Chat-Apps – the excalibur of marketing?Written by: Thomas Praus May 14, 2014
Not only since Facebook bought Whatsapp for 16 billion dollars analysts ask themselves: How can Chat-Apps turn their potential into business models? And marketers wonder: How can I connect with my customers through those apps? There are unbounded imaginations – from data over service to storytelling. Many attempt to pull the sword out of the stone. We took a quick glance at Chat-Apps and make some speculations.
Why are Chat-Apps so popular? The Chinese app ‘WeChat‘ has several million users, the competitors Line and Viber aren’t far behind. The communication is easier and less committing than the one with Social Networks, the connection between public and private is easier too. To start a group isn’t rocket science like on Facebook and the own social network, with all phone numbers, is already established. Moreover, the apps are also much faster because they are simple.
Sequioa Capital, one of the seed investors at whatsapp, points out four reasons, why Whatsapp was really worth the money: The users are very devoted and extremely active, the team is lean and the maxim: „No ads, no games, no gimmicks!“ of founder Brian Acton does also apply if you are part of Facebook.
But how the billions spent come back into the pocket? Three scenarios are possible.
1. More relevant advertising on Facebook through semantic analysis on Whatsapp
If Facebook becomes a news medium, only brands and media updates are posted and the personal communication moves into Chat-Apps, the database for Facebook becomes thinner. The big potential, to deliver advertising of particular relevance, becomes smaller. If Facebook could clearly connect all Whatsapp accounts with Facebook user IDs, it would be possible to scan the private messages for topics of interest and offer more relevant advertising on Facebook.
2. Chat-Apps as paid service
That is how Whatsapp currently earns money. After a free year, users have to pay 1 dollar per year, to use the service. 1 dollar turnover per year, per user. At the time of the takeover Facebook paid 42 dollar per user. In order to make the investment more profitable, a solid growth or higher turnover per user is necessary. Analysts developed a example calculation which shows, that it takes a period of more than 10 years to return the investment. However, this applies only to the extent that a strong growth is given. Could that be enough? Or is the plan to make more revenue with stickers or virtual presents?
3. Advertising that doesn’t look like advertising
It’s pretty clear, that there never could be ads in the news streams on Whatsapp. But what if companies could be convinced to pay a premium fee to have a profile on Whatsapp? The messengers will be another channel within the CRM and companies can pay for their access in order to connect with their customers and target group – so much to the calculus of this model.
Snapchat shows how
This notion seemed to apply, given the initial interest of Facebook in the messenger Snapchat. However, they did reject the 3 billion dollar offer. Snapchat has an estimated active user base of 30 million, particularly young women, with a expiration date for each content, which will be automatically deleted within seconds after posting.
In contrast to Whatsapp a lot brands already use Snapchat, e. g. McDonalds and Tacobell. The willingness of the users to connect with brands seems to be high. Follower receive what also works well on other platforms: coupons, a look behind the scenes, entertainment. Another Social Media Channel whose importance will grow based on the growth of the community. Another good example is HBO, who recently have started with Snapchat for the show „Girls“, in order to send Emojis in the style of the main characters of the show or behind the scenes images.
Excalibur of marketing? That might be a bit dramatically phrased. But if you take a good look at the penetration and activity of the Chat-Apps among young people, it clearly indicates that big brands should start to discuss and consider them. To get started it helps to: be courageous, gain experience and try things. Some already did and therefore are one step ahead.
(the icon image above is edited based on the image of Kodomut on Flickr)