Hearst’s Big Bet on Apps

You’re strolling down a sunny boulevard of shops, eyeing products by marquee names like Nivea, Estee Lauder and Revlon in the windows. You try on some jeans, test some makeup, spritz some perfume, finally buying a pair of shoes. A common enough scenario – except this all happens on Cosmopolitan’s new $2.99 Showcase Edition iPad app, rolled out earlier this month.

“If you look at most magazines on the iPad, all you get is this two-dimensional print ad, then you click and go to a video,” said Cosmo publishing director Donna Kalajian Legani. “ But we felt the technology is so beyond that.”

Cosmo’s racy content has also gotten an iPad upgrade: a 24-hour-a-day streaming “Mancaster’’ for the latest on what men really want; interactive flow charts to help women decode their men’s mystifying behavior; and step-by-step workout videos.

It’s all part of a drive by Cosmo owner Hearst Communications to expand into mobile in unique ways that bring in cash. Expect to pay $4.99 to see Liam Neeson come alive for March’s Esquire cover on the iPad; $1.99 buys you a special iPad edition of Popular Mechanics, featuring an an animated fly-through of an air race and an interactive earthquake map. Two years after it launched its first apps, Hearst today has 70 apps on the market, most of them paid.

In an online and mobile world where competitive magazines like Time, Popular Science and The Economist give their stuff away for free, this is heady stuff. So is in-app advertising that actually (gasp!) steers you to buy things like clothes or gear from advertisers (the Cosmo app) or buy products from the magazine itself (O: The Oprah Magazine’s iPad app peddles mugs, key chains and other items).

“We have to get people used to the fact that even if they pay for an app, there has to be advertising,” says Liz Jones, co-founder of Appency, a digital advertising agency specializing in mobile apps. “How else are publishers going to support themselves?”

Hearst execs refuse to give app revenue figures and it’s hard in their absence to gauge the success of the campaigns, beyond the giddy “4-star-plus” ratings in the iTunes store.  As every experienced marketer knows, today’s brilliant boulevard shopping app could be tomorrow’s junked CD-ROM or 8-track tape.

If nothing else, Hearst appears to be doing a good job standing out from the 300,000-plus other apps on the market. Its app money-making strategy for its 14 major magazine brands boils down to three guiding principles, according to Avi Zimak, Hearst’s advertising director for tablet media.

Go Rich: Audio, video, moving covers, interactivity, 360-degree rotation all lessen the consumer’s perception that they’re getting a pale “digital replica” of a magazine and give them a greater incentive to pay. Cosmo, Esquire, Popular Mechanics and O: The Oprah Magazine are Hearst’s poster children for that approach. Zinio, a digital newsstand and reader available on iTunes, has enabled many of these features, and is today the platform for buying single issues ($2-5) or subscriptions (up to around $20) for all Hearst magazines.

Differentiate: Oprah Winfrey’s February O Magazine featured a sketchbook application and links to buy products. The June Food Network Magazine enhanced version for iPad features an interactive guide to grilling.

Customize: Every magazine issue should offer unique digital features such as the ability to “try on” makeup or upload photos.  If you shake the iPad while testing a fragrance on Cosmo Showcase Edition, “you see the top pop off, the atomizer depress and then all the ingredients come out,” Legani said.

Of course, these are early days and none of these approaches is likely to add more than a tiny fraction to Hearst’s revenue (executives won’t reveal app performance numbers). Experimentation is still the name of the game. Hearst plans to open an “app lab” later this year where its brands, agencies and other invited guests can play with the latest hardware and software and dream up their own ideas.

Cosmo’s Legani is quick to admit that building the window-shopping app and the Mancaster didn’t come cheap. (No, she won’t say how much). What’s more, the app advertising Hearst attracts is still firmly in experimental budgets that tend to be the first cut and the least likely to be renewed. Her advertising clients participated more to learn than to earn money.

As she put it, “Nobody did this because they expect to sell a kajillion bottles of perfume.”