David,

Just wanted to add an experience that supports your comments. I am in agreement with this concept. As a matter of fact, Seven years ago I build one of the larger consulting firms in my industry in a matter of two years by developing an application for small businesses to assist them with their advertising and marketing efforts. We gave this away through every distribution channel we could (media reps, printers, cpa firms, business shows, direct marketing, everything). the application was free and open to anyone. Over 2 years we were able to build a database of 3.6 million small business users, who used this application frequently. It became our main method of communication with our marketplace. I have since retired my position from that organization and after a few years of lounging around my new company is in process of building a new application that is more broad and powerful. Hopefully with the same or bigger results. Thanks for the post. I have emailed it to our client base.

[phil gillman]

I would extend it beyond useful to "Value". Sites, content, applications can have value in a variety of ways. They can be useful, they can entertain, they can educate, but if they don't have some sort of value to someone (or rather to lots of someones) they won't last.
This to me is where the application economy is beating the interruption economy. The only screwy part is that much of the application economy is still being paid for by the interruption economy aka advertising. I think that the brands that figure out how to go from being the interruption to being the application/value will have it made. As companies start realizing that they can produce valuable experiences extend their "old line" businesses and are not interruptive, the interruptive agencies will be in big trouble.

[Adam]

Product, product, product!

It's the only thing a brand has a competitive advantage in. Surely that's obvious.

The only two things a brand can do to make an 'application' - THE ONLY TWO THINGS - are: make a service around the 'authentic' data it already holds on each customer: Egg (Online Bank) AND/OR create and help to display 'authentic' data about how a customer uses a product: Nike+ (Networked Running Shoe)

No 'authentic' data, no 'useful' service. Simple. Think iTunes/iPod. Anything else is just an ad no matter what new language you give it.

They'll be a million and one candy apps made to display social trends, stories, games and entertainments. That's the domain of culture. Again, anything else is an ad.

>Hotmail, Google and flickr

... are products! Call them applications if you must, but really applications are just 'products' you use on some kind of computer. And while we're at in, Services are products you interact with through some kind of secondary product: paper, phone, pixels, people, etc.

We are in a products-that-service-needs economy. Let's get the basics right.

Product. There's no avoiding it. And there's nothing more 'useful' than a product.

Product. The thing that ALL designers and planners are avoiding is that they need to get 'into' the product. To embed new experiences into the product. To network it and thus extract data to make new product from the old product. The first-order touch point is the... You guessed it! Product.

Extend the product.
Extend the product using data.
Extend the product using networks.
Extend the product using experiences.
Extend the product with yet more products.

Product. def: the result of multiplying

Product. Are we getting it yet? Geez! :P

(Still love ya, D.)

[Martha Mihaly]

This is an excellent post. Thank you.

I couldn't agree more. The noise within applications is already a huge problem. As I have mentioned in past posts of mine, I think that the ad agencies have grossly underestimated how and why women use the internet. It is a tool, it is a means to an end. Like your wife, I spend time USING the applications, not clicking the banner ads, ever.

It will be intersting to watch how ad agencies make the transition from traditional print model 'see and learn' advertizing, to web based 'useful and helpful'.