Why brands are ‘throwing good money after bad’ on mobile

SAN FRANCISCO, CA — “The agency model is broken. Agencies don’t get mobile; clients don’t get mobile; most mobile app makers don’t even get mobile,” said Jeff Bernstein, vice president at ad agency UMSF, on stage at VentureBeat’s MobileBeat conference today.

When it comes to mobile, are brands doing anything right?

Well, most companies have done the polling and the research; they understand that their target audiences are moving to mobile. But the largest brands are struggling to connect with consumers, and branded apps will often only receive a measly few thousand downloads.

“It’s getting harder to win,” said Guy Horrocks, CEO of Carnival Labs, also on stage at MobileBeat. “But a good brand partnered with a quality app, that’s when you get magic.”

In the past few years, many brands have sunk millions of dollars into iPhone apps that have failed to resonate with their customers. Meanwhile, game studios like Rovio are producing games that millions of people around the world are playing. The company’s flagship game, Angry Birds, hit 263 million monthly active users in January.

The panelists said that branded apps will inevitably crash and burn unless they offer high-quality content, location-based ad targeting, and a real service to consumers.

“We have to find and seize on those moments that a brand can add value,” said Bernstein, who has worked in the agency world for years. For instance, Oreo cookies are more likely to sell during snack time, and a company like Jeep would have an easier time connecting with a consumer during a snow storm.

“All these moments will occur on your phone,” added Brian Wong, founder of Kiip, a company that helps app developers offer real rewards for virtual achievements.

To help brands come up with creative ideas for new apps, Bernstein runs an incubator called Mad Valley. He describes the concept as “Madison Avenue meets tech,” and the goal is to prevent agencies and brands from “throwing good money after bad.”

To succeed, brands will need to offer high-quality entertainment, not a glorified ad. The panelists concluded that brands should approach game developers who are user-experience experts rather than relying on reputation alone.