Why Apps Must Build a Foundation for the Future
The mobile opportunity is exciting and potentially most are seeing that it’s growing and evolving far beyond original estimates. At the heart of all of it is the data that is generated, the solutions utilized to gain leverage over that data, and the challenges around privacy. There are fundamental differences between PC-based (or sedentary) user data and mobile data opportunities and because of this, the challenges in mobile are unique. New approaches and solutions are required to compete effectively which means that organizations must detach themselves from previous paradigms.
At the center of the mobile opportunity is the app ecosystem which continues to evolve at a tremendous pace. What started with apps that primarily provided simple utility, we’ve seen a maturation toward personalized, data-driven, and highly sophisticated software. We’re also seeing a continued shift away from paid apps which means that monetization must come from other areas; data utilization is at the core of this challenge. Additionally, a brand’s active app user base are among its most loyal and engaged customers with the highest lifetime value (LTV) which means that the user data is inherently valuable. Yet significant challenges exist because the rich user data generated from in-app activity is typically siloed from other user data, or worse, trapped in various point solutions.
While there have been some exciting acquisitions recently the regulatory, compliance, and compatibility environment is off to a rough start this year. Apple has been cracking down on apps collecting the IDFA, while Google has declined to feature apps with the READ_PHONE_STATE turned on, a tactic employed by measurement services such as comScore. More recently, two mobile measurement partners, Kontagent and Mobile App Tracking, were suspended from Facebook for violating their data policies. And Lyft, a consumer facing app, was sued for sending sensitive user-level data to Mixpanel.
We’re in an exciting time; everyone is moving very fast, and the ecosystem is continuing to bring new and innovative solutions to market to help app owners with their business challenges, but its important for companies to start thinking about future proofing their mobile businesses. While we can all agree that none of the activity highlighted above was deliberately malicious or nefarious, the amount of risk and potential for significant business disruption is currently way too high.
Simply put, embedding end points into the client creates significant risk, complexity, and cost. Specifically, app owners end up spending time inefficiently to manage the increased technical and operation burden, lose speed to market, and end up divorcing themselves from data ownership. Not to mention how this impacts the user by decreasing stability, consuming excessive network resources which drain battery life, and pushing frequent app store updates which users find annoying. This latter also creates greater audience fragmentation which leads to compounding complexity and cost, instantiating a vicious cycle.
Compared to the more mature enterprise software world, this setup is completely upside down. Despite the fact that most services use the same event level data, there is no standardized way for apps to expose their data. Instead service providers govern how integrations take place, which requires app owners to continually rebuild the wheel, leading to the problems I highlighted above. It’s becoming increasingly critical to implement an integration layer in between apps and Service Providers which that allows app owners to own their data, implement consistent privacy controls, and ensure that the consumer experience is protected.
When apps like Whatsapp gets bought for $19B, the stakes are incredibly high. Ultimately the time is now for mobile app businesses to think about building their foundation for the future.
Michael Katz is the author of this post. Michael is the CEO & co-founder of mParticle