The Message About Messaging Apps: They’re More Than You Think
Remember the old telephone game you played as a kid? You sat in a circle, the first child whispered something to the second, who was supposed to whisper the same thing to the third, and so on. By the time the last kid got the message, it had totally changed.
What was good for a laugh back then is now big business in the world of messaging apps. Here’s what we mean:
Messaging apps started simply enough. They were extended versions of text messaging, using the Internet to connect end-users regardless of physical location or data provider. If you could get to the Internet, you could send and receive messages.
“Messaging apps or even social apps – social networks or chat or messaging apps – are becoming platforms much more than one app or one utility that you are using.”
— Omri Barnes, VP of Strategic Partnerships at StartApp
But if the words “Messaging App” were whispered as part of the telephone game today, the last person would not describe them in any way close to that traditional definition.
“What we are seeing in the last two years, unlike any other player in the mobile ecosystem, messaging apps or even social apps – social networks or chat or messaging apps – are becoming platforms much more than one app or one utility that you are using,” said Omri Barnes, VP of Strategic Partnerships at StartApp.
According to Barnes, the future of messaging apps just may be as a Services Platform.
Messaging Apps as Services Platforms
One example Barnes cites is Line. At first glance, it’s a messaging app. The website encourages: “Free Messaging: Whenever, Wherever.” But then you can see the layers of services: Free phone or video calls (users may have to watch an ad to access); a game called Line Rangers, replete with “Line characters”; Avatars; a Line Store, where users can buy stickers, themes, games and more – all on Line’s payments platform.
Said Barnes: “Line is much more than messaging or texting or even doing calls. It’s a Services Platform. They started with the messaging app and got into a whole new business that is much wider. “
Indeed, Eli Schwartz, Director of Marketing, APAC for SurveyMonkey, explained in the Huffington Post how “Asian messaging apps of WeChat, QQ, Line, and Kakao Talk are not just growing their user base by leaps and bounds but they are even able to generate in-app revenue in tandem with that growth. Rather than encourage only developers to build onto their platform, the Asian companies build their own engaging and profitable add-ons by themselves.
Schwartz offers examples:
- WeChat: “Users can also send each other money or even pay utility bills. WeChat recently started charging users of its payment service (the ability to send funds to other users), which opened up a new revenue stream for them. WeChat’s global average revenue per user is $7.”
- QQ: “QQ has 829 million monthly active users and monetizes by selling games. The most interesting feature of QQ is that it has a live translation option to allow people who don’t speak the same language to converse.”
- Kakao: “While KakaoTalk began as a simple messaging app it has grown into a platform for games and apps. KakakoTalk monetizes by selling its users stickers and even consumer goods like Starbucks coffee gift cards.”
In fact, the potential for payments is immense. Schwartz writes: “Krish Sridhar, CEO of Loctoc, who is a mobile messaging expert and previously a digital leader at McKinsey, claimed that ‘the developer-first approach is the fastest way to grow the platform, even if in the future, the platform owners start to own many of the key functionality. For example, Messaging can be a place for banks to offer their services (via bots) while at the same time companies like Google/Facebook become the platform to quickly pay your friends.’”
Said Barnes: “Even looking at the recent launch of iOS 10, I think it’s the first time we are seeing a component coming from the Eastern world to the Western world. Stickers are not something new. Stickers to enrich the user experience on chatting and messaging are obviously not new. So seeing a company like Apple, a big part of the iOS 10 release was about the iMessage – or even the new store within the keyboard. Now you can open the App Store – a new store – within your keyboard only for those stickers. This is quite unique for Apple, but it’s not unique when looking at messaging platforms around the world – and especially when you’re talking about players from Asia.”
The Power Potential
How powerful might this market become?
Schwartz writes, “Messaging apps have the ability to be everything that happens between multiple parties on smartphones even to the extent of becoming their own operating system.”
Forrester recently released its new report “The Future Of Messaging Apps.” One of the authors, Thomas Husson, VP and principal analyst at Forrester, provided perspective in a related piece he wrote for Forbes:
“Two years ago, Forrester made the claim that mobile was the new face of social. With more than 3 billion users worldwide, messaging apps demonstrated one of the fastest-growing online behaviors and passed social networks. The reach of these apps is huge, which presents a strong relationship promise for marketers.”
Husson continued: “We expect messaging apps to play a key role throughout the customer life cycle but more specifically to enable brands to deepen conversations with their customers during the retention phases. Why? Because messaging apps combine the three keys to powerful relationships in any digital environment: frequency of use, emotional connection, and convenience.”
“We used to engage with brands in our lives in specific ways: We watched a television program, and downloaded the app; we went to movies, and then bought the film; we bought cards, whatever it was. Now, there’s a new opportunity with digital content in many platforms.”
— Omri Barnes, VP of Strategic Partnerships at StartApp
In fact, the Forrester report sees a next stage for the platforms the so-called “messaging apps” have built, which is connecting them with the burgeoning Intelligent Agents.
Writes Forrester: “With more than 3 billion consumers spending a lot of time and sharing emotions on messaging apps, brands are facing a whole new set of marketing opportunities and challenges. Messaging apps like WeChat and Facebook Messenger will soon collide with bots and intelligent agents like Apple Siri and Amazon Echo and introduce a paradigm shift for marketers where interactive and contextual conversations will replace ad broadcasting. New conversational interfaces will drive deeper relationships between consumers and brands.”
Don’t Forget Digital Content
But today, there’s another opportunity for these platforms, from user engagement and monetization points of view: Digital content.
Forty years ago, if we wanted to engage with a brand, we watched the Mickey Mouse Club on TV or went to the Disney World theme park. Thirty years ago, our parents bought us the action figures (think superheroes or Barbies). Ten years ago, parents bought the Yu-Gi-Oh playing cards. Today, we still spend on all of these, but we now add digital stickers and other content to the mix.
Said Barnes: “We used to engage with brands in our lives in specific ways: We watched a television program, and downloaded the app; we went to movies, and then bought the film; we bought cards, whatever it was. Now, there’s a new opportunity with digital content in many platforms. One that will be substantial is the messaging platforms, where you want to convey your same message, but with your own brand or in the way that you would like to attach – convey your message in your own way. Stickers can do this – instead of writing, you use stickers that have your same values and reflect you. We are seeing this as a trend.”
“For, say, giant toy makers, they are looking to take their IP with toys – things that we all played with that you can now consume in a new way through new method. Through messaging or through digital games. For these kinds of companies, to create a whole new experience with their consumers, is an opportunity. And yet you need to bring to the table a lot of experience within the mobile industry.”
Indeed, in this new world for messaging platforms, mobile is central to the equation.
“Mobile is key thanks to one thing – our mobile phone is our personal device,” said Barnes. “Even if you have a laptop for everyone in the family, it’s not the same. With the mobile phone, the pictures you are taking, the contacts, whatever, it’s your phone, it’s your experiences. That’s not the case with laptops or desktop PCs.”
So what’s next? You might want to keep an eye on chatbots.
The Wall Street Journal reports as one of its 2017 Tech Trends: “Chatbots Will Reshape Messaging Apps. How users find content and conduct transactions is future of messaging, says strategist Michael Wolf at the WSJ tech conference.”
As these automated conversations gain in usefulness, WSJ reports that Wolf feels “they could shape , shaping the outcome of one of the Internet’s largest battlegrounds.”
“At issue is the future of messaging, which has become a crucial control point in how users find content and conduct transactions as their patience with specialized smartphone apps fade.”