Marketing and Advertising Opportunities on Messaging Platforms

Twenty-five years ago this month the first text message was sent from a computer to a smart phone. No one could have imagined the meteoric growth in messaging that followed. According to Statistic Brain, over 781 billion text messages were sent in June, 2017, an average of 551 per month per subscriber.

Growth in MAUs and Revenue. Sources: Statista and eMarketer.

The two largest messaging apps, WhatsApp and Messenger (both owned by Facebook) have over 1 billion MAUs.  By 2018 mobile apps are expected to have 75% of the messaging market and 98% of market revenue. That is because free mobile apps are cheaper to use than the messaging services supplied by mobile network operators.

The downloadable free apps are frequently referred to as OTT services. That translates to “over the top” applications—ones that stream content directly to the consumer over the internet, bypassing traditional internet providers like broadcast and cable services. That means OTT apps include streaming video like Netflix and Hulu as well as the messaging apps discussed in this post.

Mobile network operators have relied on subscription revenues, although that has been declining in recent years as apps have grown in popularity. Stand-alone apps, as opposed to those owned by major platforms like Facebook and Google, obviously have incentive to monetize their free services, but the eMarketer chart shows a vast difference in the degree to which they have succeeded. The success of the Line app illustrates what is possible from the app’s perspective.

The Case of the Line App: Marketing for Monetization

In March 2010 a team was already at work on a mobile app when a earthquake of magnitude 9.1 and resulting tsunami struck the northern part of Japan. (This was the tsunami that lead to the nuclear melt-down at the Fukushima power plant.) It caused widespread devastation, leaving residents completely cut off from communications.

Three months later the Tokyo team was able to launch the LINE app, which allowed residents to communicate over the internet. Jae Hyung Kim, head of strategy and operations for Line Euro-Americas said in 2016 that, “Our core values are to help foster powerful connections for people during specific moments.” It offers services similar to other leading apps including unlimited free messaging, voice and video calls, live streaming chat and a video service similar to YouTube. It also offers mobile services and a payment system. The company has transformed itself from a messaging app to a social media platform, third in user activity in Japan following only YouTube and Twitter. The majority of LINE subscribers are in Japan, Thailand, Taiwan and Indonesia. What truly separates LINE from the pack is its ability to monetize its services as shown in the eMarketer chart.

LINE Friends 5th Anniversary

A LINE Stickers Set

LINE sells games, themes and calling credits in its Line Store. However, stickers, introduced in October 2011, are the heart of the monetization effort. LINE friends are the icons, with personalities and lives of their own. The 5th anniversary image, for example, shows that Brown and Sally are a couple. In 2014 the firm launched the LINE Creators Market which allows all users to register and sell their own stickers. LINE says there are about 720,000 creators registered in 2017, more than 400,000 sticker themes and sets, and sales of over JPY47.9 since the market was launched. LINE receives 65% of the revenue from most of those sales. The number of sticker postings on Pinterest are simply impossible to count, each one of them serving as promotion for the app. Stickers have sound as well as animation. Related sales come from of stickers characters merchandise and licensing fees. Together, the stickers-related sales accounted for about 1/3 of LINE’s revenue in 2015. Fast Company has an article about LINE stickers with more than you ever wanted to know.

Growth in LINE Advertising. Source:

https://techcrunch.com/2017/07/26/lines-q2-fewer-active-users-but-profits-leap-off-rising-ad-revenues/

Impressive though the growth of stickers has been, advertising is now LINE’s fastest growing revenue category. LINE is just beginning to offer targeting options for its ads. Performance (PPC) ads are growing explosively. Ads comprised 30% of LINE revenue when it went public in 2016. Forty-one percent of revenue came from content which includes taxi services and an online payments system. It also offers paid accounts which allow businesses to send content and promotional stickers to LINE subscribers.

LINE’s goals extend beyond just communication. It aims to be a global marketing platform. Its evolution illustrates the breadth of activities necessary to monetize the communications platform. Its future activities in search of profitability and expansion will be interesting.

Advertising: Here Come the Chatbots—Again!

The example of LINE shows that advertising is a fast-growing category in messaging apps using standard approaches like mobile banner ads and PPC. It is not surprising that Facebook has entered the fray. In September 2016 Facebook added Messages to its objectives in Ads Manager, extending the option to Instagram in June 2017. Selecting the “click to Messenger” ad objective causes Facebook to serve ads to users most likely to communicate with businesses through a chatbot. There are many of them; one study found that 63% of users were willing to communicate with a business through a chatbot and 29% said it was their preferred way to communicate with a retailer when making a purchase decision.

Kalani Milliker for CoverGirl

https://www.topbots.com/project/covergirl-kalani-hilliker-kik-bot-review/

Of course, in order for a brand to communicate with a Facebook user that way it must have a chatbot. There are already 30,000 chatbots on Facebook, many with their own personalities. CoverGirl has an app based on 16-year old television dance personality, Kalani Hilliker. The app is infused with her personality and offers make-tips, coupons and more with engaging enthusiasm. This is a high-tech way to include influencer marketing in a digital program. Note, however, that a chatbot is another app that must be marketed to users; that’s part of the beauty of the Facebook ads.

 http://adage.com/article/cmo-strategy/mr-m/311340/

Less attractive but equally engaging is Mr Mucus. This app was developed for the Amazon Echo and Google Home. When users search WebMD for information about colds and flu Mr. Mucus encourages them to ask questions about treatment of colds and flu. He doesn’t dispense the answers, but he might at some future time.



Marketing and Advertising Both Have a Role on Messenger Apps

The number of people using messaging apps globally has grown to 1.4 billion and eMarketer forecasts that by 2019 fully ¼ of the world’s population, 1.75b people, will be using them. 8.6 trillion text messages are sent each day around the world.  Marketers have taken notice, but marketing and messaging on messenger apps has just begun to take hold.

While in-app sales of stickers, emojis, games and payment services are staples of marketing on messenger apps, the role of advertising is growing. Advertising is also using the staple techniques of mobile banners and PPC. However, the sheer volume of communication that could flow to brands through messaging channels will require extensive use of chatbots. Ensuring positive user experience will require strong marketing efforts to “teach” the AI-driven bots the information users are asking for and creativity will be required to develop apps with engaging personalities. The data gathered by messaging apps may offer new targeting options to advertisers.

This fast-growing area of digital offers more impetus for the consideration of mobile-first strategies.

See the infographic 

Related Updates

Young people turning to messaging apps for news 
OTT video goes mainstream 
OTT fuels video growth

How to Build a Successful Martech Stack

Marketing automation is not a subject specifically covered in the 4th edition, although there are discussions of specific automation tools like Email Management Systems. Social Media Marketing does have a chapter on tools because the sheer complexity of SMM requires some degree of automation.

In the same spirit, the term "stack" is occasionally used, perhaps with a graphic portraying one, but the concept of a software stack is not specifically discussed. The number of software tools available to marketers, and the growing importance of their use, suggests that an introduction to the concept of a marketing technology (martech) stack might be useful. Hence the infographic.

                          

                         Example 1                             Example 2                         Example 3 

CMO lists essential tools for a martech stack as being:

• Content Management System
• Customer Relationship Management
• Email and Customer Nurture
• Acquisition/Advertising
• Optimization/SEO
• Social Media Listening and Analytics.

That list misses two other essential components. First the tools that ensure that customer data is of the highest quality and that it paints a complete picture of the customer. Second, the operating system  and runtime environment (Java, for example) that executes the software and allows all the tools to work smoothly together. That's what makes it a "stack," not just the collection of tools that most marketers appear to have at the moment.

2017 Marketing Technology Landscape

In order to understand both the complexity and necessity to build a custom stack that efficiently meets the needs of the business, view the 2017 marketing technology landscape graphic. Just looking at the structure, the six columns of marketing activities and the category headings within each of those, is helpful. Sorry, but you'll probably have to use the link to find a larger version before you can do even that!

Whether the business builds its own stack or whether it brings in an agency to assist, building a successful martech stack is not a "one size fits all" activity. It needs to be tailored to the business's priorities, long-term as well as short-term, and to the resources, both human and financial, it can devote to building and using the stack.

The examples links above are interesting and instructive, but again, this should not be a "choose one" project. Reading helpful content about building stacks would be a better use of time and the CMO link is a great place to start.

How Intelligent Chatbots are Revolutionizing Marketing

When I was writing the first edition of Internet Marketing back in the internet bubble and burst days of 2000 – 2002, I was especially pleased to have added a customer service chapter to the standard marketing fare. That effort was full of discovery including “agent technology” at a firm called Artificial Life, which no longer seems to exist at least in the same format. The featured bot was Lucy McBot, who was able to speak to the user in several different languages. As I remember there were several bot personas and good demos on the website. Using them in the classroom was fun and one of the book’s adopters pointed out to me that Lucy was programmed with snarky answers if a caller asked for a date. And that is exactly my point. They used programed responses and since natural language understanding was well less developed, these early bots were limited in their ability to communicate.

By the third edition the virtual agents had dropped out in favor of other technology advancements like mobile apps and social media, although there is one brief mention of virtual assistants. That perspective continued into the current edition with focus on customer experience in multi-channel environments and the impact of social media on experience. There just didn’t seem to be exiting developments in the use chatbots in customer care.

HubSpot Messaging Timeline

Fast forward about two years from the time that chapter was being written and witness the explosion of the intelligent (AI-driven) chatbot. It is one aspect of the explosion in AI that is all around us and offering many opportunities to marketers. HubSpot traces the evolution of bots from those early days to the AI-driven bots of today.


How Marketers Are Using Chatbots

Marketers are continuing to improve customer service bots, especially by adding AI. One article indicates that there is an opportunity for US businesses to automate 30% more of their customer contacts and save over $23 billion in customer service costs. Bots, though, are now being used in many more marketing applications. Some examples are:

•    The Cosmopolitan Hotel in Las Vegas introduced a bot named Rose in January 2017. For visitors Rose fields texts to room service as well as texts that would otherwise be questions for a human concierge (a human is standing by in case Rose can’t answer the question). She is fond of snappy answers and emojis, as you can see from the conversation below.

A Conversation with Rose at the Las Vegas Cosmopolitan Hotel

Rose also helps potential guests book their stay at the Cosmopolitan. The agency that designed Rose says that guests who booked on the Cosmopolitan site through Rose spent 39% more than guest who did not engage with the bot.

•    1-800-Flowers was already using Facebook Messenger. When Facebook added chatbots to Messenger in 2016 they were quick to create one. Later they added an IBM Watson-powered bot called Gwyn (Gifts When You Need) to their site. 1-800-Flowers says that over 70% of chatbot orders have come from new customers and those new customers are younger than its existing base

•    Sephora introduced its Kik messaging app with a Story on Snapchat to attract the teen segment of its audience. The app features a quiz that helps the bot understand the user’s makeup needs.

Sephora Chatbot

Sephora already had two Facebook Messenger bots, a Reservation Assistant for booking facials and Virtual Assist to help in selecting makeup colors.

•    In 2016 the NBA launched a bot on Facebook Messenger so fans could chat about the NBA finals. The app asks the user to select the team, then whether she wants playoffs or game highlights. A highlights offering is shown below. Not to be outdone, the Golden State Warriors created a bot for the 2017 playoffs. The chatbots follow on the heels of the NBA mobile app discussed in Chapter 12.

Notice that the chatbots are being used either for direct sales or for customer engagement. And especially notice that many of them are on messaging platforms, not the brand’s website. Why is that?

Bot Platforms

Why are so many chatbot apps being built on messaging platforms? HubSpot has a powerful answer:

bots solve the thing we loathed about apps in the first place. You don't have to download something you'll never use again. It's been said most people stick to five apps. Those holy grail spots? They're increasingly being claimed by messaging apps. Today, messaging apps have over 5 billion monthly active users, and for the first time, people are using them more than social networks.     

The statistics vary a bit, but there is agreement on which messaging platforms are the top three. These numbers are taken from Statista 2071 reports for consistency. Monthly active user for each platform are:

•    WhatsApp                         1.3 b   
•    Facebook Messenger       1.2 b       
•    WeChat                          963m

Other trending messaging platforms include Kik, LINE, Telegram and Kakaotalk.

The marketers in the examples above were already using messaging apps. Why take on the challenge of trying to create an audience for a downloaded app, especially when most are not used for long?

There many services in addition to the guidance provided on the platforms that will assist the technically-deficient marketer in building apps. Many offer free initial use.  Here are 3 lists and there are many more. 1  2  3

How Chatbots Can Boost Marketing Impact

As the examples show, intelligent chatbots have much to offer marketers. They can make it easy and fun to communicate with a brand, thus building engagement. In addition to making sales and enabling payments, they can help qualify leads. In addition:

•    They can send notifications.
•    They can collect feedback and generate insights.
•    They can offer personalized experiences.
•    They can give impetus to a content marketing strategy.

AI-driven chatbots have burst upon the scene and established themselves as an important factor in marketing with great rapidity. Marketers would be well advised to look for opportunities to increase their effectiveness with chatbots. As they do, they must remember that, in the end, customer experience is all important!

See infographic with additional data

Related Updates
Chatbot metrics
2018 chatbot trends
Status of chatbots with link to full Accenture report
This a robot, not a chatbot but it's worth sharing and comes with a short video and links to others
Good report on AI in the enterprise