The ads are inescapable. They stare at you from hoardings at busy intersections, bellow at you on live TV and cover the entire front page of major newspapers. Approximately Rs. 3500 Cr worth of traditional media advertising is bought annually by internet companies, typically peddling their smartphone apps.
It’s fantastic for the media companies, of course – at a time when the traditional consumer sectors are not growing fast enough. But it is more than a little counter-intuitive. Why would internet companies, whose entire potential user base resides online, have to resort to newspapers to sell their wares? It is tremendously wasteful, and one of the major reasons why internet companies have had to raise massive amounts of venture capital in recent years. There are 300 million newspaper readers in India, only 35 million of whom are internet shoppers. So statistically the internet companies may be wasting 90% of their advertising budgets, and they don’t even know which 90%.
At the core of this conundrum lies the issue of app discovery. It’s a mouthful, but is perhaps the biggest challenge faced by consumer internet companies this decade. The question of how users discover new internet companies was supposed to be settled. From the late 90s till around 2011, you searched on Google for what you wanted, and the search engine would throw up relevant results and a few advertisements. While companies have tried to “game” Google’s search rankings for years, the system works very well overall – the user finds what she wants, and the company acquires a customer who is already looking for services they offer. If you don’t feature high enough in the rankings, Google offers its Adwords platform so you can bid on advertising space next to the main search results. Either way, the marketplace was pretty efficient, with advertising cost being close to the value of each user. This is how the startups of the last decade – Makemytrip, Flipkart, Snapdeal etc. – got their initial user bases.
Everything changed with the move from desktops to smartphones. Of course the user base in India expanded massively – from around 20 million in 2007 to around 350 million today – largely driven by these magical, inexpensive computers we carry in our pockets. Not only did more people have access to the internet, they found it much easier to use too. Thanks to the advent of mobile apps, developers could offer a dramatically simplified user experience that users loved. Just consider the difference between the IRCTC website and their vastly superior mobile app (which you should totally use if you haven’t yet) – which you can largely credit to the magic of Android and iOS app platforms.
There was only one problem. There is no Google for mobile apps. Sure you can search on the play store, but it doesn’t work with the same efficiency as Google.com does. Even if the search algorithm improves (and it will), there is a fundamental problem in the app world – you have to download apps to try them out. Unlike in the web-world, you can’t quickly click on a link to figure out if it’s right for you. And turns out for a variety of reasons – bandwidth, data limits, limited space on the phone, and a plain bad install experience – users don’t like installing apps they aren’t sure about.
So what can an app developer do? Well you can try to get into the top-20 list on the app store – apps in that list are seen by millions of users every day. But that is a self-reinforcing list: you get on that list by being popular, and become even more popular by being on the list. So the large, global apps that make it to the list tend to stay there, making it next to impossible for new apps to gain entry. You can employ a social media agency that uses Facebook to advertise your app to a relevant user base. But that turns out to be very expensive, because a user searching for a “3BHK in Bandra” on Google is vastly more likely to click on your ad for a housing app than a random selection of 35-to-40-year olds on Facebook. You can partner with mobile operators and handset manufacturers to preferentially offer your apps to their user bases, but that dice is so loaded in favour of the financially powerful it needed the entire #SaveTheInternet campaign to prevent it from happening.
What does the future of app discovery look like? Are we doomed to suffer endless TV ads showing people flicking through their phones, or will better alternatives emerge? Imagine if you had a single app you could use to invoke any app that you liked – a “super app” if you will. No more messy downloads and cluttered home screens.
Well you already have that app on your phone – it’s called the browser. Of course people don’t like to use the browser on their phones – one user I spoke to recently didn’t even know you could open a website on your phone. But it is nonetheless a very powerful tool. The browser wars are hot again with the launch of Microsoft’s Edge, and you can expect major strides in browser technology in the next few years. Chances are you will soon be able to invoke any app from within the browser, without the need to “download” it. Rich, customized apps that use the native capabilities of your phone like the GPS and camera will just work out of the box by tapping within the browser. Google, Apple and the like will need to grapple with security issues in that world, but those don’t sound insurmountable. If that happens, the internet will be “open” again, which will surely lead to the next wave of innovation on the internet.
Another model for the future of apps can be seen in China, where too you use a single app to invoke many more apps, except it’s not a browser but a chat platform called Wechat. The Chinese use chat to order a variety of services, from booking a taxi to ordering food. It is certainly possible that human-assisted or automated chat platforms take root in India too and further simplify the app experience for Indian users. Particularly for services we use infrequently, it may be easier to push a request out on chat than download an app, create an account and learn a completely new UI. India has the added advantage of having a plentiful pool of potential chat agents who help the system get better by providing manual oversight. A number of smart young startups are betting on this chat-based app universe.
In the messy world of the internet, it is hard to say which model will prevail, or even if one model will indeed dominate the others. Maybe with improved hardware and bandwidth, downloading apps will no longer be a problem in the first place. Maybe we will see the resurgence of the browser and the open web. Maybe the future will be powered by thousands of human chat agents helping a machine solve your problems over chat. Maybe in a few years we will all be using wearable computers and marvel at the time touchscreen phones were a thing. Most likely it will be some combination of all these, plus a few new models startup founders are dreaming up as we speak.
But one thing is for certain. Five years from now a young internet executive will not be sitting with their ad agency rep, wondering whether hoardings work better or newspaper ads. Amen to that.
About the author:
Ritesh Banglani is a active venture investor in India. Lead investments in Consumer Internet, Healthcare and Media sectors at Helion. Always interested in connecting with Entrepreneurs.