27 Jul
deep-linking

Investing in Mobile

Working in mobile advertising technology, I am astounded at the pace of innovation in the space. Consumers are adopting new technology almost as fast as providers can release hardware and software updates. With mobile traffic accounting for over 30% of total web traffic and individual web properties seeing over 50% of traffic on mobile, roughly 20% of consumers’ time is spent absorbing mobile media while only 4% of advertising budgets are dedicated to the channel.

The disconnect is well documented, and many see this uneven distribution as an investment opportunity – I do, as well. However, investments are not justified simply based on the uneven distribution of future opportunity and current adoption, but by a much deeper understanding of the potential future of a vertical.

From the point of view of a mobile developer, publishers must focus on consumer engagement to ensure an apps continued success. There is a necessary balance between user monetization and user retention in order to maximize returns. Regardless of a publishers current ratio of user monetization versus user retention, it is typical for investors to focus on the user adoption of individual apps – total downloads, Monthly Active Users (MAUs), Daily Active Users (DAUs), etc.

Interestingly, larger applications who have successfully reached the tipping point of user adoption and secured screen real estate on users’ home screens are beginning to decouple their applications’ features and deploying standalone apps with single functions. Most notably, Facebook has its mainstay application, but has also kept Instagram separate, forced users to download a dedicated app to use its internal messaging feature, and released Paper (a reader app). Foursquare has also followed suit – just last week completing the decoupling of its check-in service from its location discovery feature.

Recent developments in deep linking have enabled mobile publishers to justify the development of standalone “feature” applications to optimize the user experience of each application’s functions, while still maintaining the consistency and fluidity of transitioning between apps. In addition, “the technology has allowed for developers to better segment users by behavior and provide more value by tailoring the experience to each segment” (Michael Griffiths).

Prior to deep linking technology, mobile apps existed in silos. Actions taken in-app were part of a walled garden – and no messages were able to be transmitted between applications. Links and data were not able to connect applications, nor able to transmit “user intent, ad performance, and other metrics that create the currency behind the desktop web” (Taylor Davidson). As a result, an understanding of applications relationship to one another was not able to be determined, and app search and discovery was limited if not non-existent outside of the controlled listing environment of both iOS and Android app stores.

Deep linking allows developers to not only point users to i) download, or ii) the home screen of another application, but to direct a user to a specific screen and/or action within another app; for example, instead of linking to the Yelp mobile web site, or to the front page of the Yelp app, one could link directly to a specific listing inside the Yelp app.

With publishers growing demands for a solution to tear down the walled gardens that represent their mobile applications, Apple has listened and built in a native solution – similar to deep linking – into iOS 8: Extensions. “And what they do is allow you to use apps within apps, without having to multitask your way back and forth” (Mark Wilson).

The primary difference between deep linking and Extensions boils down to the relationships formed between the applications involved. When deep linking, two applications – or a group of applications – remain as independent builds and still exist as dissociated listings in the app store. With Extensions, applications are able to be grouped together and downloaded as a single service – where a single package is downloaded and includes multiple applications, which individually resemble “plug-ins” within the master app: a.k.a. the Alpha App.

Alpha Apps, a new concept popularized in a recent Fast Company article by Mark Wilson, may be able to solve a few of the remaining hurdles which deep linking does not address. For instance, when a deep link is clicked from within an application directing the user to a specific spot within another mobile app that the user does not even have downloaded yet, what happens? The user is directed to the app store, where she is prompted to download the new app which is necessary to view the content which the deep link is pointing to. With Alpha Apps, a developer creates an enclosed environment where all necessary, and inter-linked applications, exist within the master app – a single download. In turn there are no dead-end links which result in the user being directed to download a new, necessary application.

As a result, the vast majority of the over 2.3m mobile apps available on both the iOS and Android app stores currently will become obsolete – think of them as single purpose apps, better off as extensions, built into sib menus of larger apps (you guessed it, Alpha Apps).

So, what does this mean for the future of mobile development? 

As Wilson predicts, Alpha Apps represent a chance for large, power plays to further solidify their market share on mobile by continuing to develop standalone apps which serve a singular purpose, but are housed under an umbrella application – an Alpha App – which enables seamless communication between the once walled gardens.

However, in my opinion, I see this as an opportunity for focused products solving an individual pain point for a consumer to partner and establish a single solution, to be used in tandem, to meet an end goal. For example, the current process for planning a trip may include the following apps: Yelp, Google Maps, TripAdvisor, Hipmunk, Expedia, etc. Any data gleamed from one app in the process must, right now, be manually recalled and used by the consumer in any other app to further her research and complete the purchase. If an Alpha App were formed, under a strategic partnership between the companies, the currently fragmented process would be simplified.

Consolidation through partnerships – not mergers & acquisitions. 

“Swiss Army knives don’t cut it on mobile. Packing in too many features creates apps that seem bloated and slow” (TechCrunch). Alpha Apps provide the user the best of both worlds – a solution that benefits all parties involved.

Interestingly though, the developers positioned to make this future opportunity a reality are the operating systems themselves: Apple & Google. While Google has enabled the communication between applications previously (Google Intents – even sharing data and functionality) the concept is relatively new for Apple.

While we wait for developers to adopt – or ignore – the functionality made available to them on iOS 8, I am left with an uncertainty of the future of mobile development and, in turn, monetization, which questions my continued investment in the space.

If a conglomerate of mobile app developers partnered on an Alpha App – an umbrella app to house their standalone applications – who owns the user? Who owns the data and user analytics? How are Software Development Kits (SDKs) deployed? Is monetization centralized under the Alpha App – or are each of the individual “plug-ins” able to control their own analytics, data collection, and mediation layer for ad placement?

Continuing with Davidson’s deep dive into the development of deep linking, Alpha Apps are yet “another example of how the mobile Internet experience has evolved very differently than the desktop Internet experience, in part driven by the success of mobile apps as the dominant mobile Internet experience.”

Given my uncertainties above, I am interested to see if solutions are developed to address the integration needs Alpha Apps present the mobile market. With the growth of SDK fatigue over the past 12 months, we have seen the rise of SDK Management Platforms to act as a single integration layer. If Alpha Apps are to be adopted, will the current solutions, mParticle and Segment.io, serve a dual purpose and not only provide a single point of integration for multiple partners, but also enable an Alpha App’s owner – or partners – to distribute its data and analytics to the respective partners involved?

While I see tremendous potential in the capabilities presented by Alpha Apps, for the foreseeable future I’d expect the number of applications available on app stores to grow, minimal, if any, consolidation of features by larger app publishers (e.g. Facebook), and an increased reliance on deep linking so native apps begin to closer resemble the desktop web.

I may not have a clear understanding of the future of mobile, but the uncertain direction of how the market will mature means there is still extensive room for growth. While uncertainty brings with it risk, the changing landscape will steer clear any risk adverse investors and mean greater return for those of us with a vision of the future, regardless of a clear direction on how to get there.