Thursday, December 14, 2017

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:
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

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.
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 

1 comment:

  1. No sooner had I posted this than I received a notice from American Giant with a 'click to Messenger' option for tracking updates. A customer service application!