Are Instant Messaging Apps the Future of the (Mobile) Internet?

    By | Small Business

    Mobile implies real time, and you don’t get much more real time than instant messaging (IM). In a nod to a growing trend, 2015 marks the first time Pew Research Center has asked specifically about mobile messaging apps as a separate kind of mobile activity apart from cell phone texting. In a recent survey of over 1,900 US adults, more than one third (36%) of smartphone users reported using instant messaging apps like WhatsApp, Kik, or Facebook Messenger. Not surprisingly, these apps are particularly popular with the Millennial set—nearly half (49%)of smartphone owners ages 18-29 use messaging apps, and 41% use apps like Snapchat that automatically delete sent messages.

    Similar to SMS text, the core feature of virtually all of the leading instant messaging apps is text-based instant messaging. However, many of these apps allow mobile users to message one another without using SMS data, a requirement of traditional text messages. Moreover, many of the most popular instant messaging apps offer additional functionality and services that could be considered the next generation of SMS, or Text+, if you will.

    With millions of users in play and billions of dollars at stake, there seems to be a bit of a space race shaping up among many of the world’s leading tech companies to see who can create the dominant all-in-one IM app. Some IM evangelists have gone as far as saying instant messaging platforms represent the future of a mobile-dominant Internet.

    The Anatomy of an Instant Messaging App – Case Study: Kik

    Ever heard of Kik? The Toronto-based instant messaging app recently landed a $1 billion valuation in its latest (Series D) round of funding, where the tech upstart raised a cool $50 million from Tencent, the Chinese web portal company which owns the extremely popular instant messenger (and more) app Weixin, known in English as WeChat. Right now, Kik boasts 240 million registered users, although the company is not disclosing how many of these fall into the coveted monthly active user category.

    By its own admission, Kik is wildly popular among the younger teenage subset of Millennials: 70% of Kik’s 240 million registered users are between 13 and 24 years old. Significantly, approximately 40% of US teens use Kik on a regular (monthly) basis.

    One reason for this popularity might be the existence of a unique feature: a built-in web browser which allows users to surf the mobile Internet and share content with friends. According to the one-page marketing flyer located at the bottom of the Partners page of the company website, Kik is the first smartphone messenger with such a built-in browser.

    Creating an All-In-One App

    Along with its cash infusion, Tencent aims to use its expertise in the instant messaging space to help Kik become the “WeChat of the West.” The company has already invested heavily in rival messenger app Snapchat, and owns two of the most popular messaging apps in Asia—WeChat and QQ—each of which has more than 600 million monthly active users.

    The key to the success of these apps is their ability to offer more than just instant messaging.  For instance, in China consumers use WeChat to stay connected with friends, yes, but also to post photos, play games, pay their bills, order food, transfer money, hire taxies, and keep up with their favorite brands and celebrities. In other words, to do many of the things people tend to do on the mobile Internet. The WeChat app is so dominant in China that many consider it the de facto mobile intranet for the whole country.

    Tencent is betting that Kik can transform its fledgling messenger app into a full-blown closed-loop consumer ecosystem centered on its natural target audience— the highly chatty and mobile savvy US Millennial demographic.

    “Young Americans are a large group with unmet needs. We can’t think of a better group to be building for,” said Ted Livingston, founder and CEO of Kik in a recent post on the company’s blog.

    A real live chat evangelist, CEO Livingston believes Kik’s instant messenger interface represents future of the Internet:  “We think chat will be the simplest way to connect with the world around you….Consumers and developers alike are suffering from app overload, and we are increasingly seeing the potential for services to be delivered in better, lighter-weight ways through chat….”

    I suppose having a built-in web browser doesn’t hurt either.

    And Then Monetizing It

    Sounds great, but how does Kik plan on making money? For this we turn to Kik co-founder and CTO Chris Best, who tried to answer this very question in a recent interview on CNBC’s Squawk Box. Facing a grilling from the hosts, the Kik CTO seemed to struggle a bit when trying to explain how one goes about monetizing an instant messaging app. After collecting himself for a moment, Best did better when drawing on the analogy of WeChat’s success in China: “…because chat is the natural way to communicate in mobile, they’ve built it (WeChat) as the gateway to all of the real-world businesses you want to interact with, and there’s just a tremendous amount of money there, charging for the services and promotion, and directing traffic…” He then went on to make a particularly bold statement, noting how, what search and Google was to the age of the desktop internet, chat (and presumably, Kik) is to the mobile Internet.

    Time will tell.

    As for right now, Kik seems to be experimenting with different ways to monetize the app, including editorial placements, banner ads, and Promoted Chats for brands. With Promoted Chats, brands can target followers by gender, geography and mobile device.  They can also customize automated responses based on keywords in messages from fans.

    According to the aforementioned marketing flyer, Promoted Chats allow brands to “engage in 1:1 conversations with your followers. Share videos, photos, web apps, and text updates, or gather audience feedback to create a stronger connection with your users.”

    Although there isn’t a lot of hard ROI data available confirming the utility of Promoted Chats for brands, some early feedback points to the success of the program. Here’s an excerpt from the March 5th post on the Kik company blog (parentheses are my own):

    “…since the launch of the (Promoted Chats) program (in August of 2014), more than 60 brands, including Funny or Die, Seventeen Magazine, Skullcandy and Vans, are seeing high engagement levels, with organic reach of 75-80% of Kik users. More than 10 million users have opted into a conversation with a brand, over 250 million total messages have been exchanged, and users are now sending an average of 9.4 messages to brands they’re chatting with.

    With 27 billion messages being sent by Kik users each month, and an average of 71 messages being sent per user per day, one can see how Promoted Chats could be an effective marketing tool for brands.

    Competition from Snapchat, Facebook, Google, and Others

    So what about the competition? Before Kik can claim the mantle of “WeChat of the West,” it’s going to have to take on a host of instant messenger app competitors, many of which happen to be among the biggest tech companies on the planet. Here is a snapshot of some of the leading instant messaging apps currently on the market.

    Snapchat – Arguably the trendiest of all the messenger apps, Snapchat first made a splash when it popularized the concept of ephemeral messaging via “Snaps,” where users could take a photo or video of themselves and send it to a friend. Once viewed, the photo/video disappears from the screen within a few seconds. The short lived (ephemeral) nature of these posts lead to their initial popularity among Millennial-aged users (one 2014 study found that fully 77% of college students used Snapchat daily, a stat which helped fuel media rumors about rampant sexting, which apparently were untrue).

    Since then the app has raised a boatload of money (and garnered a $16 billion valuation), with which it’s added a number of features, including Discover, which allows users to peruse photo and video content from big name media publishers like ESPN, CNN, and National Geographic, and Stories, which allows users to post photos and videos directly into their Snapchat feed that their friends can view and interact with for up to 24 hours before they are automatically deleted.

    Many (including Kik co-founder Chris Best) believe that the introduction of Discover and Stories suggests that Snapchat is shifting its focus to broadcasting rather than instant messaging. I’m not sure if I buy this argument. Although the numbers vary widely depending on where you look, the general consensus is that Snapchat currently has over 100 million daily active users. To me, Snapchat looks to have designs on becoming the all-in-one messenger app to rule them all; the WeChat of the World, if you please.

    Facebook Messenger – Any talk of world-dominating messenger apps almost by default has to include Facebook Messenger. It has all the bells and whistles you might expect from the world’s largest social network, including HD voice and video calling, instant photo and video messaging, group chatting, a location transmission feature, a money transfer option, voice messaging and, perhaps best of all, a hearty selection of Emoji stickers to capture every mood.

    Given its aggressive and far-reaching investments in mobile and mobile video in recent years, it’s fair to say that Facebook has developed a strong track record for spotting and then exploiting the next big trend. With over 600 million monthly active users, something tells me Facebook Messenger is just getting started.

    What’s App – Remember back in February of 2014 when Facebook acquired these guys for $19 billion? What’s App carved out a niche by positioning itself as a free alternative to SMS text messaging— an instant messenger platform that allows users to replace their expensive SMS service with free texting worldwide.  In addition to basic text messaging, WhatsApp users can also set up chat groups, and send each other unlimited images, videos, and audio media messages. Sounds like a hit. With nearly 800 million monthly active users, it truly is.

    Instagram Direct – Speaking of companies owned by Facebook, Instagram rolled out what could be considered its version of an instant messaging application in December of 2014 when it launched Instagram Direct. As the name implies, Instagram Direct allows users to send photos and videos privately to a designated group of followers or even to individuals. It’s not clear how many people are using the feature, but with 300 million monthly active users on Instagram, it’s worthy of note.

    Google Hangouts – In March of 2015, Google (finally) broke off its popular instant messenger app from its floundering Google Plus social media platform. The new Hangouts app provides a clean desktop interface that invites users to get started by calling a friend via video call, phone call, or instant message.

    My colleagues and I actually use Hangouts as sort of an all-in-one communication platform whether we’re in the office together or remote from each other, on desktop or on mobile. With the click of a button, you can be in a near-instant video conference with a group of up to 10 people, and the instant text messaging is, well, instant (up to 100 people can be on a group text chat). Integration with YouTube allows users in a live group video chat to watch YouTube videos together in real time. This feature enables business users who may be in disparate locations to upload presentations to YouTube and watch them as a group.

    Google doesn’t release monthly active user data on Hangouts, but given the general popularity of instant messaging apps and Google’s recent move to carve out a dedicated space for the app, it’s probably safe to assume Hangouts will be hanging out for some time (sorry, couldn’t resist).

    NB: While calls to other Hangouts users are free worldwide, calls to other numbers may carry charges.

    iMessage – You can’t mention Google’s instant messenger app without giving a nod to one of its chief rivals, Apple’s iMessage. As one might expect, iMessage has many of the same features as other leading instant messenger apps, including photo/video sharing, location transmission, etc. Like Hangouts, iMessage leverages Apple’s “intelligent assistant” SIRI to provide a voice-to-text feature—just speak into the app, and SIRI translates your words into text.  According to Apple CEO Tim Cook, over 40 billion iMessages are sent daily; that pretty much says it all.

    OK, I’m running out of space and time, but here are names and links to some other popular instant messaging apps: Viber, Line, Telegram, and Hike.

    What It All Means for Businesses and Marketers

    As to whether instant messaging apps represent the preferred interface, and as such the future, of a mobile-dominant Internet, the jury is still out. If anything, the proliferation of apps seems to be fragmenting the centralizing nature of the traditional search-engine-based Internet. To say that an app-based interface in general—and a single app in particular—could dominate an Internet ecosystem that is growing in sophistication and complexity daily strains credulity. For most of us, IM apps still remain tangential rather than fundamental to the fabric of our daily lives; they’re still nothing more than on-ramps to the Internet superhighway.

    That said, the market opportunity for IM is clearly there and seems to be growing. Businesses and marketers should monitor this trend and look for relatively low-risk ways to experiment with IM marketing, much as companies like Seventeen Magazine were able to do with Kik’s Promoted Chats. Brands that are targeting Millennials, especially younger Millennials, may want to more aggressively pursue opportunities to experiment with IM campaigns.

    One thing’s for certain: with the most populous demographic on the planet continuing to embrace IM, and with so many big names in tech in the IM arms race, you can expect to see instant messaging apps enter into the marketing mainstream soon enough.

    RWD is Your Mobile Design Solution

    This article was syndicated from Business 2 Community: Are Instant Messaging Apps the Future of the (Mobile) Internet?

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