Everyone is clamoring about the new iPhone 3Gs and, more importantly, the iPhone 3.0 software update. And with good reason. It’s a powerful new upgrade to one of the best smartphones on the market. Video capabilities, built-in turn-by-turn GPS, internal compass, FM transmitter, MMS capabilities (which Apple is actually late on as most other phones have—even the cheap-o’s), video editing, voice control, and even internet tethering. Plus, it’s all connected to the App Store; wherein lies the real potential.

So many more robust and useful iPhone applications that take advantage of the new hardware features are likely on the horizon. Which begs the inevitable question: should advertisers (or brands) start seriously paying attention to the iPhone and investing in application development? I’m sure there are plenty of people who would say “Yes. Oh, God yes!” and plenty who would say “Nope. Not for us.” Everyone’s situation will differ. What I hope to do here is offer up some solid reasoning as to why a company might pour some money into an iPhone app, and reasoning for why it might be a good idea to hold off. So here we go…

Why it might be a good idea
First off, the iPhone is becoming (if it isn’t already) one of the best platforms for mobile advertising out there. It’s capabilities are nearly unrivaled, and has the potential to serve as an outlet for customers to interact with your brand in entirely new and exciting ways. Second, if you create an application that really solves a problem or proves incredibly useful to your audience, it could be great exposure. Think of all the tech-savvy early-adopters who could fan the flames of a rock-solid app that serves a purpose and works well.

Third, it’s advertising people would pay for. Create an app people actually find appealing or useful, and it’s likely they’d be willing to pay a dollar or two for it. Take for example Kraft Foods and their iFood app. They provide users with daily recipes, a store locator feature, the ability to add a recipe’s ingredients to a shopping list, and more. And just like similar recipe apps from McCormick and Betty Crocker / General Mills, the Kraft recipes conveniently call for Kraft products. And finally, if nothing else, mobile advertising like this literally gets you into people’s pockets and purses. They take your ad with you wherever they go, and may engage with it several times a day if you do it right.

Why it might NOT be a good idea
IMO, the number one reason one might decide to not invest in producing an iPhone app is cost. I’ve never attempted it, and don’t even know many people that have, but I gather it can get pretty time-consuming, and as a result, pretty costly. Probably even more so if your plan is to incorporate many features using several different pieces of the phone. And with development cost goes testing and debugging cost. The first version of the app won’t (and shouldn’t) be the last. Even if you have a great idea for an app, one could wind up spending as much money ironing out bugs and improving upon the user experience based on customer feedback. Nothing would be worse than to spend $100,000 on an app that users find difficult to use, and that garners only negative reviews. It’s also becoming increasingly difficult to find most new apps that don’t have some kind of pre-launch buzz behind them. The iTunes store seems to be overrun with thousands of cheezy, weak, and otherwise useless apps, that will probably get in the way of people finding yours.

I’ve also heard that although the iPhone (and iPod Touch) is one of the most popular devices and the most widely used in terms of operating system data requests, the overall user base of the iPhone isn’t that hefty. Maybe 20% of the total smartphone market according to AdMob, and probably far less in terms of the overall cellphone market. One could argue that money might be better spent on a content-rich website that has a longer shelf-life, or some kind of broader campaign with an online component.

So in short, there are equally weighted reasons for and against. Success I guess comes down to identifying a real need, having a good idea behind it, and having the resources available to pull it off and maintain it. And this is all just one web guy’s take on the matter. There’s room for a whole lot more discussion here…

— Scott Wolf