25 April 2009

iCandy: What iPhone Apps and Hershey Bars Have in Common

1-billion-appsRecession? What recession? Apple enjoyed a 15% surge in profits for the first quarter of this year and, more sensationally, just sold its one billionth iPhone App. That’s one billion in just nine months! That would be remarkable during boom times, but during the worst economy in 70 years?

Well, of course. It makes perfect sense. In fact, perhaps the recession is the reason it happened…

Prolific marketing writer Seth Godin attributes the success of iPhone apps to this being a “pick anything” era,  in which people are being forced to make choices, since doing nothing is not an option. That explanation is interesting but over-intellectualized, like trying to explain the subtext of a Michael Bay movie.

The more plausible reason is much simpler:

Apps are cheap treats. For about a buck, you can get a game that will delight you for hours and hours. And during rough times, cheap treats are what the people need. Just look at the candy industry, where chocolate sales are soaring right now. Hershey’s alone just reported a 20% profit increase.

Yes, for some companies, recessions = sweet times.

No question, consumers are cutting back on discretionary spending — but not all of it. The harsher the economy gets, the more we need ways to make ourselves happy. Cheap ways, of course. That vacation to Bermuda may now be out of the question, and the new Audi R8 is strictly a fantasy, but you know, that Almond Joy at the checkout counter is well within reach. And while I’m in a spending mood, I can play God on my iPod Touch for 99 cents. Bring it on!

These minor indulgences are exactly what many Americans need right now to get through the muck and mire.

So if you’re running a business and wondering how to get us consumers into your store, don’t undermine your brand by lowering your prices. Rather, entice us in with a whole new line of impulse-priced diversions — diversions that can literally be had for pocket change.

A lot of execs would say, that’s nice, but pocket change won’t save my business.

But the guys at Apple said, sure, the profit on each item might be minuscule, but let’s multiply that by, oh, a billion. More importantly, let’s use those cheap items to compel people to buy really profitable hardware. Trust us: they’ll legitimize a reason to splurge on an iPhone — just watch… And, hey, we gotta do all this RIGHT NOW when our competitors are weak and cowardly and cutting back on advertising. We’ll even run ads for the Apps! This will make us synonymous with good cheap fun during really hard times. You know, it’s almost too bad that these recessions don’t come around more often…

Sound crazy? Well, someone had to do it. Apple did.

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Freddy is the Founder & Creative Strategist of Atomic Tango. He also teaches graduate-level marketing communication courses at the University of Southern California (go Trojans!), shoots pool somewhat adequately, and herds cats. Freddy received his BA from Harvard and his MBA from USC.

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Phanos Pitiris
Phanos Pitiris
15 years ago

Apple is just duplicating its success with iTunes. The difference now is taking much shorter time to reach the billion apps (compared to the time it took to reach the billion iTunes downloads) because the “buck for an Apple something” has matured now. The stage of the economy might help as well, maybe because a lot of people lost their jobs and this might be a cheap way to entertain themselves