Can anyone take on the might of the App Store?
Extract from MONTHLY DIGEST July 2009
The challenge facing Palm with its Palm Catalog and Nokia with its Ovi Store is like all things in telecoms, a numbers game.
The benchmark for both digital retailers is of course, Apple's very own App Store. If you look at the stats for the App Store it's an awesome task ahead to beat over one billion application downloads in a nine-month timeframe.
The key to Apple's download success is often attributed to things like customer delight around the user experience, the amount of applications choice available to the consumer but no one seems to go near the bigger factor: the amount of advertising spend on the App Store and at what time the ATL communications kicked in.
Apple spent $486 million on advertising in 2008 - around 10 percent of its SG&A (selling, general and administrative) expenses. At the same time, let's not undervalue the consumer pulling power that 55,000+ applications allows you or indeed the Wall-Street-heartening news that in order to hoover up all of those apps it would cost you around $145,000, an average of two bucks and 60 cents. Now, in English, £88,500, an average of £1.60 per widget. Now, in Euros, EUR 100,00, an average of EUR 1.80 per digital gizzmo.
Although this is not necessarily comparing apples with apples it shows the commitment needed as a global brand to play on the world stage. One look at the chart below displays clearly how tough the App Store is likely to be.
Source: Mediacells Limited 2004 - 2009 All Rights Reserved
From this perspective the Palm Catalog not only has a mountain to climb but a mountain path that is riddled with ravines, fiercesome lions, headless horsemen, escaped sociopathic serial killers et al. To extend the analogy, Nokia looks like a storm cloud, ominously hovering over the Apple mountain, ready to rain on everybody's parade. Nokia has just about beaten Apple's 2008 annual advertising spend with its statement of intent to market the Nokia N97, which is reported, in Media Week (18-Jun-09), as worth £300 million global media spend.
Global agency Carat won the Nokia N97 account from Mediacom after a three-month pitch process and it will be interesting to observe how the marketing communications unravel.
The UK media account will be activated from September under Carat's auspices so all eyes on the agency in the Autumn.
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